| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) | |
| |
||
(Address of principal executive offices) |
(Zip Code) | |
| Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered | ||
| Large accelerated filer | ☐ | Accelerated filer | ☐ | |||
| ☒ | Smaller reporting company | |||||
| Emerging growth company | ||||||
Page |
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PART I. |
2 |
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Item 1. |
2 |
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2 |
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4 |
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5 |
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6 |
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7 |
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9 |
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Item 2. |
44 |
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Item 3. |
73 |
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Item 4. |
73 |
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PART II. |
75 |
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Item 1. |
75 |
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Item 1A. |
75 |
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Item 2. |
101 |
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Item 3. |
102 |
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Item 4. |
102 |
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Item 5. |
102 |
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Item 6. |
102 |
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103 |
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Item 1. |
Financial Statements. |
(in thousands, except for par value and share data) |
July 4, 2021 |
January 3, 2021 |
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| Assets |
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| Current assets |
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| Cash and cash equivalents |
$ | $ | ||||||
| Restricted cash |
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| Accounts receivable, net |
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| Inventories |
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| Prepaid expenses and other current assets |
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| Total current assets |
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| Property and equipment, net |
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| Operating lease assets |
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| Goodwill |
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| Other intangible assets, net |
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| Equity method investments, net |
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| Deferred tax assets |
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| Other non-current assets |
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| Total non-current assets |
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| Total assets |
$ | $ | ||||||
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| Current liabilities |
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| Accounts payable |
$ | $ | ||||||
| Accrued liabilities |
||||||||
| Current portion of deferred revenue |
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| Indirect and employee taxes payable |
||||||||
| Current portion of debt, net of debt issuance costs |
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| Current portion of related party loans |
||||||||
| Current portion of operating lease liabilities—sites trading less than one year |
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| Current portion of operating lease liabilities—sites trading more than one year |
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| Other current liabilities |
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| Total current liabilities |
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| Debt, net of current portion and debt issuance costs |
||||||||
| Property mortgage loans, net of debt issuance costs |
||||||||
| Related party loans, net of current portion and imputed interest |
||||||||
| Operating lease liabilities, net of current portion - sites trading less than one year |
||||||||
| Operating lease liabilities, net of current portion - sites trading more than one year |
||||||||
| Finance lease liabilities |
||||||||
| Financing obligation |
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| Deferred revenue, net of current portion |
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| Deferred tax liabilities |
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| Other non-current liabilities |
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| Total non-current liabilities |
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| Total liabilities |
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(in thousands, except for par value and share data) |
July 4, 2021 |
January 3, 2021 |
||||||
| Senior convertible preference shares, £ |
||||||||
| Redeemable C ordinary shares, £ |
||||||||
| Shareholders’ deficit |
||||||||
| A ordinary shares, £ |
||||||||
| Additional paid-in capital |
||||||||
| Accumulated deficit |
( |
) | ( |
) | ||||
| Accumulated other comprehensive income (loss) |
( |
) | ||||||
| Total shareholders’ deficit attributable to Membership Collective Group Inc. |
( |
) | ( |
) | ||||
| Noncontrolling interest |
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| Total shareholders’ deficit |
( |
) | ( |
) | ||||
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| Total liabilities, redeemable shares and shareholders’ deficit |
$ | $ | ||||||
| |
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|||||
(in thousands except for per share data) |
13 Weeks Ended |
26 Weeks Ended |
||||||||||||||
July 4, 2021 |
June 28, 2020 |
July 4, 2021 |
June 28, 2020 |
|||||||||||||
Revenues |
||||||||||||||||
Membership revenues |
$ | $ | $ | $ | ||||||||||||
In-House revenues |
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Other revenues |
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Total revenues |
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Operating expenses |
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In-House operating expenses (exclusive of depreciation and amortization of $ |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Other operating expenses (exclusive of depreciation and amortization of $ |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
General and administrative expenses |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Pre-opening expenses |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Depreciation and amortization |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Other |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Total operating expenses |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Operating loss |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Other (expense) income |
||||||||||||||||
Interest expense, net |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Gain (loss) on sale of property and other, net |
( |
) | ( |
) | ||||||||||||
Share of loss of equity method investments |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Total other expense, net |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Loss before income taxes |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Income tax (expense) benefit |
( |
) | ||||||||||||||
Net loss |
( |
) |
( |
) |
( |
) |
( |
) | ||||||||
Net loss attributable to noncontrolling interests |
||||||||||||||||
Net loss attributable to Membership Collective Group Inc. |
$ |
( |
) |
$ |
( |
) |
$ |
( |
) |
$ |
( |
) | ||||
Net loss attributable to A ordinary, B ordinary, C ordinary, and C2 ordinary shareholders |
||||||||||||||||
Basic and diluted |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
(in thousands) |
13 Weeks Ended |
26 Weeks Ended |
||||||||||||||
July 4, 2021 |
June 28, 2020 |
July 4, 2021 |
June 28, 2020 |
|||||||||||||
| Net loss |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
| Other comprehensive income |
||||||||||||||||
| Foreign currency translation adjustment |
( |
) | ||||||||||||||
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| Comprehensive loss |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Loss attributable to noncontrolling interest |
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| Foreign currency translation adjustment attributable to noncontrolling interest |
( |
) | ( |
) | ||||||||||||
| |
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| Total comprehensive loss attributable to Membership Collective Group Inc. |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
| |
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Redeemable Preferred Shares |
Redeemable C Ordinary Shares |
Ordinary Shares |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(in thousands except for share data) |
Shares |
Amount |
Shares |
Amount |
A Ordinary Shares |
B Ordinary Shares |
C Ordinary Shares |
C2 Ordinary Shares |
D Ordinary Shares |
Amount |
Additional Paid-In Capital |
Accumulated Deficit |
Accumulated Other Comprehensive Income (Loss) |
Total Shareholders’ Deficit Attributable to Membership Collective Group Inc. |
Noncontrolling Interest |
Total Shareholders’ Deficit |
||||||||||||||||||||||||||||||||||||||||||||||||
| As of December 29, 2019 |
$ | $ | — | — | $ | $ | $ | ( |
) | $ | $ | ( |
) | $ | $ | ( |
) | |||||||||||||||||||||||||||||||||||||||||||||||
| Net loss |
— | — | — | — | — | — | — | — | — | — | — | ( |
) | — | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||||||||||||||||||||
| Distributions to noncontrolling interest |
— | — | — | — | — | — | — | — | — | — | — | — | — | — | ( |
) | ( |
) | ||||||||||||||||||||||||||||||||||||||||||||||
| Contributions from noncontrolling interest |
— | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Net change in cumulative translation adjustment |
— | — | — | — | — | — | — | — | — | — | — | — | ( |
) | ||||||||||||||||||||||||||||||||||||||||||||||||||
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| As of March 29, 2020 |
$ |
$ |
— |
— |
$ |
$ |
$ |
( |
) |
$ |
$ |
( |
) |
$ |
$ |
( |
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| Net loss |
— | — | — | — | — | — | — | — | — | — | — | ( |
) | — | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||||||||||||||||||||
| Distributions to noncontrolling interest |
— | — | — | — | — | — | — | — | — | — | — | — | — | — | ( |
) | ( |
) | ||||||||||||||||||||||||||||||||||||||||||||||
| Contributions from noncontrolling interest |
— | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Conversion of related party loan to A ordinary shares |
— | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of redeemable C ordinary shares |
— | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Redeemable C ordinary shares issuance costs |
— | — | — | ( |
) | — | — | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
| Net change in cumulative translation adjustment |
— | — | — | — | — | — | — | — | — | — | — | — | ( |
) | ||||||||||||||||||||||||||||||||||||||||||||||||||
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| As of June 28, 2020 |
$ |
$ |
— |
— |
$ |
$ |
$ |
( |
) |
$ |
$ |
( |
) |
$ |
$ |
( |
) | |||||||||||||||||||||||||||||||||||||||||||||||
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| As of January 3, 2021 |
$ | $ | $ | $ | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | $ | ( |
) | |||||||||||||||||||||||||||||||||||||||||||||||
| Net loss |
— | — | — | — | — | — | — | — | — | — | — | ( |
) | ( |
) | ( |
) | ( |
) | |||||||||||||||||||||||||||||||||||||||||||||
| Distributions to noncontrolling interest |
— | — | — | — | — | — | — | — | — | — | — | — | — | — | ( |
) | ( |
) | ||||||||||||||||||||||||||||||||||||||||||||||
| Contributions from noncontrolling interest |
— | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of senior convertible preference shares (Note 15) |
— | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Senior convertible preference shares issuance costs |
— | ( |
) | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of redeemable C ordinary shares (Note 16) |
— | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Share-based compensation, net of tax |
— | — | — | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Net change in cumulative translation adjustment |
— | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
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| As of April 4, 2021 |
$ |
$ |
$ |
$ |
$ |
( |
) |
$ |
$ |
( |
) |
$ |
$ |
( |
) | |||||||||||||||||||||||||||||||||||||||||||||||||
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| Net loss |
— | — | — | — | — | — | — | — | — | — | — | ( |
) | — | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||||||||||||||||||||
| Distributions to noncontrolling interest |
— | — | — | — | — | — | — | — | — | — | — | — | — | — | ( |
) | ( |
) | ||||||||||||||||||||||||||||||||||||||||||||||
| Non-cash dividends on senior convertible preference shares |
— | — | — | — | — | — | — | — | — | ( |
) | — | — | ( |
) | — | ( |
) | ||||||||||||||||||||||||||||||||||||||||||||||
| C2 ordinary shares issued in connection with the Cipura Acquisition (Note 3) |
— | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| C2 ordinary shares issued in connection with the Mandolin Acquisition (Note 3) |
— | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Purchase of Soho Works North America noncontrolling interests (Note 3) |
— | — | — | — | — | — | — | — | — | — | ( |
) | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Purchase of Scorpios noncontrolling interests (Note 3) |
— | — | — | — | — | — | — | — | — | — | ( |
) | ( |
) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| C2 ordinary shares issued in connection with the Line and Saguaro Acquisition (Note 3) |
— | — | — | — | — | — | — | — | — | — | — | ( |
) | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Accretion of redeemable preferred shares to redemption value, net of foreign currency remeasurement gain |
— | — | — | — | — | — | — | — | — | ( |
) | — | ( |
) | — | ( |
) | |||||||||||||||||||||||||||||||||||||||||||||||
| Share-based compensation, net of tax |
— | — | — | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Net change in cumulative transition adjustment |
— | — | — | — | — | — | — | — | — | — | — | — | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||||||||||||||||||||||
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| As of July 4, 2021 |
$ |
$ |
$ |
$ |
$ |
( |
) |
$ |
$ |
( |
) |
$ |
$ |
( |
) | |||||||||||||||||||||||||||||||||||||||||||||||||
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|||||||||||||||||||||||||||||||||
(in thousands) |
26 Weeks Ended |
|||||||
July 4, 2021 |
June 28, 2020 |
|||||||
Cash flows from operating activities |
||||||||
Net loss |
$ | ( |
) | $ | ( |
) | ||
Adjustments to reconcile net loss to net cash used in operating activities |
||||||||
Depreciation and amortization |
||||||||
Share-based compensation, net of tax |
||||||||
Income tax benefit |
( |
) | ( |
) | ||||
(Gain) loss on disposal of property and other, net |
( |
) | ||||||
Share of loss of equity method investments |
||||||||
Amortization of debt issuance costs |
||||||||
Loss on debt extinguishment |
||||||||
Imputed interest on interest free related party loans |
||||||||
PIK interest settled on extinguishment, net of non-cash interest |
( |
) | ||||||
Distributions from equity method investees |
||||||||
Loss on foreign currency exchange rates |
||||||||
Guarantee provision |
||||||||
Changes in assets and liabilities: |
||||||||
Accounts receivable |
( |
) | ||||||
Inventories |
( |
) | ||||||
Operating leases, net |
||||||||
Other operating assets |
( |
) | ( |
) | ||||
Deferred revenue |
( |
) | ( |
) | ||||
Accounts payable and accrued and other liabilities |
||||||||
Net cash used in operating activities |
( |
) | ( |
) | ||||
Cash flows from investing activities |
||||||||
Purchase of property and equipment |
( |
) | ( |
) | ||||
Purchase of intangible assets |
( |
) | ( |
) | ||||
Cash acquired in the Cipura Acquisition (Note 3) |
||||||||
Acquisition of noncontrolling interests (Note 3) |
( |
) | ||||||
Investments in equity method investees |
( |
) | ||||||
Net cash used in investing activities |
( |
) | ( |
) | ||||
Cash flows from financing activities |
||||||||
Repayment of borrowings |
( |
) | ||||||
Payment for debt extinguishment costs |
( |
) | ||||||
Issuance of related party loans |
— |
|||||||
Proceeds from borrowings |
||||||||
Payments for debt issuance costs |
( |
) | ( |
) | ||||
Principal payments on finance leases |
( |
) | ( |
) | ||||
Proceeds from financing obligation |
||||||||
Principal payments on financing obligation |
( |
) | ( |
) | ||||
Distributions to noncontrolling interest |
( |
) | ( |
) | ||||
Contributions from noncontrolling interest |
||||||||
Senior convertible preference shares issued, net of issuance costs (Note 15) |
||||||||
Proceeds from issuance of redeemable C ordinary shares, net of issuance costs (Note 16) |
||||||||
Net cash provided by financing activities |
||||||||
Effect of exchange rate changes on cash and cash equivalents, and restricted cash |
( |
) | ||||||
Net (decrease) increase in cash and cash equivalents, and restricted cash |
( |
) | ||||||
Cash, cash equivalents and restricted cash |
||||||||
Beginning of period |
||||||||
End of period |
$ |
$ |
||||||
(in thousands) |
26 Weeks Ended |
|||||||
July 4, 2021 |
June 28, 2020 |
|||||||
Cash, cash equivalents and restricted cash are comprised of: |
||||||||
Cash and cash equivalents |
$ | $ | ||||||
Restricted cash in current assets |
||||||||
Cash, cash equivalents and restricted cash as of July 4, 2021 and June 28, 2020 |
$ |
$ |
||||||
Supplemental disclosures: |
||||||||
Cash paid for interest (including settlement of paid-in-kind |
$ | $ | ||||||
Cash paid for income taxes |
||||||||
Supplemental disclosures of non-cash investing and financing activities: |
||||||||
C2 ordinary shares issued in exchange for acquisitions of businesses and noncontrolling interests (Note 3) |
$ | $ | ||||||
Conversion of related party loan to A ordinary shares |
||||||||
Operating lease assets obtained in exchange for new operating lease liabilities |
||||||||
Non-cash dividends on senior convertible preference shares (Note 15) |
— |
|||||||
Accrued capital expenditures |
||||||||
1. |
Nature of the Business |
2. |
Summary of Significant Accounting Policies |
| • | the timing of re-opening of Houses in a manner that is compliant with local laws and regulations, including the relaxing of mandatory capacity constraints, as well as anticipated demand; |
| • | the level of in-House sales activity (primarily sales of food and beverage) that, even after opening, may be subject to reduced capacity as a result of on-going restrictions; |
| • | the continued high level of membership retention and renewals (which has been evidenced throughout the pandemic); and |
| • | the implementation of extensive cost reduction measures that continue to support the timing of House re-openings and anticipated levels of capacity. |
3. |
Acquisitions |
4. |
Consolidated Variable Interest Entities |
July 4, 2021 (1) |
January 3, 2021 |
|||||||
Cash and cash equivalents |
$ | $ | ||||||
Restricted cash |
— | |||||||
Accounts receivable |
||||||||
Inventories |
||||||||
Prepaid expenses and other current assets |
||||||||
Total current assets |
||||||||
Property and equipment, net |
||||||||
Operating lease assets |
||||||||
Other intangible assets, net |
||||||||
Other non-current assets |
||||||||
Total assets |
$ |
$ |
||||||
Accounts payable |
||||||||
Accrued liabilities |
||||||||
Indirect and employee taxes payable |
||||||||
Current portion of operating lease liabilities - sites trading less than one year |
||||||||
Current portion of operating lease liabilities - sites trading more than one year |
||||||||
Other current liabilities |
||||||||
Total current liabilities |
||||||||
Debt |
||||||||
Operating lease liabilities, net of current portion - sites trading less than one year |
||||||||
Operating lease liabilities, net of current portion - sites trading more than one year |
||||||||
Other non-current liabilities |
||||||||
Total liabilities |
$ |
$ |
||||||
Net assets |
$ |
$ |
||||||
(1) |
Amounts as of July 4, 2021 include balances related to SWNA following the Soho Works Acquisition, as this entity continues to be thinly capitalized. |
5. |
Equity Method Investments |
(in thousands) |
13 Weeks Ended |
26 Weeks Ended |
||||||||||||||
July 4, 2021 (1) |
June 28, 2020 |
July 4, 2021 (1) |
June 28, 2020 |
|||||||||||||
Revenues |
$ | $ | $ | $ | ||||||||||||
Operating loss |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Net loss (2) |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
(1) |
Includes the financial information of Cipura through May 10, 2021. |
(2) |
The net loss shown above relates entirely to continuing operations. |
(in thousands) |
As of |
|||||||
July 4, 2021 (1) |
January 3, 2021 |
|||||||
Current assets |
$ | $ | ||||||
Non-current assets |
||||||||
Total assets |
$ |
$ |
||||||
Current liabilities |
||||||||
Non-current liabilities |
||||||||
Total liabilities |
$ |
$ |
||||||
(1) |
Excludes the financial information of Cipura, which ceased to be an equity method investee on May 10, 2021 as a result of the Cipura Acquisition, as described in Note 3, Acquisitions. |
6. |
Leases |
(in thousands) Fiscal year ending |
Operating Leases |
Finance Leases |
||||||
Undiscounted lease payments |
||||||||
Remainder of 2021 |
$ | $ | ||||||
2022 |
||||||||
2023 |
||||||||
2024 |
||||||||
2025 |
||||||||
Thereafter |
||||||||
Total undiscounted lease payments |
||||||||
Present value adjustment |
||||||||
Total net lease liabilities |
$ |
$ |
||||||
(in thousands) |
26 Weeks Ended |
|||||||
July 4, 2021 |
June 28, 2020 |
|||||||
Cash flows from operating activities |
||||||||
Cash paid for amounts included in the measurement of lease liabilities: |
||||||||
Operating cash flows from operating leases |
$ | ( |
) | $ | ( |
) | ||
Interest payments for finance leases |
( |
) | ( |
) | ||||
Cash flows from financing activities related to leases |
||||||||
Principal payments for finance leases |
$ | ( |
) | $ | ( |
) | ||
Supplemental disclosures of non-cash investing and financing activities: |
||||||||
Operating lease assets obtained in exchange for new operating lease liabilities |
$ | $ | ||||||
26 Weeks Ended |
||||||||
July 4, 2021 |
June 28, 2020 |
|||||||
| Weighted-average remaining lease term |
||||||||
| Finance leases |
||||||||
| Operating leases |
||||||||
| Weighted-average discount rate |
||||||||
| Finance leases |
% | % | ||||||
| Operating leases |
% | % | ||||||
(in thousands) |
Operating Leases Under |
|||
Fiscal year ending |
Construction |
|||
| Estimated total undiscounted lease payments |
||||
| Remainder of 2021 |
$ | |||
| 2022 |
||||
| 2023 |
||||
| 2024 |
||||
| 2025 |
||||
| Thereafter |
||||
| |
|
|||
| Total undiscounted lease payments expected to be capitalized |
$ |
|||
| |
|
|||
7. |
Revenue Recognition |
(in thousands) |
Next twelve months from July 4, 2021 |
Future periods |
||||||
| Membership and registration fees |
$ | $ | ||||||
| |
|
|
|
|||||
| Total future revenues |
$ |
$ |
||||||
| |
|
|
|
|||||
(in thousands) |
July 4, 2021 |
January 3, 2021 |
||||||
| Contract receivables |
$ | $ | ||||||
| Contract assets |
||||||||
| Contract liabilities |
||||||||
| Inventories, Prepaid Expenses and Other Current Assets |
(in thousands) |
April 4, 2021 |
January 3, 2021 |
||||||
Amounts owed by equity method investees |
$ | $ | ||||||
Prepayments and accrued income |
||||||||
Contract assets |
||||||||
Other receivables |
||||||||
Total prepaid expenses and other current assets |
$ |
$ |
||||||
9. |
Property and Equipment, Net |
10. |
Goodwill and Intangible Assets |
(in thousands) |
UK |
US |
Europe and RoW |
Total |
||||||||||||
January 3, 2021 |
$ |
$ |
$ |
$ |
||||||||||||
Cipura Acquisition (Note 3) |
— | — | ||||||||||||||
Line and Saguaro Acquisition (Note 3) |
— | — | ||||||||||||||
Foreign currency translation adjustment |
— | ( |
) | ( |
) | |||||||||||
July 4, 2021 |
$ |
$ |
$ |
$ |
||||||||||||
11. |
Accrued Liabilities and Other Current Liabilities |
(in thousands) |
July 4, 2021 |
January 3, 2021 |
||||||
Accrued interest |
$ | $ | ||||||
Hotel deposits |
||||||||
Trade, capital and other accruals |
||||||||
$ |
$ |
|||||||
12. |
Debt |
(in thousands) |
July 4, 2021 |
January 3, 2021 |
||||||
Revolving credit facilities, interest at (1) |
$ | $ | ||||||
Permira Senior Facility, interest at |
— | |||||||
US government-backed bank loan, interest at |
— | |||||||
Senior Secured Notes, interest at |
— | |||||||
Other loans (see additional description below) |
||||||||
Less: Current portion of long-term debt |
( |
) | ( |
) | ||||
Total long-term debt, net of current portion |
$ |
$ |
||||||
(1) |
The Company does not believe that there are any material potential effects on financial reporting of the market-wide migration away from LIBOR, which is expected to be phased out at the end of calendar year 2021, to alternative reference rates. The Company plans to either repay its outstanding debt balances with associated LIBOR rates prior to the end of calendar year 2021 or to replace the LIBOR benchmark rate with another benchmark rate, such as the SONIA. Refer to Note 22, Subsequent Events for further information. |
(in thousands) |
July 4, 2021 |
January 3, 2021 |
||||||
Term loan, interest at |
$ | $ | ||||||
Mezzanine loan, interest at |
||||||||
Total property mortgage loans |
$ |
$ |
||||||
(in thousands) |
July 4, 2021 |
January 3, 2021 |
||||||
Related party loans, unsecured, |
$ | $ | ||||||
Related party loans, unsecured, |
||||||||
Less: Current portion of related party loans |
( |
) | ( |
) | ||||
Total related party loans, net of current portion |
$ |
$ |
||||||
Currency |
Maturity date |
Principal balance as of July 4, 2021 |
Applicable interest rate as of July 4, 2021 |
|||||||||||||
Greek Street loan |
$ | % | ||||||||||||||
Soho House Hong Kong loan (1) |
% | |||||||||||||||
Compagnie de Phalsbourg credit facility |
% | |||||||||||||||
Optima Bank loan |
% | |||||||||||||||
Greek government loan |
% | |||||||||||||||
(1) |
The Company must comply with certain financial covenants, including the requirement that the Company maintain certain minimum EBITDA levels, calculated pursuant to the Soho House Hong Kong loan agreement; the minimum EBITDA requirement was not met as of January 3, 2021. In June 2021, the creditor of the Soho House Hong Kong Loan waived the existing covenant breach and the ongoing minimum EBITDA requirements until January 3, 2022. |
(in thousands) |
||||
| Remainder of 2021 |
$ | |||
| 2022 |
||||
| 2023 |
||||
| 2024 |
||||
| 2025 |
||||
| Thereafter |
||||
| |
|
|||
$ |
||||
| |
|
|||
13. |
Fair Value Measurements |
(in thousands) |
Carrying Value |
Fair Value |
||||||
| July 4, 2021 |
||||||||
| Related party loans |
$ | $ | ||||||
| Senior Secured Notes |
||||||||
| Property mortgage loans |
||||||||
| Other non-current debt |
||||||||
| |
|
|
|
|||||
$ |
$ |
|||||||
| |
|
|
|
|||||
| (in thousands) |
Carrying Value |
Fair Value |
||||||
| January 3, 2021 |
||||||||
| Related party loans |
$ | $ | ||||||
| Permira Senior Facility |
||||||||
| US government-backed bank loan |
||||||||
| Property mortgage loans |
||||||||
| Other non-current debt |
||||||||
| |
|
|
|
|||||
$ |
$ |
|||||||
| |
|
|
|
|||||
14. |
Share-Based Compensation |
(in thousands) |
13 Weeks Ended July 4, 2021 |
26 Weeks Ended July 4, 2021 |
||||||
SARs |
$ | $ | ||||||
Growth Shares |
||||||||
Total share-based compensation expense |
||||||||
Tax benefit for share-based compensation expense |
||||||||
Share-based compensation expense, net of tax |
$ |
$ |
||||||
15. |
Redeemable Preferred Shares |
16. |
C Ordinary Shares |
17. |
Loss Per Share and Shareholders’ Deficit |
13 Weeks Ended July 4, 2021 |
||||||||||||||||
(in thousands except share and per share amounts) |
A Ordinary Shares |
B Ordinary Shares |
C Ordinary Shares |
C2 Ordinary Shares |
||||||||||||
| Computation of basic and diluted loss per share |
||||||||||||||||
| Net loss attributable to Membership Collective Group Inc. |
$ |
( |
) |
$ |
( |
) |
$ |
( |
) |
$ |
( |
) | ||||
| Less: Cumulative May 2016 preferred shares undeclared dividends |
( |
) |
( |
) |
( |
) |
( |
) | ||||||||
| Less: Incremental accretion of May 2016 preferred shares to redemption value |
( |
) |
( |
) |
( |
) |
( |
) | ||||||||
| Add: Foreign currency remeasurement of redeemable preferred shares |
||||||||||||||||
| Less: Non-cash dividends on the Senior Preference Shares |
( |
) |
( |
) |
( |
) |
( |
) | ||||||||
| |
|
|
|
|
|
|
|
|||||||||
| Net loss adjusted for preferred shares dividends |
$ |
( |
) |
$ |
( |
) |
$ |
( |
) |
$ |
( |
) | ||||
| |
|
|
|
|
|
|
|
|||||||||
| Weighted average shares outstanding for basic and diluted loss per share |
||||||||||||||||
| |
|
|
|
|
|
|
|
|||||||||
| Basic and diluted loss per share |
$ |
( |
) |
$ |
( |
) |
$ |
( |
) |
$ |
( |
) | ||||
| |
|
|
|
|
|
|
|
|||||||||
13 Weeks Ended June 28, 2020 |
||||||||||||||||
(in thousands except share and per share amounts) |
A Ordinary Shares |
B Ordinary Shares |
C Ordinary Shares |
C2 Ordinary Shares |
||||||||||||
| Computation of basic and diluted loss per share |
||||||||||||||||
| Net loss attributable to Membership Collective Group Inc. |
$ |
( |
) |
$ |
( |
) |
$ |
( |
) |
$ |
( |
) | ||||
| Less: Cumulative preferred shares undeclared dividends |
( |
) |
( |
) |
( |
) |
( |
) | ||||||||
| |
|
|
|
|
|
|
|
|||||||||
| Net loss adjusted for preferred shares dividends |
$ |
( |
) |
$ |
( |
) |
$ |
( |
) |
$ |
( |
) | ||||
| |
|
|
|
|
|
|
|
|||||||||
| Weighted average shares outstanding for basic and diluted loss per share |
||||||||||||||||
| |
|
|
|
|
|
|
|
|||||||||
| Basic and diluted loss per share |
$ |
( |
) |
$ |
( |
) |
$ |
( |
) |
$ |
( |
) | ||||
| |
|
|
|
|
|
|
|
|||||||||
26 Weeks Ended July 4, 2021 |
||||||||||||||||
(in thousands except share and per share amounts) |
A Ordinary Shares |
B Ordinary Shares |
C Ordinary Shares |
C2 Ordinary Shares |
||||||||||||
| Computation of basic and diluted loss per share |
||||||||||||||||
| Net loss attributable to Membership Collective Group Inc. |
$ |
( |
) |
$ |
( |
) |
$ |
( |
) |
$ |
( |
) | ||||
| Less: Cumulative May 2016 preferred shares undeclared dividends |
( |
) |
( |
) |
( |
) |
( |
) | ||||||||
| Less: Incremental accretion of preferred shares to redemption value |
( |
) |
( |
) |
( |
) |
( |
) | ||||||||
| Add: Foreign currency remeasurement of redeemable preferred shares |
||||||||||||||||
| Less: Non-cash dividends on the Senior Preference Shares |
( |
) |
( |
) |
( |
) |
( |
) | ||||||||
| |
|
|
|
|
|
|
|
|||||||||
| Net loss adjusted for preferred shares dividends |
$ |
( |
) |
$ |
( |
) |
$ |
( |
) |
$ |
( |
) | ||||
| |
|
|
|
|
|
|
|
|||||||||
| Weighted average shares outstanding for basic and diluted loss per share |
||||||||||||||||
| |
|
|
|
|
|
|
|
|||||||||
| Basic and diluted loss per share |
$ |
( |
) |
$ |
( |
) |
$ |
( |
) |
$ |
( |
) | ||||
| |
|
|
|
|
|
|
|
|||||||||
26 Weeks Ended June 28, 2020 |
||||||||||||||||
(in thousands except share and per share amounts) |
A Ordinary Shares |
B Ordinary Shares |
C Ordinary Shares |
C2 Ordinary Shares |
||||||||||||
| Computation of basic and diluted loss per share |
||||||||||||||||
| Net loss attributable to Membership Collective Group Inc. |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
| Less: Cumulative preferred shares undeclared dividends |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| |
|
|
|
|
|
|
|
|||||||||
| Net loss adjusted for preferred shares dividends |
$ |
( |
) |
$ |
( |
) |
$ |
( |
) |
$ |
( |
) | ||||
| |
|
|
|
|
|
|
|
|||||||||
| Weighted average shares outstanding for basic and diluted earnings per share |
||||||||||||||||
| |
|
|
|
|
|
|
|
|||||||||
| Basic and diluted loss per share |
$ |
( |
) |
$ |
( |
) |
$ |
( |
) |
$ |
( |
) | ||||
| |
|
|
|
|
|
|
|
|||||||||
18. |
Commitments and Contingencies |
19. |
Income Taxes |
20. |
Segments |
| • | UK, |
| • | North America, |
| • | Europe and RoW, |
| • | Soho House Design. |
(in thousands) |
13 Weeks Ended July 4, 2021 |
|||||||||||||||||||||||||||
North America |
UK |
Europe & RoW |
Soho House Design |
Reportable Segment Total |
All Other |
Total |
||||||||||||||||||||||
| Membership revenues |
$ |
$ |
$ |
$ |
— |
$ |
$ |
$ |
||||||||||||||||||||
| In-House revenues |
— |
— |
||||||||||||||||||||||||||
| Other revenues |
||||||||||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Total segment revenue |
||||||||||||||||||||||||||||
| Elimination of equity accounted revenue |
( |
) | ( |
) |
( |
) |
— |
( |
) | — |
( |
) | ||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Consolidated revenue |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
(in thousands) |
13 Weeks Ended June 28, 2020 |
|||||||||||||||||||||||||||
North America |
UK |
Europe & RoW |
Soho House Design |
Reportable Segment Total |
All Other |
Total |
||||||||||||||||||||||
| Membership revenues |
$ |
$ |
$ |
$ |
— |
$ |
$ |
$ |
||||||||||||||||||||
| In-House revenues |
— |
— |
— |
|||||||||||||||||||||||||
| Other revenues |
||||||||||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Total segment revenue |
||||||||||||||||||||||||||||
| Elimination of equity accounted revenue |
( |
) |
( |
) |
( |
) |
— |
( |
) |
— |
( |
) | ||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Consolidated revenue |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
(in thousands) |
26 Weeks Ended July 4, 2021 |
|||||||||||||||||||||||||||
North America |
UK |
Europe & RoW |
Soho House Design |
Reportable Segment Total |
All Other |
Total |
||||||||||||||||||||||
| Membership revenues |
$ |
$ |
$ |
$ |
— |
$ |
$ |
$ |
||||||||||||||||||||
| In-House revenues |
— |
— |
||||||||||||||||||||||||||
| Other revenues |
||||||||||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Total segment revenue |
||||||||||||||||||||||||||||
| Elimination of equity accounted revenue |
( |
) |
( |
) |
( |
) |
— |
( |
) |
— |
( |
) | ||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Consolidated revenue |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
(in thousands) |
26 Weeks Ended June 28, 2020 |
|||||||||||||||||||||||||||
North America |
UK |
Europe & RoW |
Soho House Design |
Reportable Segment Total |
All Other |
Total |
||||||||||||||||||||||
| Membership revenues |
$ |
$ |
$ |
$ |
— |
$ |
$ |
$ |
||||||||||||||||||||
| In-House revenues |
— |
— |
||||||||||||||||||||||||||
| Other revenues |
||||||||||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Total segment revenue |
||||||||||||||||||||||||||||
| Elimination of equity accounted revenue |
( |
) |
( |
) |
( |
) |
— |
( |
) |
— |
( |
) | ||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Consolidated revenue |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
(in thousands) |
13 Weeks Ended July 4, 2021 |
|||||||||||||||||||||||||||
North America |
UK |
Europe & RoW |
Soho House Design |
Reportable Segment Total |
All Other |
Total |
||||||||||||||||||||||
| Total consolidated segment revenue |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||||||||
| Total segment operating expenses |
( |
) |
( |
) |
( |
) |
( |
) |
( |
) |
( |
) |
( |
) | ||||||||||||||
| Share of equity method investments adjusted EBITDA |
— |
— |
||||||||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Reportable segments adjusted EBITDA |
( |
) |
( |
) |
( |
) |
( |
) |
||||||||||||||||||||
| Unallocated corporate overhead |
( |
) | ||||||||||||||||||||||||||
| |
|
|||||||||||||||||||||||||||
| Consolidated adjusted EBITDA |
( |
) | ||||||||||||||||||||||||||
| Depreciation and amortization |
( |
) | ||||||||||||||||||||||||||
| Interest expense, net |
( |
) | ||||||||||||||||||||||||||
| Income tax expense |
( |
) | ||||||||||||||||||||||||||
| Gain on sale of property and other, net |
||||||||||||||||||||||||||||
| Share of loss of equity method investments |
( |
) | ||||||||||||||||||||||||||
| Foreign exchange |
( |
) | ||||||||||||||||||||||||||
| Pre-opening expenses |
( |
) | ||
| Non-cash rent |
||||
| Deferred registration fees, net |
( |
) | ||
| Share of equity method investments adjusted EBITDA |
( |
) | ||
| Share-based compensation expense |
( |
) | ||
| Other expenses, net |
( |
) | ||
| |
|
|||
| Net loss |
$ |
( |
) | |
| |
|
13 Weeks Ended June 28, 2020 |
||||||||||||||||||||||||||||
(in thousands) |
North America |
UK |
Europe & RoW |
Soho House Design |
Reportable Segment Total |
All Other |
Total |
|||||||||||||||||||||
| Total consolidated segment revenue |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||||||||
| Total segment operating expenses |
( |
) | ( |
) |
( |
) |
( |
) |
( |
) |
( |
) |
( |
) | ||||||||||||||
| Share of equity method investments adjusted EBITDA |
( |
) |
— |
— |
||||||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Reportable segments adjusted EBITDA |
( |
) |
( |
) |
( |
) |
||||||||||||||||||||||
| Unallocated corporate overhead |
( |
) | ||||||||||||||||||||||||||
| |
|
|||||||||||||||||||||||||||
| Consolidated adjusted EBITDA |
( |
) | ||||||||||||||||||||||||||
| Depreciation and amortization |
( |
) | ||||||||||||||||||||||||||
| Interest expense, net |
( |
) | ||||||||||||||||||||||||||
| Income tax benefit |
||||||||||||||||||||||||||||
| Loss on sale of property and other, net |
( |
) | ||||||||||||||||||||||||||
| Share of loss of equity method investments |
( |
) | ||||||||||||||||||||||||||
| Foreign exchange |
( |
) | ||||||||||||||||||||||||||
| Pre-opening expenses |
( |
) | ||||||||||||||||||||||||||
| Non-cash rent |
( |
) | ||||||||||||||||||||||||||
| Deferred registration fees, net |
||||||||||||||||||||||||||||
| Share of equity method investments adjusted EBITDA |
( |
) | ||||||||||||||||||||||||||
| Other expenses, net |
( |
) | ||||||||||||||||||||||||||
| |
|
|||||||||||||||||||||||||||
| Net loss |
$ |
( |
) | |||||||||||||||||||||||||
| |
|
|||||||||||||||||||||||||||
(in thousands) |
26 Weeks Ended July 4, 2021 |
|||||||||||||||||||||||||||
North America |
UK |
Europe & RoW |
Soho House Design |
Reportable Segment Total |
All Other |
Total |
||||||||||||||||||||||
| Total consolidated segment revenue |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||||||||
| Total segment operating expenses |
( |
) |
( |
) |
( |
) |
( |
) |
( |
) |
( |
) |
( |
) | ||||||||||||||
| Share of equity method investments adjusted EBITDA |
( |
) |
— |
— |
||||||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Reportable segments adjusted EBITDA |
( |
) |
( |
) |
( |
) |
( |
) |
||||||||||||||||||||
| Unallocated corporate overhead |
( |
) | ||||||||||||||||||||||||||
| |
|
|||||||||||||||||||||||||||
| Consolidated adjusted EBITDA |
( |
) | ||||||||||||||||||||||||||
| Depreciation and amortization |
( |
) | ||||||||||||||||||||||||||
| Interest expense, net |
( |
) | ||||||||||||||||||||||||||
| Income tax benefit |
||||||||||||||||||||||||||||
| Gain on sale of property and other, net |
||||||||||||||||||||||||||||
| Share of loss of equity method investments |
( |
) | ||||||||||||||||||||||||||
| Foreign exchange (1) |
( |
) | ||||||||||||||||||||||||||
| Pre-opening expenses |
( |
) | ||||||||||||||||||||||||||
| Non-cash rent |
( |
) | ||||||||||||||||||||||||||
| Deferred registration fees, net |
||||||||||||||||||||||||||||
| Share of equity method investments adjusted EBITDA |
( |
) | ||||||||||||||||||||||||||
| Share-based compensation expense |
( |
) | ||||||||||||||||||||||||||
| Other expenses, net |
( |
) | ||||||||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Net loss |
$ |
( |
) | |||||||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
(1) |
Includes the effect of a prior-period error correction, as discussed in Note 2, Summary of Significant Accounting Policies – Basis of Presentation. |
(in thousands) |
26 Weeks Ended June 28, 2020 |
|||||||||||||||||||||||||||
North America |
UK |
Europe & RoW |
Soho House Design |
Reportable Segment Total |
All Other |
Total |
||||||||||||||||||||||
| Total consolidated segment revenue |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||||||||
| Total segment operating expenses |
( |
) |
( |
) |
( |
) |
( |
) |
( |
) |
( |
) |
( |
) | ||||||||||||||
| Share of equity method investments adjusted |
||||||||||||||||||||||||||||
| EBITDA |
( |
) |
— |
— |
||||||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Reportable segments adjusted EBITDA |
( |
) |
( |
) |
( |
) |
||||||||||||||||||||||
| Unallocated corporate overhead |
( |
) | ||||||||||||||||||||||||||
| |
|
|||||||||||||||||||||||||||
| Consolidated adjusted EBITDA |
||||||||||||||||||||||||||||
| Depreciation and amortization |
( |
) | ||||||||||||||||||||||||||
| Interest expense, net |
( |
) | ||||||||||||||||||||||||||
| Income tax benefit |
||||||||||||||||||||||||||||
| Loss on sale of property and other, net |
( |
) | ||||||||||||||||||||||||||
| Share of loss of equity method investments |
( |
) | ||||||||||||||||||||||||||
| Foreign exchange |
( |
) | ||||||||||||||||||||||||||
| Pre-opening expenses |
( |
) | ||||||||||||||||||||||||||
| Non-cash rent |
( |
) | ||||||||||||||||||||||||||
| Deferred registration fees, net |
( |
) | ||||||||||||||||||||||||||
| Share of equity method investments adjusted EBITDA |
( |
) | ||||||||||||||||||||||||||
| Other expenses, net |
( |
) | ||||||||||||||||||||||||||
| |
|
|||||||||||||||||||||||||||
| Net loss |
$ |
( |
) | |||||||||||||||||||||||||
| |
|
|||||||||||||||||||||||||||
(in thousands) |
13 Weeks Ended |
26 Weeks Ended |
||||||||||||||
July 4, 2021 |
June 28, 2020 |
July 4, 2021 |
June 28, 2020 |
|||||||||||||
| Net loss |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
| Depreciation and amortization |
||||||||||||||||
| Interest expense, net |
||||||||||||||||
| Income tax expense (benefit) |
( |
) | ( |
) | ( |
) | ||||||||||
| |
|
|
|
|
|
|
|
|||||||||
| EBITDA |
( |
) |
( |
) |
( |
) |
( |
) | ||||||||
| (Gain) loss on sale of property and other, net |
( |
) | ( |
) | ||||||||||||
| Share of loss of equity method investments |
||||||||||||||||
| Foreign exchange |
||||||||||||||||
| Pre-opening expenses (1) |
||||||||||||||||
| Non-cash rent |
( |
) | ||||||||||||||
| Deferred registration fees, net |
( |
) | ( |
) | ||||||||||||
| Share of equity method investments adjusted EBITDA |
||||||||||||||||
| Share-based compensation expense, net of tax |
— | — | ||||||||||||||
| Other expenses, net (2) |
||||||||||||||||
| |
|
|
|
|
|
|
|
|||||||||
| Adjusted EBITDA |
$ |
( |
) |
$ |
( |
) |
$ |
( |
) |
$ |
||||||
| |
|
|
|
|
|
|
|
|||||||||
(1) |
The entire balance of these costs is related to pre-opening activities for our Houses in each of the periods presented. |
(2) |
Represents other items included in operating expenses, which are outside the normal scope of the Company’s ordinary activities or non-cash, including expenses incurred in respect of membership credits of $IPO-related costs of $ |
(in thousands) |
July 4, 2021 |
January 3, 2021 |
||||||
| Long-lived assets by geography |
||||||||
| United Kingdom |
$ | $ | ||||||
| North America |
||||||||
| All other foreign countries |
||||||||
| |
|
|
|
|||||
| Total long-lived assets |
$ |
$ |
||||||
| |
|
|
|
|||||
21. |
Related Party Transactions |
(in thousands) |
July 4, 2021 |
January 3, 2021 |
||||||
| Soho House Toronto Partnership |
$ | ( |
) | $ | ( |
) | ||
| Soho House—Cipura (Miami), LLC |
— | |||||||
| Raycliff Red LLP |
( |
) | ( |
) | ||||
| Mirador Barcel S.L. |
||||||||
| Little Beach House Barcelona S.L. |
||||||||
| Mimea XXI S.L. |
||||||||
| |
|
|
|
|||||
$ |
( |
) |
$ |
( |
) | |||
| |
|
|
|
|||||
22. |
Subsequent Events |
| • | Affiliates of The Yucaipa Companies, LLC, and Messrs. Ron Burkle, Nick Jones, and Richard Caring exchanged their equity interests in Soho House Holdings Limited for |
| • | The other existing equity holders of Soho House Holdings Limited exchanged their equity interests for |
Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations. |
| • | Membership: |
| • | Physical and digital spaces: |
| • | Design: |
| • | Services, products and experiences: |
| • | Innovation: |
| • | House Foundations: |
| • | Cities Without Houses |
| • | Soho House Digital Membership |
| • | Soho Friends |
| • | The ability to grow our member base. In-House Revenue growth. The impact of long-term member growth on Membership Revenues can be particularly impactful to our earnings given the lower direct expenses associated with incremental Membership Revenues relative to our other revenue streams. |
| • | Our ability to grow In-House RevenuesIn-House Revenues. We continue to actively develop the offerings in our Soho Houses and our other membership brands to improve overall experience and capture greater spend on food and beverage, accommodation, spa services, private events and our other goods and services. We believe that the pricing of our In-House offerings, which is reflective of the membership fees we receive from members who consume most of our In-House offerings, represents great value to our members for the level of quality provided, reinforcing the overall membership experience, rewarding brand loyalty and creating the opportunity for future revenue enhancement. Our proven ability to drive long-term member growth at existing Houses is also an important contributing factor in sustaining In-House Revenue growth. |
| • | Our ability to adjust membership pricing |
| • | Our ability to grow our membership brands and products |
As of |
||||||||
July 4, 2021 |
June 28, 2020 |
|||||||
(Unaudited) |
||||||||
| Number of Soho Houses |
30 |
26 |
||||||
| North America |
11 | 9 | ||||||
| United Kingdom |
11 | 10 | ||||||
| Europe/RoW |
8 | 7 | ||||||
| Number of Soho House Members |
111,910 |
120,082 |
||||||
| North America |
42,296 | 46,060 | ||||||
| United Kingdom |
45,277 | 46,961 | ||||||
| Europe/RoW |
19,750 | 21,770 | ||||||
| All Other |
4,587 | 5,291 | ||||||
| Number of Other Members |
15,930 |
129 |
||||||
| North America |
3,268 | 0 | ||||||
| United Kingdom |
12,012 | 129 | ||||||
| Europe/RoW |
650 | 0 | ||||||
| Number of Active App Users |
94,678 |
71,956 |
||||||
13-Weeks Ended |
13-Weeks Ended |
26-Weeks Ended |
26-Weeks Ended |
|||||||||||||||||||||||||||||
July 4, 2021 |
June 28, 2020 |
July 4, 2021 |
June 28, 2020 |
July 4, 2021 |
June 28, 2020 |
July 4, 2021 |
June 28, 2020 |
|||||||||||||||||||||||||
Actuals |
Actuals |
Constant Currency (1) |
Actuals |
Actuals |
Constant Currency (1) |
|||||||||||||||||||||||||||
(Unaudited, dollar amounts in thousands) |
||||||||||||||||||||||||||||||||
| Operating Loss |
(46,860 |
) |
(58,089 |
) |
(46,860 |
) |
(66,096 |
) |
(110,420 |
) |
(85,241 |
) |
(110,420 |
) |
(94,464 |
) | ||||||||||||||||
| Operating Loss Margin |
(38 | )% | n/m | (38 | )% | n/m | (56 | )% | (43 | )% | (56 | )% | (43 | )% | ||||||||||||||||||
| House-Level Contribution |
16,743 |
18,040 |
16,743 |
20,526 |
26,866 |
37,392 |
26,866 |
41,437 |
||||||||||||||||||||||||
| House-Level Contribution margin |
19 | % | 38 | % | 19 | % | 38 | % | 19 | % | 23 | % | 19 | % | 23 | % | ||||||||||||||||
| Other Contribution |
(3,779 |
) |
(9,791 |
) |
(3,779 |
) |
(11,141 |
) |
(15,503 |
) |
(9,189 |
) |
(15,503 |
) |
(10,183 |
) | ||||||||||||||||
| Other Contribution Margin |
(10 | )% | (100 | )% | (10 | )% | (100 | )% | (29 | )% | (25 | )% | (29 | )% | (25 | )% | ||||||||||||||||
| Adjusted EBITDA |
(12,556 |
) |
(19,680 |
) |
(12,556 |
) |
(22,393 |
) |
(35,348 |
) |
(28,623 |
) |
(35,348 |
) |
(31,720 |
) | ||||||||||||||||
| As a percentage of Total Revenue |
(10 | )% | (35 | )% | (10 | )% | (35 | )% | (18 | )% | (14 | )% | (18 | )% | (14 | )% | ||||||||||||||||
| (1) | See “Non-GAAP Financial Measures” for an explanation of our constant currency results. |
13-Weeks Ended |
Constant Currency change % (1) |
|||||||||||||||||||
July 4, 2021 |
June 28, 2020 |
June 28, 2020, Constant Currency (1) |
||||||||||||||||||
Actuals |
||||||||||||||||||||
(Dollar amounts in thousands) |
Change % |
(Dollar amounts in thousands) |
||||||||||||||||||
(Unaudited) |
||||||||||||||||||||
| Revenues |
||||||||||||||||||||
| Membership Revenues |
44,863 | 44,456 | 1 | % | 50,583 | (11 | )% | |||||||||||||
| In-House Revenues |
45,793 | 3,111 | n/m | 3,540 | n/m | |||||||||||||||
| Other Revenues |
33,423 | 9,437 | |
n/m |
|
10,738 | n/m | |||||||||||||
| |
|
|
|
|
|
|
|
|
|
|||||||||||
| Total Revenues |
124,079 | 57,004 | |
n/m |
|
64,861 | 91 | % | ||||||||||||
| |
|
|
|
|
|
|
|
|
|
|||||||||||
| Operating Expenses |
||||||||||||||||||||
| In-House operating expenses (exclusive of depreciation and amortization) |
(70,430 | ) | (29,194 | ) | |
n/m |
|
(33,218 | ) | |
n/m |
| ||||||||
| Other operating expenses (exclusive of depreciation and amortization) |
(40,685 | ) | (19,561 | ) | |
n/m |
|
(22,257 | ) | 83 | % | |||||||||
| General and administrative expenses |
(19,500 | ) | (15,702 | ) | (24 | )% | (17,866 | ) | (9 | )% | ||||||||||
| Pre-opening expenses |
(6,493 | ) | (5,701 | ) | (14 | )% | (6,487 | ) | 0 | % | ||||||||||
| Depreciation and amortization |
(21,905 | ) | (16,176 | ) | (35 | )% | (18,406 | ) | (19 | )% | ||||||||||
| Other |
(11,926 | ) | (28,759 | ) | 59 | % | (32,723 | ) | 64 | % | ||||||||||
| |
|
|
|
|
|
|
|
|
|
|||||||||||
| Total Operating Expenses |
(170,939 | ) | (115,093 | ) | (49 | )% | (130,957 | ) | (31 | )% | ||||||||||
| |
|
|
|
|
|
|
|
|
|
|||||||||||
| Operating Loss |
(46,860 | ) | (58,089 | ) | 19 | % | (66,096 | ) | 29 | % | ||||||||||
| Other (Expense) Income |
||||||||||||||||||||
| Interest Expense, net |
(17,018 | ) | (17,897 | ) | 5 | % | (20,364 | ) | 16 | % | ||||||||||
| Gain (Loss) on sale of property and other, net |
6,903 | (12 | ) | n/m | (14 | ) | n/m | |||||||||||||
| Share of loss of equity method investments |
(130 | ) | (2,136 | ) | 94 | % | (2,430 | ) | 95 | % | ||||||||||
| |
|
|
|
|
|
|
|
|
|
|||||||||||
| Total other (expense) income, net |
(10,245 | ) | (20,045 | ) | 49 | % | (22,808 | ) | 55 | % | ||||||||||
| |
|
|
|
|
|
|
|
|
|
|||||||||||
| Loss Before Income Taxes |
(57,105 | ) | (78,134 | ) | 27 | % | (88,904 | ) | 36 | % | ||||||||||
| |
|
|
|
|
|
|
|
|
|
|||||||||||
| Income tax benefit |
(3 | ) | 277 | |
n/m |
|
315 | |
n/m |
| ||||||||||
| Net Loss |
(57,108 | ) | (77,857 | ) | 27 | % | (88,589 | ) | 36 | % | ||||||||||
| Net income attributable to noncontrolling interest |
1,121 | 1,707 | (34 | )% | 1,942 | (42 | )% | |||||||||||||
| Net loss attributable to Membership Collective Group Inc. |
(55,987 | ) | (76,150 | ) | 26 | % | (86,647 | ) | 35 | % | ||||||||||
| (1) | See “Non-GAAP Financial Measures” for an explanation of our constant currency results. |
13-Weeks Ended |
Percent Change |
|||||||||||||||
July 4, 2021 |
June 28, 2020 |
Actuals |
Constant Currency (1) |
|||||||||||||
Dollar amounts in thousands |
||||||||||||||||
(Unaudited) |
||||||||||||||||
| Total Revenues |
$ | 124,079 | $ | 57,004 | |
n/m |
|
91 | % | |||||||
| North America |
$ | 53,833 | $ | 26,710 | n/m | n/m | ||||||||||
| United Kingdom |
$ | 39,613 | $ | 13,155 | |
n/m |
|
|
n/m |
| ||||||
| Europe/RoW |
$ | 12,649 | $ | 6,913 | 83 | % | 61 | % | ||||||||
| Soho House Design |
$ | 4,107 | $ | 2,786 | 47 | % | 30 | % | ||||||||
| All Other |
$ | 13,877 | $ | 7,440 | 87 | % | 64 | % | ||||||||
| (1) | See “Non-GAAP Financial Measures” for an explanation of our constant currency results. |
13-Weeks Ended |
Percent Change |
|||||||||||||||
July 4, 2021 |
June 28, 2020 |
Actuals |
Constant Currency (1) |
|||||||||||||
(Dollar amounts in thousands) |
||||||||||||||||
(Unaudited) |
||||||||||||||||
| Membership Revenues |
$ | 44,863 | $ | 44,456 | 1 | % | (11 | )% | ||||||||
| North America |
$ | 21,365 | $ | 24,585 | (13 | )% | (13 | )% | ||||||||
| United Kingdom |
$ | 14,423 | $ | 12,800 | 13 | % | (1 | )% | ||||||||
| Europe/RoW |
$ | 4,032 | $ | 4,595 | (12 | )% | (23 | )% | ||||||||
| All Other |
$ | 5,043 | $ | 2,476 | |
n/m |
|
79 | % | |||||||
| (1) | See “Non-GAAP Financial Measures” for an explanation of our constant currency results. |
13-Weeks Ended |
Percent Change |
|||||||||||||||
July 4, 2021 |
June 28, 2020 |
Actuals |
Constant Currency (1) |
|||||||||||||
(Dollar amounts in thousands) |
||||||||||||||||
(Unaudited) |
||||||||||||||||
| In-House Revenues |
$ | 45,793 | $ | 3,111 | n/m | |
n/m |
| ||||||||
| North America |
$ | 24,147 | $ | 971 | n/m | |
n/m |
| ||||||||
| United Kingdom |
$ | 17,830 | $ | — | n/m | n/m | ||||||||||
| Europe/RoW |
$ | 3,816 | $ | 2,140 | 78 | % | 57 | % | ||||||||
| (1) | See “Non-GAAP Financial Measures” for an explanation of our constant currency results. |
13-Weeks Ended |
Percent Change |
|||||||||||||||
July 4, 2021 |
June 28, 2020 |
Actuals |
Constant Currency (1) |
|||||||||||||
(Dollar amounts in thousands) |
||||||||||||||||
(Unaudited) |
||||||||||||||||
| Other Revenues |
$ | 33,423 | $ | 9,437 | n/m | n/m | ||||||||||
| North America |
$ | 8,321 | $ | 1,154 | n/m | n/m | ||||||||||
| United Kingdom |
$ | 7,360 | $ | 355 | n/m | |
n/m |
| ||||||||
| Europe/RoW |
$ | 4,801 | $ | 178 | n/m | |
n/m |
| ||||||||
| Soho House Design |
$ | 4,107 | $ | 2,786 | 47 | % | 30 | % | ||||||||
| All Other |
$ | 8,834 | $ | 4,964 | 78 | % | 56 | % | ||||||||
| (1) | See “Non-GAAP Financial Measures” for an explanation of our constant currency results. |
13-Weeks Ended |
Percent Change |
|||||||||||||||
July 4, 2021 |
June 28, 2020 |
Actuals |
Constant Currency (1) |
|||||||||||||
| (Dollar amounts in thousands) |
||||||||||||||||
(Unaudited) |
||||||||||||||||
| In-House Operating Expenses |
$ | (70,430 | ) | $ | (29,194 | ) | n/m | n/m | ||||||||
| Percent of total House revenues |
(81 | )% | (62 | )% | (19 | )% | ||||||||||
| Operating Loss |
$ | (46,860 | ) | $ | (58,089 | ) | 19 | % | 29 | % | ||||||
| Operating Loss Margin |
(38 | )% | n/m | 64 | % | |||||||||||
| House-Level Contribution |
$ | 16,743 | $ | 18,040 | (7 | )% | (18 | )% | ||||||||
| House-Level Contribution Margin |
19 | % | 38 | % | (19 | )% | ||||||||||
| House-Level Contribution-by segment: |
||||||||||||||||
| North America |
11,116 | 10,694 | 4 | % | (9 | )% | ||||||||||
| United Kingdom |
1,655 | 3,583 | (54 | )% | (59 | )% | ||||||||||
| Europe/RoW |
(1,382 | ) | 431 | n/m | n/m | |||||||||||
| All Other |
5,354 | 3,332 | 61 | % | 41 | % | ||||||||||
| House-Level Contribution Margin-by segment: |
||||||||||||||||
| North America |
24 | % | 41 | % | ||||||||||||
| United Kingdom |
5 | % | 29 | % | ||||||||||||
| Europe/RoW |
(18 | )% | 6 | % | ||||||||||||
| All Other |
n/m | n/m | ||||||||||||||
| (1) | See “Non-GAAP Financial Measures” for an explanation of our constant currency results. |
13-Weeks Ended |
Percent Change |
|||||||||||||||
July 4, 2021 |
June 28, 2020 |
Actuals |
Constant Currency (1) |
|||||||||||||
(Dollar amounts in thousands) |
||||||||||||||||
(Unaudited) |
||||||||||||||||
| Other Operating Expenses |
(40,685 | ) | (19,561 | ) | n/m | 83 | % | |||||||||
| Percentage of total Other Revenues |
n/m | n/m | ||||||||||||||
| Operating Loss |
(46,860 | ) | (58,089 | ) | 19 | % | 29 | % | ||||||||
| Operating Loss Margin |
(38 | )% | n/m | 64 | % | |||||||||||
| Other Contribution |
(3,779 | ) | (9,791 | ) | 61 | % | 66 | % | ||||||||
| Other Contribution Margin |
(10 | )% | (100 | )% | 90 | % | ||||||||||
| Other Contribution-by segment: |
||||||||||||||||
| North America |
2,093 | (1,939 | ) | n/m | n/m | |||||||||||
| United Kingdom |
(1,952 | ) | (1,729 | ) | (13 | )% | 1 | % | ||||||||
| Europe/RoW |
1,514 | (1,413 | ) | n/m | n/m | |||||||||||
| Soho House Design |
(2,203 | ) | (1,016 | ) | n/m | 91 | % | |||||||||
| Other |
(3,231 | ) | (3,694 | ) | 13 | % | 23 | % | ||||||||
| Other Contribution Margin-by segment: |
||||||||||||||||
| North America |
25 | % | n/m | |||||||||||||
| United Kingdom |
(18 | )% | n/m | |||||||||||||
| Europe/RoW |
32 | % | n/m | |||||||||||||
| Soho House Design |
(54 | )% | (36 | )% | ||||||||||||
| Other |
(27 | )% | (69 | )% | ||||||||||||
| (1) | See “Non-GAAP Financial Measures” for an explanation of our constant currency results. |
13-Weeks Ended |
Percent Change |
|||||||||||||||
July 4, 2021 |
June 28, 2020 |
Actual |
Constant Currency (1) |
|||||||||||||
| (Dollar amounts in thousands) |
||||||||||||||||
(Unaudited) |
||||||||||||||||
| General and Administrative Expenses |
19,500 | 15,702 | 24 | % | 9 | % | ||||||||||
| Percent of Total Revenues |
16 | % | 28 | % | ||||||||||||
| (1) | See “Non-GAAP Financial Measures” for an explanation of our constant currency results. |
13-Weeks Ended |
Percent Change |
|||||||||||||||
July 4, 2021 |
June 28, 2020 |
Actual |
Constant Currency (1) |
|||||||||||||
| (Dollar amounts in thousands) |
||||||||||||||||
(Unaudited) |
||||||||||||||||
| Pre-opening expenses |
6,493 | 5,701 | 14 | % | 0 | % | ||||||||||
| Percent of Total Revenues |
5 | % | 10 | % | ||||||||||||
| (1) | See “Non-GAAP Financial Measures” for an explanation of our constant currency results. |
13-Weeks Ended |
Percent Change |
|||||||||||||||
July 4, 2021 |
June 28, 2020 |
Actual |
Constant Currency (1) |
|||||||||||||
| (Dollar amounts in thousands) |
||||||||||||||||
(Unaudited) |
||||||||||||||||
| Depreciation and Amortization |
21,905 | 16,176 | 35 | % | 19 | % | ||||||||||
| Percent of Total Revenue |
18 | % | 28 | % | ||||||||||||
| (1) | See “Non-GAAP Financial Measures” for an explanation of our constant currency results. |
13-Weeks Ended |
Percent Change |
|||||||||||||||
July 4, 2021 |
June 28, 2020 |
Actual |
Constant Currency (1) |
|||||||||||||
| (Dollar amounts in thousands) |
||||||||||||||||
(Unaudited) |
||||||||||||||||
| Other |
11,926 | 28,759 | (59 | )% | (64 | )% | ||||||||||
| Percentage of Total Revenues |
10 | % | 50 | % | ||||||||||||
| (1) | See “Non-GAAP Financial Measures” for an explanation of our constant currency results. |
13-Weeks Ended |
Percent Change |
|||||||||||||||
July 4, 2021 |
June 28, 2020 |
Actual |
Constant Currency (1) |
|||||||||||||
| (Dollar amounts in thousands) |
||||||||||||||||
(Unaudited) |
||||||||||||||||
| Interest Expense, Net |
17,018 | 17,897 | (5 | )% | (16 | )% | ||||||||||
| Percentage of Total Revenues |
14 | % | 31 | % | ||||||||||||
| (1) | See “Non-GAAP Financial Measures” for an explanation of our constant currency results. |
13-Weeks Ended |
Percent Change |
|||||||||||||||
July 4, 2021 |
June 28, 2020 |
Actual |
Constant Currency (1) |
|||||||||||||
| (Dollar amounts in thousands) |
||||||||||||||||
(Unaudited) |
||||||||||||||||
| Adjusted EBITDA |
(12,556 | ) | (19,680 | ) | 36 | % | 44 | % | ||||||||
| Percentage of Total Revenues |
(10 | )% | (35 | )% | ||||||||||||
| (1) | See “Non-GAAP Financial Measures” for an explanation of our constant currency results. |
26-Weeks Ended |
June 28, 2020, Constant Currency (1) |
|||||||||||||||||||
July 4, 2021 |
June 28, 2020 |
|||||||||||||||||||
Actuals |
||||||||||||||||||||
(Dollar amounts in thousands) |
Change % |
(Dollar amounts in thousands) |
Constant Currency change % (1) |
|||||||||||||||||
(Unaudited) |
||||||||||||||||||||
| Revenues |
||||||||||||||||||||
| Membership Revenues |
85,356 | 92,208 | (7 | )% | 102,185 | (16 | )% | |||||||||||||
| In-House Revenues |
62,052 | 70,982 | (13 | )% | 78,662 | (21 | )% | |||||||||||||
| Other Revenues |
49,072 | 35,366 | 39 | % | 39,193 | 25 | % | |||||||||||||
| |
|
|
|
|
|
|
|
|
|
|||||||||||
| Total Revenues |
196,480 | 198,556 | (1 | )% | 220,040 | (11 | )% | |||||||||||||
| |
|
|
|
|
|
|
|
|
|
|||||||||||
| Operating Expenses |
||||||||||||||||||||
| In-House operating expenses (exclusive of depreciation and amortization) |
(116,239 | ) | (124,663 | ) | 7 | % | (138,152 | ) | 16 | % | ||||||||||
| Other operating expenses (exclusive of depreciation and amortization) |
(68,878 | ) | (45,690 | ) | (51 | )% | (50,634 | ) | (36 | )% | ||||||||||
| General and administrative expenses |
(36,005 | ) | (39,849 | ) | 10 | % | (44,161 | ) | 18 | % | ||||||||||
| Pre-opening expenses |
(11,318 | ) | (11,388 | ) | 1 | % | (12,620 | ) | 10 | % | ||||||||||
| Depreciation and amortization |
(39,750 | ) | (31,125 | ) | (28 | )% | (34,493 | ) | (15 | )% | ||||||||||
| Other |
(34,710 | ) | (31,082 | ) | (12 | )% | (34,444 | ) | (1 | )% | ||||||||||
| |
|
|
|
|
|
|
|
|
|
|||||||||||
| Total Operating Expenses |
(306,900 | ) | (283,797 | ) | (8 | )% | (314,504 | ) | 2 | % | ||||||||||
| |
|
|
|
|
|
|
|
|
|
|||||||||||
| Operating Loss |
(110,420 | ) | (85,241 | ) | (30 | )% | (94,464 | ) | (17 | )% | ||||||||||
| Other (Expense) Income |
||||||||||||||||||||
| Interest Expense, net |
(46,622 | ) | (35,653 | ) | (31 | )% | (39,511 | ) | (18 | )% | ||||||||||
| Gain (loss) on sale of property and other, net |
6,903 | (11 | ) | n/m | (12 | ) | n/m | |||||||||||||
| Share of loss of equity method investments |
(826 | ) | (2,312 | ) | 64 | % | (2,562 | ) | 68 | % | ||||||||||
| Total other (expense) income, net |
(40,545 | ) | (37,976 | ) | (7 | )% | (42,085 | ) | 4 | % | ||||||||||
| |
|
|
|
|
|
|
|
|
|
|||||||||||
| Loss Before Income Taxes |
(150,965 | ) | (123,217 | ) | (23 | )% | (136,549 | ) | (11 | )% | ||||||||||
| |
|
|
|
|
|
|
|
|
|
|||||||||||
| Income tax benefit |
820 | 380 | n/m | 421 | 95 | % | ||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|||||||||||
| Net Loss |
(150,145 | ) | (122,837 | ) | (22 | )% | (136,128 | ) | (10 | )% | ||||||||||
| Net income attributable to noncontrolling interest |
3,679 | 3,056 | 20 | % | 3,387 | 9 | % | |||||||||||||
| Net loss attributable to Membership Collective Group Inc. |
(146,466 | ) | (119,781 | ) | (22 | )% | (132,741 | ) | (10 | )% | ||||||||||
| (1) | See “Non-GAAP Financial Measures” for an explanation of our constant currency results. |
26-Weeks Ended |
Percent Change |
|||||||||||||||
July 4, 2021 |
June 28, 2020 |
Actuals |
Constant Currency (1) |
|||||||||||||
(Dollar amounts in thousands) |
||||||||||||||||
Unaudited |
||||||||||||||||
| Total Revenues |
$ | 196,480 | $ | 198,556 | (1 | )% | (11 | )% | ||||||||
| North America |
92,265 | 90,509 | 2 | % | 2 | % | ||||||||||
| United Kingdom |
54,025 | 61,784 | (13 | )% | (21 | )% | ||||||||||
| Europe/RoW |
18,645 | 21,184 | (12 | )% | (21 | )% | ||||||||||
| Soho House Design |
8,460 | 7,830 | 8 | % | (3 | )% | ||||||||||
| All Other |
23,085 | 17,249 | 34 | % | 21 | % | ||||||||||
| (1) | See “Non-GAAP Financial Measures” for an explanation of our constant currency results. |
26-Weeks Ended |
Percent Change |
|||||||||||||||
July 4, 2021 |
June 28, 2020 |
Actuals |
Constant Currency (1) |
|||||||||||||
(Dollar amounts in thousands) |
||||||||||||||||
Unaudited |
||||||||||||||||
| Membership Revenues |
$ | 85,356 | $ | 92,208 | (7 | )% | (16 | )% | ||||||||
| North America |
41,672 | 50,598 | (18 | )% | (18 | )% | ||||||||||
| United Kingdom |
28,054 | 27,265 | 3 | % | (7 | )% | ||||||||||
| Europe/RoW |
8,086 | 8,860 | (9 | )% | (18 | )% | ||||||||||
| All Other |
7,544 | 5,485 | 38 | % | 24 | % | ||||||||||
| (1) | See “Non-GAAP Financial Measures” for an explanation of our constant currency results. |
26-Weeks Ended |
Percent Change |
|||||||||||||||
July 4, 2021 |
June 28, 2020 |
Actuals |
Constant Currency (1) |
|||||||||||||
(Dollar amounts in thousands) |
||||||||||||||||
(Unaudited) |
||||||||||||||||
| In-House Revenues |
$ | 62,052 | $ | 70,982 | (13 | )% | (21 | )% | ||||||||
| North America |
38,403 | 32,892 | 17 | % | 17 | % | ||||||||||
| United Kingdom |
17,891 | 26,022 | (31 | )% | (38 | )% | ||||||||||
| Europe/RoW |
5,758 | 12,068 | (52 | )% | (57 | )% | ||||||||||
| (1) | See “Non-GAAP Financial Measures” for an explanation of our constant currency results. |
26-Weeks Ended |
Percent Change |
|||||||||||||||
July 4, 2021 |
June 28, 2020 |
Actuals |
Constant Currency (1) |
|||||||||||||
(Dollar amounts in thousands) |
||||||||||||||||
(Unaudited) |
||||||||||||||||
| Other Revenues |
$ | 49,072 | $ | 35,366 | 39 | % | 25 | % | ||||||||
| North America |
12,190 | 7,019 | 74 | % | 74 | % | ||||||||||
| United Kingdom |
8,080 | 8,497 | (5 | )% | (14 | )% | ||||||||||
| Europe/RoW |
4,801 | 256 | n/m | n/m | ||||||||||||
| Soho House Design |
8,460 | 7,830 | 8 | % | (3 | )% | ||||||||||
| All Other |
15,541 | 11,764 | 32 | % | 19 | % | ||||||||||
| (1) | See “Non-GAAP Financial Measures” for an explanation of our constant currency results. |
26-Weeks Ended |
Percent Change |
|||||||||||||||
July 4, 2021 |
June 28, 2020 |
Actuals |
Constant Currency (1) |
|||||||||||||
(Dollar amounts in thousands) |
||||||||||||||||
(Unaudited) |
||||||||||||||||
| In-House Operating Expenses |
$ | 116,239 | $ | 124,663 | (7 | )% | (16 | )% | ||||||||
| Percent of total House revenues |
19 | % | 23 | % | (4 | )% | ||||||||||
| Operating Loss |
$ | (110,420 | ) | $ | (85,241 | ) | (30 | )% | (17 | )% | ||||||
| Operating Loss Margin |
(56 | )% | (43 | )% | (13 | )% | ||||||||||
| House-Level Contribution |
$ | 26,867 | $ | 37,392 | (28 | )% | (35 | )% | ||||||||
| House-Level Contribution Margin |
19 | % | 23 | % | (4 | )% | ||||||||||
| House-Level Contribution-by segment: |
||||||||||||||||
| North America |
17,695 | 22,515 | (21 | )% | (29 | )% | ||||||||||
| United Kingdom |
6,062 | 9,087 | (33 | )% | (40 | )% | ||||||||||
| Europe/RoW |
(3,297 | ) | 1,420 | n/m | n/m | |||||||||||
| All Other |
6,407 | 4,370 | 47 | % | 32 | % | ||||||||||
| House-Level Contribution Margin-by segment: |
||||||||||||||||
| North America |
22 | % | 27 | % | (5 | )% | ||||||||||
| United Kingdom |
13 | % | 17 | % | (4 | )% | ||||||||||
| Europe/RoW |
(24 | )% | 7 | % | (31 | )% | ||||||||||
| All Other |
n/m | n/m | n/m | |||||||||||||
| (1) | See “Non-GAAP Financial Measures” for an explanation of our constant currency results. |
26-Weeks Ended |
Percent Change |
|||||||||||||||
July 4, 2021 |
June 28, 2020 |
Actuals |
Constant Currency (1) |
|||||||||||||
| (Dollar amounts in thousands) |
||||||||||||||||
(Unaudited) |
||||||||||||||||
| Other Operating Expenses |
68,878 | 45,690 | 51 | % | 36 | % | ||||||||||
| Percentage of total Other Revenues |
(29 | )% | (25 | )% | (4 | )% | ||||||||||
| Operating Loss |
$ | (110,420 | ) | $ | (85,241 | ) | (30 | )% | (17 | )% | ||||||
| Operating Loss Margin |
(56 | )% | (43 | )% | (13 | )% | ||||||||||
| Other Contribution |
(15,503 | ) | (9,189 | ) | (69 | )% | (52 | )% | ||||||||
| Other Contribution Margin |
(29 | )% | (25 | )% | (4 | )% | ||||||||||
| Other Contribution-by segment: |
||||||||||||||||
| North America |
2,719 | (1,580 | ) | n/m | n/m | |||||||||||
| United Kingdom |
(4,796 | ) | 485 | n/m | n/m | |||||||||||
| Europe/RoW |
825 | (2,570 | ) | n/m | n/m | |||||||||||
| Soho House Design |
(4,801 | ) | (578 | ) | n/m | n/m | ||||||||||
| Other |
(9,450 | ) | (4,946 | ) | (91 | )% | (72 | )% | ||||||||
| Other Contribution Margin-by segment: |
||||||||||||||||
| North America |
22 | % | (23 | )% | ||||||||||||
| United Kingdom |
(38 | )% | 6 | % | ||||||||||||
| Europe/RoW |
17 | % | n/m | |||||||||||||
| Soho House Design |
(57 | )% | (7 | )% | ||||||||||||
| Other |
(48 | )% | (38 | )% | ||||||||||||
| (1) | See “Non-GAAP Financial Measures” for an explanation of our constant currency results. |
26-Weeks Ended |
Percent Change |
|||||||||||||||
July 4, 2021 |
June 28, 2020 |
Actual |
Constant Currency (1) |
|||||||||||||
| (Dollar amounts in thousands) |
||||||||||||||||
(Unaudited) |
||||||||||||||||
| General and Administrative Expenses |
36,005 | 39,849 | (10 | )% | (18 | )% | ||||||||||
| Percent of Total Revenues |
18 | % | 20 | % | ||||||||||||
| (1) | See “Non-GAAP Financial Measures” for an explanation of our constant currency results. |
26-Weeks Ended |
Percent Change |
|||||||||||||||
July 4, 2021 |
June 28, 2020 |
Actual |
Constant Currency (1) |
|||||||||||||
| (Dollar amounts in thousands) |
||||||||||||||||
(Unaudited) |
||||||||||||||||
| Pre-opening expenses |
11,318 | 11,388 | (1 | )% | (10 | )% | ||||||||||
| Percent of Total Revenues |
6 | % | 6 | % | ||||||||||||
| (1) | See “Non-GAAP Financial Measures” for an explanation of our constant currency results. |
26-Weeks Ended |
Percent Change |
|||||||||||||||
July 4, 2021 |
June 28, 2020 |
Actual |
Constant Currency (1) |
|||||||||||||
| (Dollar amounts in thousands) |
||||||||||||||||
(Unaudited) |
||||||||||||||||
| Depreciation and Amortization |
39,750 | 31,125 | 28 | % | 15 | % | ||||||||||
| Percent of Total Revenue |
20 | % | 16 | % | ||||||||||||
| (1) | See “Non-GAAP Financial Measures” for an explanation of our constant currency results. |
26-Weeks Ended |
Percent Change |
|||||||||||||||
July 4, 2021 |
June 28, 2020 |
Actual |
Constant Currency (1) |
|||||||||||||
| (Dollar amounts in thousands) |
||||||||||||||||
(Unaudited) |
||||||||||||||||
| Other |
34,710 | 31,082 | 12 | % | 1 | % | ||||||||||
| Percentage of Total Revenues |
18 | % | 16 | % | ||||||||||||
| (1) | See “Non-GAAP Financial Measures” for an explanation of our constant currency results. |
26-Weeks Ended |
Percent Change |
|||||||||||||||
July 4, 2021 |
June 28, 2020 |
Actual |
Constant Currency (1) |
|||||||||||||
| (Dollar amounts in thousands) |
||||||||||||||||
(Unaudited) |
||||||||||||||||
| Interest Expense, Net |
46,622 | 35,653 | 31 | % | 18 | % | ||||||||||
| Percentage of Total Revenues |
24 | % | 18 | % | ||||||||||||
| (1) | See “Non-GAAP Financial Measures” for an explanation of our constant currency results. |
26-Weeks Ended |
Percent Change |
|||||||||||||||
July 4, 2021 |
June 28, 2020 |
Actual |
Constant Currency (1) |
|||||||||||||
| (Dollar amounts in thousands) |
||||||||||||||||
(Unaudited) |
||||||||||||||||
| Adjusted EBITDA |
(35,348 | ) | (28,623 | ) | (23 | )% | (11 | )% | ||||||||
| Percentage of Total Revenues |
(18 | )% | (14 | )% | ||||||||||||
| (1) | See “Non-GAAP Financial Measures” for an explanation of our constant currency results. |
13-Weeks Ended |
Percent Change |
|||||||||||||||
July 4, 2021 |
June 28, 2020 |
Actuals |
Constant Currency (1) |
|||||||||||||
Actuals |
Actuals |
|||||||||||||||
| |
|
|
|
|||||||||||||
(Unaudited, dollar amounts in thousands) |
||||||||||||||||
| Net Loss |
(57,108 | ) | (77,857 | ) | 27 | % | 36 | % | ||||||||
| Depreciation and Amortization |
21,905 | 16,176 | 35 | % | 19 | % | ||||||||||
| Interest Expense, net |
17,018 | 17,897 | (5 | )% | (16 | )% | ||||||||||
| Income tax expense (benefit) |
3 | (277 | ) | n/m | n/m | |||||||||||
| |
|
|
|
|
|
|
|
|||||||||
| EBITDA |
(18,182 | ) | (44,061 | ) | 59 | % | 64 | % | ||||||||
| (Gain) loss on sale of property and other, net |
(6,903 | ) | 12 | n/m | n/m | |||||||||||
| Share of loss of equity method investments |
130 | 2,136 | 94 | % | 95 | % | ||||||||||
| Foreign exchange (2) |
1,055 | 4,903 | 78 | % | 81 | % | ||||||||||
| Share of equity method investments adjusted EBITDA |
1,456 | 498 | n/m | n/m | ||||||||||||
| Share-based compensation expense |
2,548 | — | n/m | n/m | ||||||||||||
| Membership credits expense (3) |
1,404 | 8,175 | 83 | % | 85 | % | ||||||||||
| COVID-19 related charges (4) |
(272 | ) | 1,739 | n/m | n/m | |||||||||||
| Corporate financing and restructuring costs (5) |
6,208 | 505 | n/m | n/m | ||||||||||||
| Abandoned project and site closure costs |
— | 6,413 | 100 | % | 100 | % | ||||||||||
| |
|
|
|
|
|
|
|
|||||||||
| Adjusted EBITDA |
(12,556 | ) | (19,680 | ) | 36 | % | 44 | % | ||||||||
| |
|
|
|
|
|
|
|
|||||||||
| (1) | See “Non-GAAP Financial Measures” for an explanation of our constant currency results. |
| (2) | The increase in foreign exchange period on period is driven by an increase in non-USD denominated borrowings, which have increased since the preceding period, foreign exchange volatility, and an out of period adjustment as described in Note 2 of the Company’s condensed consolidated financial statements included elsewhere in this document. |
| (3) | Beginning on March 14, 2020, due to the COVID-19 pandemic, we issued membership credits to active members of our closed Houses to be redeemed for certain Soho Home products and services. Membership credits were a one-time goodwill gesture, issued as a marketing offer to active members. The expense represents our best estimate of the cost in fulfilling the membership credits. |
| (4) | Represent items of additional expense incurred in order to comply with health and safety protocols while keeping certain Houses open during the pandemic. In 2021, we received a government grant related to business rates in the UK which reduced our COVID related expenses. |
| (5) | Our Corporate financing and restructuring costs vary significantly each year and period presented based on financing and restructuring being undertaken. Such costs do not relate to normal, recurring, cash operating expenses. In the second quarter 2021, these costs consisted of IPO-related costs of $6,205 incurred during this quarter. In the second quarter 2020, we incurred costs of $505 related to our internal restructuring initiative to simplify the business in terms of headcount and cost structure. |
July 4, 2021 |
June 28, 2020 |
Change % |
June 28, 2020 Constant Currency (1) |
Constant Currency Change % (1) |
||||||||||||||||
Actuals |
||||||||||||||||||||
| |
|
|||||||||||||||||||
(Unaudited, dollar amounts in thousands) |
||||||||||||||||||||
| |
|
|||||||||||||||||||
| Operating Loss |
(46,860 | ) | (58,089 | ) | 19 | % | (66,096 | ) | 29 | % | ||||||||||
| General and Administrative |
19,500 | 15,702 | 24 | % | 17,866 | 9 | % | |||||||||||||
| Pre-opening expenses |
6,493 | 5,701 | 14 | % | 6,487 | 0 | % | |||||||||||||
| Depreciation and Amortization |
21,905 | 16,176 | 35 | % | 18,406 | 19 | % | |||||||||||||
| Other |
11,926 | 28,759 | (59 | )% | 32,723 | (64 | )% | |||||||||||||
| Non-House Membership Revenue |
(3,483 | ) | (333 | ) | n/m | (379 | ) | n/m | ||||||||||||
| Other Revenues |
(33,423 | ) | (9,437 | ) | n/m | (10,738 | ) | n/m | ||||||||||||
| Other Operating Expenses |
40,685 | 19,561 | n/m | 22,257 | 83 | % | ||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|||||||||||
| House-Level Contribution |
16,743 | 18,040 | (7 | )% | 20,526 | (18 | )% | |||||||||||||
| |
|
|
|
|
|
|
|
|
|
|||||||||||
| Operating Loss Margin |
(38 | )% | n/m | n/m | ||||||||||||||||
| House-Level Contribution Margin |
19 | % | 38 | % | (19 | )% | ||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|||||||||||
| (1) | See “Non-GAAP Financial Measures” for an explanation of our constant currency results. |
July 4, 2021 |
June 28, 2020 |
Change% |
March 29, 2020 Constant Currency (1) |
Constant Currency Change% (1) |
||||||||||||||||
| Actuals |
||||||||||||||||||||
| |
|
|||||||||||||||||||
(Unaudited, dollar amounts in thousands) |
||||||||||||||||||||
| Membership Revenues |
44,863 | 44,456 | 1 | % | 50,583 | (11 | )% | |||||||||||||
| Less: Non-House Membership Revenue |
(3,483 | ) | (333 | ) | n/m | (379 | ) | n/m | ||||||||||||
| Add: In-House Revenues |
45,793 | 3,111 | n/m | 3,540 | n/m | |||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|||||||||||
| Total House Revenues |
87,173 | 47,234 | 85 | % | 53,744 | 62 | % | |||||||||||||
| |
|
|
|
|
|
|
|
|
|
|||||||||||
| Less: In-House Operating Expenses |
||||||||||||||||||||
| In-House Operating Expenses |
70,430 | 29,194 | n/m | 33,218 | n/m | |||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|||||||||||
| House-Level Contribution |
16,743 | 18,040 | (7 | )% | 20,526 | (18 | )% | |||||||||||||
| |
|
|
|
|
|
|
|
|
|
|||||||||||
| (1) See “Non-GAAP Financial Measures” for an explanation of our constant currency results. |
| |||||||||||||||||||
July 4, 2021 |
June 28, 2020 |
Change% |
June 28, 2020 Constant Currency (1) |
Constant Currency Change% (1) |
||||||||||||||||
Actuals |
||||||||||||||||||||
| |
|
|||||||||||||||||||
(Unaudited, dollar amounts in thousands) |
||||||||||||||||||||
| Operating Loss |
(46,860 | ) | (58,089 | ) | 19 | % | (66,096 | ) | 29 | % | ||||||||||
| General and Administrative |
19,500 | 15,702 | 24 | % | 17,866 | 9 | % | |||||||||||||
| Pre-opening expenses |
6,493 | 5,701 | 14 | % | 6,487 | 0 | % | |||||||||||||
| Depreciation and Amortization |
21,905 | 16,176 | 35 | % | 18,406 | 19 | % | |||||||||||||
| Other |
11,926 | 28,759 | (59 | )% | 32,723 | (64 | )% | |||||||||||||
| House Membership Revenues |
(41,380 | ) | (44,123 | ) | (6 | )% | (50,205 | ) | (18 | )% | ||||||||||
| In-House Revenues |
(45,793 | ) | (3,111 | ) | n/m | (3,540 | ) | n/m | ||||||||||||
| In-House Operating Expenses |
70,430 | 29,194 | n/m | 33,218 | n/m | |||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|||||||||||
| Total Other Contribution |
(3,779 | ) | (9,791 | ) | 61 | % | (11,141 | ) | 66 | % | ||||||||||
| |
|
|
|
|
|
|
|
|
|
|||||||||||
| Operating Loss Margin |
(38 | )% | n/m | n/m | ||||||||||||||||
| Other Contribution Margin |
(10 | )% | (100 | )% | (100 | )% | ||||||||||||||
| (1) See “Non-GAAP Financial Measures” for an explanation of our constant currency results. |
|
|||||||||||||||||||
July 4, 2021 |
June 28, 2020 |
Change% |
June 28, 2020 Constant Currency (1) |
Constant Currency Change% (1) |
||||||||||||||||
Actuals |
||||||||||||||||||||
| |
|
|||||||||||||||||||
(Unaudited, dollar amounts in thousands) |
||||||||||||||||||||
| Other Contribution |
||||||||||||||||||||
| Non-House Membership Revenue |
3,483 | 333 | n/m | 379 | n/m | |||||||||||||||
| Other Revenues |
33,423 | 9,437 | n/m | 10,738 | n/m | |||||||||||||||
| Less: Other Operating Expenses |
40,685 | 19,561 | n/m | 22,257 | 83 | % | ||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|||||||||||
| Other Contribution |
(3,779 | ) | (9,791 | ) | 61 | % | (11,141 | ) | 66 | % | ||||||||||
| |
|
|
|
|
|
|
|
|
|
|||||||||||
| (1) | See “Non-GAAP Financial Measures” for an explanation of our constant currency results. |
26-Weeks Ended |
Percent Change |
|||||||||||||||
| ADJUSTED EBITDA |
July 4, 2021 Actuals |
June 28, 2020 Actuals |
Actuals |
Constant Currency (1) |
||||||||||||
(Unaudited, dollar amounts in thousands) |
||||||||||||||||
| Net Loss |
(150,145 | ) | (122,837 | ) | (22 | )% | (10 | )% | ||||||||
| Depreciation and Amortization |
39,750 | 31,125 | 28 | % | 15 | % | ||||||||||
| Interest Expense, net |
46,622 | 35,653 | 31 | % | 18 | % | ||||||||||
| Income tax benefit |
(820 | ) | (380 | ) | n/m | 95 | % | |||||||||
| |
|
|
|
|
|
|
|
|||||||||
| EBITDA |
(64,593 | ) | (56,439 | ) | (14 | )% | (3 | )% | ||||||||
| (Gain) loss on sale of property and other, net |
(6,903 | ) | 11 | n/m | n/m | |||||||||||
| Share of loss of equity method investments |
826 | 2,312 | 64 | % | 68 | % | ||||||||||
| Foreign exchange (2) |
15,922 | 5,294 | n/m | n/m | ||||||||||||
| Share of equity method investments adjusted EBITDA |
2,327 | 1,708 | (36 | )% | (23 | )% | ||||||||||
| Share-based compensation expense |
4,677 | — | n/m | n/m | ||||||||||||
| Membership credits expense (3) |
4,154 | 8,175 | 49 | % | 54 | % | ||||||||||
| COVID-19 related charges (4) |
(241 | ) | 2,901 | n/m | n/m | |||||||||||
| Corporate financing and restructuring costs (5) |
8,483 | 1,002 | n/m | n/m | ||||||||||||
| Abandoned project and site closure costs |
— | 6,413 | 100 | % | 100 | % | ||||||||||
| |
|
|
|
|
|
|
|
|||||||||
| Adjusted EBITDA |
(35,348 | ) | (28,623 | ) | (23 | )% | (11 | )% | ||||||||
| |
|
|
|
|
|
|
|
|||||||||
| (1) | See “Non-GAAP Financial Measures” for an explanation of our constant currency results. |
| (2) | The increase in foreign exchange period on period is driven by an increase in non-USD denominated borrowings, which have increased since the preceding period, foreign exchange volatility, and an out of period adjustment as described in Note 2 of the Company’s condensed consolidated financial statements included elsewhere in this document. |
| (3) | Beginning on March 14, 2020, due to the COVID-19 pandemic, we issued membership credits to active members of our closed Houses to be redeemed for certain Soho Home products and services. Membership credits were a one-time goodwill gesture, issued as a marketing offer to active members. The expense represents our best estimate of the cost in fulfilling the membership credits. |
| (4) | Represent items of additional expense incurred in order to comply with health and safety protocols while keeping certain Houses open during the pandemic. In 2021, we received a government grant related to business rates in the UK which reduced our COVID related expenses. |
| (5) | Our Corporate financing and restructuring costs vary significantly each year and period presented based on financing and restructuring being undertaken. Such costs do not relate to normal, recurring, cash operating expenses. In first half 2021, these costs consisted of certain items relating to acquiring shareholdings of joint ventures and non-controlling interests not held by the Company of $250 and refinancing fees and IPO-related costs totalling $8,233. In first half 2020, we commenced an internal restructuring to simplify the business in terms of headcount and cost structure, incurring costs of $1,002. |
July 4, 2021 |
June 28, 2020 |
Change % |
June 28, 2020 Constant Currency (1) |
Constant Currency Change % (1) |
||||||||||||||||
Actuals |
||||||||||||||||||||
| |
|
|||||||||||||||||||
(Unaudited, dollar amounts in thousands) |
||||||||||||||||||||
| Operating Loss |
(110,420 | ) | (85,241 | ) | (30 | )% | (94,464 | ) | (17 | )% | ||||||||||
| General and Administrative |
36,005 | 39,849 | (10 | )% | 44,161 | (18 | )% | |||||||||||||
| Pre-opening expenses |
11,318 | 11,388 | (1 | )% | 12,620 | (10 | )% | |||||||||||||
| Depreciation and Amortization |
39,750 | 31,125 | 28 | % | 34,493 | 15 | % | |||||||||||||
| Other |
34,710 | 31,082 | 12 | % | 34,444 | 1 | % | |||||||||||||
| Non-House Membership Revenue |
(4,303 | ) | (1,135 | ) | n/m | (1,258 | ) | n/m | ||||||||||||
| Other Revenues |
(49,072 | ) | (35,366 | ) | 39 | % | (39,193 | ) | 25 | % | ||||||||||
| Other Operating Expenses |
68,878 | 45,690 | 51 | % | 50,634 | 36 | % | |||||||||||||
| |
|
|
|
|
|
|
|
|
|
|||||||||||
| House-Level Contribution |
26,866 | 37,392 | (28 | )% | 41,437 | (35 | )% | |||||||||||||
| |
|
|
|
|
|
|
|
|
|
|||||||||||
| Operating Loss Margin |
(56 | )% | (43 | )% | (43 | )% | ||||||||||||||
| House-Level Contribution Margin |
19 | % | 23 | % | 23 | % | ||||||||||||||
| |
|
|
|
|
|
|||||||||||||||
| (1) | See “Non-GAAP Financial Measures” for an explanation of our constant currency results. |
July 4, 2021 |
June 28, 2020 |
Change % |
March 29, 2020 Constant Currency (1) |
Constant Currency Change % (1) |
||||||||||||||||
Actuals |
||||||||||||||||||||
| |
|
|||||||||||||||||||
(Unaudited, dollar amounts in thousands) |
||||||||||||||||||||
| Membership Revenues |
85,356 | 92,208 | (7 | )% | 102,185 | (16 | )% | |||||||||||||
| Less: Non-House Membership |
(4,303 | ) | (1,135 | ) | n/m | (1,258 | ) | n/m | ||||||||||||
| Add: In-House Revenues |
62,052 | 70,982 | (13 | )% | 78,662 | (21 | )% | |||||||||||||
| |
|
|
|
|
|
|
|
|
|
|||||||||||
| Total House Revenues |
143,105 | 162,055 | (12 | )% | 179,589 | (20 | )% | |||||||||||||
| |
|
|
|
|
|
|
|
|
|
|||||||||||
| Less: In-House Operating Expenses |
||||||||||||||||||||
| In-House Operating Expenses |
116,239 | 124,663 | (7 | )% | 138,152 | (16 | )% | |||||||||||||
| |
|
|
|
|
|
|
|
|
|
|||||||||||
| House-Level Contribution |
26,866 | 37,392 | (28 | )% | 41,437 | (35 | )% | |||||||||||||
| |
|
|
|
|
|
|
|
|
|
|||||||||||
| (1) See “Non-GAAP Financial Measures” for an explanation of our constant currency results. |
| |||||||||||||||||||
July 4, 2021 |
June 28, 2020 |
Change % |
June 28, 2020 Constant Currency (1) |
Constant Currency Change % (1) |
||||||||||||||||
Actuals |
||||||||||||||||||||
| |
|
|||||||||||||||||||
(Unaudited, dollar amounts in thousands) |
||||||||||||||||||||
| Operating Loss |
(110,420 | ) | (85,241 | ) | (30 | )% | (94,464 | ) | (17 | )% | ||||||||||
| General and Administrative |
36,005 | 39,849 | (10 | )% | 44,161 | (18 | )% | |||||||||||||
| Pre-opening expenses |
11,318 | 11,388 | (1 | )% | 12,620 | (10 | )% | |||||||||||||
| Depreciation and Amortization |
39,750 | 31,125 | 28 | % | 34,493 | 15 | % | |||||||||||||
| Other |
34,710 | 31,082 | 12 | % | 34,444 | 1 | % | |||||||||||||
| House Membership Revenues |
(81,053 | ) | (91,073 | ) | (11 | )% | (100,927 | ) | (20 | )% | ||||||||||
| In-House Revenues |
(62,052 | ) | (70,982 | ) | (13 | )% | (78,662 | ) | (21 | )% | ||||||||||
| In-House Operating Expenses |
116,239 | 124,663 | (7 | )% | 138,152 | (16 | )% | |||||||||||||
| |
|
|
|
|
|
|
|
|
|
|||||||||||
| Total Other Contribution |
(15,503 | ) | (9,189 | ) | (69 | )% | (10,183 | ) | (52 | )% | ||||||||||
| |
|
|
|
|
|
|
|
|
|
|||||||||||
| Operating Loss Margin |
(56 | )% | (43 | )% | (43 | )% | ||||||||||||||
| Other Contribution Margin |
(29 | )% | (25 | )% | (25 | )% | ||||||||||||||
| (1) See “Non-GAAP Financial Measures” for an explanation of our constant currency results. |
| |||||||||||||||||||
July 4, 2021 |
June 28, 2020 |
Change % |
June 28, 2020 Constant Currency (1) |
Constant Currency Change % (1) |
||||||||||||||||
Actuals |
||||||||||||||||||||
| |
|
|||||||||||||||||||
(Unaudited, dollar amounts in thousands) |
||||||||||||||||||||
| Other Contribution |
||||||||||||||||||||
| Non-House Membership Revenue |
4,303 | 1,135 | n/m | 1,258 | n/m | |||||||||||||||
| Other Revenues |
49,072 | 35,366 | 39 | % | 39,193 | 25 | % | |||||||||||||
| Less: Other Operating Expenses |
68,878 | 45,690 | 51 | % | 50,634 | 36 | % | |||||||||||||
| |
|
|
|
|
|
|
|
|
|
|||||||||||
| Other Contribution |
(15,503 | ) | (9,189 | ) | (69 | )% | (10,183 | ) | (52 | )% | ||||||||||
| |
|
|
|
|
|
|
|
|
|
|||||||||||
| (1) | See “Non-GAAP Financial Measures” for an explanation of our constant currency results. |
26-Weeks Ended |
||||||||
July 4, 2021 |
June 28, 2020 |
|||||||
(Unaudited, dollar amounts in thousands) |
||||||||
| Net cash (used in) generated by |
||||||||
| Net cash used in operating activities |
(94,220 | ) | (14,695 | ) | ||||
| Net cash used in investing activities |
(50,028 | ) | (67,166 | ) | ||||
| Net cash provided by financing activities |
140,983 | 168,490 | ||||||
| Effect of exchange rates on cash and cash equivalents |
242 | (2,924 | ) | |||||
| |
|
|
|
|||||
| Net (decrease) increase in cash and cash equivalents |
(3,023 | ) | 83,705 | |||||
| |
|
|
|
|||||
| • | actions taken (or not taken) by our employees relating to health, safety, construction, welfare, or otherwise; |
| • | security or data breaches or incidents, fraudulent activities associated with our membership database or electronic payment systems or unauthorized access to or use or disclosure of confidential, sensitive or PII; |
| • | litigation and legal claims, regardless of the merits or the outcome; |
| • | third-party misappropriation, dilution, infringement or other violation of our intellectual property; and |
| • | illegal activity targeted at us or others. |
| • | make it more difficult for us to satisfy our obligations with respect to our indebtedness, and any failure to comply with the obligations under our credit facilities, including restrictive covenants, could result in an event of default under such facilities; |
| • | increase our vulnerability to adverse economic and industry conditions, which could place us at a competitive disadvantage compared to our competitors that have proportionately less indebtedness; |
| • | require the dedication of a substantial portion of our cash flow from operations towards the payment of amounts due on our indebtedness, thereby reducing the availability of such cash flow to fund working capital, capital expenditures, acquisitions, joint ventures and development or other corporate purposes; |
| • | increase our cost of borrowing and cause us to incur substantial fees from time to time in connection with debt amendments or refinancing; |
| • | increase our exposure to rising interest rates because a portion of our borrowings is at variable interest rates; |
| • | limit our flexibility in planning for, or reacting to, changes in our business and our industry; |
| • | place us at a competitive disadvantage compared to our competitors that are less highly leveraged and that, therefore, may be able to take advantage of opportunities that our leverage prevents us from exploiting, including acquiring new assets; |
| • | restrict us from making strategic acquisitions or cause us to make non-strategic divestitures to service or repay such indebtedness; and |
| • | limit our ability to borrow additional funds, or dispose of assets to raise funds, if needed, for working capital, capital expenditures, acquisitions, and other corporate purposes. |
| • | incur indebtedness or guarantees or engage in sale and leaseback transactions; |
| • | incur liens; |
| • | engage in mergers, acquisitions and asset sales; |
| • | alter the business conducted today by the company and its restricted subsidiaries; |
| • | make investments and loans; |
| • | declare dividends or other distributions; |
| • | enter into agreements limiting restricted subsidiary distributions; and |
| • | engage in certain transactions with affiliates. |
| • | limited in how we conduct our business; |
| • | unable to raise additional debt or equity financing on terms acceptable to us, or at all, to operate during general economic or business downturns; or |
| • | unable to compete effectively or to take advantage of new business opportunities. |
| • | construction delays or cost overruns (including with respect to labor and materials) that may increase project costs; |
| • | obtaining zoning, occupancy, and other required permits or authorizations; |
| • | changes in economic conditions that may result in weakened or lack of demand or negative project returns; |
| • | governmental restrictions on the size or kind of development; |
| • | lack of availability of rooms or spaces for revenue-generating activities during construction, modernization or renovation projects; |
| • | environmental conditions of properties being developed; |
| • | force majeure events, including earthquakes, tornadoes, hurricanes, floods or tsunamis; and |
| • | design defects that could increase costs. |
| • | sensitive data regarding our business, including intellectual property, personal information (including PII), and other confidential and proprietary data, could be stolen; |
| • | our electronic communications systems, including email and other methods, could be disrupted, delayed, or damaged, and our ability to conduct our business operations could be seriously damaged until such systems can be restored; |
| • | our ability to process customer orders and our distribution channels could be disrupted, interrupted or damaged, resulting in delays in revenue recognition, harm to our relationships with customers and prospective customers and harm to our reputation; |
| • | accidental release or loss of or access to information maintained in our or third-party service providers’ information systems and networks, including PII of our employees and our members, may occur; and |
| • | PII relating to various parties, including members, customers, employees and business partners, could be compromised, and we may be found to be in violation of applicable data privacy, security and protection laws, rules, regulations, industry standards, policies or contractual obligations. |
| • | changes in the valuation of our deferred tax assets and liabilities; |
| • | expected timing and amount of the release of any tax valuation allowances; |
| • | tax effects of stock-based compensation; |
| • | costs related to intercompany restructurings; |
| • | changes in tax laws, regulations and double taxation agreements, or in the interpretation, administration, or application thereof (in particular, as a result of Brexit); or |
| • | lower than anticipated future earnings in jurisdictions where we have lower statutory tax rates and higher than anticipated future earnings in jurisdictions where we have higher statutory tax rates. |
| • | being permitted to provide only two years of audited financial statements, in addition to any required unaudited interim financial statements, with correspondingly reduced “Management’s Discussion and Analysis of Financial Condition and Results of operation” disclosure; |
| • | not being required to comply with the auditor attestation requirements in the assessment of our internal control over financial reporting; |
| • | reduced disclosure obligations regarding executive compensation; and |
| • | exemptions from the requirements of holding a non-binding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. |
| • | so long as the Voting Group owns at least 35% of our total outstanding shares of common stock, it will be entitled to designate nine directors for nomination, of which Yucaipa shall have the right to designate seven directors for nomination, Mr. Caring shall have the right to designate one director for nomination and Mr. Jones shall have the right to designate one director for nomination; |
| • | so long as the Voting Group owns less than 35% but at least 15% of our total outstanding shares of common stock, it will be entitled to designate six directors for nomination, of which Yucaipa shall have the right to designate four directors for nomination, Mr. Caring shall have the right to designate one director for nomination and Mr. Jones shall have the right to designate one director for nomination; |
| • | so long as the Voting Group owns less than 15% but at least 9% of our total outstanding shares of common stock, it will be entitled to designate three directors for nomination, of which Yucaipa shall have the right to designate one director for nomination, Mr. Caring shall have the right to designate one director for nomination and Mr. Jones shall have the right to designate one director for nomination; and |
| • | in the event that the Voting Group owns less than 9% of our total outstanding shares of common stock, neither the Voting Group nor any member will be entitled to designate any individuals for nomination for election to the Board; provided, however, that in the event at any time either Mr. Caring or Mr. Jones (in the case of Mr. Jones, at such time as Mr. Jones is not also our Chief Executive Officer) (including their respective affiliates and family members) shall own less than 5% of the shares of our outstanding common stock, such member shall no longer have the nominee designation rights set forth above and such designation shall instead be made by Yucaipa, unless, in each case, any individual member of the Voting Group owns more than 5% of our total outstanding common stock (at such time after the Voting Group owns less than 9% of our total outstanding shares of common stock), in which case such member will be entitled to nominate one director for election (though no other Voting Group member shall have any obligation to vote in favor of such nomination). In addition, for so long as Mr. Jones serves as our Chief Executive Officer, he shall remain a director on our Board. |
| • | Once the Voting Group owns less than 15% of the shares of our total outstanding shares of common stock, all remaining shares of Class B common stock will automatically convert on a one-for-one |
| • | a Board that is composed of a majority of independent directors, as defined under the listing rules of the NYSE; |
| • | a compensation committee that is composed entirely of independent directors; and |
| • | a nominating and corporate governance committee that is composed entirely of independent directors. |
| • | market conditions in the broader stock market; |
| • | actual or anticipated fluctuations in our quarterly financial and operating results; |
| • | introduction of new products or services by us or our competitors; |
| • | issuance of new or changed securities analysts’ reports or recommendations; |
| • | results of operation that vary from expectations of securities analysis and investors; |
| • | guidance, if any, that we provide to the public, any changes in such guidance or our failure to meet such guidance; |
| • | strategic actions by us or our competitors; |
| • | announcement by us, our competitors or our vendors of significant contracts or acquisitions; |
| • | sales, or anticipated sales, of large blocks of our common stock; |
| • | additions or departures of key personnel; |
| • | regulatory, legal or political developments; |
| • | tax developments; |
| • | public responses to press releases or other public announcements by us or third parties, including our filings with the SEC; |
| • | litigation and governmental investigations; |
| • | changing economic conditions; |
| • | changes in accounting principles; |
| • | default under agreements governing our indebtedness; |
| • | exchange rate fluctuations; and |
| • | other events or factors, including those from natural or man-made disasters, war, acts of terrorism or responses to these events. |
| * | Filed herewith. |
| Membership Collective Group Inc. | ||||||
| Date: August 26, 2021 | By: | /s/ Nick Jones | ||||
| Nick Jones | ||||||
| Chief Executive Officer | ||||||
| Date: August 26, 2021 | By: | /s/ Humera Afzal | ||||
| Humera Afzal | ||||||
| Chief Financial Officer | ||||||
Exhibit 3.1
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION OF
MEMBERSHIP COLLECTIVE GROUP INC.
Membership Collective Group Inc., a corporation organized and existing under the laws of the State of Delaware (the “Corporation”) hereby certifies as follows:
1. The original Certificate of Incorporation of the Corporation was filed with the Office of the Secretary of State of the State of Delaware on February 10, 2021 (the “Original Certificate”).
2. The Corporation is filing this Amended and Restated Certificate of Incorporation of the Corporation (the “Certificate”), which restates, integrates and further amends the Original Certificate, as heretofore amended, and which was duly adopted by all necessary action of the board of directors of the Corporation and the stockholders of the Corporation in accordance with the provisions of Sections 242, 245 and 228 of the General Corporation Law of the State of Delaware (the “DGCL”).
3. The text of the Original Certificate is hereby amended and restated in its entirety hereby to read in full as follows:
ARTICLE I
The name of the corporation (hereinafter the “Corporation”) is Membership Collective Group Inc.
ARTICLE II
The address of the Corporation’s registered office in the State of Delaware is 1209 Orange Street, City of Wilmington, County of New Castle, 19081. The name of the Corporation’s registered agent at such address is The Corporation Trust Company.
ARTICLE III
The nature of the business of the Corporation and the objects or purposes to be transacted, promoted or carried on by the Corporation is to engage in any lawful act or activity for which corporations may be organized under the DGCL, including, without limitation, (i) investing in securities of Soho House Holdings Limited and any of its subsidiaries, (ii) exercising all rights, powers, privileges and other incidents of ownership or possession with respect to the Corporation’s assets, including managing, holding, selling and disposing of such assets and (iii) engaging in any other activities incidental or ancillary thereto.
ARTICLE IV
Section 4.01 Authorized Capital Stock and Recapitalization.
(a) The total number of shares of all classes of capital stock that the Corporation is authorized to issue is two billion (2,000,000,000) shares of capital stock, of which 1,000,000,000 shares shall be Class A common stock, par value $0.01 per share (the “Class A Common Stock”), 500,000,000 shares shall be Class B common stock, par value $0.01 per share (the “Class B Common Stock” and, together with the Class A Common Stock, the “Common Stock”) and 500,000,000 shares shall be preferred stock, par value $0.01 per share (the “Preferred Stock”). Subject to the rights of the holders of any series of Preferred Stock then outstanding, the number of authorized shares of any of the Common Stock or Preferred Stock may be increased or decreased (but not below the number of shares thereof then outstanding) by the affirmative vote of the holders of a majority in voting power of the stock of the Corporation entitled to vote thereon irrespective of the provisions of Section 242(b)(2) of the DGCL or any successor provision thereof, and no vote of the holders of any of the Common Stock or Preferred Stock voting separately as a class shall be required therefor.
(b) Effective upon the filing of this Certificate with the Office of the Secretary of State of the State of Delaware, all shares of common stock, par value $0.01 per share, of the Corporation issued and outstanding immediately prior to the filing of this Certificate of Incorporation (the “Existing Common Stock”) shall be recapitalized, reclassified and reconstituted into one (1) fully paid and non-assessable share of Class A Common Stock (as defined below) (the “Recapitalization”). The Recapitalization shall occur automatically without any further action by the holders of Existing Common Stock. The outstanding stock certificate that, immediately prior to the Recapitalization, represented the outstanding Existing Common Shares shall, upon and after the Recapitalization, be deemed to represent one (1) share of Class A Common Stock, without the need for surrender or exchange thereof.
Section 4.02 Common Stock. The terms of the Common Stock set forth below shall be subject to the express terms of any series of Preferred Stock then outstanding.
(a) Voting Rights. Except as otherwise required by applicable law or this Certificate:
(i) each share of Class A Common Stock shall entitle the record holder thereof as of the applicable record date to one (1) vote per share in person or by proxy on all matters submitted to a vote of the holders of Class A Common Stock, whether voting separately as a class or otherwise;
(ii) each share of Class B Common Stock shall entitle the record holder thereof as of the applicable record date to ten (10) votes per share in person or by proxy on all matters submitted to a vote of the holders of Class B Common Stock, whether voting separately as a class or otherwise; and
(iii) except as otherwise required in this Certificate, the holders of shares of Class A Common Stock and Class B Common Stock shall vote together as a single class (or, if any holders of shares of Preferred Stock are entitled to vote together with the holders of Class A Common Stock and Class B Common Stock, as a single class with such holders of Preferred Stock) on all matters submitted to a vote of stockholders of the Corporation.
(b) Dividends and Distributions. Subject to applicable law and the rights, if any, of the holders of any outstanding series of Preferred Stock or any class or series of stock having a preference over or the right to participate with the Common Stock with respect to the payment of dividends or distributions, the holders of Common Stock shall be entitled to receive, as, if and when declared by the Board out of the funds of the Corporation legally available therefor, such dividends (payable in cash, shares of stock of the Corporation, property or assets of the Corporation or otherwise) as the Board may from time to time in its sole discretion determine.
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(c) Liquidation Rights. In the event of liquidation, dissolution or winding up of the affairs of the Corporation, whether voluntary or involuntary, after payment or provision for payment of the debts and other liabilities of the Corporation and after making provisions for preferential and other amounts, if any, to which the holders of Preferred Stock or any class or series of stock having a preference over or the right to participate with the Class A Common Stock with respect to payments in liquidation shall be entitled, the remaining assets and funds of the Corporation available for distribution shall be divided among and paid ratably to the holders of all outstanding shares of Class A Common Stock and Class B Common Stock in proportion to the number of shares held by each such stockholder. A consolidation, reorganization or merger of the Corporation with any other Person or Persons (as defined below), or a sale of all or substantially all of the assets of the Corporation, shall not be considered to be a dissolution, liquidation or winding up of the Corporation within the meaning of this Section 4.02(c).
(d) Class B Common Stock.
(i) From and after the effectiveness of this Certificate with the Secretary of State of the State of Delaware (the “Effective Time”), shares of Class B Common Stock may be issued only to, and registered only in the name of, a member of the Voting Group (as defined in the Stockholders Agreement, dated on or about the Effective Time, by and among the Corporation and Yucaipa American Alliance Fund II, L.P., Yucaipa American Alliance (Parallel) Fund II, L.P., Richard Caring and Nick Jones (as the same may be amended, supplemented, restated or otherwise modified from time to time, the “Stockholders’ Agreement”)) (such holders, collectively, the “Permitted Class B Owners”).
Section 4.03 Conversions and Transfers of Class B Common Stock.
(a) Optional Conversion of Class B Common Stock. At the option of a holder of Class B Common Stock, each share of Class B Common Stock shall be convertible, at any time or from time to time, into one fully paid and nonassessable share of Class A Common Stock as provided herein. Each holder of Class B Common stock who elects to convert the same into shares of Class A Common Stock shall surrender the certificate or certificates (if any), duly endorsed, at the office of the Corporation or the Corporation’s transfer agent (the “Transfer Agent”), and shall give written notice to the Corporation at such office that such holder elects to convert the same and shall state therein the number of shares of Class B Common Stock being converted. Such conversion shall be deemed to have been made immediately prior to the close of business on the date of such surrender and the certificate or certificates representing the shares of Class B Common Stock, or, if the shares are uncertificated, immediately prior to the close of business on the date that the holder delivers notice of such conversion to the Transfer Agent and the person entitled to receive the shares of Class A Common Stock issuable upon such conversion shall be treated for all purposes as the record holder of such shares of Class A Common Stock at such time.
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(b) Automatic Conversion of Class B Common Stock. Each share of Class B Common Stock shall automatically, without any further action, convert into one share of Class A Common Stock immediately following a transfer to any person other than a Permitted Class B Owner. Such conversion shall occur automatically without the need for any further action by the holders of such shares and whether or not the certificates representing such shares (if any) are surrendered to the Corporation or the Transfer Agent; provided, however, that the Corporation shall not be obligated to issue certificates evidencing the shares of Class A Common Stock issuable upon such conversion unless the certificates evidencing such shares of Class B Common Stock are either delivered to the Corporation or the Transfer Agent, or the holder notifies the Corporation that such certificates have been lost, stolen or destroyed and executes an agreement satisfactory to the Corporation to indemnify the Corporation from any loss incurred by it in connection with such certificates. Upon the occurrence of such automatic conversion of the shares of Class B Common Stock, the holder of Class B Common Stock so converted shall surrender the certificates representing such shares (if any) at the office of the Corporation or the Transfer Agent.
(c) Conversion upon Death. Each share of Class B Common Stock held of record by a natural person, including a natural person serving in a trustee capacity, other than a Permitted Class B Owner, shall automatically, without any further action, convert into one fully paid and nonassessable share of Class A Common Stock upon the death of such natural person.
(d) Final Conversion of Class B Common Stock. At such time as the Voting Group owns less than 15% of the shares of the Corporation’s total outstanding Common Stock (the “Final Conversion Date”), each issued share of Class B Common Stock shall automatically, without any further action, convert into one share of Class A Common Stock. Following the Final Conversion Date, the Corporation may no longer issue any additional shares of Class B Common Stock. Such conversion shall occur automatically without the need for any further action by the holders of such shares and whether or not the certificates representing the shares (if any) are surrendered to the Corporation or the Transfer Agent; provided, however, that the Corporation shall not be obligated to issue certificates evidencing the shares of Class A Common Stock issuable upon such conversion unless the certificates evidencing such shares of Class B Common Stock are either delivered to the Corporation or the Transfer Agent, or the holder notifies the Corporation that such certificates have been lost, stolen or destroyed and executes an agreement satisfactory to the Corporation to indemnify the Corporation from any loss incurred by it in connection with such certificates. Upon the occurrence of such automatic conversion of the shares of Class B Common Stock, the holder of Class B Common Stock so converted shall surrender the certificates representing such shares (if any) at the office of the Corporation or the Transfer Agent.
(e) Procedures. The Board of Directors may, to the extent permitted by law, from time to time establish, modify, amend or rescind, by bylaw or otherwise, regulations and procedures not inconsistent with the provisions of this Section 4.03 for determining whether any transfer or acquisition of shares of Class B Common Stock would violate the provisions hereof and for the orderly application, administration and implementation of the provisions of this Section 4.03. Any such procedures and regulations shall be kept on file with the Secretary of the Corporation and with the Transfer Agent and shall be made available for inspection by and, upon written request shall be mailed to, holders of shares of Class B Common Stock.
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(f) Immediate Effect. In the event of a conversion of shares of Class B Common Stock to shares of Class A Common Stock pursuant to this Section 4.03, such conversions shall be deemed to have been made at the time that the transfer of shares occurred or immediately upon the Final Conversion Date, as applicable.
Section 4.04 Certificates. All certificates or book entries representing shares of Class B Common Stock shall bear a legend substantially in the following form (or in such other form as the Board of Directors may determine):
THE SECURITIES REPRESENTED BY THIS [CERTIFICATE][BOOK ENTRY] ARE SUBJECT TO THE RESTRICTIONS (INCLUDING RESTRICTIONS ON TRANSFER) SET FORTH IN THE AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF THE CORPORATION AS IT MAY BE AMENDED AND/OR RESTATED (A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE CORPORATION AND SHALL BE PROVIDED FREE OF CHARGE TO ANY STOCKHOLDER MAKING A REQUEST THEREFOR).
Section 4.05 Fractions. Class A Common Stock and Class B Common Stock may be issued and transferred in fractions of a share which shall entitle the holder to exercise fractional voting rights and to have the benefit of all other rights of holders of Class A Common Stock and Class B Common Stock, as applicable. Subject to the Restrictions, holders of shares of Class A Common Stock and Class B Common Stock shall be entitled to transfer fractions thereof and the Corporation shall, and shall cause the Transfer Agent to, facilitate any such transfers, including by issuing certificates or making book entries representing any such fractional shares. For all purposes of this Certificate of Incorporation, all references to Class A Common Stock and Class B Common Stock or any share thereof (whether in the singular or plural) shall be deemed to include references to any fraction of a share of such Class A Common Stock or Class B Common Stock.
Section 4.06 Amendment. Except as otherwise required by law, holders of Class A Common Stock and Class B Common Stock shall not be entitled to vote on any amendment to this Certificate of Incorporation (including any Preferred Stock Certificate of Designation (as defined below)) that relates solely to the terms of one or more outstanding series of Preferred Stock if the holders of such affected series are entitled, either separately or together with the holders of one or more other such series, to vote thereon pursuant to this Certificate of Incorporation (including any Preferred Stock Certificate of Designation).
Section 4.07 Preferred Stock. The Board is authorized, by resolution or resolutions, to provide, out of the authorized but unissued shares of Preferred Stock, for the issuance from time to time of shares of Preferred Stock in one or more series and, by filing a certificate of designation (a “Preferred Stock Certificate of Designation”) pursuant to the applicable provisions of the DGCL, to establish from time to time the number of shares to be included in each such series, with such powers (including voting powers, if any), designations, preferences, participating, optional or other rights, if any, and qualifications, limitations or restrictions thereof, if any, as are stated and expressed in the resolution or resolutions providing for the issuance thereof adopted by the Board, including, but not limited to, determination of any of the following:
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(a) the distinctive designation of the series, whether by number, letter or title, and the number of shares which will constitute the series;
(b) the dividend rate, if any, and the times of payment of dividends, if any, on the shares of the series, whether such dividends will be cumulative and, if so, from what date or dates, and the relation which such dividends, if any, shall bear to the dividends payable on any other class or classes or series of stock;
(c) the price or prices at which, and the terms and conditions on which, the shares of the series may be redeemed at the option of the Corporation or the holder thereof or upon the happening of a specified event;
(d) whether or not the shares of the series will be entitled to the benefit of a retirement or sinking fund to be applied to the purchase or redemption of such shares and, if so entitled, the amount of such fund and the terms and provisions relative to the operation thereof;
(e) the amounts payable on, and the preferences, if any, of the shares of the series in the event of any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Corporation or upon the happening of any other specified event;
(f) whether or not the shares of the series will be convertible into, or exchangeable for, at the option of either the holder or the Corporation or upon the happening of a specified event, shares of any other class or classes or series of stock of the Corporation and, if so convertible or exchangeable, the conversion price or prices, or the rates of exchange, and any adjustments thereof, at which such conversion or exchange may be made, and any other terms and conditions of such conversion or exchange;
(g) whether or not the shares of the series will have priority over or be on a parity with or be junior to the shares of any other class or classes or series of stock of the Corporation in any respect, or will be entitled to the benefit of limitations restricting the issuance of shares of any other class or classes or series of stock of the Corporation, restricting the payment of dividends on or the making of other distributions in respect of shares of any other class or classes or series of stock of the Corporation ranking junior to the shares of the series as to dividends or distributions, or restricting the purchase or redemption of the shares of any such junior class or classes or series of stock of the Corporation, and the terms of any such restriction;
(h) whether or not the shares of the series will have voting rights or powers and, if so, the terms of such voting rights and powers; and
(i) any other powers, preferences and rights, and qualifications, limitations and restrictions thereof, of the series.
Except as otherwise required by law, holders of any series of Preferred Stock shall be entitled to only such voting rights and powers, if any, as shall expressly be granted thereto by this Certificate. Except as otherwise expressly provided in this Certificate, no vote of the holders of shares of Preferred Stock or Common Stock shall be a prerequisite to the issuance of any shares of any series of the Preferred Stock so authorized in accordance with this Certificate. Except as otherwise required by law, holders of Common Stock shall not be entitled to vote on any amendment to this Certificate that relates solely to the terms of one or more outstanding series of Preferred Stock if the holders of such affected series are entitled, either separately as a class or together with the holders of one or more other such series as a separate class, to vote thereon pursuant to this Certificate or pursuant to the DGCL. Unless otherwise provided by this Certificate, the Board may, by resolution or resolutions, increase or decrease (but not below the number of shares of such series then outstanding) the number of shares of any series of Preferred Stock established by a Preferred Stock Certificate of Designation pursuant to this Article IV and the DGCL and, if the number of shares of such series shall be so decreased, the shares constituting such decrease shall resume the status that they had prior to the adoption of the resolution originally fixing the number of shares of such series.
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Section 4.08 Rights upon Liquidation and Dissolution. On any liquidation, dissolution or winding-up of the Corporation, the holders of Class A Common Stock and Class B Common Stock will be entitled to share equally, identically and ratably in all assets remaining after the payment of any liabilities, liquidation preferences and accrued or declared but unpaid dividends, if any, with respect to any outstanding preferred stock, unless a different treatment is approved by the affirmative vote of the holders of a majority of the outstanding shares of such affected class, voting separately as a class
Section 4.09 Change of Control Transactions. The holders of Class A Common Stock and Class B Common Stock will be treated equally and identically with respect to shares of Class A Common Stock or Class B Common Stock owned by them, unless different treatment of the shares of each class is approved by the affirmative vote of the holders of a majority of the outstanding shares of the class treated differently, voting separately as a class, on (a) the closing of the sale, transfer or other disposition of all or substantially all of the assets of the Corporation, (b) the consummation of a consolidation, merger or reorganization which results in the voting securities of the Corporation outstanding immediately before the transaction (or the voting securities issued with respect to the voting securities of the Corporation outstanding immediately before the transaction) representing less than a majority of the combined voting power of the voting securities of the Corporation or the surviving or acquiring entity or (c) the closing of the transfer (whether by merger, consolidation or otherwise), in one transaction or a series of related transactions, to a person or group of affiliated persons of securities of the company if, after closing, the transferee person or group would hold 50% or more of the outstanding voting power of the Corporation (or the surviving or acquiring entity). However, consideration to be paid or received by a holder of common stock in connection with any such assets sale, consolidation, merger or reorganization under any employment, consulting, severance or other compensatory arrangement will be disregarded for the purposes of determining whether holders of common stock are treated equally and identically.
ARTICLE V
Section 5.01 General Powers. Except as otherwise provided by applicable law or this Certificate, the business and affairs of the Corporation shall be managed by or under the direction of the Board.
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Section 5.02 Number of Directors. Except as otherwise provided for or fixed pursuant to Article IV and this Article V (relating to the rights of any series of Preferred Stock to elect additional directors); the total number of directors shall be as determined from time to time exclusively by the Board; provided, that in no event shall the total number of directors be less than three (3) nor more than fifteen (15). Election of directors need not be by written ballot unless the Bylaws (as defined below) shall so require.
Section 5.03 Classified Board; Term of Office. The directors (other than those directors elected by the holders of any series of Preferred Stock, voting separately as a series or together with one or more other such series, as the case may be) shall be divided into three classes designated Class I, Class II and Class III. Each class shall consist, as nearly as possible, of one-third of the total number of such directors. Class I directors shall initially serve for a term expiring at the first annual general meeting of stockholders following the date the Common Stock is first publicly traded (the “IPO Date”), Class II directors shall initially serve for a term expiring at the second annual general meeting of stockholders following the IPO Date and Class III directors shall initially serve for a term expiring at the third annual general meeting of stockholders following the IPO Date. At each succeeding annual general meeting, successors to the class of directors whose term expires at that annual meeting shall be elected for a term expiring at the third succeeding annual meeting of stockholders. If the number of such directors is changed, any increase or decrease shall be apportioned among the classes so as to maintain the number of directors in each class as nearly equal as possible, and any such additional director of any class elected to fill a newly created directorship resulting from an increase in such class shall hold office for a term that shall coincide with the remaining term of that class, but in no case shall a decrease in the number of directors remove or shorten the term of any incumbent director. Each director shall hold office until the annual meeting at which his or her term expires and until his or her successor shall be elected and qualified, subject, however, to such director’s earlier death, resignation, retirement, removal or disqualification. The Board is authorized to assign members of the Board already in office to their respective class.
Section 5.04 Quorum. Notwithstanding anything to the contrary set forth in this Certificate, the Bylaws or applicable law, but in addition to any requirements set forth in this Certificate, the Bylaws and applicable law, if the Voting Group owns at least 9% of the outstanding Common Stock of the Corporation and there is at least one member of the Board who is a Voting Group Designee (as defined in the Stockholders’ Agreement), a quorum for the transaction of business at any meeting of the Board shall include at least one Voting Group Designee unless each Voting Group Designee provides notice in writing or by electronic transmission to the Corporation waiving his or her right to be included in the quorum at such meeting. Notwithstanding anything to the contrary set forth herein, but in addition to any other vote required by this Certificate, the Bylaws or applicable law, at any time that the Voting Group owns at least 9% of the outstanding Common Stock of the Corporation, the Corporation shall not (directly or indirectly, by merger, consolidation or otherwise) amend, alter or repeal this Section 5.04, or adopt any provision inconsistent herewith, without the prior written consent of the Voting Group.
Section 5.05 Vacancies; Newly Created Directorships. Except as otherwise provided by this Certificate, and subject to the terms of the Stockholders’ Agreement, any vacancy resulting from the death, resignation, removal or disqualification of a director or other cause, or any newly created directorship in the Board, shall be filled only by an affirmative vote of a majority of the directors then in office, although less than a quorum, or by the sole remaining director, and shall not be filled by the stockholders of the Corporation; provided, that, (i) for so long as the Voting Group owns, at least 9% of the outstanding Common Stock of the Corporation, any vacancy resulting from the death, resignation, removal, disqualification or other cause in respect of any Voting Group Designee, including the failure of any Voting Group Designee to be elected, shall be filled only by the Voting Group and (ii) for so long as any member of the Voting Group owns at least 5% of the outstanding Common Stock of the Corporation and has the right to nominate a director pursuant to Section 3.1(b) of the Stockholders Agreement, any vacancy resulting from the death, resignation, removal, disqualification or other cause in respect of any Member Designee, including the failure of any Member Designee to be elected, shall be filled only by such member of the Voting Group. Except as otherwise provided by this Certificate, a director elected to fill a vacancy or newly created directorship shall hold office until the annual meeting of stockholders for the election of directors of the class to which he or she has been appointed and until his or her successor has been duly elected and qualified, subject, however, to such director’s earlier death, resignation, retirement, removal or disqualification.
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Section 5.06 Removal of Directors. Except as otherwise provided by law, the Stockholders’ Agreement or this Certificate, directors may be removed only for cause by the affirmative vote of the holders of a majority of the voting power of the outstanding shares of the stock of the Corporation entitled to vote thereon, voting together as a single class.
Section 5.07 Voting Rights of Preferred Stock. Notwithstanding the foregoing, whenever the holders of any one or more series of Preferred Stock shall have the right, voting separately as a series or separately as a class with one or more such other series of Preferred Stock, to elect directors, the election, term of office, removal, filling of vacancies (including filling any newly created directorships) any and other features of such directorships shall be governed by the terms of the other provisions of this Certificate (including any Preferred Stock Certificate of Designation). Notwithstanding anything herein to the contrary, during any period when the holders of any series of Preferred Stock have the right to elect additional directors, then upon commencement and for the duration of the period during which such right continues: (i) the then otherwise total number of directors of the Corporation shall automatically be increased by such specified number of directors, and the holders of such Preferred Stock shall be entitled to elect the additional directors so provided for or fixed pursuant to such provisions, and (ii) each such additional director shall serve until such director’s successor shall have been duly elected and qualified, or until such director’s right to hold such office terminates pursuant to such provisions, whichever occurs earlier, subject to his or her earlier death, resignation, retirement, removal or disqualification. Except as otherwise provided by the Board in the resolution or resolutions establishing such series, whenever the holders of any series of Preferred Stock having such right to elect additional directors are divested of such right pursuant to the provisions of such stock, the terms of office of all such additional directors elected by the holders of such stock, or elected to fill any vacancies resulting from the death, resignation, retirement, removal or disqualification of such additional directors, shall forthwith terminate, and the total authorized number of directors of the Corporation shall be reduced accordingly.
ARTICLE VI
In furtherance and not in limitation of the rights, powers, privileges and discretionary authority granted or conferred by the DGCL or other statutes or laws of the State of Delaware, the Board is expressly authorized to make, alter, amend or repeal the bylaws of the Corporation (as the same may be amended and/or restated from time to time, the “Bylaws”), without any action on the part of the stockholders.
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ARTICLE VII
Except as otherwise required by law, and subject to the rights of the holders of any series of Preferred Stock, special meetings of the stockholders of the Corporation may be called only by (i) the Chairperson of the Board, at any time, (ii) the Secretary of the Corporation at the direction of a majority of the directors then in office, at any time, or (iii) until such time as The Yucaipa Companies LLC and its Affiliates (as such term is defined in Section 11.06 below (collectively, “Yucaipa”) ceases to beneficially own at least 50.1% of the outstanding shares of Common Stock (the “Trigger Event”), the Secretary of the Corporation at the written request of the holders of a majority of the voting power of the then outstanding Common Stock, and special meetings may not be called by any other person or persons. Business transacted at any special meeting of stockholders shall be limited to the purpose or purposes stated in the notice.
ARTICLE VIII
To the fullest extent permitted by the DGCL, as it now exists or may hereafter be amended, a director of the Corporation shall not be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty owed to the Corporation or its stockholders. Any repeal or amendment or modification of this Article VIII (including by changes in applicable law), or the adoption of any provision of this Certificate inconsistent with this Article VIII, shall, to the extent permitted by applicable law, be prospective only (except to the extent such amendment or change in applicable law permits the Corporation to provide a broader limitation on a retroactive basis than permitted prior thereto), and shall not adversely affect any limitation on the personal liability of any director of the Corporation with respect to acts or omissions occurring prior to the time of such repeal or amendment or modification or adoption of such inconsistent provision. If any provision of the DGCL is amended to authorize corporate action further eliminating or limiting the personal liability of directors, then the liability of directors shall be eliminated or limited to the fullest extent permitted by the DGCL, as so amended.
ARTICLE IX
Subject to the rights of the holders of one or more series of Preferred Stock then outstanding to act by written consent as provided in any Preferred Stock Certificate of Designation, any action required or permitted to be taken by stockholders must be effected at a duly called annual or special meeting of stockholders; provided, that prior to the Trigger Event, any action required or permitted to be taken at any annual or special meeting of stockholders of the Corporation may be taken without a meeting, without prior notice and without a vote, if a consent or consents in writing, setting forth the action so taken, is signed by or on behalf of the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted and shall be delivered to the Corporation in accordance with the DGCL.
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ARTICLE X
Section 10.01 Indemnification. Each person who was or is made a party or is threatened to be made a party to or is otherwise involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative (hereinafter a “Proceeding”), by reason of the fact that he or she or a person of whom he or she is the legal representative is or was, at any time during which this Certificate is in effect (whether or not such person continues to serve in such capacity at the time any indemnification or payment of expenses pursuant hereto is sought or at the time any proceeding relating thereto exists or is brought), a director or officer of the Corporation or is or was at any such time serving at the request of the Corporation as a director, officer, trustee, employee or agent of another corporation or of a partnership, joint venture, trust or other enterprise, including service with respect to employee benefit plans maintained or sponsored by the Corporation (hereinafter, an “Indemnitee”), whether the basis of such Proceeding is alleged action in an official capacity as a director, officer, trustee, employee or agent or in any other capacity while serving as a director, officer, trustee, employee or agent, shall be (and shall be deemed to have a contractual right to be) indemnified and held harmless by the Corporation (and any successor of the Corporation by merger or otherwise) to the fullest extent permitted by the DGCL as the same exists or may hereafter be amended or modified from time to time (but, in the case of any such amendment or modification, only to the extent that such amendment or modification permits the Corporation to provide greater indemnification rights than said law permitted the Corporation to provide prior to such amendment or modification), against all expense, liability and loss (including reasonably incurred attorneys’ fees, judgments, fines, excise taxes or penalties arising under the Employee Retirement Income Security Act of 1974 and amounts paid or to be paid in settlement) incurred or suffered by such person in connection therewith and such indemnification shall continue as to a person who has ceased to be a director, officer, trustee, employee or agent and shall inure to the benefit of his or her heirs, executors and administrators; provided, however, that except as provided in Section 10.04 of this Article X, the Corporation shall indemnify any such person seeking indemnification in connection with a Proceeding (or part thereof) initiated by such person only if such Proceeding (or part thereof) was authorized in the first instance by the Board.
Section 10.02 Advancement of Expenses. The right to indemnification conferred upon Indemnitees in this Article X shall include the right, without the need for any action by the Board, to be paid by the Corporation (and any successor of the Corporation by merger or otherwise) the expenses incurred in defending any such Proceeding in advance of its final disposition, such advances to be paid by the Corporation within twenty (20) days after the receipt by the Corporation of a statement or statements from the claimant requesting such advance or advances from time to time; provided, however, the payment of such expenses incurred by a director or officer in his or her capacity as a director or officer (and not in any other capacity in which service was or is rendered by such person while a director or officer, including, without limitation, service to an employee benefit plan) shall be made only upon delivery to the Corporation of an undertaking by or on behalf of such director or officer to repay all amounts so advanced if it shall ultimately be determined by final judicial decision from which there is no further right of appeal that such director or officer is not entitled to be indemnified for such expenses under this Article X or otherwise.
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Section 10.03 Nature of Rights; Other Sources. The rights conferred upon Indemnitees in this Article X shall be contract rights between the Corporation and each Indemnitee to whom such rights are extended that vest at the commencement of such person’s service to or at the request of the Corporation and all such rights shall continue as to an Indemnitee who has ceased to be a director or officer of the Corporation or ceased to serve at the Corporation’s request as a director, officer, trustee, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, as described herein, and shall inure to the benefit of the Indemnitee’s heirs, executors and administrators. The Corporation hereby acknowledges that certain Indemnitees may have certain rights to indemnification, advancement of expenses and/or insurance (other than directors’ and officers’ liability insurance or similar insurance obtained or maintained by or on behalf of the Corporation, its affiliates or any of the foregoing’s respective subsidiaries) from persons or entities other than the Corporation (collectively, the “Other Indemnitors”). The Corporation hereby agrees (i) that it is the indemnitor of first resort of the Indemnitees (i.e., its obligations to an Indemnitee hereunder are primary and any obligation of the Other Indemnitors to advance expenses or to provide indemnification for the same expenses or liabilities incurred by such Indemnitee are secondary), (ii) that it shall be required to advance the full amount of expenses incurred by an Indemnitee and shall be liable for the full amount of all losses, claims, damages, liabilities and expenses (including reasonably incurred attorneys’ fees, judgments, fines, penalties and amounts paid in settlement) to the extent legally permitted and as required by the terms hereof, without regard to any rights an Indemnitee may have against the Other Indemnitors, and (iii) that it irrevocably waives, relinquishes and releases the Other Indemnitors from any and all claims against the Other Indemnitors for contribution, subrogation or any other recovery of any kind in respect thereof. The Corporation further agrees that no advancement or payment by the Other Indemnitors on behalf of an Indemnitee with respect to any claim for which such Indemnitee has sought indemnification from the Corporation hereunder shall affect the foregoing and the Other Indemnitors shall have a right of contribution and/or be subrogated to the extent of such advancement or payment to all of the rights of recovery of such Indemnitee against the Corporation. For the avoidance of doubt, no person or entity providing directors’ or officers’ liability insurance or similar insurance obtained or maintained by or on behalf of the Corporation, any of its affiliates or any of the foregoing’s respective subsidiaries, including any person or entity providing such insurance obtained or maintained as contemplated by Section 10.08, shall be an Other Indemnitor.
Section 10.04 Claims. To obtain indemnification under this Article X, a claimant shall submit to the Corporation a written request, including therein or therewith such documentation and information as is reasonably available to the claimant and is reasonably necessary to determine whether and to what extent the claimant is entitled to indemnification. Upon written request by a claimant for indemnification pursuant to the first sentence of this Section 10.04, a determination, if required by applicable law, with respect to the claimant’s entitlement thereto shall be made as follows: (i) if requested by the claimant, by Independent Counsel (as hereinafter defined), or (ii) if no request is made by the claimant for a determination by Independent Counsel, (a) by a majority vote of Disinterested Directors (as hereinafter defined), even though less than a quorum, (b) if there are no such Disinterested Directors, or if a majority of the Disinterested Directors so directs, by Independent Counsel in a written opinion to the Board, a copy of which shall be delivered to the claimant, or (c) if a majority of Disinterested Directors so directs, by a majority of the stockholders of the Corporation. In the event the determination of entitlement to indemnification is to be made by Independent Counsel, the Independent Counsel shall be selected by the Board. If it is so determined that the claimant is entitled to indemnification, payment to the claimant shall be made within ten (10) days after such determination.
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Section 10.05 Enforcement. If a claim under Section 10.01 of this Article X is not paid in full by the Corporation within sixty (60) days after a written claim pursuant to Section 10.04 of this Article X has been received by the Corporation, or if a claim under Section 10.02 of this Article X is not paid in full by the Corporation within twenty (20) days after a written claim therefor has been made, the claimant may at any time thereafter bring suit against the Corporation to recover the unpaid amount of the claim and, if successful in whole or in part, the claimant shall be entitled to be paid also the expense of prosecuting such claim to the fullest extent permitted by law. It shall be a defense to any such action that in the case of a claim for indemnification, the claimant has not met the standard of conduct which makes it permissible under the DGCL for the Corporation to indemnify the claimant for the amount claimed. Neither the failure of the Corporation (including its Board, Disinterested Directors, Independent Counsel or stockholders) to have made a determination prior to the commencement of such action that indemnification of the claimant is proper in the circumstances because he or she has met the applicable standard of conduct set forth in the DGCL, nor an actual determination by the Corporation (including its Board, Disinterested Directors, Independent Counsel or stockholders) that the claimant has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that the claimant has not met the applicable standard of conduct.
Section 10.06 Procedures. If a determination shall have been made pursuant to Section 10.04 of this Article X that the claimant is entitled to indemnification, the Corporation shall be bound by such determination in any judicial proceeding commenced pursuant to Section 10.05 of this Article X. The Corporation shall be precluded from asserting in any judicial proceeding commenced pursuant to Section 10.05 of this Article X that the procedures and presumptions of this Article X are not valid, binding and enforceable and shall stipulate in such proceeding that the Corporation is bound by all the provisions of this Article X.
Section 10.07 Non-Exclusive Rights. The right to indemnification and the payment of expenses incurred in defending a Proceeding in advance of its final disposition conferred in this Article X: (i) shall not be exclusive of any other right which any person may have or hereafter acquire under any statute, provision of this Certificate, Bylaws, agreement, vote of stockholders or Disinterested Directors or otherwise and (ii) cannot be terminated by the Corporation, the Board or the stockholders of the Corporation with respect to any act or omission that is the subject of the Proceeding for which indemnification or advancement of expenses is sought prior to the date of such termination. Any amendment, modification, alteration or repeal of this Article X (by merger, consolidation or otherwise) that in any way diminishes, limits, restricts, adversely affects or eliminates any right of an Indemnitee or his or her successors to indemnification, advancement of expenses or otherwise shall be prospective only and shall not, without the written consent of the Indemnitee, in any way diminish, limit, restrict, adversely affect or eliminate any such right with respect to any actual or alleged state of facts, occurrence, action or omission then or previously existing, or any action, suit or proceeding previously or thereafter brought or threatened based in whole or in part upon any such actual or alleged state of facts, occurrence, action or omission.
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Section 10.08 Insurance. The Corporation may maintain insurance, at its expense, to protect itself and any director, officer, employee or agent of the Corporation or another corporation, partnership, joint venture, trust or other enterprise, against any expense, liability or loss, whether or not the Corporation would have the power to indemnify such person against such expense, liability or loss under the DGCL.
Section 10.09 Additional Rights. The Board may grant rights to indemnification, and rights to be paid by the Corporation the expenses incurred in connection with any Proceeding in advance of its final disposition, to any current or former employee or agent of the Corporation to the fullest extent of the provisions of this Article X with respect to the indemnification and advancement of expenses of current or former directors and officers of the Corporation.
Section 10.10 Severability. If any provision or provisions of this Article X shall be held to be invalid, illegal or unenforceable for any reason whatsoever: (i) the validity, legality and enforceability of the remaining provisions of this Article X (including, without limitation, each portion of any Section of this Article X containing any such provision held to be invalid, illegal or unenforceable, that is not itself held to be invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby; and (ii) to the fullest extent possible, the provisions of this Article X (including, without limitation, each such portion of any Section of this Article X containing any such provision held to be invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested by the provision held invalid, illegal or unenforceable.
Section 10.11 Definitions; Construction. For purposes of this Article X: “Disinterested Director” means a director of the Corporation who is not and was not a party to the Proceeding in respect of which indemnification is sought by the claimant; and “Independent Counsel” means a law firm, a member of a law firm, or an independent practitioner, that is experienced in matters of corporate law and shall include any person who, under the applicable standards of professional conduct then prevailing, would not have a conflict of interest in representing either the Corporation or the claimant in an action to determine the claimant’s rights under this Article X. Any reference to an officer of the Corporation in this Article X shall be deemed to refer exclusively to the officers appointed as such pursuant to the Bylaws by the Board or by an officer to whom the Board has delegated the power to appoint officers, and any reference to an officer of any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise shall be deemed to refer exclusively to an officer appointed by the board of directors (or equivalent governing body) of such other entity pursuant to the certificate of incorporation and bylaws (or equivalent organizational documents) of such other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise. The fact that any person who is or was an employee of the Corporation or an employee of any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise has been given or has used the title of “vice president” or any other title that could be construed to suggest or imply that such person is or may be an officer of the Corporation or of such other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise shall not result in such person being constituted as, or being deemed to be, an officer of the Corporation or of such other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise for purposes of this Article X.
Section 10.12 Notices. Any notice, request or other communication required or permitted to be given to the Corporation under this Article X shall be in writing and either delivered in person or sent by telecopy, fax, email, overnight mail or courier service, or certified or registered mail, postage prepaid, return receipt requested, to the Secretary of the Corporation and shall be effective only upon receipt by the Secretary.
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ARTICLE XI
Section 11.01 Recognition of Corporate Opportunities. In recognition and anticipation that (i) certain directors, officers, principals, partners, members, managers, employees, agents and/or other representatives of Yucaipa or its respective Affiliates (as defined below) may serve as directors, officers or agents of the Corporation and its Affiliates, and (ii) Yucaipa or its respective Affiliates may now engage and may continue to engage in the same or similar activities or related lines of business as those in which the Corporation and Affiliates, directly or indirectly, may engage and/or other business activities that overlap with or compete with those in which the Corporation and its Affiliates, directly or indirectly, may engage, the provisions of this Article XI are set forth to regulate and define the conduct of certain affairs of the Corporation and its Affiliates with respect to certain classes or categories of business opportunities as they may involve Yucaipa or its respective Affiliates and any person or entity who, while a stockholder, director, officer or agent of the Corporation or any of its Affiliates, is a director, officer, principal, partner, member, manager, employee, agent and/or other representative of Yucaipa or its Affiliates (each, an “Identified Person”), on the one hand, and the powers, rights, duties and liabilities of the Corporation and its Affiliates and its and their respective stockholders, directors, officers, and agents in connection therewith, on the other. To the fullest extent permitted by law (including, without limitation, the DGCL), and notwithstanding any other duty (contractual, fiduciary or otherwise, whether at law or in equity), each Identified Person (i) shall have the right to, directly or indirectly, engage in and possess interests in other business ventures of every type and description, including those engaged in the same or similar business activities or lines of business as the Corporation or any of its Affiliates or deemed to be competing with the Corporation or any of its Affiliates, on its own account, or in partnership with, or as a direct or indirect equity holder, controlling person, stockholder, director, officer, employee, agent, Affiliate (including any portfolio company), member, financing source, investor, director or indirect manager, general or limited partner or assignee of any other person or entity with no obligation to offer to the Corporation or its subsidiaries or other Affiliates the right to participate therein and (ii) shall have the right to invest in, or provide services to, any person that is engaged in the same or similar business activities as the Corporation or its Affiliates or directly or indirectly competes with the Corporation or any of its Affiliates.
Section 11.02 Competitive Opportunities. In the event that any Identified Person acquires knowledge of a potential transaction or matter which may be an investment, corporate or business opportunity or prospective economic or competitive advantage in which the Corporation or its Affiliates could have an interest or expectancy (contractual, equitable or otherwise) (a “Competitive Opportunity”) or otherwise is then exploiting any Competitive Opportunity, to the fullest extent permitted under the DGCL and notwithstanding any other duty existing at law or in equity, the Corporation and its Affiliates will have no interest in, and no expectation (contractual, equitable or otherwise) that such Competitive Opportunity be offered to it. To the fullest extent permitted by law, any such interest or expectation (contractual, equitable or otherwise) is hereby renounced so that such Identified Person shall (i) have no duty to communicate or present such Competitive Opportunity to the Corporation or its Affiliates, (ii) have the right to either hold any such Competitive Opportunity for such Identified Person’s own account and benefit or the account of the former, current or future direct or indirect equity holders, controlling persons, stockholders, directors, officers, employees, agents, Affiliates, members, financing sources, investors, direct or indirect managers, general or limited partners or assignees of any Identified Person or to direct, recommend, assign or otherwise transfer such Competitive Opportunity to persons or entities other than the Corporation or any of its subsidiaries, Affiliates or direct or indirect equity holders and (iii) notwithstanding any provision in this Certificate to the contrary, not be obligated or liable to the Corporation, any stockholder, director or officer of the Corporation or any other person or entity by reason of the fact that such Identified Person, directly or indirectly, took any of the actions noted in the immediately preceding clause (ii), pursued or acquired such Competitive Opportunity for itself or any other person or entity or failed to communicate or present such Competitive Opportunity to the Corporation or its Affiliates.
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Section 11.03 Acknowledgement. Any person or entity purchasing or otherwise acquiring or holding any interest in any shares of capital stock of the Corporation or any other interest in the Corporation shall be deemed to have notice of and to have consented to the provisions of this Article XI.
Section 11.04 Interpretation; Duties. In the event of a conflict or other inconsistency between this Article XI and any other Article or provision of this Certificate, this Article XI shall prevail under all circumstances. Notwithstanding anything to the contrary herein, under no circumstances shall the provisions of this Article XI (other than this Section 11.04 of this Article XI) apply to (or result in or be deemed to result in a limitation or elimination of any duty (contractual, fiduciary or otherwise, whether at law or in equity)) owed by any employee of the Corporation or any of its subsidiaries, irrespective of whether such employee otherwise would be an Identified Person, and any Competitive Opportunity waived or renounced by any person or entity pursuant to such other provisions of this Article XI shall be expressly reserved and maintained by such person or entity, as applicable (and shall not be waived or renounced) as to any such employee.
Section 11.05 Section 122(17) of the DGCL. For the avoidance of doubt, subject to Section 11.04 of this Article XI, this Article XI is intended to constitute, with respect to the Identified Persons, a disclaimer and renunciation, to the fullest extent permitted under Section 122(17) of the DGCL, of any right of the Corporation or any of its Affiliates with respect to the matters set forth in this Article XI, and this Article XI shall be construed to effect such disclaimer and renunciation to the fullest extent permitted under the DGCL.
Section 11.06 Definitions. Solely for purposes of this Article XI, (A) “Affiliate” shall mean (a) with respect to Yucaipa, any person or entity that, directly or indirectly, is controlled by a Yucaipa entity, controls a Yucaipa entity, or is under common control with a Yucaipa entity, excluding (i) the Corporation, and (ii) any entity that is controlled by the Corporation (including its direct and indirect subsidiaries), and (b) in respect of the Corporation, any person or entity that, directly or indirectly, is controlled by the Corporation, and (B) “Yucaipa” shall mean the The Yucaipa Companies LLC.
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ARTICLE XII
Unless the Corporation consents in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware shall, to the fullest extent permitted by law, be the sole and exclusive forum for (a) any derivative action or proceeding brought on behalf of the Corporation, (b) any action asserting a claim of breach of a fiduciary duty owed by any director, officer, other employee or stockholder of the Corporation, (c) any action asserting a claim arising pursuant to any provision of the DGCL or of this Certificate or the Bylaws or as to which the DGCL confers jurisdiction on the Court of Chancery of the State of Delaware, or (d) any action asserting a claim governed by the internal affairs doctrine. Notwithstanding anything to the contrary herein, but subject to the foregoing provisions of this Article XII, the federal district courts of the United States shall be the exclusive forum for the resolution of any action, suit or proceeding asserting a cause of action arising under the Securities Act of 1933, as amended. The provisions of this Article XII do not apply to claims arising under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Any person or entity purchasing or otherwise acquiring any interest in shares of capital stock of the Corporation shall be deemed to have notice of and, to the fullest extent permitted by law, to have consented to the provisions of this Article XII.
ARTICLE XIII
Section 13.01 Section 203 of the DGCL. The Corporation hereby expressly elects not to be governed by Section 203 of the DGCL.
Section 13.02 Interested Stockholders. Notwithstanding the foregoing, the Corporation shall not engage in any business combination (as defined below), at any point in time at which the Common Stock is registered under Section 12(b) or 12(g) of the Exchange Act, with any interested stockholder (as defined below) for a period of three (3) years following the time that such stockholder became an interested stockholder, unless:
(a) prior to such time, the Board approved either the business combination or the transaction which resulted in the stockholder becoming an interested stockholder, or
(b) upon consummation of the transaction which resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock (as defined below) of the Corporation outstanding at the time the transaction commenced, excluding for purposes of determining the voting stock outstanding (but not the outstanding voting stock owned by the interested stockholder) those shares owned (a) by persons who are directors and also officers and (b) employee stock plans in which employee participants do not have the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer, or
(c) at or subsequent to such time, the business combination is approved by the Board and authorized at an annual or special meeting of stockholders, and not by written consent, by the affirmative vote of at least 66 2/3% of the outstanding voting stock of the Corporation which is not owned by the interested stockholder.
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Section 13.03 Certain Exceptions. The restrictions contained in this Article XIII shall not apply if:
(a) a stockholder becomes an interested stockholder inadvertently and (i) as soon as practicable divests itself of ownership of sufficient shares so that the stockholder ceases to be an interested stockholder and (ii) would not, at any time, within the three-year period immediately prior to the business combination between the Corporation and such stockholder, have been an interested stockholder but for the inadvertent acquisition of ownership, or
(b) the business combination is proposed prior to the consummation or abandonment of and subsequent to the earlier of the public announcement or the notice required hereunder of a proposed transaction which (i) constitutes one of the transactions described in the second sentence of this Section 13.03(b), (ii) is with or by a person who either was not an interested stockholder during the previous three years or who became an interested stockholder with the approval of the Board and (iii) is approved or not opposed by a majority of the directors then in office (but not less than one) who were directors prior to any person becoming an interested stockholder during the previous three years or were recommended for election or elected to succeed such directors by a majority of such directors. The proposed transactions referred to in the preceding sentence are limited to (x) a merger or consolidation of the Corporation (except for a merger in respect of which, pursuant to Section 251(f) of the DGCL, no vote of the stockholders of the Corporation is required), (y) a sale, lease, exchange, mortgage, whether as part of a dissolution or otherwise, of assets of the Corporation or of any direct or indirect majority-owned subsidiary of the Corporation (other than to any direct or indirect wholly owned subsidiary or to the Corporation) having an aggregate market value equal to fifty percent or more of either that aggregate market value of all the assets of the Corporation determined on a consolidated basis or the aggregate market value of all the outstanding stock of the Corporation or (z) a proposed tender or exchange offer for fifty percent or more of the outstanding voting stock of the Corporation. The Corporation shall give not less than 20 days’ notice to all interested stockholders prior to the consummation of any of the transactions described in clause (x) or (y) of the second sentence of this Section 13.03.
Section 13.04 Definitions. For purposes of this Article XIII only, references to:
(a) “affiliate” means a person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, another person.
(b) “associate”, when used to indicate a relationship with any person, means: (i) any corporation, partnership, unincorporated association or other entity of which such person is a director, officer or partner or is, directly or indirectly, the owner of 20% or more of any class of voting stock; (ii) any trust or other estate in which such person has at least a 20% beneficial interest or as to which such person serves as trustee or in a similar fiduciary capacity; and (iii) any relative or spouse of such person, or any relative of such spouse, who has the same residence as such person.
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(c) “business combination”, when used in reference to the Corporation and any interested stockholder of the Corporation, means:
(i) any merger or consolidation of the Corporation or any direct or indirect majority-owned subsidiary of the Corporation (a) with the interested stockholder, or (b) with any other corporation, partnership, unincorporated association or other entity if the merger or consolidation is caused by the interested stockholder and as a result of such merger or consolidation Section 13.02 of this Article XIII is not applicable to the surviving entity;
(ii) any sale, lease, exchange, mortgage, pledge, transfer or other disposition (in one transaction or a series of transactions), except proportionately as a stockholder of the Corporation, to or with the interested stockholder, whether as part of a dissolution or otherwise, of assets of the Corporation or of any direct or indirect majority-owned subsidiary of the Corporation which assets have an aggregate market value equal to 10% or more of either the aggregate market value of all the assets of the Corporation determined on a consolidated basis or the aggregate market value of all the outstanding stock of the Corporation;
(iii) any transaction which results in the issuance or transfer by the Corporation or by any direct or indirect majority-owned subsidiary of the Corporation of any stock of the Corporation or of such subsidiary to the interested stockholder, except: (a) pursuant to the exercise, exchange or conversion of securities exercisable for, exchangeable for or convertible into stock of the Corporation or any such subsidiary which securities were outstanding prior to the time that the interested stockholder became such; (b) pursuant to a merger under Section 251(g) of the DGCL; (c) pursuant to a dividend or distribution paid or made, or the exercise, exchange or conversion of securities exercisable for, exchangeable for or convertible into stock of the Corporation or any such subsidiary which security is distributed, pro rata to all holders of a class or series of stock of the Corporation subsequent to the time the interested stockholder became such; (d) pursuant to an exchange offer by the Corporation to purchase stock made on the same terms to all holders of said stock; or (e) any issuance or transfer of stock by the Corporation; provided, however, that in no case under items (c)-(e) of this subsection (iii) shall there be an increase in the interested stockholder’s proportionate share of the stock of any class or series of the Corporation or of the voting stock of the Corporation (except as a result of immaterial changes due to fractional share adjustments);
(iv) any transaction involving the Corporation or any direct or indirect majority-owned subsidiary of the Corporation which has the effect, directly or indirectly, of increasing the proportionate share of the stock of any class or series, or securities convertible into the stock of any class or series, of the Corporation or of any such subsidiary which is owned by the interested stockholder, except as a result of immaterial changes due to fractional share adjustments or as a result of any purchase or redemption of any shares of stock not caused, directly or indirectly, by the interested stockholder; or
(v) any receipt by the interested stockholder of the benefit, directly or indirectly (except proportionately as a stockholder of the Corporation), of any loans, advances, guarantees, pledges, or other financial benefits (other than those expressly permitted in subsections (i)-(iv) above) provided by or through the Corporation or any direct or indirect majority-owned subsidiary.
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(d) “control”, including the terms “controlling,” “controlled by” and “under common control with,” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting stock, by contract, or otherwise. A person who is the owner of 20% or more of the outstanding voting stock of a corporation, partnership, unincorporated association or other entity shall be presumed to have control of such entity, in the absence of proof by a preponderance of the evidence to the contrary. Notwithstanding the foregoing, a presumption of control shall not apply where such person holds voting stock, in good faith and not for the purpose of circumventing this Section, as an agent, bank, broker, nominee, custodian or trustee for one or more owners who do not individually or as a group have control of such entity.
(e) “interested stockholder” means any person (other than the Corporation or any direct or indirect majority-owned subsidiary of the Corporation) that (i) is the owner of 15% or more of the outstanding voting stock of the Corporation, or (ii) is an affiliate or associate of the Corporation and was the owner of 15% or more of the outstanding voting stock of the Corporation at any time within the three (3) year period immediately prior to the date on which it is sought to be determined whether such person is an interested stockholder; and the affiliates and associates of such person; but “interested stockholder” shall not include any person whose ownership of shares in excess of the 15% limitation set forth herein is the result of any action taken solely by the Corporation, provided that such person shall be an interested stockholder if thereafter such person acquires additional shares of voting stock of the Corporation, except as a result of further corporate action not caused, directly or indirectly, by such person. For the purpose of determining whether a person is an interested stockholder, the voting stock of the Corporation deemed to be outstanding shall include stock deemed to be owned by the person through application of the definition of “owner” below but shall not include any other unissued stock of the Corporation which may be issuable pursuant to any agreement, arrangement or understanding, or upon exercise of conversion rights, warrants or options, or otherwise.
(f) “owner,” including the terms “own” and “owned,” when used with respect to any stock, means a person that individually or with or through any of its affiliates or associates:
(g) beneficially owns such stock, directly or indirectly; or
(i) has (A) the right to acquire such stock (whether such right is exercisable immediately or only after the passage of time) pursuant to any agreement, arrangement or understanding, or upon the exercise of conversion rights, exchange rights, warrants or options, or otherwise; provided, however, that a person shall not be deemed the owner of stock tendered pursuant to a tender or exchange offer made by such person or any of such person’s affiliates or associates until such tendered stock is accepted for purchase or exchange; or (B) the right to vote such stock pursuant to any agreement, arrangement or understanding; provided, however, that a person shall not be deemed the owner of any stock because of such person’s right to vote such stock if the agreement, arrangement or understanding to vote such stock arises solely from a revocable proxy or consent given in response to a proxy or consent solicitation made to ten (10) or more persons; or
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(ii) has any agreement, arrangement or understanding for the purpose of acquiring, holding, voting (except voting pursuant to a revocable proxy or consent as described in item (B) of subsection (i) above), or disposing of such stock with any other person that beneficially owns, or whose affiliates or associates beneficially own, directly or indirectly, such stock.
(h) “person” means any individual, corporation, partnership, unincorporated association or other entity.
(i) “stock” means, with respect to any corporation, capital stock and, with respect to any other entity, any equity interest.
(j) “voting stock” means stock of any class or series entitled to vote generally in the election of directors. Every reference to a percentage of voting stock shall refer to such percentages of the votes of such voting stock.
ARTICLE XIV
If any provision or provisions of this Certificate shall be held to be invalid, illegal or unenforceable as applied to any circumstance for any reason whatsoever: (i) the validity, legality and enforceability of such provisions in any other circumstance and of the remaining provisions of this Certificate (including, without limitation, each portion of any Article (or section or subsection thereof) of this Certificate containing any such provision held to be invalid, illegal or unenforceable that is not itself held to be invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby and (ii) to the fullest extent possible, the provisions of this Certificate (including, without limitation, each such portion of any Article (or any section or subsection thereof) of this Certificate containing any such provision held to be invalid, illegal or unenforceable) shall be construed so as to permit the Corporation to protect its directors, officers, employees and agents from personal liability in respect of their good faith service to or for the benefit of the Corporation to the fullest extent permitted by law.
ARTICLE XV
The Corporation reserves the right to amend, alter, change or repeal any provision contained in this Certificate, in the manner now or hereafter prescribed by this Certificate and the DGCL, and all rights, preferences and privileges herein conferred upon stockholders by and pursuant to this Certificate in its current form or as hereafter amended are granted subject to the right reserved in this Article XV. Notwithstanding the foregoing, from and after the occurrence of the Trigger Event, notwithstanding any other provisions of this Certificate or any provision of law which might otherwise permit a lesser vote or no vote, but in addition to greater or additional vote or consent required hereunder (including any vote of the holders of any particular class or classes or series of stock required by law or by this Certificate), the affirmative vote of the holders of at least 66 2/3% of the voting power of the outstanding shares of stock entitled to vote thereon, voting together as a single class, shall be required to alter, amend or repeal Section 4.03 of Article IV, Articles V, VI, VII, VIII, IX, X, XI, XII and XIII, and this Article XV.
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From and after the occurrence of the Trigger Event, notwithstanding any other provisions of this Certificate or any provision of law which might otherwise permit a lesser vote or no vote, but in addition to any additional or greater vote or consent required hereunder (including any vote of the holders of any particular class or classes or series of stock required by law or by this Certificate), the affirmative vote of the holders of at least 66 2/3% of the voting power of the outstanding shares of stock entitled to vote thereon, voting together as a single class, shall be required in order for the stockholders of the Corporation to alter, amend or repeal, in whole or in part, any provision of the Bylaws or to adopt any provision inconsistent therewith.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the Corporation has caused this Certificate to be signed by a duly authorized officer as of this 19th date of July, 2021.
| MEMBERSHIP COLLECTIVE GROUP INC. | ||
| By: | /s/ Humera Afzal | |
| Name: | Humera Afzal | |
| Title: | Chief Financial Officer | |
MEMBERSHIP COLLECTIVE GROUP INC. — CERTIFICATE OF INCORPORATION
Exhibit 3.2
AMENDED AND RESTATED BYLAWS
OF
MEMBERSHIP COLLECTIVE GROUP INC.
(Adopted as of July 19, 2021)
ARTICLE I
OFFICES
Section 1.01 Registered Office. The address of the registered office of Membership Collective Group Inc. (hereinafter the “Corporation”) in the State of Delaware, and the name of its registered agent at such address, shall be as set forth in the Amended and Restated Certificate of Incorporation of the Corporation, as the same may be amended and/or restated from time to time (the “Certificate of Incorporation”).
Section 1.02 Other Offices. The Corporation may have a principal or other office or offices at such other place or places, either within or without the State of Delaware, as the Board of Directors may from time to time determine or as shall be necessary or appropriate for the conduct of the business of the Corporation.
ARTICLE II
STOCKHOLDERS
Section 2.01 Place of Meetings. All meetings of stockholders shall be held at the principal office of the Corporation or at such other place, if any, within or without the State of Delaware, or solely by means of remote communication in accordance with Section 2.13 of these Bylaws and applicable law, as may be designated by the Board of Directors and stated in the notice of the meeting.
Section 2.02 Annual Meetings. If required by applicable law, an annual meeting of stockholders for the election of directors and the transaction of such other business as may properly be brought before the meeting in accordance with Section 2.07 of these Bylaws shall be held on such day and at such hour, as shall be fixed by the Board of Directors and designated in the notice of meeting. The Corporation may postpone, adjourn, reschedule or cancel any previously scheduled annual meeting of stockholders.
Section 2.03 Special Meetings. Special meetings of stockholders may only be called in the manner provided in the Certificate of Incorporation. Special meetings of stockholders shall be held on such day and at such hour, as shall be designated in the notice of meeting. Business transacted at any special meeting of stockholders shall be limited to the purpose or purposes stated in the notice of meeting. Except in the case of a special meeting of stockholders called at the request of the stockholders pursuant to the express terms of the Certificate of Incorporation, the Corporation may postpone, adjourn, reschedule or cancel any previously scheduled special meeting of stockholders.
Section 2.04 Notice of Meetings. Except as otherwise provided by the Certificate of Incorporation or applicable law, notice, stating the place, if any, date and time of the meeting, the means of remote communication, if any, by which stockholders and proxyholders not physically present may be deemed to be present and vote at such meeting, the record date for determining the stockholders entitled to vote at the meeting, if such date is different from the record date for determining stockholders entitled to notice of the meeting, and, in the case of a special meeting, the purpose or purposes for which the meeting is called, shall be given not less than ten (10) days nor more than sixty (60) days before the date on which the meeting is to be held, to each stockholder entitled to vote at such meeting as of the record date for determining the stockholders entitled to notice of the meeting. Notice may be given either personally, by courier service, by electronic mail, by other form of electronic transmission in the manner provided in Section 232 of the General Corporation Law of the State of Delaware or by mail. If mailed, such notice shall be deemed to be delivered when deposited in the United States mail with postage thereon prepaid, addressed to the stockholder at such stockholder’s address as it appears on the stock transfer books of the Corporation. If delivered by courier service, such notice shall be deemed to be given at the earlier of when the notice is received or left at such stockholder’s address. If notice is given by electronic mail or other electronic transmission, such notice shall be deemed to be given at the times provided in the General Corporation Law of the State of Delaware. Such further notice shall be given as may be required by law.
Section 2.05 Quorum; Adjournment of Meetings. Except as otherwise provided by law or by the Certificate of Incorporation, the holders of a majority in voting power of the outstanding capital stock entitled to vote at the meeting, represented in person or by proxy, shall constitute a quorum at a meeting of stockholders, except that when specified business is to be voted on by a class or series or classes or series of stock voting as a separate class, the holders of a majority in voting power of the shares of such class or series or classes or series shall constitute a quorum of such class or series or classes or series with respect to the vote on such business. The chairperson of the meeting may adjourn the meeting from time to time, whether or not there is such a quorum. No notice of an adjourned meeting need be given except as required by law. At the adjourned meeting, the Corporation may transact any business which might have been transacted at the original meeting. The stockholders present at a duly called meeting at which a quorum is present may continue to transact business until adjournment, notwithstanding the withdrawal of enough stockholders to leave less than a quorum.
Section 2.06 Proxies. Each stockholder entitled to vote at a meeting of stockholders or to express consent to corporate action in writing without a meeting may authorize another person or persons to act for such stockholder by proxy in any manner provided by applicable law, but no such proxy shall be voted or acted upon after three years from its date, unless the proxy provides for a longer period. A proxy shall be irrevocable if it states that it is irrevocable and if, and only as long as, it is coupled with an interest sufficient in law to support an irrevocable power. A stockholder may revoke any proxy which is not irrevocable by attending the meeting and voting in person or by delivering to the Secretary a revocation of the proxy or a new proxy bearing a later date.
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Section 2.07 Notice of Stockholder Business and Nominations.
(a) Annual Meeting of Stockholders.
(i) At any annual meeting of the stockholders, only such nominations of persons for election to the Board of Directors and only other business shall be considered or conducted, as shall have been properly brought before the meeting. For nominations to be properly made at an annual meeting, and proposals of other business to be properly brought before an annual meeting, nominations and proposals of other business must be: (A) pursuant to the Corporation’s notice of meeting (or any supplement thereto) delivered pursuant to Section 2.04 of these Bylaws, (B) by or at the direction of the Board of Directors or any duly authorized committee thereof, (C) by any stockholder of the Corporation who (i) was a stockholder of record at the time of giving of notice provided for in this Bylaw and at the time of the annual meeting, (ii) is entitled to vote at the meeting and (iii) complies with the notice procedures set forth in this Bylaw as to such business or nomination or (D) as provided in the Stockholders Agreement (as defined in the Certificate of Incorporation). Subject to the Stockholders Agreement, paragraph (C) of this Section 2.07(a)(i) shall be the exclusive means for a stockholder to make nominations or submit other business (other than matters properly brought under Rule 14a-8 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and included in the Corporation’s notice of meeting) before an annual meeting of stockholders.
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(ii) Without qualification or limitation, for any nominations or any other business to be properly brought before an annual meeting by a stockholder pursuant to paragraph (a)(i)(C) of this Bylaw, the stockholder must have given timely notice thereof in writing to the Secretary and such other business must otherwise be a proper matter for stockholder action. To be timely, a stockholder’s notice shall be delivered to the Secretary at the principal executive offices of the Corporation not earlier than the close of business on the 120th day and not later than the close of business on the 90th day prior to the first anniversary of the preceding year’s annual meeting (which date shall, for purposes of the Corporation’s first annual meeting of stockholders after its shares of Common Stock are first publicly traded, be deemed to have occurred on July 15, 2021); provided, however, that in the event that the date of the annual meeting is more than 30 days before or more than 60 days after such anniversary date, notice by the stockholder to be timely must be so delivered not earlier than the close of business on the 120th day prior to the date of such annual meeting and not later than the close of business on the 90th day prior to the date of such annual meeting or, if the first public announcement of the date of such annual meeting is less than 100 days prior to the date of such annual meeting, the 10th day following the day on which public announcement of the date of such meeting is first made by the Corporation. In no event shall any adjournment or postponement of an annual meeting or the announcement thereof commence a new time period (or extend any time period) for the giving of a stockholder’s notice as described above. In addition, to be timely, a stockholder’s notice shall further be updated and supplemented, if necessary, so that the information provided or required to be provided in such notice shall be true and correct as of the record date for determining the stockholders entitled to vote at the meeting and as of the date that is ten (10) business days prior to the meeting or any adjournment or postponement thereof, and such update and supplement shall be delivered to the Secretary at the principal executive offices of the Corporation not later than five (5) business days after such record date for the meeting in the case of the update and supplement required to be made as of such record date, and not later than eight (8) business days prior to the date for the meeting, any adjournment or postponement thereof in the case of the update and supplement required to be made as of ten (10) business days prior to the meeting or any adjournment or postponement thereof. To be in proper form, a stockholder’s notice (whether given pursuant to this paragraph (a)(ii) or paragraph (b)) to the Secretary must: (a) set forth, as to the stockholder giving the notice and the beneficial owner, if any, on whose behalf the nomination or proposal is made (i) the name and address of such stockholder, as they appear on the Corporation’s books and records, of such beneficial owner, if any, and of their respective affiliates or associates or others acting in concert therewith, (ii) (A) the class or series and number of shares of capital stock of the Corporation which are, directly or indirectly, owned beneficially and of record by such stockholder, such beneficial owner, and of their respective affiliates or associates or others acting in concert therewith, (B) any option, warrant, convertible security, stock appreciation right, or similar right with an exercise or conversion privilege or a settlement payment or mechanism at a price related to any class or series of shares of the Corporation or with a value derived in whole or in part from the value of any class or series of shares of the Corporation, any derivative or synthetic arrangement having the characteristics of a long position in any class or series of shares of the Corporation, or any contract, derivative, swap or other transaction or series of transactions designed to produce economic benefits and risks that correspond substantially to the ownership of any class or series of shares of the Corporation, including due to the fact that the value of such contract, derivative, swap or other transaction or series of transactions is determined by reference to the price, value or volatility of any class or series of shares of the Corporation, whether or not such instrument, contract or right shall be subject to settlement in the underlying class or series of capital stock of the Corporation or otherwise, through the delivery of cash or other property, or otherwise, and without regard of whether the stockholder of record, the beneficial owner, if any, or any affiliates or associates or others acting in concert therewith, may have entered into transactions that hedge or mitigate the economic effect of such instrument, contract or right, or any other direct or indirect opportunity to profit or share in any profit derived from any increase or decrease in the value of shares of the Corporation (any of the foregoing, a “Derivative Instrument”) directly or indirectly owned beneficially by such stockholder, the beneficial owner, if any, or any affiliates or associates or others acting in concert therewith, (C) any proxy, contract, arrangement, understanding, or relationship pursuant to which such stockholder or beneficial owner has a right to vote any shares of any security of the Corporation, (D) any contract, arrangement, understanding, relationship or otherwise, including any repurchase or similar so-called “stock borrowing” agreement or arrangement, engaged in, directly or indirectly, by such stockholder or beneficial owner, the purpose or effect of which is to mitigate loss to, reduce the economic risk (of ownership or otherwise) of any class or series of the shares of the Corporation by, manage the risk of share price changes for, or increase or decrease the voting power of, such stockholder or beneficial owner with respect to any class or series of the shares of the Corporation, or which provides, directly or indirectly, the opportunity to profit or share in any profit derived from any decrease in the price or value of any security of the Corporation (any of the foregoing, a “Short Interest”), (E) any rights to dividends on the shares of the Corporation owned beneficially by such stockholder or beneficial owner that are separated or separable from the underlying shares of the Corporation, (F) any proportionate interest in shares of the Corporation or Derivative Instruments held, directly or indirectly, by a general or limited partnership in which such stockholder or beneficial owner is a general partner or, directly or indirectly, beneficially owns an interest in a general partner of such general or limited partnership, (G) any performance-related fees (other than an asset-based fee) that such stockholder or beneficial owner is entitled to based on any increase or decrease in the value of shares of the Corporation or Derivative Instruments, if any, as of the date of such notice, including without limitation any such interests
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held by members of such stockholder’s or beneficial owner’s immediate family sharing the same household, (H) any significant equity interests or any Derivative Instruments or Short Interests in any principal competitor of the Corporation held by such stockholder or beneficial owner, and (I) any direct or indirect interest of such stockholder or beneficial owner in any contract with the Corporation, any affiliate of the Corporation or any principal competitor of the Corporation (including, in any such case, any employment agreement, collective bargaining agreement or consulting agreement), and (iii) any other information relating to such stockholder and beneficial owner, if any, that would be required to be disclosed in a proxy statement and form of proxy or other filings required to be made in connection with solicitations of proxies for, as applicable, the proposal and/or for the election of directors in a contested election pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder; (b) if the notice relates to any business other than a nomination of a director or directors that the stockholder proposes to bring before the meeting, set forth (i) a brief description of the business desired to be brought before the meeting, the reasons for conducting such business at the meeting and any material interest of such stockholder and beneficial owner, if any, on whose behalf such proposal is made in such business, (ii) the text of the proposal or business (including the text of any resolutions proposed for consideration, and, in the event that such business includes a proposal to amend the Bylaws, the text of such proposed amendment) and (iii) a description of all agreements, arrangements and understandings between such stockholder and beneficial owner, if any, and any other person or persons (including their names) in connection with the proposal of such business by such stockholder; (c) set forth, as to each person, if any, whom the stockholder proposes to nominate for election or reelection to the Board of Directors (i) all information relating to such person that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors in a contested election pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder, (ii) such person’s written consent to being named in the Corporation’s proxy statement as a nominee and to serving as a director if elected and (iii) a description of all direct and indirect compensation and other material monetary agreements, arrangements and understandings during the past three (3) years, and any other material relationships, between or among such stockholder and beneficial owner, if any, and their respective affiliates and associates, or others acting in concert therewith, on the one hand, and each proposed nominee, and his or her respective affiliates and associates, or others acting in concert therewith, on the other hand, including, without limitation, all information that would be required to be disclosed pursuant to Rule 404 promulgated under Regulation S-K if the stockholder making the nomination and any beneficial owner on whose behalf the nomination is made, if any, or any affiliate or associate thereof or person acting in concert therewith, were the “registrant” for purposes of such rule and the nominee were a director or executive officer of such registrant; and (d) with respect to each nominee for election or reelection to the Board of Directors, include a completed and signed questionnaire, representation and agreement required by Section 2.08 of these Bylaws. The Corporation may require any proposed nominee to furnish such other information as may be required by the Corporation, including, without limitation, such information as may be requested to determine the eligibility of such proposed nominee to serve as an independent director of the Corporation or that could be material to a reasonable stockholder’s understanding of the independence, or lack thereof, of such nominee.
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(iii) Notwithstanding anything in the second sentence of paragraph (a)(ii) of this Bylaw to the contrary, in the event that the number of directors to be elected to the Board of Directors is increased effective after the time period for which nominations would otherwise be due under paragraph (a)(ii) of this Bylaw and there is no public announcement by the Corporation naming all of the nominees for director or specifying the size of the increased Board of Directors at least 100 days prior to the first anniversary of the preceding year’s annual meeting, a stockholder’s notice required by this Bylaw shall also be considered timely, but only with respect to nominees for any new directorships created by such increase, if it shall be delivered to the Secretary at the principal executive offices of the Corporation not later than the close of business on the 10th day following the day on which such public announcement is first made by the Corporation.
(b) Special Meetings of Stockholders. Only such business shall be conducted at a special meeting of stockholders as shall have been brought before the meeting pursuant to the Corporation’s notice of meeting. Nominations of persons for election to the Board of Directors may be made at a special meeting of stockholders at which directors are to be elected pursuant to the Corporation’s notice of meeting (A) by or at the direction of the Board of Directors or any duly authorized committee thereof, (B) provided that the Board of Directors has determined that directors shall be elected at such meeting, by any stockholder of the Corporation who (i) is a stockholder of record at the time of giving of notice provided for in this Bylaw and at the time of the special meeting, (ii) is entitled to vote at the meeting, and (iii) complies with the notice procedures set forth in this Bylaw as to such nomination, or (C) as provided in the Stockholders’ Agreement. The immediately preceding sentence shall be the exclusive means for a stockholder to make nominations before a special meeting of stockholders at which directors are to be elected or appointed. In the event that the Corporation calls a special meeting of stockholders for the purpose of electing one or more directors to the Board of Directors, other than with respect to any nomination made in the manner provided in the Stockholders’ Agreement, any stockholder may nominate a person or persons (as the case may be) for election to such position(s) as specified in the Corporation’s notice of meeting only if the stockholder’s notice required by paragraph (a)(ii) of this Bylaw with respect to any nomination (including the completed and signed questionnaire, representation and agreement required by Section 2.08 of these Bylaws) shall be delivered to the Secretary at the principal executive offices of the Corporation not earlier than the close of business on the 120th day prior to the date of such special meeting and not later than the close of business on the later of the 90th day prior to the date of such special meeting or, if the first public announcement of the date of such special meeting is less than 100 days prior to the date of such special meeting, the 10th day following the day on which the Corporation first makes a public announcement of the date of the special meeting at which directors are to be elected. In no event shall any adjournment or postponement of a special meeting or the announcement thereof commence a new time period (or extend any time period) for the giving of a stockholder’s notice as described in the immediately preceding sentence.
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(c) General.
(i) Only such persons who are nominated in accordance with the procedures set forth in this Bylaw or in the Stockholders’ Agreement shall be eligible to serve as directors and only such business shall be conducted at a meeting of stockholders as shall have been brought before the meeting in accordance with the procedures set forth in this Bylaw. Except as otherwise provided by law, the Certificate of Incorporation or these Bylaws, the chairperson of the meeting shall have the power and duty to determine whether a nomination or any business proposed to be brought before the meeting was made or proposed, as the case may be, in accordance with the procedures set forth in this Bylaw and, if any proposed nomination or business is not in compliance with this Bylaw, to declare that such defective proposal or nomination shall be disregarded; provided, that nothing herein shall limit the power and authority of the Board of Directors to make any such determinations in advance of any meeting of stockholders. Notwithstanding anything herein to the contrary, unless otherwise required by law, if the stockholder (or a qualified representative of the stockholder) does not appear at the annual or special meeting of stockholders of the Corporation to make a nomination or present a proposal of other business, such nomination shall be disregarded and such proposed business shall not be transacted, notwithstanding that proxies in respect of such vote may have been received by the Corporation. For purposes of this Bylaw, to be considered a qualified representative of the stockholder, a person must be a duly authorized officer, manager or partner of such stockholder or authorized by a writing executed by such stockholder or an electronic transmission delivered by such stockholder to act for such stockholder as proxy at the meeting of stockholders and such person must produce such writing or electronic transmission, or a reliable reproduction of the writing or electronic transmission, at the meeting of stockholders.
(ii) For purposes of this Bylaw, “public announcement” shall mean disclosure in a press release reported by a national news service or in a document publicly filed by the Corporation with the Securities and Exchange Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act and the rules and regulations promulgated thereunder.
(iii) Notwithstanding the foregoing provisions of this Bylaw, a stockholder shall also comply with all applicable requirements of the Exchange Act and the rules and regulations thereunder with respect to the matters set forth in this Bylaw; provided, however, that any references in these Bylaws to the Exchange Act or the rules promulgated thereunder are not intended to and shall not limit the requirements applicable to nominations or proposals as to any other business to be considered pursuant to paragraph (a)(i)(C) or paragraph (b) of this Bylaw. Nothing in this Bylaw shall be deemed to affect any rights (i) of stockholders to request inclusion of proposals in the Corporation’s proxy statement pursuant to Rule 14a-8 under the Exchange Act or (ii) of the holders of any series of Preferred Stock if and to the extent provided for under law, the Certificate of Incorporation or these Bylaws. Subject to Rule 14a-8 under the Exchange Act, nothing in these Bylaws shall be construed to permit any stockholder, or give any stockholder the right, to include or have disseminated or described in the Corporation’s proxy statement any nomination of director or directors or any other business proposal.
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(iv) Notwithstanding the foregoing, the nomination of any Voting Group Designee (as defined in the Stockholders’ Agreement) shall not be subject to the provisions of this Section 2.07.
Section 2.08 Submission of Questionnaire, Representation and Agreement. To be eligible to be a nominee for election or reelection as a director of the Corporation and qualified to serve as a director, a person must deliver (such delivery to be made, in the case of a person nominated for election as a director of the Corporation pursuant to paragraph (a)(i)(C) or paragraph (b) of Section 2.07 of these Bylaws, in accordance with the time periods prescribed for delivery of notice under Section 2.07 of these Bylaws) to the Secretary at the principal executive offices of the Corporation a written questionnaire with respect to the background and qualification of such person and the background of any other persons or entities on whose behalf the nomination is being made pursuant to paragraph (a)(i)(C) or paragraph (b) of Section 2.07 of these Bylaws (which questionnaire shall be provided by the Secretary upon written request) and a written representation and agreement (in the form provided by the Secretary upon written request) that such person (A) is not and will not become a party to (1) any agreement, arrangement or understanding with, and has not given any commitment or assurance to, any person or entity as to how such person, if elected as a director of the Corporation, will act or vote on any issue or question (a “Voting Commitment”) that has not been disclosed to the Corporation or (2) any Voting Commitment that could limit or interfere with such person’s ability to comply, if elected as a director of the Corporation, with such person’s fiduciary duties under applicable law, (B) is not and will not become a party to any agreement, arrangement or understanding with any person or entity other than the Corporation with respect to any direct or indirect compensation, reimbursement or indemnification in connection with service or action as a director that has not been disclosed therein and (C) in such person’s individual capacity and on behalf of any person or entity on whose behalf the nomination is being made, would be in compliance, if elected as a director of the Corporation, and will comply with all applicable publicly disclosed corporate governance, conflict of interest, confidentiality and stock ownership and trading policies and guidelines of the Corporation.
Section 2.09 Required Vote. At all meetings of the stockholders at which directors are to be elected and a quorum is present, a plurality of the votes cast by stockholders entitled to vote for the election of such directors shall be sufficient to elect such directors. Except as otherwise provided by applicable law, the Certificate of Incorporation, these Bylaws, the rules or regulations of any stock exchange applicable to the Corporation, or any regulation applicable to the Corporation, its stockholders or its securities (in which case such vote as prescribed by applicable law shall be the applicable vote on the matter), in all matters other than the election of directors, the affirmative vote of the holders of a majority in voting power of the shares present in person or represented by proxy at the meeting and entitled to vote on the matter shall be the act of the stockholders.
Section 2.10 Inspectors of Elections. The Corporation may, and to the extent required by applicable law, in advance of any meeting of stockholders, appoint one or more inspectors of election, which inspector or inspectors may include individuals who serve the Corporation in other capacities, including, without limitation, as officers, employees, agents or representatives, to act at the meetings of stockholders and make a written report thereof. One or more persons may be designated as alternate inspectors to replace any inspector who fails to act. If no inspector or alternate has been appointed to act or is able to act at a meeting of stockholders, the chairperson of the meeting shall appoint one or more inspectors to act at the meeting. Each inspector, before discharging his or her duties, shall take and sign an oath faithfully to execute the duties of inspector with strict impartiality and according to the best of his or her ability. The inspectors shall have the duties prescribed by law.
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Section 2.11 Action Without a Meeting. Unless prohibited by the Certificate of Incorporation, any action permitted or required to be taken at a meeting of stockholders, may be taken without a meeting, without prior notice and without a vote, if a consent or consents in writing, setting forth the action so taken, shall be signed by or on behalf of the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted and shall be delivered to the Corporation in accordance with applicable law. Prompt notice of the taking of corporate action without a meeting by less than a unanimous written consent shall be given to those stockholders who have not consented in writing and who, if the action had been taken at a meeting, would have been entitled to notice of the meeting if the record date for notice of such meeting had been the date that written consents signed by a sufficient number of the holders to take the action were delivered to the Corporation.
Section 2.12 Conduct of Meetings. The date and time of the opening and the closing of the polls for each matter upon which the stockholders will vote at a meeting shall be announced at the meeting by the chairperson of the meeting. The Board of Directors may adopt by resolution such rules and regulations for the conduct of the meeting of stockholders as it shall deem appropriate. Except to the extent inconsistent with such rules and regulations as adopted by the Board of Directors, the chairperson of any meeting of stockholders shall have the right and authority to convene and (for any or no reason) to recess and/or adjourn the meeting, to prescribe such rules, regulations and procedures and to do all such acts as, in the judgment of such presiding person, are appropriate for the proper conduct of the meeting. Such rules, regulations or procedures, whether adopted by the Board of Directors or prescribed by the chairperson of the meeting, may include, without limitation, the following: (i) the establishment of an agenda or order of business for the meeting; (ii) rules and procedures for maintaining order at the meeting and the safety of those present; (iii) limitations on attendance at or participation in the meeting to stockholders entitled to vote at the meeting, their duly authorized and constituted proxies or such other persons as the chairperson of the meeting shall determine; (iv) restrictions on entry to the meeting after the time fixed for the commencement thereof; and (v) limitations on the time allotted to questions or comments by participants. Unless and to the extent determined by the Board of Directors or the chairperson of the meeting, meetings of stockholders shall not be required to be held in accordance with the rules of parliamentary procedure.
Section 2.13 Remote Meetings. If authorized by the Board of Directors in its sole discretion, and subject to such guidelines and procedures as the Board of Directors may adopt, stockholders and proxyholders not physically present at a meeting of stockholders may, by means of remote communication:
(a) participate in a meeting of stockholders; and
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(b) be deemed present in person and vote at a meeting of stockholders whether such meeting is to be held at a designated place or solely by means of remote communication; provided, that (i) the Corporation shall implement reasonable measures to verify that each person deemed present and permitted to vote at the meeting by means of remote communication is a stockholder or proxyholder, (ii) the Corporation shall implement reasonable measures to provide such stockholders and proxyholders a reasonable opportunity to participate in the meeting and to vote on matters submitted to the stockholders, including an opportunity to read or hear the proceedings of the meeting substantially concurrently with such proceedings, and (iii) if any stockholder or proxyholder votes or takes other action at the meeting by means of remote communication, a record of such vote or other action shall be maintained by the Corporation.
ARTICLE III
BOARD OF DIRECTORS
Section 3.01 General Powers. Except as otherwise provided in the General Corporation Law of the State of Delaware or the Certificate of Incorporation, the business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors.
Section 3.02 Number of Directors. The total number of directors shall be fixed from time to time in the manner provided by the Certificate of Incorporation. No decrease in the total number of directors shall shorten the term of any incumbent director.
Section 3.03 Quorum; Required Vote. Except as otherwise provided by law or the Certificate of Incorporation, a majority of the total number of directors then in office shall constitute a quorum for the transaction of business at any meeting of the Board of Directors, but in no event shall less than one-third of the total number of directors (including any vacancies or unfilled newly created directorships) constitute a quorum. Except as otherwise provided by law or the Certificate of Incorporation, the vote of the majority of the directors present at a meeting at which a quorum is present shall be the act of the Board of Directors.
Section 3.04 Telephonic Participation. All or any one or more directors may participate in a meeting of the Board of Directors or of any committee thereof by means of conference telephone or other communications equipment by means of which all persons participating in the meeting can hear each other and participation in a meeting pursuant to such communications equipment shall constitute presence in person at such meeting.
Section 3.05 Place of Meetings. The Board of Directors may hold its meetings at such place or places, if any, within or without the State of Delaware, as the Board of Directors may from time to time determine.
Section 3.06 Regular Meetings. Regular meetings of the Board of Directors may be held at such time and place, if any, within or without the State of Delaware, as shall from time to time be determined by the Board of Directors. After there has been such determination, and notice thereof has been given to each member of the Board of Directors, regular meetings may be held without further notice being given.
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Section 3.07 Special Meetings. Subject to the notice requirements of Section 3.08, special meetings of the Board of Directors shall be held whenever called by the chairperson of the Board, if any, the Chief Executive Officer or by a majority of the directors.
Section 3.08 Notice. Notice of any special meeting of directors shall be given to each director at his or her business or residence in writing by hand delivery, overnight mail or courier service, electronic mail or other electronic transmission, or orally in person or by telephone. If by overnight mail or courier service, such notice shall be deemed adequately delivered when the notice is delivered to the overnight mail or courier service company at least twenty-four (24) hours before such meeting. If by electronic mail or other electronic transmission, such notice shall be deemed adequately delivered when the notice is transmitted at least twelve (12) hours before such meeting. If given orally in person or by telephone or by hand delivery, the notice shall be given at least twelve (12) hours prior to the time set for the meeting. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the Board of Directors need be specified in the notice of such meeting.
Section 3.09 Resignation. Any director of the Corporation may resign at any time by giving notice in writing or by electronic transmission thereof to the Corporation. The resignation of any director shall be effective when the resignation is delivered, unless the resignation specifies a later effective date or an effective date determined upon the happening of an event or events; and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective.
Section 3.10 Vacancies on Board of Directors; Newly Created Directorships. Except as otherwise provided in the Certificate of Incorporation, and subject to the terms of the Stockholders’ Agreement, any vacancy resulting from the death, resignation, removal or disqualification of any director or other cause, or any newly created directorship resulting from any increase in the authorized number of directors, shall be filled only by an affirmative vote of a majority of the directors then in office, although less than a quorum, or by the sole remaining director, and shall not be filled by the stockholders of the Corporation; provided, that, (i) for so long as the Voting Group (as defined in the Stockholders Agreement) owns, beneficially or of record, at least 9% of the outstanding Common Stock of the Corporation, any vacancy resulting from the death, resignation, removal, disqualification or other cause in respect of any Voting Group Designee, including the failure of any Voting Group Designee to be elected, shall be filled only by the Voting Group and (ii) for so long as any member of the Voting Group owns at least 5% of the outstanding Common Stock of the Corporation and has the right to nominate a director pursuant to Section 3.1(b) of the Stockholders Agreement, any vacancy resulting from the death, resignation, removal, disqualification or other cause in respect of any Member Designee, including the failure of any Member Designee to be elected, shall be filled only by such member of the Voting Group. Except as otherwise provided by this Bylaw, a director elected to fill a vacancy or newly created directorship shall hold office until the annual meeting of stockholders for the election of directors of the class to which he or she has been appointed and until his or her successor has been duly elected and qualified, subject, however, to such director’s earlier death, resignation, retirement, removal or disqualification.
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Section 3.11 Executive and Other Committees. The Board of Directors may designate one or more committees of the Board of Directors, including an Executive Committee to exercise, subject to applicable provisions of law, all the powers and authority of the Board of Directors in the management of the business and affairs of the Corporation when the Board of Directors is not in session. The Executive Committee and each such other committee shall consist of two (2) or more directors of the Corporation and, subject to applicable law and any other law, rule or regulation applicable to the Corporation (including the rules and regulations of any securities exchange on which the Corporation’s shares are listed). The Board of Directors may designate one (1) or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. Except to the extent restricted by law, the Certificate of Incorporation or these Bylaws, any such committee, to the extent provided by the General Corporation Law of the State of Delaware, these Bylaws or the designating resolution, shall have and may exercise all the powers and authority of the Board of Directors. In the absence or disqualification of any member of such committee or committees, the member or members thereof present at any meeting and not disqualified from voting, whether or not constituting a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member. Each committee shall keep written minutes of its proceedings and shall report such proceedings to the Board of Directors when required.
Each committee of the Board of Directors may fix its own rules of procedure and shall hold its meetings as provided by such rules, except as may otherwise be provided by in these Bylaws or by resolution of the Board of Directors designating such committee. Notice of such meetings shall be given to each member of the committee in the manner provided for in Section 3.08 of these Bylaws. Each committee shall serve at the pleasure of the Board of Directors and the Board of Directors shall have power at any time to fill vacancies in, to change the membership of, or to dissolve any such committee. Unless otherwise provided in the Certificate of Incorporation, these Bylaws or the resolution of the Board of Directors designating the committee, a committee may create one or more subcommittees, each subcommittee to consist of one or more members of the committee, and delegate to a subcommittee any or all of the powers and authority of the committee. Except as otherwise expressly provided in these Bylaws or the by resolution of the Board of Directors designating such committee, every reference to a committee or to a member of a committee in these Bylaws shall apply to any subcommittee or member of a subcommittee mutatis mutandis.
Section 3.12 Action Without Meeting. Unless otherwise restricted by the Certificate of Incorporation, any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting if all members of the Board of Directors or any committee thereof, as the case may be, consent thereto in writing or by electronic transmission. After an action is taken, the consent or consents relating thereto shall be filed with the minutes or proceedings of the Board of Directors or committee in the same paper or electronic form as the minutes are maintained.
Section 3.13 Fees and Compensation. The Board of Directors shall have the authority to fix the compensation, including fees, reimbursement of expenses and equity compensation, of directors for services to the Corporation in any capacity, including for attendance of meetings of the Board of Directors or participation on any committees. Directors who are officers or employees of the Corporation may receive, if the Board of Directors desires, compensation for service as directors. Nothing herein contained shall be construed to preclude any director from serving the Corporation in any other capacity and receiving compensation therefor.
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ARTICLE IV
OFFICERS
Section 4.01 Officers. The elected officers of the Corporation shall be chosen by the Board of Directors and may include a chairperson of the Board, a Chief Executive Officer, one or more Presidents, a Chief Financial Officer, and a Secretary, all of whom shall be elected by the Board of Directors. The chairperson of the Board, if any, shall be chosen from among the directors. All officers elected by the Board of Directors shall each have such powers and duties as generally pertain to their respective offices, subject to the specific provisions of this ARTICLE IV. Such officers shall also have such powers and duties as from time to time may be conferred by the Board of Directors or by any committee thereof. In addition, the Board of Directors or any committee thereof may from time to time elect, or the Chief Executive Officer may appoint, such other officers (including one or more Vice Presidents, Assistant Secretaries, Treasurers and Controllers) and such agents, as may be necessary or desirable for the conduct of the business of the Corporation. Any number of offices may be held by the same person. Such other officers and agents shall have such duties and shall hold their offices for such terms as shall be provided in these Bylaws or as may be prescribed by the Board of Directors or such committee or by the Chief Executive Officer, as the case may be.
Section 4.02 Term of Office. The principal officers of the Corporation shall hold office until his or her successor shall have been duly chosen and shall qualify, or until his or her earlier death, resignation, retirement, removal or disqualification.
Section 4.03 Removal. Any officer may be removed, either with or without cause, at any time, by the Board of Directors. Any officer or agent appointed by the Chief Executive Officer may also be removed by him or her whenever, in his or her judgment, the best interests of the Corporation would be served thereby. No elected officer shall have any contractual rights against the Corporation for compensation by virtue of such election beyond the date of the election of his or her successor or his or her earlier death, resignation, removal or disqualification, whichever event shall first occur, except as otherwise provided in an employment contract or under an employee deferred compensation plan.
Section 4.04 Resignations. Any officer may resign at any time by giving notice in writing or by electronic transmission thereof to the Corporation. The resignation of any officer shall be effective when the resignation is delivered, unless the resignation specifies a later effective date or an effective date determined upon the happening of an event or events; and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective.
Section 4.05 Vacancies. A vacancy in any office may be filled in the manner prescribed in these Bylaws for appointment to such office.
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Section 4.06 Powers and Duties. Subject to the control of the Board of Directors, the officers shall each have such authority and perform such duties in the management of the Corporation as from time to time may be prescribed by the Board of Directors and as may be delegated by the Chief Executive Officer without limiting the foregoing:
(a) Chairperson of the Board. The chairperson of the Board, if any, shall preside at all meetings of the Board of Directors and he or she shall have and perform such other duties as from time to time may be assigned to him or her by the Board of Directors.
(b) Chief Executive Officer. The Chief Executive Officer of the Corporation shall, subject to the control of the Board of Directors, have general supervision, direction and control of the business and officers of the Corporation. The Chief Executive Officer shall preside at all meetings of the stockholders and, in the absence of a chairperson of the Board, at all meetings of the Board of Directors. Unless there shall have been elected one or more Presidents of the Corporation, the Chief Executive Officer shall be the President of the Corporation.
(c) President. Each President shall have such general powers and duties of supervision and management as shall be assigned to him or her by the Board of Directors.
(d) Chief Financial Officer. The Chief Financial Officer shall have the custody of the corporate funds and securities and shall keep full and accurate account of receipts and disbursements in books belonging to the Corporation. He or she shall deposit all moneys and other valuables in the name and to the credit of the Corporation in such depositaries as may be designated by the Board of Directors. He or she shall disburse the funds of the Corporation as may be ordered by the Board of Directors, the chairperson of the Board, Chief Executive Officer or a President, taking proper vouchers for such disbursements. He or she shall render to the chairperson of the Board, Chief Executive Officer, each President and the Board of Directors at the regular meetings of the Board of Directors, or whenever they may request it, an account of all his or her transactions as Chief Financial Officer and of the financial condition of the Corporation. If required by the Board of Directors, he or she shall give the Corporation a bond for the faithful discharge of his or her duties in such amount and with such surety as the Board of Directors shall prescribe. The Chief Executive Officer may direct the Treasurer or any assistant Treasurer to assume and perform the duties of the Chief Financial Officer in the absence or disability of the Chief Financial Officer, and the Treasurer or any assistant Treasurer shall perform other duties commonly incident to his or her office and shall also perform such other duties and have such other powers as the Board of Directors or the Chief Executive Officer shall designate from time to time.
(e) Secretary. The Secretary, if present, shall act as secretary at all meetings of the Board of Directors or any committee thereof and of the stockholders and keep the minutes thereof in a book or books to be provided for that purpose. He or she shall see that all notices required to be given by the Corporation are duly given and served; he or she shall have charge of the stock records of the Corporation; he or she shall see that all reports, statements and other documents required by law are properly kept and filed; and in general, he or she shall perform all the duties incident to the office of Secretary and such other duties as from time to time may be assigned to him or her by the Chief Executive Officer or the Board of Directors.
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Section 4.07 Salaries. The salaries of the principal officers shall be fixed from time to time by the Board of Directors or a committee thereof appointed for such purpose, and the salaries of any other officers may be fixed by the Chief Executive Officer.
ARTICLE V
CAPITAL STOCK
Section 5.01 Certificated and Uncertificated Stock; Transfers.
(a) Subject to paragraph (d) below, the shares of stock of the Corporation shall be represented by certificates, provided that the Board of Directors may provide by resolution or resolutions that some or all of any or all classes or series of the Corporation’s stock shall be uncertificated shares. Any such resolution shall not apply to shares represented by a certificate until such certificate is surrendered to the Corporation.
(b) The shares of the stock of the Corporation shall be transferable in the manner prescribed by law and in these Bylaws. In the case of certificated shares of stock, transfers shall be made on the books of the Corporation only by the holder thereof or by such holder’s attorney duly authorized in writing, upon surrender for cancellation of certificate(s) for at least the same number of shares, with an assignment and power of transfer endorsed thereon or attached thereto, duly executed, with such proof of the authenticity of the signature as the Corporation or its agents may reasonably require. In the case of uncertificated shares of stock, transfers shall be made on the books of the Corporation only upon receipt of proper transfer instructions from the registered holder of the shares or by such person’s attorney duly authorized in writing, and upon compliance with appropriate procedures for transferring shares in uncertificated form. No transfer of stock shall be valid as against the Corporation for any purpose until it shall have been entered in the stock records of the Corporation by an entry showing from and to whom transferred.
(c) Every holder of stock in the Corporation represented by certificates shall be entitled to have a certificate signed by, or in the name of the Corporation by any two authorized officers certifying the number and class of shares of stock of the Corporation owned by such holder. Unless the Board of Directors by resolution directs otherwise, the chairperson of the Board, the Chief Executive Officer, any President, any Vice President, the Treasurer, any Assistant Treasurer, the Secretary and any Assistant Secretary of the Corporation shall be authorized to sign stock certificates. Any or all of the signatures on such certificates may be an electronic signature. In case any officer, transfer agent or registrar who has signed or whose electronic signature has been placed upon a certificate has ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if he or she were such officer, transfer agent or registrar at the date of issue.
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(d) Notwithstanding anything to the contrary in these Bylaws, at all times that the Corporation’s stock is listed on a stock exchange, the shares of the stock of the Corporation shall comply with all direct registration system eligibility requirements established by such exchange, including any requirement that shares of the Corporation’s stock be eligible for issue in uncertificated or book-entry form. All issuances and transfers of shares of the Corporation’s stock shall be entered on the books of the Corporation with all information necessary to comply with such direct registration system eligibility requirements, including the name and address of the person to whom the shares of stock are issued, the number of shares of stock issued and the date of issue. The Board of Directors shall have the power and authority to make such rules and regulations as it may deem necessary or proper concerning the issue, transfer and registration of shares of stock of the Corporation in both the certificated and uncertificated form.
Section 5.02 Lost, Stolen, Mutilated or Destroyed Certificates. As a condition to the issue of a new certificate of stock or uncertificated shares in the place of any certificate theretofore issued and alleged to have been lost, stolen, mutilated or destroyed, the Corporation may require the owner of any such certificate, or such owner’s legal representatives, to give the Corporation a bond in such sum and in such form as it may direct or to otherwise indemnify the Corporation against any claim that may be made against it on account of the alleged loss, theft, mutilation or destruction of any such certificate or the issuance of such new certificate or uncertificated shares. Proper evidence of such loss, theft, mutilation or destruction shall be procured for the Corporation, if required. The Corporation may authorize the issuance of such new certificate without any bond when in its judgment it is proper to do so.
Section 5.03 Record Owners. The stock ledger shall be the only evidence as to who are the stockholders of the Corporation and the Corporation shall be entitled to recognize the exclusive right of a person registered on its stock ledger as the owner of shares to receive dividends, to vote and to receive notice, and otherwise to exercise all of the rights and powers of an owner of such shares, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise required by law.
Section 5.04 Transfer and Registry Agents. The Corporation may from time to time maintain one or more transfer offices or agencies and registry offices or agencies at such place or places as may be determined from time to time by the Board of Directors.
Section 5.05 Record Date.
(a) In order that the Corporation may determine the stockholders entitled to notice of and to vote at any meeting of stockholders or any adjournment thereof, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted and which record date, unless otherwise required by law, shall not be more than 60 nor less than 10 days before the date of such meeting. If the Board of Directors so fixes a date, such date shall also be the record date for determining the stockholders entitled to vote at such meeting unless the Board of Directors determines, at the time it fixes such record date, that a later date on or before the date of meeting shall be the date for making such determination. If no such record date is fixed by the Board of Directors, then the record date shall, unless otherwise required by law, be at the close of business on the day next preceding the day on which notice of such meeting is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held.
(b) In order that the Corporation may determine the stockholders entitled to receive payment of any dividend or other distribution or allotment of any rights or the stockholders entitled to exercise any rights in respect of any change, conversion or exchange of stock, or for the purpose of any other lawful action, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted and which record date shall not be more than 60 days prior to such action. If no such record date is fixed, the record date for determining stockholders for any such purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto.
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(c) In order that the Corporation may determine the stockholders entitled to express consent to corporate action in writing without a meeting, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors and which record date shall not be more than 10 days after the date upon which the resolution fixing the record date is adopted by the Board of Directors. If no record date for determining stockholders entitled to express consent to corporate action in writing without a meeting has been fixed by the Board of Directors (i) when no prior action of the Board of Directors is required by law, the record date for such purpose shall be the first date on which a signed written consent setting forth the action taken or proposed to be taken is delivered to the Corporation in accordance with applicable law, and (ii) if prior action by the Board of Directors is required by law, the record date for such purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution taking such prior action.
ARTICLE VI
AMENDMENTS
Section 6.01 Amendments by Stockholders. These Bylaws may be altered, amended or repealed and new Bylaws may be added by the stockholders (i) prior to the Trigger Event (as defined in the Certificate of Incorporation), by the affirmative vote of the holders of a majority in voting power of the stock entitled to vote thereon and (ii) after the Trigger Event, by the affirmative vote of the holders of at least 66 2/3% of the voting power of the stock entitled to vote thereon at any annual meeting of the stockholders or at any special meeting thereof if notice of the proposed alteration, amendment, repeal or addition is contained in the notice of such special meeting.
Section 6.02 Amendments by the Board of Directors. The Board of Directors may adopt, amend or repeal these Bylaws as provided in the Certificate of Incorporation.
ARTICLE VII
MISCELLANEOUS PROVISIONS
Section 7.01 Fiscal Year. The fiscal year of the Corporation shall be fixed by resolution of the Board of Directors.
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Section 7.02 Voting of Securities Owned by the Corporation. The Board of Directors may authorize any person on behalf of the Corporation to attend and vote at any meeting of security holders of any entity in which the Corporation holds securities and to exercise, on behalf of the Corporation, any and all of the rights and powers incident to the ownership of such securities, including the authority to execute and deliver proxies, powers of attorney and consents on behalf of the Corporation. Unless the Board of Directors directs otherwise, each of the Chairman, the Chief Executive Officer and any President shall have the powers specified in the preceding provisions of this Section 7.02.
Section 7.03 Dividends. Subject to the provisions of the Certificate of Incorporation, the Board of Directors may, out of funds legally available therefor, declare dividends upon the capital stock of the Corporation as and when they deem expedient, in accordance with law. Before declaring any dividend there may be set apart out of any funds of the Corporation available for dividends such sum or sums as the directors from time to time in their discretion may deem proper for working capital or as a reserve fund to meet contingencies or for equalizing dividends or for such other purposes as the directors may deem conducive to the interests of the Corporation. The Board of Directors may abolish any such reserve at any time.
Section 7.04 Waiver of Notice. Whenever any notice is required to be given under the provisions of the General Corporation Law of the State of Delaware, the Certificate of Incorporation or these Bylaws, a written waiver, signed by the person or persons entitled to such notice, or a waiver by electronic transmission by the person entitled to notice, whether before or after the time stated therein, shall be deemed equivalent to the giving of such notice. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except when the person attends a meeting for the express purpose of objecting at the beginning of the meeting to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any annual, regular or special meeting of the stockholders or the Board of Directors or committee thereof need be specified in any waiver of notice of such meeting.
Section 7.05 Contracts. Except as otherwise required by law, the Certificate of Incorporation or these Bylaws, any contracts or other instruments may be executed and delivered in the name and on the behalf of the Corporation by such officer or officers of the Corporation as the Board of Directors may from time to time direct. Such authority may be general or confined to specific instances as the Board of Directors may determine. The chairperson of the Board, the Chief Executive Officer, each President, the Chief Financial Officer or any Vice President may execute bonds, contracts, deeds, leases and other instruments to be made or executed for or on behalf of the Corporation. Subject to any restrictions imposed by the Board of Directors or the chairperson of the Board, the Chief Executive Officer, each President, the Chief Financial Officer or any Vice President of the Corporation may delegate contractual powers to others under his or her jurisdiction, it being understood, however, that any such delegation of power shall not relieve such officer of responsibility with respect to the exercise of such delegated power.
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Exhibit 31.1
CERTIFICATION PURSUANT TO
RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934,
AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Nick Jones, certify that:
| 1. | I have reviewed this Quarterly Report on Form 10-Q of Membership Collective Group 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(s) 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) | [Paragraph omitted in accordance with Exchange Act Rule 13a-14(a)] |
| (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 most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) 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(s) 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 the 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: August 26, 2021 | By: | /s/ Nick Jones | ||||
| Nick Jones | ||||||
| Chief Executive Officer | ||||||
| (Principal Executive Officer) |
Exhibit 31.2
CERTIFICATION PURSUANT TO
RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934,
AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Humera Afzal, certify that:
| 6. | I have reviewed this Quarterly Report on Form 10-Q of Membership Collective Group Inc.; |
| 7. | 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; |
| 8. | 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; |
| 9. | The registrant’s other certifying officer(s) 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) | [Paragraph omitted in accordance with Exchange Act Rule 13a-14(a)] |
| (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 most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 10. | The registrant’s other certifying officer(s) 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 the 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: August 26, 2021 | By: | /s/ Humera Afzal | ||||
| Humera Afzal | ||||||
| Chief Financial Officer | ||||||
| (Principal Financial Officer) |
Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Membership Collective Group Inc. (the “Company”) on Form 10-Q for the 13-week period ending July 4, 2021, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned certifies, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that, to his knowledge:
| 1. | The Report fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as amended; and |
| 2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations the Company. |
| August 26, 2021 | By: | /s/ Nick Jones | ||||
| Nick Jones | ||||||
| Chief Executive Officer | ||||||
| (Principal Executive Officer) |
The foregoing certification is being furnished to the Securities and Exchange Commission as an exhibit to the Report and shall not be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and it is not to be incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.
Exhibit 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Membership Collective Group Inc. (the “Company”) on Form 10-Q for the 13-week period ending July 4, 2021, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned certifies, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that, to her knowledge:
| 3. | The Report fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as amended; and |
| 4. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations the Company. |
| August 26, 2021 | By: | /s/ Humera Afzal | ||||
| Humera Afzal | ||||||
| Chief Financial Officer | ||||||
| (Principal Financial Officer) |
The foregoing certification is being furnished to the Securities and Exchange Commission as an exhibit to the Report and shall not be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and it is not to be incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.
Condensed Consolidated Statements of Operations (Parenthetical) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
|---|---|---|---|---|
Jul. 04, 2021 |
Jun. 28, 2020 |
Jul. 04, 2021 |
Jun. 28, 2020 |
|
| In House Operating Expenses [Member] | ||||
| Operating cost and expenses | $ 15,828 | $ 11,286 | $ 26,690 | $ 21,323 |
| Other Operating Expenses [Member] | ||||
| Operating cost and expenses | $ 6,077 | $ 4,890 | $ 13,060 | $ 9,802 |
Condensed Consolidated Statements of Comprehensive Loss - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
|---|---|---|---|---|
Jul. 04, 2021 |
Jun. 28, 2020 |
Jul. 04, 2021 |
Jun. 28, 2020 |
|
| Statement of Comprehensive Income [Abstract] | ||||
| Net loss | $ (57,108) | $ (77,857) | $ (150,145) | $ (122,837) |
| Other comprehensive income | ||||
| Foreign currency translation adjustment | (1,481) | 4,579 | 14,599 | 18,056 |
| Comprehensive loss | (58,589) | (73,278) | (135,546) | (104,781) |
| Loss attributable to noncontrolling interest | 1,121 | 1,707 | 3,679 | 3,056 |
| Foreign currency translation adjustment attributable to noncontrolling interest | (71) | 14 | (115) | 264 |
| Total comprehensive loss attributable to Membership Collective Group Inc. | $ (57,539) | $ (71,557) | $ (131,982) | $ (101,461) |
Condensed Consolidated Statements of Changes in Redeemable Shares and Shareholders' Deficit - USD ($) |
Total |
Redeemable Preferred Stock [Member] |
Common Class C [Member] |
Common Class C Two [Member] |
Redeemable Class C Common Stock [Member] |
Ordinary Shares [Member]
Common Class A [Member]
|
Ordinary Shares [Member]
Common Class B [Member]
|
Ordinary Shares [Member]
Common Class C [Member]
|
Ordinary Shares [Member]
Common Class C Two [Member]
|
Ordinary Shares [Member]
Common Class D [Member]
|
Additional Paid-in Capital [Member] |
Accumulated Deficit [Member] |
Accumulated Other Comprehensive Income (Loss) [Member] |
Total Shareholders' Deficit Attributable to Membership Collective Group Inc. [Member] |
Noncontrolling Interest [Member] |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Beginning Balance, Shares at Dec. 29, 2019 | 10,000,000 | 6,933,004 | 166,110,113 | 4,469,417 | 3,326,048 | ||||||||||
| Beginning Balance at Dec. 29, 2019 | $ (181,969,000) | $ 14,700 | $ 67,416,000 | $ 262,532,000 | $ 48,461,000 | $ (528,642,000) | $ 26,000 | $ (217,623,000) | $ 35,654,000 | ||||||
| Net loss | (44,980,000) | (43,631,000) | (43,631,000) | (1,349,000) | |||||||||||
| Distributions to noncontrolling interest | (271,000) | (271,000) | |||||||||||||
| Contributions from noncontrolling interest | 15,213,000 | 15,213,000 | |||||||||||||
| Net change in cumulative translation adjustment | 13,491,000 | 13,741,000 | 13,741,000 | (250,000) | |||||||||||
| Ending Balance, Shares at Mar. 29, 2020 | 10,000,000 | 6,933,004 | 166,110,113 | 4,469,417 | 3,326,048 | ||||||||||
| Ending Balance at Mar. 29, 2020 | (198,516,000) | $ 14,700,000 | $ 67,416,000 | 262,532,000 | 48,461,000 | (572,273,000) | 13,767,000 | (247,513,000) | 48,997,000 | ||||||
| Beginning Balance, Shares at Dec. 29, 2019 | 10,000,000 | 6,933,004 | 166,110,113 | 4,469,417 | 3,326,048 | ||||||||||
| Beginning Balance at Dec. 29, 2019 | (181,969,000) | $ 14,700 | $ 67,416,000 | 262,532,000 | 48,461,000 | (528,642,000) | 26,000 | (217,623,000) | 35,654,000 | ||||||
| Net loss | (122,837,000) | ||||||||||||||
| Ending Balance, Shares at Jun. 28, 2020 | 10,000,000 | 3,326,048 | 16,435,997 | 168,286,537 | 4,469,417 | ||||||||||
| Ending Balance at Jun. 28, 2020 | (240,116,000) | $ 14,700,000 | $ 160,405,000 | 265,181,000 | 68,224,000 | (648,423,000) | 18,346,000 | (296,672,000) | 56,556,000 | ||||||
| Beginning Balance, Shares at Mar. 29, 2020 | 10,000,000 | 6,933,004 | 166,110,113 | 4,469,417 | 3,326,048 | ||||||||||
| Beginning Balance at Mar. 29, 2020 | (198,516,000) | $ 14,700,000 | $ 67,416,000 | 262,532,000 | 48,461,000 | (572,273,000) | 13,767,000 | (247,513,000) | 48,997,000 | ||||||
| Net loss | (77,857,000) | (76,150,000) | (76,150,000) | (1,707,000) | |||||||||||
| Distributions to noncontrolling interest | (10,000) | (10,000) | |||||||||||||
| Contributions from noncontrolling interest | 9,290,000 | 9,290,000 | |||||||||||||
| Net change in cumulative translation adjustment | 4,565,000 | 4,579,000 | 4,579,000 | (14,000) | |||||||||||
| Conversion of related party loan to A ordinary shares, Shares | 2,176,424 | ||||||||||||||
| Conversion of related party loan to A ordinary shares | 22,412,000 | 2,649,000 | 19,763,000 | 22,412,000 | |||||||||||
| Issuance of redeemable C ordinary shares, Shares | 9,502,993 | ||||||||||||||
| Issuance of redeemable C ordinary shares | $ 94,000,000 | ||||||||||||||
| Redeemable C ordinary shares issuance costs | $ (1,011,000) | ||||||||||||||
| Ending Balance, Shares at Jun. 28, 2020 | 10,000,000 | 3,326,048 | 16,435,997 | 168,286,537 | 4,469,417 | ||||||||||
| Ending Balance at Jun. 28, 2020 | (240,116,000) | $ 14,700,000 | $ 160,405,000 | $ 265,181,000 | 68,224,000 | (648,423,000) | 18,346,000 | (296,672,000) | 56,556,000 | ||||||
| Beginning Balance, Shares at Jan. 03, 2021 | 10,000,000 | 16,435,997 | 166,575,991 | 4,469,417 | 1,710,546 | 3,326,048 | 2,850,897 | ||||||||
| Beginning Balance at Jan. 03, 2021 | (373,993,000) | $ 14,700,000 | $ 160,405,000 | $ 265,181,000 | 72,755,000 | (757,103,000) | (13,257,000) | (432,424,000) | 58,431,000 | ||||||
| Net loss | (93,037,000) | (90,479,000) | (90,479,000) | (2,558,000) | |||||||||||
| Distributions to noncontrolling interest | (19,000) | (19,000) | |||||||||||||
| Contributions from noncontrolling interest | 644,000 | 644,000 | |||||||||||||
| Net change in cumulative translation adjustment | 16,009,000 | 15,965,000 | 15,965,000 | 44,000 | |||||||||||
| Conversion of related party loan to A ordinary shares, Shares | 4,751,497 | ||||||||||||||
| Conversion of related party loan to A ordinary shares | $ 47,000,000 | ||||||||||||||
| Issuance of senior convertible preference shares (Note 15), Shares | 12,970,766 | ||||||||||||||
| Issuance of senior convertible preference shares (Note 15) | $ 175,000,000 | ||||||||||||||
| Senior convertible preference shares issuance costs | $ (13,426,000) | ||||||||||||||
| APIC, Share-based Payment Arrangement, Increase for Cost Recognition | 2,129,000 | 2,129,000 | 2,129,000 | ||||||||||||
| Ending Balance, Shares at Apr. 04, 2021 | 22,970,766 | 21,187,494 | 166,575,991 | 4,469,417 | 1,710,546 | 3,326,048 | 2,850,897 | ||||||||
| Ending Balance at Apr. 04, 2021 | (448,267,000) | $ 176,274,000 | $ 207,405,000 | $ 265,181,000 | 74,884,000 | (847,582,000) | 2,708,000 | (504,809,000) | 56,542,000 | ||||||
| Beginning Balance, Shares at Jan. 03, 2021 | 10,000,000 | 16,435,997 | 166,575,991 | 4,469,417 | 1,710,546 | 3,326,048 | 2,850,897 | ||||||||
| Beginning Balance at Jan. 03, 2021 | (373,993,000) | $ 14,700,000 | $ 160,405,000 | $ 265,181,000 | 72,755,000 | (757,103,000) | (13,257,000) | (432,424,000) | 58,431,000 | ||||||
| Net loss | (150,145,000) | ||||||||||||||
| Ending Balance, Shares at Jul. 04, 2021 | 22,970,766 | 21,187,494 | 166,575,991 | 4,469,417 | 1,710,546 | 10,521,415 | 2,850,897 | ||||||||
| Ending Balance at Jul. 04, 2021 | (486,541,000) | $ 185,406,000 | $ 207,405,000 | $ 275,265,000 | 133,129,000 | (902,661,000) | 1,227,000 | (493,040,000) | 6,499,000 | ||||||
| Beginning Balance, Shares at Apr. 04, 2021 | 22,970,766 | 21,187,494 | 166,575,991 | 4,469,417 | 1,710,546 | 3,326,048 | 2,850,897 | ||||||||
| Beginning Balance at Apr. 04, 2021 | (448,267,000) | $ 176,274,000 | $ 207,405,000 | $ 265,181,000 | 74,884,000 | (847,582,000) | 2,708,000 | (504,809,000) | 56,542,000 | ||||||
| Net loss | (57,108,000) | (55,987,000) | (55,987,000) | (1,121,000) | |||||||||||
| Distributions to noncontrolling interest | (114,000) | (114,000) | |||||||||||||
| Net change in cumulative translation adjustment | (1,410,000) | (1,481,000) | (1,481,000) | 71,000 | |||||||||||
| APIC, Share-based Payment Arrangement, Increase for Cost Recognition | 2,548,000 | 2,548,000 | 2,548,000 | ||||||||||||
| Adjustments to Additional Paid in Capital, Dividends in Excess of Retained Earnings | (4,177,000) | 4,177,000 | (4,177,000) | (4,177,000) | |||||||||||
| C2 ordinary shares issued in connection with the Cipura Acquisition (Note 3), Shares | 644,828 | ||||||||||||||
| C2 ordinary shares issued in connection with the Cipura Acquisition (Note 3) | 8,700,000 | 905,000 | 7,795,000 | 8,700,000 | |||||||||||
| C2 ordinary shares issued in connection with the Mandolin Acquisition (Note 3), Shares | 92,647 | ||||||||||||||
| C2 ordinary shares issued in connection with the Mandolin Acquisition (Note 3) | 1,250,000 | 130,000 | 1,120,000 | 1,250,000 | |||||||||||
| Purchase of Soho Works North America noncontrolling interests (Note 3), Shares | 3,984,883 | ||||||||||||||
| Purchase of Soho Works North America noncontrolling interests (Note 3) | 5,596,000 | 26,945,000 | 32,541,000 | (32,541,000) | |||||||||||
| Purchase of Scorpios noncontrolling interests (Note 3), Shares | 572,410 | ||||||||||||||
| Purchase of Scorpios noncontrolling interests (Note 3) | (8,653,000) | 809,000 | 6,876,000 | 7,685,000 | (16,338,000) | ||||||||||
| C2 ordinary shares issued in connection with the Line and Saguaro Acquisition (Note 3), Shares | 1,900,599 | ||||||||||||||
| C2 ordinary shares issued in connection with the Line and Saguaro Acquisition (Note 3) | (25,645,000) | $ 2,644,000 | 23,001,000 | 25,645,000 | |||||||||||
| Accretion of redeemable preferred shares to redemption value, net of foreign currency remeasurement gain | (4,955,000) | $ 4,955,000 | (5,863,000) | 908,000 | (4,955,000) | ||||||||||
| Ending Balance, Shares at Jul. 04, 2021 | 22,970,766 | 21,187,494 | 166,575,991 | 4,469,417 | 1,710,546 | 10,521,415 | 2,850,897 | ||||||||
| Ending Balance at Jul. 04, 2021 | $ (486,541,000) | $ 185,406,000 | $ 207,405,000 | $ 275,265,000 | $ 133,129,000 | $ (902,661,000) | $ 1,227,000 | $ (493,040,000) | $ 6,499,000 |
Nature of the Business |
6 Months Ended | ||
|---|---|---|---|
Jul. 04, 2021 | |||
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||
| Nature of Operations |
Membership Collective Group Inc. (“MCG”) is a company incorporated on February 10, 2021 under the laws of the State of Delaware that was created for the purpose of consolidating our predecessor entity and facilitating the initial public offering (the “IPO”) of our Class A common stock that was completed on July 19, 2021 (as more fully described in Note 22, Subsequent Events). Prior to the IPO, MCG was a holding company with nominal assets and no liabilities, contingencies, or commitments, and ha d not conducted any operations other than acquiring 100% of the equity interests of our predecessor entity, Soho House Holdings Limited (“SHHL”). During the periods presented in these unaudited interim condensed consolidated financial statements, our business was conducted through SHHL, a Jersey, Channel Islands private limited company, and its subsidiaries and joint ventures. In conjunction with the closing of the IPO, certain existing shareholders of SHHL exchanged their equity interests in SHHL for a number of shares in MCG having an equivalent value, and SHHL became a wholly-owned consolidated subsidiary of MCG. These transactions are accounted for as a reorganization of entities under common control. As a result, the consolidated financial statements of MCG in periods after the IPO will recognize the assets and liabilities received in the exchanges at their historical carrying amounts, as reflected in the historical financial statements of SHHL presented herein. SHHL is a global membership platform of physical and digital spaces that connects a vibrant, diverse group of members from across the world. These members use the platform to both work and socialize, to connect, create, have fun and drive a positive change. Our members engage with us through our global portfolio of 30 Soho Houses, nine Soho Works Clubs, The Ned in London, Scorpios Beach Club in Mykonos, Soho Home, our interiors and lifestyle retail brand, and our digital channels. The consolidated entity presented is referred to herein as “MCG”, “we”, “us”, “our”, or the “Company”, as the context requires and unless otherwise noted. |
Summary of Significant Accounting Policies |
6 Months Ended | ||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jul. 04, 2021 | |||||||||||||||||||
| Accounting Policies [Abstract] | |||||||||||||||||||
| Summary of Significant Accounting Policies |
Basis of Presentation The unaudited condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for reporting interim information on Form 10-Q. The preparation of the financial statements in conformity with US GAAP requires the use of estimates, judgments and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities as of the date of the financial statements, and the reported amounts of revenues and expenses during the periods presented. We consistently applied the accounting policies described in the consolidated financial statements of SHHL as of and for the year ended January 3, 2021 included in Amendment No. 1 to the Company’s Form S-1 filed with the SEC on July 6, 2021 in preparing these unaudited interim condensed consolidated financial statements, other than those impacted by new accounting standards as described below. We operate on a fiscal year calendar consisting of a 52- or 53-week period ending on the last Sunday in December or the first Sunday in January of the next calendar year. In a 52-week fiscal year, each quarter contains 13 weeks of operations; in a 53-week fiscal year, each of the first, second and third quarters includes 13 weeks of operations and the fourth quarter includes 14 weeks of operations. Certain information and footnote disclosures normally included in financial statements prepared in accordance with US GAAP have been omitted in accordance with the rules and regulations of the SEC. The year-end condensed consolidated balance sheet data was derived from audited financial statements but does not include all disclosures required by US GAAP. The unaudited condensed consolidated financial statements include normal recurring adjustments, which in the opinion of management are necessary for the fair presentation of the condensed consolidated balance sheets, condensed consolidated statements of operations, of comprehensive loss, of changes in redeemable shares and shareholders’ deficit, and of cash flows for the periods presented. The unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes thereto, included in Amendment No. 1 to the Company’s Form S-1 filed with the SEC on July 6, 2021. The results of operations for the 13- and 26-week periods ending July 4, 2021 and June 28, 2020 are not necessarily indicative of the operating results for the full fiscal year or any future periods. The unaudited condensed consolidated statement of operations and statement of comprehensive loss for the 26 weeks ended July 4, 2021 include the correction of an error related to the Company’s consolidated financial statements for the fiscal years ended January 3, 2021 and December 29, 2019. The error relates to the correction of a consolidating adjustment for foreign currency transaction gains of $13 million in the fiscal year ended January 3, 2021 and $4 million in the fiscal year ended December 29, 2019. The correction of this error is presented within other in the condensed consolidated statement of operations for the 26 weeks ended July 4, 2021 and within foreign currency translation adjustment in the condensed consolidated statement of comprehensive loss for the 26 weeks ended July 4, 2021. Certain prior period amounts have been reclassified to conform to the current period presentation with no impact on previously reported net loss or cash flows, and no material impact on financial position. Going Concern The accompanying condensed consolidated financial statements of the Company have been prepared assuming the Company will continue as a going concern. The going concern basis of presentation assumes that we will continue in operation for at least a period of one year after the date these financial statements are issued, and contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. We have experienced net losses and significant cash outflows from cash used in operating activities over the past years as we develop our Houses. During the 13 weeks and 26 weeks ended July 4, 2021, the Company incurred a consolidated net loss of $57 million and $150 million, respectively. During the 26 weeks ended July 4, 2021, the Company had negative cash flow from operations of $94 million. As of July 4, 2021, the Company had an accumulated deficit of $ 903 million. As of July 4, 2021, the Company had cash and cash equivalents of $49 million, and restricted cash of $8 million. In addition, since March 2020, the COVID-19 pandemic has significantly impacted our business and we have had to temporarily close some or all of our Houses, hotels and public restaurants, at different times due to the ongoing effects of the pandemic, which has and will continue to have an impact on our revenues. At the date of issuance of these condensed consolidated financial statements, our Houses are open where possible, but with varying restrictions on operating capacity, in some of our geographies. In assessing the going concern basis of preparation of the condensed consolidated financial statements for the 13 weeks and 26 weeks ended July 4, 2021, we have taken into consideration detailed cash flow forecasts for the Company, the Company’s forecast compliance with bank covenants, and the continued availability of funding to the Company from banks and shareholders. We have considered the impact of the COVID-19 pandemic on the Company and the resultant global economic uncertainties and have undertaken a re-assessment of the cash flow forecasts covering a period of at least 12 months from the date these financial statements are issued. Cash flow forecasts have been prepared based on a range of scenarios including, but not limited to, no further debt or equity funding, the timing of a full re-opening of our Houses staggered and/or deferred to the end of the calendar year, cost reductions, both limited and extensive, and a combination of these different scenarios. We have assessed the sensitivity analysis on cash flows, and in order to finance these cash flow forecasts, we have completed a series of positive financing events during 2021, including issuance of new senior secured notes in an aggregate amount equal to $295 million, €62 million ($73 million) and £53 million ($73 million), issuance of $175 million of senior convertible preference shares, and subsequent to the period end the completion of our IPO for net proceeds of $402million after deducting underwriting discounts (including net proceeds from the partial exercise of the overallotment option). The senior secured notes include an option for the Company to issue additional notes in an aggregate amount of up to million on or prior to March 31, 2022 . The proceeds from the senior secured notes and senior convertible preference shares have been used to repay all amounts outstanding under the Permira Senior Facility and the US government-backed bank loan. The proceeds from the IPO were used to repay the outstanding principal balance of our revolving credit facility of $98 million (as of July 4, 2021), which remains in place as a source of additional liquidity if required, and to pay the redemption price of outstanding redeemable preferred shares, with the remainder to be used for general corporate purposes, including working capital needs. See Note 12, Debt, Note 15, Redeemable Preferred Shares, and Note 22, Subsequent Events, for additional information. W e believe that the completed working capital events, our projected cash flows and the actions available to management to further control expenditure, as necessary, provide the Company with sufficient working capital (including cash and cash equivalents) to achieve its plans to recover from the impact of the pandemic, subject to the following key factors:
While the impact of lockdowns and other restrictions may continue beyond current expectations and impact the Company’s ability to open Houses and return to a level of operation consistent with pre COVID-19 within the timeframes assumed in management’s detailed cash flow forecasts, we believe that the Company has sufficient financial resources together with an established and cash generative business model, and access to capital. Based on the available cash as a result of completed financing events discussed above, and the measures that have been put in place to control costs, we believe that the Company is able to continue in operational existence, meet its liabilities as they fall due, operate within its existing facilities, and meet all of its covenant requirements for a period of at least twelve months from the date these financial statements are issued. Based on the above, the condensed consolidated financial statements have been presented on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. Accordingly, we continue to adopt the going concern basis in preparing the condensed consolidated financial statements for the 13 weeks and 26 weeks ended July 4, 2021. Offering Costs Direct and incremental legal and accounting costs associated with the Company’s proposed initial public offering are deferred and classified as a component of other assets in the unaudited condensed consolidated balance sheet. Such costs will be offset against the proceeds received in the offering. During the 13 weeks and 26 weeks ended July 4, 2021, the Company incurred $13 million andmillion related to the offering. As of July 4, 2021, $7 million was included in other assets in the unaudited condensed consolidated balance sheet, while $7 million was recognized in other in the unaudited condensed consolidated statements of operations for the 13 weeks and 26 weeks ended July 4, 2021. There were no deferred offering costs incurred during the 13 weeks and 26 weeks ended June 28, 2020. Comprehensive Loss The entire balance of accumulated other comprehensive income (loss), net of income taxes, is related to the cumulative translation adjustment in each of the periods presented. The changes in the balance of accumulated other comprehensive income (loss), net of income tax, are attributable solely to the net change in the cumulative translation adjustment in each of the periods presented, and include the error correction described above during the 26 weeks ended July 4, 2021. Recently Adopted Accounting Standards In August 2020, the FASB issued ASU
2020-06 , Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40)2020-06 simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity. The ASU is part of the FASB’s simplification initiative, which aims to reduce unnecessary complexity in US GAAP. The ASU’s amendments are effective for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years. The Company elected to early adopt the ASU on January 4, 2021. The provisions of this ASU have been applied on a modified retrospective basis and did not have a material impact on the Company’s condensed consolidated financial statements and related disclosures. |
Acquisitions |
6 Months Ended | ||
|---|---|---|---|
Jul. 04, 2021 | |||
| Business Combinations [Abstract] | |||
| Acquisitions |
Cipura Acquisition Prior to May 2021, the Company held a 50% interest in Soho House—Cipura (Miami), LLC (“Cipura”), which owns and operates the Mandolin Aegean Bistro, located in Miami, Florida. Historically, the Company accounted for its investment in Cipura using the equity method of accounting. On May 10, 2021, the Company acquired the remaining 50% ownership interest in Cipura in exchange for issuing 644,828million, which is included in gain (loss) on sale of property and other, net in the unaudited condensed consolidated statements of operations for the 13 weeks and 26 weeks ended July 4, 2021. The fair value of the Company’s previously held interest was determined based upon the purchase consideration for the remaining 50% ownership interest. The Cipura Acquisition was accounted for as a business combination under the acquisition method of accounting. As a result, the Company recognized less than $1 million of cash and cash equivalents, less than $1 million of net working capital liabilities, $1 million of property and equipment, $3 million of intangible assets (consisting of an indefinite-lived trade name), less than $1 million of deferred tax liabilities, and $4 million of right-of-use pre-existing relationship, with a corresponding increase in the amount of goodwill recognized from the transaction. As a result of the acquisition, the Company recognized goodwill of $17 million, which represents intellectual capital, know-how for potential future openings and undertakings, and economic benefits that the Company expects to derive from the ability to expand the Mandolin Aegean Bistro brand that do not qualify for separate recognition. The entire value of goodwill has been allocated to a separate reporting unit which did not have any goodwill prior to the Cipura Acquisition. The recognized goodwill is not deductible for tax purposes. Due to the recent completion of the Cipura Acquisition, the Company recorded the assets acquired and liabilities assumed at their preliminary estimated fair values. As of July 4, 2021, the Company had not finalized the determination of fair values allocated to various assets and liabilities, including, but not limited to: property and equipment; intangible assets; right-of-use The condensed consolidated financial statements include the results of Cipura from May 10, 2021 through July 4, 2021, however such results are considered immaterial to the overall operations of the Company. The condensed consolidated statements of operations for the 13 weeks and 26 weeks ended July 4, 2021 also include less than $1 million in acquisition related costs, which were expensed as incurred and are included in general and administrative expense. Mandolin Acquisition On May 10, 2021, the Company acquired the intellectual property rights for Mr. Mandolin and Mrs. Mandolin (the “Mandolin IP”) in exchange for issuing 92,647 Soho Works Acquisition On May 10, 2021, the Company issued 3,984,883 C2 ordinary shares with an aggregate fair value of $54 million to SW SPV, LLC (the “SW Seller”) in order to acquire the SW Seller’s 30% equity ownership interest in Soho Works North America, LLC (the “Soho Works Acquisition”). The fair value of the C2 ordinary shares was derived by using an implied valuation of $13.49 per share, as described above. Prior to the Soho Works Acquisition, the Company held a controlling interest in and therefore consolidated Soho Works North America, LLC. The Soho Works Acquisition was accounted for as a transaction with a noncontrolling interest holder that did not result in a loss of control. The Company derecognized noncontrolling interest of $33 million and recorded the difference between the fair value of consideration transferred to the SW Seller of $54 million and the carrying value of the noncontrolling interest as a reduction in additional paid-in capital (i.e. a deemed distribution in the absence of retained earnings). Following the Soho Works Acquisition, the Company became the sole equity owner of Soho Works North America, LLC. Scorpios Noncontrolling Interests Acquisitions On April 30, 2021, the Company acquired an additional 12% equity interest from various noncontrolling interest holders of Paraga Beach S.A. for cash consideration of $9 million. Paraga Beach S.A owns and operates the Scorpios Beach Club. On May 12, 2021, the Company issued 572,410 C2 ordinary shares with an aggregate fair value of $8 million to Seligny Holdings Limited and Jaquelle Limited in order to acquire an additional 11% equity interest in Paraga Beach S.A (collectively, the “Scorpios Noncontrolling Interests Acquisitions”). The fair value of the C2 ordinary shares was derived by using an implied valuation of $13.49 per share, as described above. Prior to the Scorpios Noncontrolling Interests Acquisitions, the Company held a controlling interest in and therefore consolidated Paraga Beach S.A. Therefore, the Scorpios Noncontrolling Interests Acquisitions were accounted for as transactions with noncontrolling interest holders that did not result in a loss of control. In total, the Company derecognized noncontrolling interest of $16 million and recorded the difference between the fair value of consideration transferred to the noncontrolling interest holders and the carrying value of the noncontrolling interest as a reduction in additional paid-in capital. Following the Scorpios Noncontrolling Interests Acquisitions, Seligny Holdings Limited and Jaquelle Limited continue to hold a 10% ownership interest in Paraga Beach S.A. Line and Saguaro Acquisition On June 22, 2021 the Company entered into a membership interests purchase agreement with Sydell Group LLC (“Sydell”) to acquire all of the outstanding shares in the companies that together operate existing and future “The Line” and “Saguaro” hotels in the United States (the “Line and Saguaro Acquisition”). The hotels that are currently operational are located in Los Angeles, Washington DC, Austin, Scottsdale and Palm Springs, and between them offer a variety of food and beverage offerings together with approximately 1,470 hotel rooms. An additional hotel is under development in San Francisco. The Company issued 1,900,599 C2 ordinary shares with an aggregate fair value of $26 million as consideration for the Line and Saguaro Acquisition. The fair value of the C2 ordinary shares was derived by using an implied valuation of $13.49 per share, as described above. The Line and Saguaro Acquisition was accounted for as a business combination under the acquisition method of accounting. The only acquired identifiable assets are related to the hotel management agreements intangible asset, which has a total fair value of $24 million and an estimated useful life of 15 years. The Company did not acquire any other assets or assume any other liabilities. As a result of the Line and Saguaro Acquisition, the Company recognized $2 million of goodwill, which represents the fair value of the assembled workforce that is not separately recognized from goodwill and the economic benefits that the Company expects to derive from the ability to expand the hotel management agreements that do not qualify for separate recognition. In addition, the goodwill relates to the synergies expected to be gained from the affiliation of the Line hotels with the Soho House brand name. The entire value of goodwill has been allocated to a separate reporting unit which did not have any goodwill prior to the Line and Saguaro Acquisition. The recognized goodwill is not deductible for tax purposes. The condensed consolidated financial statements include the results of the acquired business from June 22, 2021 through July 4, 2021, however such results are considered immaterial to the overall operations of the Company. The condensed consolidated statements of operations for the 13 weeks and 26 weeks ended July 4, 2021 also include less than $1 million in acquisition related costs, which were expensed as incurred and are included in general and administrative expense. T he C2 ordinary shares issued in the transactions described above were converted to Class A common stock of MCG upon completion of our IPO in July 2021, as further described in Note 22, Subsequent Events. |
Consolidated Variable Interest Entities |
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| Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Consolidated Variable Interest Entities |
The Company determined that it is the primary beneficiary of the following material variable interest entities (“VIEs”): Soho Restaurants Limited (13 weeks and 26 weeks ended July 4, 2021 only); Soho House-Sydell, LLP (all periods presented); Soho Works Limited (all periods presented); and Soho Works North America, LLC (all periods presented). Soho Restaurants Limited S oho Restaurants Limited (“Soho Restaurants”) is a casual fast-dining business that operates various restaurants throughout the UK. Prior to the August 2020 reorganization of Soho Restaurants (as further described below), the Company provided unsecured non-interest bearing loan notes (“Soho Restaurants Loan Notes”) to Soho Restaurants from time to time and guaranteed the obligations of Soho Restaurants under certain property leases with respect to any required rental and other payments. Prior to the year ended January 3, 2021, the Company did not have to make any payments under these rental guarantees and determined that the likelihood of the Company having to perform under the guarantees was remote. As a result of the impact of the COVID-19 pandemic on Soho Restaurants’ operations, the Company reassessed the likelihood of performance under the guarantees and recognized a charge of$ 5million during the 13 weeks ended June 28, 2020; this guarantee provision is included in general and administrative expense in the condensed consolidated statements of operations for the 13 weeks and 26 weeks ended June 28, 2020. On August 18, 2020, Soho Restaurants underwent a series of reorganization steps, through which Quentin Partners Limited (“Quentin Partners”), an affiliate of the Company, became the sole equity holder of Soho Restaurants Limited. As part of these reorganization steps, various notes payable and receivable held by Soho Restaurants were acquired, settled, or, in some cases, forgiven. Specifically, Quentin Partners acquired for nominal consideration (and forgave) all outstanding Soho Restaurants Loan Notes with the exception of a £1 million ($1 million) Loan Note, which remains outstanding after the reorganization was completed. As a result of the reorganization and the Company’s variable interest in Soho Restaurants (consisting primarily of the Loan Note and certain lease guarantees), the Company determined that it is the primary beneficiary of Soho Restaurants due to its related party affiliation with Quentin Partners and its funding of the majority of Soho Restaurants’ operations. As such, the Company began consolidating Soho Restaurants on August 18, 2020. The Soho Restaurants reorganization transaction was accounted for using the acquisition method of accounting. Soho House-Sydell, LLP T he Soho House-Sydell, LLP joint venture maintains a management agreement to operate The Ned, which is owned by unconsolidated related parties to the Company. Management fees are recognized in other revenues in the condensed consolidated statements of operations. Soho Works Limited and Soho Works North America, LLC The Soho Works Limited (“SWL”) joint venture develops and operates Soho-branded, membership-based co-working spaces, with two sites currently in operation in the UK. Soho Works North America, LLC and its wholly owned subsidiaries (“SWNA”) plans to develop and operate Soho-branded, membership-based co-working spaces in North America. Refer to Note 3, Acquisitions for additional information regarding the Soho Works Acquisition. The following table summarizes the carrying amounts and classification of the consolidated VIEs’ assets and liabilities included in the condensed consolidated balance sheets. The obligations of the consolidated VIEs other than Soho Restaurants Limited are non-recourse to the Company, and the assets of the VIEs can be used only to settle those obligations.
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Equity Method Investments |
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| Equity Method Investments and Joint Ventures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Equity Method Investments |
The Company maintains a portfolio of equity method investments owned through noncontrolling interests in investments with one or more partners. There have been no changes in the Company’s equity method investment ownership interests in existing entities (other than the Cipura Acquisition, as described in Note 3, Acquisitions) and no new equity method investments since January 3, 2021. Under applicable guidance for VIEs, the Company determined that its investments in Soho House Toronto Partnership (“Soho House Toronto”) and the entities comprising 56-60 Redchurch Street, London are VIEs. Soho House Toronto owns and operates a House located in Toronto, while 56-60 Redchurch Street, London provides additional members’ accommodation capacity for Shoreditch House in London. Prior to June 2020, the Company’s investment in the entities comprising Soho House Barcelona were also considered to be VIEs, as described further below. Toronto Joint Venture On March 28, 2012, the Company and two unrelated investors (“Toronto Partners”) formed Soho House Toronto to establish and operate a house in Toronto, Canada. The Company is responsible for managing the development and operations of the property with key operating decisions requiring joint approval with the Toronto Partners. Barcelona Joint Venture On January 28, 2014, the Company and an unrelated development partner (“Barcelona Partner”) formed Mimea XXI, S.L.U. (“Mimea”) to establish and operate Soho House Barcelona in Barcelona, Spain. Soho House Barcelona is owned by Mirador Barcel S.L., a subsidiary of Mimea. On June 4, 2020, the Company entered into an agreement to operate Little Beach House Barcelona, a private members club and hotel developed at the existing Barcelona property. Little Beach House Barcelona is a newly formed subsidiary under Mimea. 56-60 Redchurch Street, London Joint Venture On July 6, 2015, the Company and an unrelated investor (“Raycliff Partner”) formed Raycliff Red LLP (“Club Row Rooms”) to develop and operate a hotel at 58-60 Redchurch Street intended to provide additional members’ accommodation to the nearby Shoreditch House in London. This was later extended to include 56 Redchurch Street under the same terms. The Company is responsible for managing the operations of the property and the Raycliff Partner is responsible for managing the building. The Company concluded that it is not the primary beneficiary of the Soho House Toronto or 56-60 Redchurch Street, London VIEs in any of the periods presented, as its joint venture partners have the power to participate in making decisions related to the majority of significant activities of each investee. Accordingly, the Company concluded that application of the equity method of accounting is appropriate for these investees. Barcelona was previously determined to be a VIE; however, the execution of amended governing documents in June 2020 constitutes a reconsideration event and Barcelona no longer meets the VIE criteria. Summarized Financial Information The following tables present summarized financial information for all unconsolidated equity method investees. The Company’s maximum exposure to losses related to its equity method investments is limited to its ownership interests, as well as certain guarantees.
The Company’s equity method investees have not yet adopted ASC 842, Leases right-of-use |
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Leases |
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| Leases [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Leases |
The Company has entered into various lease agreements for its Houses, hotels, restaurants, spas and other properties across North America, Europe, and Asia. The Company’s material leases have reasonably assured lease terms ranging from 1 year to 30 years for operating leases and 50 years for finance leases. Certain operating leases provide the Company with multiple renewal options that generally range from 5 years to 10 years, with rent payments on renewal based on a predetermined annual increase or market rates at the time of exercise of the renewal. The Company has 2 material finance leases with 25-year renewal options, with rent payments on renewal based on upward changes in inflation rates. As of July 4, 2021, the Company recognized right-of-use right-of-use right-of-use As part of our overall plan to improve liquidity during the COVID-19 pandemic, the Company negotiated with certain lessors to defer or waive certain rent payments on leased buildings. Cash payment deferrals and waivers have been separately recorded in the period arrangements occurred, and therefore, there have been no remeasurements to the lease liabilities and right-of-use The maturity of the Company’s operating and finance lease liabilities as of July 4, 2021 is as follows:
As of July 4, 2021, and January 3, 2021, the long-term liabilities for finance leases were Certain lease agreements include variable lease payments that, in the future, will vary based on changes in the local inflation rates, market rate rents, or business revenues of the leased premises. Leases that contain market rate rents generally reset every five years. Straight-line rent expense recognized as part of in-House operating expenses for operating leases was $24 million and $27 million for the 13 weeks ended July 4, 2021 and June 28, 2020, respectively, and $53 million, and $53 million for the 26 weeks ended July 4, 2021 and June 28, 2020, respectively. For the 13 weeks ended July 4, 2021 and June 28, 2020, the Company recognized amortization expense related to the right-of-use right-of-use New Houses typically have a maturation profile that commences sometime after the lease commencement date used in the determination of the lease accounting in accordance with Topic 842. The condensed consolidated balance sheets set out the operating lease liabilities split between sites trading less than one year and sites trading more than one year. “Sites trading less than one year” and “sites trading more than one year” reference sites that have been open (as measured from the date the site first accepted a paying guest) for a period less than one year from the balance sheet date and those that have been open for a period longer than one year from the balance sheet date. The following information represents supplemental disclosure for the statement of cash flows related to operating and finance leases:
The following summarizes additional information related to operating and finance leases:
As of July 4, 2021, the Company has entered into 11 operating lease agreements for Houses, hotels, restaurants, and other properties that are in various stages of construction by the landlord. The Company will determine the classification as of the lease commencement date, but currently expects these under construction leases to be operating leases. Soho House Design (“SHD”) is involved to varying degrees in the design of these leased properties under construction. For certain of these leases, the Soho House Design team is acting as the construction manager on behalf of the landlord. Pending significant completion of all landlord improvements and final execution of the related lease, the Company expects these leases to commence in fiscal years ending 2021, 2022, 2023 and 2026. The Company estimates the total undiscounted lease payments for the leases commencing in fiscal years 2021, 2022, 2023 and 2026 will be $318 million, $469 million, $194 million, and $142 million, respectively, with weighted-average expected lease terms of 19 years, 23 years, 19 years, and 25 years for 2021, 2022, 2023 and 2026, respectively. The following summarizes the Company’s estimated future undiscounted lease payments for current leases under construction, including properties where the Soho House Design team is acting as the construction manager:
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Revenue Recognition |
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| Revenue Recognition [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Revenue Recognition |
T he Company’s revenues consist primarily of annual membership fees and initial registration fees; food and beverage, accommodation and spa revenues generated in the Company’s Houses; and revenues that are not generated within the Houses, such as revenues from the stand-alone restaurants, as well as design fees from Soho House Design, Soho Home, retail Cowshed products, Soho Works sites, the Scorpios Beach Club, and management fees from The Ned. Disaggregated revenue disclosures for the 13 weeks and 26 weeks ended July 4, 2021 and June 28, 2020 are included in Note 20, Segments. The following table includes estimated revenues expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied) at the end of the reporting period ending July 4, 2021. The Company applies the practical expedient and does not disclose information about remaining performance obligations for contracts that have original expected durations of one year or less.
All consideration from contracts with customers is included in the amounts presented above. The following table provides information about contract receivables, contract assets and contract liabilities from contracts with customers:
Contract assets consist of accrued unbilled income related to build-out contracts and are recognized in prepaid expenses and other assets on the condensed consolidated balance sheets. Contract liabilities include deferred membership revenue, hotel deposits (which are presented in accrued liabilities on the condensed consolidated balance sheets), and gift vouchers. Revenue recognized that was included in the contract liability balance as of the beginning of the period was $21 million and $17 million during the 13 weeks ended July 4, 2021 and June 28, 2020, respectively and $37 million and $36 million during the 26 weeks ended July 4, 2021 and June 28, 2020, respectively.
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Inventories, Prepaid Expenses and Other Current Assets |
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| Prepaid Expense and Other Assets, Current [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Inventories, Prepaid Expenses and Other Current Assets |
I nventories consist of raw materials, service stock and supplies (primarily food and beverage) and finished goods which are externally sourced. Raw materials and service stock and supplies totaled $8 million and $8 million as of July 4, 2021 and January 3, 2021, respectively. Finished goods totaled $18 million and $15 million as of July 4, 2021 and January 3, 2021, respectively. The table below presents the components of prepaid expenses and other current assets.
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Property and Equipment, Net |
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| Property, Plant and Equipment [Abstract] | ||||
| Property and Equipment, Net |
Additions totaled $22 million and $35 million during the 13 weeks ended July 4, 2021 and June 28, 2020, respectively, and $37 million and $61 million during the 26 weeks ended July 4, 2021 and June 28, 2020, respectively, and were primarily related to leasehold improvements and fixtures and fittings for sites under development.
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Goodwill and Intangible Assets |
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| Goodwill and Intangible Assets Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Goodwill and Intangible Assets |
A summary of goodwill for each of the Company’s applicable reportable segments from January 3, 2021 to July 4, 2021 is as follows:
Refer to Note 3, Acquisitions for information on additional intangible assets recognized during the 13 weeks ended July 4, 2021 in connection with the Cipura Acquisition, Mandolin Acquisition, and the Line and Saguaro Acquisition. |
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Accrued Liabilities and Other Current Liabilities |
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| Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Accounts Payable, Accrued Liabilities, and Other Liabilities Disclosure, Current [Text Block] |
Included in trade, capital and other accruals is $2 million and $2 million as of July 4, 2021 and January 3, 2021, respectively, related to social security taxes that were deferred as a result of government relief afforded by the COVID-19 pandemic which have not yet been paid. The balance of other curr e nt liabilities on the condensed consolidated balance sheets includes a contingent liability of $12 million and $12 million as of July 4, 2021 and January 3, 2021, respectively, associated with membership credits issued beginning in March 2020 (refer to Note 18, Commitments and Contingencies, for more information). |
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Debt |
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| Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Debt |
Debt balances, net of debt issuance costs, are as follows:
Property mortgage loans, net of debt issuance costs, are as follows:
Related party loans, net of current portion and imputed interest, are as follows:
The weighted-average interest rate on fixed rate borrowings was 8% as of July 4, 2021 and 7% as of June 28, 2020. The weighted-average interest rate on floating rate borrowings was 4% as of July 4, 2021 and 7% as of June 28, 2020. Debt The description below shows the financial instrument amounts in the currency of denomination with USD equivalent in brackets, where applicable, translated using the exchange rates in effect at the time of the respective transaction. On December 5, 2019, the Company entered into a £55 million ($72 million) floating rate revolving credit facility with a maturity date of January 25, 2022. In April 2020, the Company secured an additional £20 million ($25 million) of liquidity under this facility and extended the maturity until . As of July 4, 2021 and January 3, 2021, the Company had £4 million ($6 million) and £14 million ($19 million) remaining to draw against this facility, respectively. The facility is secured on a fixed and floating charge basis over certain assets of the Company. The Company incurred interest expense of $1 million and $1 million during the 13 weeks ended July 4, 2021 and June 28, 2020, respectively, and $2 million and $2 million on this facility during the 26 weeks ended July 4, 2021 and June 28, 2020, respectively. In April 2017, the Company entered into the Permira Senior Facility, which consisted of a £275 million ($345 million) senior secured loan with an interest rate of LIBOR (subject to a floor of 1%) + 7%. A portion of the interest was in the form of payment in kind, with the accrued interest being converted to capital outstanding on the loan at each interest payment date. The Permira Senior Facility was secured on a fixed and floating charge basis over the assets of the Company. As of January 3, 2021, the Company had £397 million ($ million) due under the Permira Senior Facility, which was initially scheduled to mature in however the maturity date was subsequently extended until . The Company incurred interest expense of zero and $10 million on the Permira Senior Facility during the 13 weeks ended July 4, 2021 and June 28, 2020, respectively, and $13 million and $21 million during the 26 weeks ended July 4, 2021 and June 28, 2020, respectively. In March 2021, the Company repaid in full the balance outstanding under the Permira Senior Facility, consisting of a GBP tranche with an outstanding principal balance, including accrued payment-in-kind payment-in-kind payment-in-kind On April 24, 2020, the Company entered into an unsecured promissory note under the Paycheck Protection Program (the “PPP”), with a principal amount of $22 million. The loan had a January 2023 maturity date and was subject to a 1% interest rate. The PPP was established under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) and is administered by the US Small Business Administration (the “SBA”). The Company repaid all amounts outstanding under the US government-backed bank loan in March 2021. The Company incurred interest expense of zero and less than $1 million during the 13 weeks and 26 weeks ended July 4, 2021. On March 31, 2021, Soho House Bond Limited, a wholly-owned subsidiary of the Company, issued pursuant to a Notes Purchase Agreement senior secured notes, which were subscribed for by certain funds managed, sponsored or advised by Goldman Sachs & Co. LLC or its affiliates, in aggregate amounts equal to $295 million, €62 million ($73 million) and £53 million ($73 million) (the “Initial Notes”). The Notes Purchase Agreement includes an option to issue, and a commitment on the part of the purchasers to subscribe for, further notes in one or several issuances on or prior to March 31, 2022 in an aggregate amount of up to $100 million (the “Additional Notes” and, together with the Initial Notes, the “Senior Secured Notes”). The Senior Secured Notes mature on March 31, 2027 and bear interest at a fixed rate equal to a cash margin of 2.0192% per annum for the Initial Notes or 2.125% per annum for any Additional Notes, plus a payment-in-kind The remaining loans consist of the following:
Property Mortgage Loans In February 2019, the Company refinanced an existing term loan and mezzanine loan associated with a March 2014 corporate acquisition of Soho Beach House Miami with a new term loan and mezzanine loan. The new term loan of $55 million and mezzanine loan of $62 million are secured on the underlying property and operations of Soho Beach House Miami and are due in February 2024. The loans bear interest at 5.34% and 7.25%, respectively. The Company incurred interest expense on these facilities of $ 2 million and $ 2 million during the 13 weeks ended July 4, 2021 and June 28, 2020, respectively, and $ 4 million and $ 4 million during the 26 weeks ended July 4, 2021 and June 28, 2020, respectively . Related Party Loans In 2017, Soho Works Limited entered into a term loan facility agreement with two individuals who are the holders of the Company’s redeemable preferred shares related to a £40 million term loan facility. The SWL loan bears interest at 7% and matures at the earliest of: (a) September 29, 2022; (b) the date of disposal of the whole or substantial part of the Soho Works Limited; (c) the date of sale by the shareholders of the entire issued share capital of Soho Works Limited to a third party; (d) the date of the admission of Soho Works Limited to any recognized investment exchange or multi-lateral trading facility; and (e) any later date that the two individuals may determine in their sole discretion. In December 2019, Soho Works Limited drew £11 million ($14 million) under the facility. The carrying amount of the term loan was £14 million ($19 million) and £13 million ($18 million) as of July 4, 2021 and January 3, 2021, respectively. The Company incurred interest expense of less than $1 million and less than $1 million during the 13 weeks ended July 4, 2021 and June 28, 2020, respectively, and less than $1 million and $1 million during the 26 weeks ended July 4, 2021 and June 28, 2020, respectively, on this facility. In non-interest bearing loan agreement with a noncontrolling interest shareholder of certain of its subsidiaries in Greece for a principal amount of less than €1 million ($1 million). The shareholder loan is presented within current portion of related party loans on the condensed consolidated balance sheets and matures in December 2021. The shareholder loan has an effective interest rate of 4%. Shareholders of the Company provided £19 million unsecured, non-interest bearing loan notes. The loan notes constituted unsecured obligations, and the rights of the noteholders under such loan notes were contractually subordinated to any secured senior indebtedness of the Company. In May 2020, the Company issued 2,176,424 A ordinary shares to settle the loan notes. Prior to settlement, the loan notes had an effective interest rate of 10%. The Company recognized effective interest expense of $1 million and $2 million on these loan notes during the 13 weeks and 26 weeks ended June 28, 2020, respectively. The following table presents future principal payments for the Company’s debt, property mortgage loans, and related party loans as of July 4, 2021:
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Fair Value Measurements |
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| Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Fair Value Measurements |
Recurring and Non-recurring Fair Value Measurements There were no assets or liabilities measured at fair value on a recurring or non-recurring basis as of July 4, 2021. There were no assets or liabilities measured at fair value on a recurring or non-recurring basis as of January 3, 2021 with the exception of Little House Mayfair Apartments for which the Company recognized an impairment loss during the fiscal year ended January 3, 2021. Fair Value of Financial Instruments The Company believes the carrying values of its financial instruments related to current assets and liabilities approximate fair value due to short-term maturities. The Company believes that the carrying value of the Senior Secured Notes (excluding debt issuance costs of $11 million as of July 4, 2021) closely approximates the fair value of such notes, given the proximity of the initial issuance of the Senior Secured Notes to the period-end date. With respect to the fair value of the Permira Senior Facility as of January 3, 2021, the Company does not believe that its financial performance or creditworthiness changed significantly since the inception of the facility, which was issued at par with a floating interest rate of LIBOR (subject to a floor of 1%) + 7%. Given the nature of this floating rate obligation and the stability of the Company’s creditworthiness, the carrying value (excluding debt issuance costs of $5 million as of January 3, 2021) closely approximated the Permira obligation’s fair value prior to the repayment of the Permira Senior Facility in March 2021. The fair value of the remaining debt is estimated to be equal to the current carrying value of each instrument based on a comparison of each instrument’s contractual terms to current market terms. The Company does not believe that the use of different market inputs would have resulted in a materially different fair value of debt as of July 4, 2021 and January 3, 2021. The following table presents the estimated fair values (all of which are Level 2 fair value measurements) of the Company’s debt instruments with maturity dates in 2022 and thereafter:
non-current liabilities and non-current assets approximate their fair values.
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Share-Based Compensation |
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| Share-based Payment Arrangement [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Share-Based Compensation |
In August 2020, the Company established the 2020 Equity and Incentive Plan (the “Plan”) under which Share Appreciation Rights (”SARs”) and Growth Shares were issued to certain of its employees. The awards are settled in ordinary D shares and the Company can grant up to 9,978,143 ordinary D shares under the Plan. As of July 4, 2021, there were 7,189,393 SARs and 2,850,897 Growth Shares outstanding under the 2020 Equity and Incentive Plan. As of January 3, 2021, there were 5,536,998 SARs and 2,850,897 Growth Shares outstanding under the plan. The Company granted an additional 11,170 and 1,709,737 SARs during the 13 weeks and 26 weeks ended July 4, 2021, respectively. There were zero and 57,342 SARs forfeited during the 13 weeks and 26 weeks ended July 4, 2021, respectively. The base price of all SARs as of each respective grant date was equal to the deemed fair value of the underlying ordinary shares on such date, as determined by the Company with the assistance of periodic valuations from a third-party valuation firm. Share-based compensation during the 13 weeks and 26 weeks ended July 4, 2021 was recorded in the condensed consolidated statements of operations within general and administrative expense as shown in the following tables:
There was no share-based compensation expense recognized during the 13 weeks and 26 weeks ended June 28, 2020. As of July 4, 2021, total compensation expense not yet recognized related to unvested SARs is approximately $23 million, which is expected to be recognized over a weighted average period of 3.23 years. As of July 4, 2021, total compensation expense not yet recognized related to unvested Growth Shares is approximately $9 million, which is expected to be recognized over a weighted average period of 3.14 years. |
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Redeemable Preferred Shares |
6 Months Ended | ||
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Jul. 04, 2021 | |||
| Stockholders' Equity Note [Abstract] | |||
| Redeemable Preferred Shares |
In May 2016, the Company issued 10,000,000, 7% redeemable preferred shares totalling £10 million ($ 15 million) to unrelated parties. These shares are redeemable by the holders upon an exit, such as an IPO, or sale of the Company and the cumulative dividends are only paid on redemption. As of January 3, 2021, redemption of the preferred shares was not probable. As of July 4, 2021, the Company concluded that the shares were probable of becoming redeemable and, therefore, accreted the shares to their redemption value of $20 million. The accretion of $5 million is reflected as a reduction in additional paid-in capital on the condensed consolidated statements of changes in redeemable shares and shareholders’ deficit for the 13 weeks and 26 weeks ended July 4, 2021. In addition, the Company remeasured the redeemable preferred shares using the exchange rate in effect at the end of the period and recognized a foreign currency translation gain of $1 million, which is reflected within accumulated deficit on the condensed consolidated statements of changes in redeemable shares and shareholders’ deficit for the 13 weeks and 26 weeks ended July 4, 2021. On March 31, 2021, the Company issued 12,970,766 senior convertible preference shares (the “Senior Preference Shares”) in an aggregate liquidation preference of $175 million, or approximately $13.49 per Senior Preference Share (the “Issuance Price”), to certain funds managed, sponsored or advised by Goldman Sachs & Co. LLC or its affiliates (the “Preference Share Investors”). The Company received net proceeds of $162 million and incurred transaction costs of $13 million related to the Senior Preference Shares. In addition, the Preference Share Investors granted the Company the right to purchase, at the discretion of the Company at any time up to six months effective from March 31, 2021, 5,558,900 Senior Preference Shares in an aggregate liquidation preference of $75 million. The Senior Preference Shares rank senior in right of payment and priority to all other classes of shares of the Company and junior in right of payment to all classes of indebtedness of the Company. The Senior Preference Shares accrue a non-cash dividend of 8% per annum on the investment amount of the Senior Preference Shares plus all previously compounded non-cash dividends. During the 13 weeks and 26 weeks ended July 4, 2021, the Company recognized non-cash preferred dividends of $4 million as an adjustment to the carrying value of the Senior Preference Shares, with a corresponding reduction in additional paid-in capital on the condensed consolidated statements of changes in redeemable shares and shareholders’ deficit. The Senior Preference Shares do not have a stated maturity date but are redeemable for cash at the option of the holder on or after March 31, 2026, provided that the Company has not undergone a qualifying public listing prior to that date. The shares may also be redeemed for cash at any time prior to March 31, 2022 at the option of the Company. The Senior Preference Shares (including accrued dividends) are convertible into C ordinary shares at the option of the holders at any time, at a conversion price of $13.49 per share. Upon a public listing of the Company’s shares, the Senior Preference Shares (including accrued dividends) will convert into the publicly listed securities based on the lesser of (i) $13.49 per share, and (ii) the public share offering price multiplied by an agreed upon discount factor. The holders of the Senior Preference Shares are entitled to appoint one
non-executive director and one non-voting observer director to the Company’s board and have certain veto rights with respect to shareholder reserved matters. Holders of the Senior Preference Shares are also entitled to vote at general meetings of the Company. As of July 4, 2021, redemption of the Senior Preference Shares was not probable. On July 19, 2021, all of the outstanding Senior Preference Shares were converted into an aggregate of 15,526,619 shares of Class A common stock of Membership Collective Group Inc. immediately upon the closing of the IPO (as described in Note 22, Subsequent Events). |
C Ordinary Shares |
6 Months Ended | ||
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Jul. 04, 2021 | |||
| Temporary Equity Disclosure [Abstract] | |||
| C Ordinary Shares |
On August 23, 2019, the Company issued redeemable C ordinary shares to an unrelated third party. On the same date, the new investor purchased A ordinary shares directly from Mr. Nick Jones; these shares were immediately converted into an equal number of redeemable C ordinary shares. On November 4, 2019, the Company issued additional shares to the same investor, resulting in a total of 6,933,004 redeemable C ordinary shares issued and outstanding as of December 29, 2019. On May 19, 2020, the Company issued an additional 9,502,993 redeemable C ordinary shares to a different unrelated third party for a total subscription price of $100 million, net of discount of $6 million. The Company received net proceeds of $94 million and incurred $1 million of share issuance costs in connection with this issuance. The Company recorded the redeemable C ordinary shares as mezzanine equity as a result of the redemption provision described below. An investor option was provided in conjunction with the redeemable C ordinary shares issued on May 19, 2020. In March 2021, the investor option was exercised for the full $50 million, net of a discount of $3 million, and the Company issued an additional 4,751,497 redeemable C ordinary shares. The Company received net proceeds of $47 million and did not incur any material share issuance costs in connection with this issuance. As a result, the Company had 21,187,494 redeemable C ordinary shares issued and outstanding as of July 4, 2021. Upon meeting certain conditions, the holders of the redeemable C ordinary shares described above have the option to redeem all of the shares between October 1, 2023 and March 31, 2024 with respect to the shares issued in August 2019 or between August 23, 2023 and February 23, 2024 with respect to the shares issued in May 2020 and March 2021, provided that the Company has not completed a public listing of its shares prior to the beginning of the respective redemption period. The redemption amount is determined using a 5% stated rate of return on the holders’ aggregate subscription price, calculated for the period between August 23, 2019 (or May 19, 2020 for the subsequent issuance) and the redemption date. As of July 4, 2021, redemption of the redeemable C ordinary shares was not probable and, therefore, the Company recorded the shares at their original issuance price and has not accreted the shares to their redemption value. On December 8, 2020, Mr. Nick Jones sold certain of his A ordinary shares to an unrelated third party and as a condition of the transaction, the A ordinary shares were converted into 1,710,546 C ordinary shares. Unlike the previously issued redeemable C ordinary shares described above, the investor does not have the right to redeem these converted C ordinary shares. Therefore, 1,710,546 of the total C ordinary shares outstanding as of July 4, 2021 and January 3, 2021 are classified as permanent equity instead of mezzanine equity. On July 19, 2021, all of the outstanding redeemable C ordinary shares were converted into an aggregate of 6,592,023 shares of Class A common stock and 10,871,215 shares of Class B common stock of Membership Collective Group Inc. immediately prior to the IPO (as described in Note 22, Subsequent Events). |
Loss Per Share and Shareholders' Deficit |
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| Stockholders' Equity Note [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loss Per Share and Shareholders' Deficit |
The Company has issued four classes of shares. Holders of A ordinary shares (par value of £1) are entitled to one vote for each A ordinary share held. Each A ordinary shareholder is entitled pari passu to dividend payments or any other distributions. B ordinary shareholders are entitled to income rights in proportion to the A ordinary shareholders based on the number of shares held only after £167 million ($230 million, translated using the exchange rate on July 4, 2021) has been returned in aggregate to the holders of A ordinary shares, the C ordinary shares and the C2 ordinary shares. The Company issued redeemable C ordinary shares (par value of £1) to unrelated third parties throughout the fiscal years ended December 29, 2019 and January 3, 2021 and during the 13 weeks ended April 4, 2021, as described in Note 16, C Ordinary Shares. The holders of redeemable C ordinary shares are entitled to one vote for each share held. In addition, so long as certain conditions are met, each of the investors will be entitled to appoint one non-executive director and one non-voting observer director to the Company’s board and will also have certain veto rights with respect to a sale of the Company prior to August 23, 2024. All redeemable C ordinary shares are entitled to dividend payments or any other distributions on a pari passu basis with other classes of ordinary shares. Upon a public listing of the Company’s shares, the redeemable C ordinary shares will convert into the same class of shares as the A ordinary shares on a 1:1 basis, subject to certain anti-dilution protection, whereby the holders of the redeemable C ordinary shares will receive additional shares if the value of the as-converted redeemable C ordinary shares is less than the investors’ initial subscription price. Separate from the redeemable C ordinary shares discussed above, in December 2020, the Company converted 1,710,546 A ordinary shares into 1,710,546 C ordinary shares which are not redeemable by the Company. These C ordinary shares do not have any voting or veto rights. The shares are entitled to dividend payments or any other distributions on a pari passu basis with other classes of ordinary shares. Upon a public listing of the Company’s shares, the C ordinary shares will convert into the same class of shares as the A ordinary shares on a 1:1 basis, subject to certain anti-dilution protection, whereby the holders of the C ordinary shares will receive additional shares if the value of the as-converted C ordinary shares is less than the investors’ initial purchase price. As of January 3, 2021, the Company had 3,326,048 non-voting C2 ordinary shares outstanding. During the 13 weeks ended July 4, 2021, the Company issued a total of 7,195,367 C2 ordinary shares in connection with various transactions as described in Note 3, Acquisitions. The C2 ordinary shares are entitled to dividend payments or any other distributions on a pari passu basis with other classes of ordinary shares. In August 2020, the Company established its 2020 Equity and Incentive Plan, under which employees received SARs and Growth Shares which will be settled in D ordinary shares (par value of £0.0001). As of July 4, 2021, there are 2,850,897 D ordinary shares issued and outstanding. Any additional D ordinary shares may be issued only pursuant to the Plan or any other approved incentive plans of the Company. The D ordinary shares do not have any voting rights. D ordinary shareholders are entitled to income and distribution rights in proportion to the A ordinary, B ordinary, C ordinary and C2 ordinary shareholders based on the number of shares held only after $1,800 million has been returned to the holders of all other classes of ordinary shares. The Company computes loss per share of A ordinary shares, B ordinary shares, C ordinary shares, and C2 ordinary shares using the two-class method. The tables below illustrate the reconciliation of the loss and the number of shares used in the calculations of basic and diluted loss per share:
The net loss attributable to the Company in calculating basic and diluted loss per share for all periods presented is adjusted for cumulative undeclared dividends on the May 2016 preferred shares. In addition, the net loss attributable to the Company in calculating basic and diluted loss per share for the 13 weeks and 26 weeks ended July 4, 2021 is adjusted for non-cash dividends on the Senior Preference Shares. The loss per share calculations for the 13 weeks and 26 weeks ended July 4, 2021 and June 28, 2020 exclude additional shares that would be issuable to the holders of redeemable C ordinary shares in the event of a public listing that resulted in the value of the redeemable C ordinary shares being less than the investor’s initial subscription price, because the impact of including such additional shares would be anti-dilutive. In addition, the loss per share calculation for the 13 weeks and 26 weeks ended July 4, 2021 excludes: (i) D ordinary shares, as the related Growth Shares have not yet vested and the inclusion of D ordinary shares in diluted loss per share would be anti-dilutive; and (ii) additional shares that would be issuable to the holders of the Senior Preference Shares if such shares were converted into C ordinary shares at the option of the holders, because the impact of including such additional shares would be anti-dilutive. |
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Commitments and Contingencies |
6 Months Ended | ||
|---|---|---|---|
Jul. 04, 2021 | |||
| Commitments and Contingencies Disclosure [Abstract] | |||
| Commitments and Contingencies |
Litigation Matters The Company is not a party to any litigation other than litigation in the ordinary course of business. The Company’s management and legal counsel do not expect that the ultimate outcome of any of its currently ongoing legal proceedings, individually or collectively, will have a material adverse effect on the Company’s condensed consolidated financial statements. Commitments and Contingencies In connection one-time goodwill gesture deemed to be a marketing offer to members, and were initially set to expire on December 31, 2020. The liability associated with the membership credits is derecognized based on the usage of credits and the cost of the inventory or services to fulfill the Company’s obligation to its members; this liability is classified within other current liabilities on the Company’s condensed consolidated balance sheet. In March 2021, the Company decided in its discretion to further extend the expiration date to September 30, 2021. The Company simultaneously adjusted its obligation based on its best estimate of the cost to be incurred. The maximum cost the Company could incur is approximately $25 million, however this is highly unlikely and the liability recorded reflects management’s best estimate of the redemption rate applied to the membership credits issued. The redemption rate is based on the Company’s cumulative experience to-date. Accordingly, an estimated liability of $12 million and $12 million. Capital Commitments As of July 4, 2021, capital expenditure commitments contracted for but not yet incurred total $4 million and are related primarily to construction and site improvement costs for Soho House Austin. As of January 3, 2021, capital expenditure commitments contracted for but not yet incurred total $1 million and are related primarily to Soho House Hong Kong. |
Income Taxes |
6 Months Ended | ||
|---|---|---|---|
Jul. 04, 2021 | |||
| Income Tax Disclosure [Abstract] | |||
| Income Taxes |
For the 13 weeks and 26 weeks ended July 4, 2021, there have been no material changes in the Company’s estimates or provisions for income taxes recorded in the unaudited condensed consolidated balance sheet. The Company has generated incremental deferred tax assets relating to tax losses and excess interest based on the results for the 13 weeks and 26 weeks ended July 4, 2021. Full valuation allowances have been recorded against the incremental deferred tax assets recognized. The level of unrecognized tax benefits has increased by $2 million and $3 million in the 13 weeks and 26 weeks ended July 4, 2021. There is no impact on the Company’s effective tax rate for the 13 weeks and 26 weeks ended July 4, 2021 as there is a corresponding reduction in the valuation allowance applied for the period. During the period, the UK government enacted a change in tax rate from the current 19% to 25%, with effect from April 1, 2023. The Company has therefore re-measured its UK deferred tax assets and liabilities. Net deferred tax assets, before valuation allowance, increased by $21 million, with a corresponding increase in the valuation allowance. Therefore, there was no impact on the Company’s condensed consolidated balance sheet or statements of operations as of and for any period presented. The effective tax rate for the 13 weeks ended July 4, 2021 was (0.01)%,
June 28, 2020. |
Segments |
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| Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Segments |
The Company’s build-out and design services, which comprise its Soho House Design operating segment. The Company has identified the following four reportable segments:
The Company analyzed the results of the Retail, Home & Beauty and Soho Works operating segments and concluded that they did not warrant separate presentation as reportable segments as they do not provide additional useful information to the readers of the financial statements. Therefore, these segments are included as part of an “All Other” category. The Company manages and assesses the performance of the reportable segments by adjusted EBITDA, which is defined as net income (loss) before depreciation and amortization, interest expense, net, provision (benefit) for income taxes, adjusted to take account of the impact of certain non-cash and other items that the Company does not consider in its evaluation of ongoing operating performance. These other items include, but are not limited to, loss (gain) on sale of property and other, net, share of loss (profit) of equity method investments, foreign exchange, pre-opening expenses, non-cash rent, deferred registration fees, net, share of equity method investments adjusted EBITDA, and share-based compensation expense. The following tables present disaggregated revenue for the 13 weeks and 26 weeks ended July 4, 2021 and June 28, 2020 and the key financial metrics reviewed by the Chief Operating Decision Maker (“CODM”) for the Company’s reportable segments:
Revenue recognized from Soho House Design totaled $4 million and $3 million during the 13 weeks ended July 4, 2021 and June 28, 2020, respectively, and $8 million and $8 million for the 26 weeks ended July 4, 2021 and June 28, 2020, respectively. During the fiscal year ended December 29, 2019, Soho House Design ceased providing build-out services as a result of the Company’s decision to shift strategic focus to the higher-margin design services. Some of SHD’s build-out services are provided as part of the Company’s in-house development activities (including to certain related parties as described in Note 21, Related Parties), which do not generate revenues from third parties. The following tables present the reconciliation of reportable segment adjusted EBITDA to total consolidated segment revenue and the reconciliation of net loss to adjusted EBITDA:
The following table presents long-lived asset information (which includes property and equipment, net, operating lease right-of-use
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Related Party Transactions |
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| Related Party Transactions [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Related Party Transactions |
In 2017, Soho Works Limited entered into a term loan facility agreement with two individuals who are the holders of the Company’s redeemable preferred shares. In December 2019, Soho Works Limited drew £11 million ($14 million) under this facility. For additional information, refer to Note 12, Debt – Related Party Loans. In 2013, 2016, 2018, and 2019, the Company entered into certain loans with its existing shareholders, affiliates of The Yucaipa Companies, LLC, Richard Caring and Nick Jones. These loans have been repaid or converted into ordinary shares of the Company as of January 3, 2021. For additional information, refer to Note 12, Debt – Related Party Loans. The amounts owed by (to) equity method investees due within one year are as follows:
Amounts owed by equity method investees due within one year are included in prepaid expenses and other current assets on the condensed consolidated balance sheets. Amounts owed to equity method investees due within one year are included in other current liabilities on the condensed consolidated balance sheets. In 2016, Soho Works Limited, a consolidated VIE, entered into an agreement to lease a property under construction by the landlord with Store Holding Group Ltd, a wholly-owned subsidiary of the noncontrolling interest holders of SWL. The handover of six floors of the leased property occurred on a floor-by-floor The Company is party to a property lease arrangement with The Yucaipa Companies LLC. The operating lease asset and liability associated with this lease are $11 million and $17 million as of July 4, 2021, respectively, and $12 million and $17 million as of January 3, 2021, respectively. Rent expense associated with this lease totaled $1 million and $1 million for the 13 weeks ended July 4, 2021 and June 28, 2020, respectively, and $2 million and $2 million during the 26 weeks ended July 4, 2021 and June 28, 2020, respectively. Through Soho-Ludlow Tenant LLC, the Company is a party to a property lease agreement dated May 3, 2019 for 137 Ludlow Street, New York with Ludlow 137 Holdings LLC, an affiliate of The Yucaipa Companies LLC. This lease runs for a term of 22 years until April 20, 2041, with options to extend for three additional five-year terms. The operating lease right-of-use The Company leases the Ludlow property from 139 Ludlow Acquisition LLC, an equity method investee. This is a 25-year lease that commenced May 1, 2016. The operating lease right-of-use The Company leases the Tel Aviv House from an affiliate of Raycliff Capital, LLC which holds a portion of the redeemable C ordinary shares. This lease commenced on June 1, 2021. The operating lease right-of-use In return for arranging, and providing financial and transaction advisory services in connection with, the issuance of the Senior Secured Notes and the Senior Preference Shares as described in Note 12, Debt, and Note 15, Redeemable Preferred Shares, respectively, an affiliate of Yucaipa Companies LLC received a fee in an aggregate amount of $10 million pursuant to a fee letter arrangement with the Company dated March 23, 2021. |
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Subsequent Events |
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| Subsequent Events [Abstract] | |||||||||||
| Subsequent Events |
Initial Public Offering On July 19, 2021, we completed the IPO of Class A of our common stock pursuant to a Registration Statement on Form S-1 (File No. 333-257206). Immediately prior to the closing of the IPO, we completed the following transactions which resulted in changes to our outstanding ordinary shares:
In the IPO, we sold 30,567,918 shares of Class A common stock at a public offering price of $14.00 per share, including 567,918 shares of Class A common sold pursuant to the underwriters’ partial exercise of a “greenshoe” option to purchase additional shares of common stock to cover over-allotments. The net proceeds were $402 million, after deducting underwriting discounts. A portion of the proceeds from the IPO was used to repay outstanding indebtedness of $98 million in respect of our revolving credit facility and to pay the redemption price of the outstanding May 2016 redeemable preferred shares in an aggregate amount of $20 million. |
Summary of Significant Accounting Policies (Policies) |
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| Accounting Policies [Abstract] | |||||||||||||||||
| Basis of Presentation | Basis of Presentation The unaudited condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for reporting interim information on Form 10-Q. The preparation of the financial statements in conformity with US GAAP requires the use of estimates, judgments and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities as of the date of the financial statements, and the reported amounts of revenues and expenses during the periods presented. We consistently applied the accounting policies described in the consolidated financial statements of SHHL as of and for the year ended January 3, 2021 included in Amendment No. 1 to the Company’s Form S-1 filed with the SEC on July 6, 2021 in preparing these unaudited interim condensed consolidated financial statements, other than those impacted by new accounting standards as described below. We operate on a fiscal year calendar consisting of a 52- or 53-week period ending on the last Sunday in December or the first Sunday in January of the next calendar year. In a 52-week fiscal year, each quarter contains 13 weeks of operations; in a 53-week fiscal year, each of the first, second and third quarters includes 13 weeks of operations and the fourth quarter includes 14 weeks of operations. Certain information and footnote disclosures normally included in financial statements prepared in accordance with US GAAP have been omitted in accordance with the rules and regulations of the SEC. The year-end condensed consolidated balance sheet data was derived from audited financial statements but does not include all disclosures required by US GAAP. The unaudited condensed consolidated financial statements include normal recurring adjustments, which in the opinion of management are necessary for the fair presentation of the condensed consolidated balance sheets, condensed consolidated statements of operations, of comprehensive loss, of changes in redeemable shares and shareholders’ deficit, and of cash flows for the periods presented. The unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes thereto, included in Amendment No. 1 to the Company’s Form S-1 filed with the SEC on July 6, 2021. The results of operations for the 13- and 26-week periods ending July 4, 2021 and June 28, 2020 are not necessarily indicative of the operating results for the full fiscal year or any future periods. The unaudited condensed consolidated statement of operations and statement of comprehensive loss for the 26 weeks ended July 4, 2021 include the correction of an error related to the Company’s consolidated financial statements for the fiscal years ended January 3, 2021 and December 29, 2019. The error relates to the correction of a consolidating adjustment for foreign currency transaction gains of $13 million in the fiscal year ended January 3, 2021 and $4 million in the fiscal year ended December 29, 2019. The correction of this error is presented within other in the condensed consolidated statement of operations for the 26 weeks ended July 4, 2021 and within foreign currency translation adjustment in the condensed consolidated statement of comprehensive loss for the 26 weeks ended July 4, 2021. Certain prior period amounts have been reclassified to conform to the current period presentation with no impact on previously reported net loss or cash flows, and no material impact on financial position. |
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| Going Concern | Going Concern The accompanying condensed consolidated financial statements of the Company have been prepared assuming the Company will continue as a going concern. The going concern basis of presentation assumes that we will continue in operation for at least a period of one year after the date these financial statements are issued, and contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. We have experienced net losses and significant cash outflows from cash used in operating activities over the past years as we develop our Houses. During the 13 weeks and 26 weeks ended July 4, 2021, the Company incurred a consolidated net loss of $57 million and $150 million, respectively. During the 26 weeks ended July 4, 2021, the Company had negative cash flow from operations of $94 million. As of July 4, 2021, the Company had an accumulated deficit of $ 903 million. As of July 4, 2021, the Company had cash and cash equivalents of $49 million, and restricted cash of $8 million. In addition, since March 2020, the COVID-19 pandemic has significantly impacted our business and we have had to temporarily close some or all of our Houses, hotels and public restaurants, at different times due to the ongoing effects of the pandemic, which has and will continue to have an impact on our revenues. At the date of issuance of these condensed consolidated financial statements, our Houses are open where possible, but with varying restrictions on operating capacity, in some of our geographies. In assessing the going concern basis of preparation of the condensed consolidated financial statements for the 13 weeks and 26 weeks ended July 4, 2021, we have taken into consideration detailed cash flow forecasts for the Company, the Company’s forecast compliance with bank covenants, and the continued availability of funding to the Company from banks and shareholders. We have considered the impact of the COVID-19 pandemic on the Company and the resultant global economic uncertainties and have undertaken a re-assessment of the cash flow forecasts covering a period of at least 12 months from the date these financial statements are issued. Cash flow forecasts have been prepared based on a range of scenarios including, but not limited to, no further debt or equity funding, the timing of a full re-opening of our Houses staggered and/or deferred to the end of the calendar year, cost reductions, both limited and extensive, and a combination of these different scenarios. We have assessed the sensitivity analysis on cash flows, and in order to finance these cash flow forecasts, we have completed a series of positive financing events during 2021, including issuance of new senior secured notes in an aggregate amount equal to $295 million, €62 million ($73 million) and £53 million ($73 million), issuance of $175 million of senior convertible preference shares, and subsequent to the period end the completion of our IPO for net proceeds of $402million after deducting underwriting discounts (including net proceeds from the partial exercise of the overallotment option). The senior secured notes include an option for the Company to issue additional notes in an aggregate amount of up to million on or prior to March 31, 2022 . The proceeds from the senior secured notes and senior convertible preference shares have been used to repay all amounts outstanding under the Permira Senior Facility and the US government-backed bank loan. The proceeds from the IPO were used to repay the outstanding principal balance of our revolving credit facility of $98 million (as of July 4, 2021), which remains in place as a source of additional liquidity if required, and to pay the redemption price of outstanding redeemable preferred shares, with the remainder to be used for general corporate purposes, including working capital needs. See Note 12, Debt, Note 15, Redeemable Preferred Shares, and Note 22, Subsequent Events, for additional information. W e believe that the completed working capital events, our projected cash flows and the actions available to management to further control expenditure, as necessary, provide the Company with sufficient working capital (including cash and cash equivalents) to achieve its plans to recover from the impact of the pandemic, subject to the following key factors:
While the impact of lockdowns and other restrictions may continue beyond current expectations and impact the Company’s ability to open Houses and return to a level of operation consistent with pre COVID-19 within the timeframes assumed in management’s detailed cash flow forecasts, we believe that the Company has sufficient financial resources together with an established and cash generative business model, and access to capital. Based on the available cash as a result of completed financing events discussed above, and the measures that have been put in place to control costs, we believe that the Company is able to continue in operational existence, meet its liabilities as they fall due, operate within its existing facilities, and meet all of its covenant requirements for a period of at least twelve months from the date these financial statements are issued. Based on the above, the condensed consolidated financial statements have been presented on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. Accordingly, we continue to adopt the going concern basis in preparing the condensed consolidated financial statements for the 13 weeks and 26 weeks ended July 4, 2021. |
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| Offering Costs | Offering Costs Direct and incremental legal and accounting costs associated with the Company’s proposed initial public offering are deferred and classified as a component of other assets in the unaudited condensed consolidated balance sheet. Such costs will be offset against the proceeds received in the offering. During the 13 weeks and 26 weeks ended July 4, 2021, the Company incurred $13 million andmillion related to the offering. As of July 4, 2021, $7 million was included in other assets in the unaudited condensed consolidated balance sheet, while $7 million was recognized in other in the unaudited condensed consolidated statements of operations for the 13 weeks and 26 weeks ended July 4, 2021. There were no deferred offering costs incurred during the 13 weeks and 26 weeks ended June 28, 2020. |
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| Comprehensive Loss | Comprehensive Loss The entire balance of accumulated other comprehensive income (loss), net of income taxes, is related to the cumulative translation adjustment in each of the periods presented. The changes in the balance of accumulated other comprehensive income (loss), net of income tax, are attributable solely to the net change in the cumulative translation adjustment in each of the periods presented, and include the error correction described above during the 26 weeks ended July 4, 2021. |
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| Recently Adopted Accounting Standards | Recently Adopted Accounting Standards In August 2020, the FASB issued ASU
2020-06 , Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40)2020-06 simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity. The ASU is part of the FASB’s simplification initiative, which aims to reduce unnecessary complexity in US GAAP. The ASU’s amendments are effective for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years. The Company elected to early adopt the ASU on January 4, 2021. The provisions of this ASU have been applied on a modified retrospective basis and did not have a material impact on the Company’s condensed consolidated financial statements and related disclosures. |
Consolidated Variable Interest Entities (Tables) |
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| Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Summary of consolidated VIEs' assets and liabilities included in the condensed consolidated balance sheets | The following table summarizes the carrying amounts and classification of the consolidated VIEs’ assets and liabilities included in the condensed consolidated balance sheets. The obligations of the consolidated VIEs other than Soho Restaurants Limited are non-recourse to the Company, and the assets of the VIEs can be used only to settle those obligations.
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Equity Method Investments (Tables) |
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| Equity Method Investments and Joint Ventures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Summary of the company's maximum exposure to losses related to its equity method investments | The following tables present summarized financial information for all unconsolidated equity method investees. The Company’s maximum exposure to losses related to its equity method investments is limited to its ownership interests, as well as certain guarantees.
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| Summary of equity method investment summarized balance sheet |
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Leases (Tables) |
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| Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Summary of the maturity of the Company's operating and finance lease liabilities | The maturity of the Company’s operating and finance lease liabilities as of July 4, 2021 is as follows:
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| Summary of the supplemental disclosure for the statement of cash flows related to operating and finance leases | The following information represents supplemental disclosure for the statement of cash flows related to operating and finance leases:
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| Summary of the additional information related to operating and finance leases | The following summarizes additional information related to operating and finance leases:
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| Summary of the Company's estimated future undiscounted lease payments for current leases | The following summarizes the Company’s estimated future undiscounted lease payments for current leases under construction, including properties where the Soho House Design team is acting as the construction manager:
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Revenue Recognition (Tables) |
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| Revenue Recognition [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Summary of disaggregation of revenue | The following table includes estimated revenues expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied) at the end of the reporting period ending July 4, 2021. The Company applies the practical expedient and does not disclose information about remaining performance obligations for contracts that have original expected durations of one year or less.
The following table provides information about contract receivables, contract assets and contract liabilities from contracts with customers:
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Inventories, Prepaid Expenses and Other Current Assets (Tables) |
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| Prepaid Expense and Other Assets, Current [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Prepaid Expenses And Other Current Assets | The table below presents the components of prepaid expenses and other current assets.
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Goodwill and Intangible Assets (Tables) |
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| Goodwill and Intangible Assets Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Summary of Goodwill | A summary of goodwill for each of the Company’s applicable reportable segments from January 3, 2021 to July 4, 2021 is as follows:
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Accrued Liabilities and Other Current Liabilities (Tables) |
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| Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Accrued Liabilities [Table Text Block] |
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Debt (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 04, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Summary of Property Mortgage Loans, Net of Debt Issuance Costs | Debt balances, net of debt issuance costs, are as follows:
Property mortgage loans, net of debt issuance costs, are as follows:
Related party loans, net of current portion and imputed interest, are as follows:
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| Summary of Future Principal Payments for the Company's Debt, Property Mortgage Loans, and Related Party Loans | The following table presents future principal payments for the Company’s debt, property mortgage loans, and related party loans as of July 4, 2021:
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| Summary Of remaining loans consist | The remaining loans consist of the following:
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Fair Value Measurements (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 04, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Summary of Estimated Fair Values of the Company's Debt Instruments | The following table presents the estimated fair values (all of which are Level 2 fair value measurements) of the Company’s debt instruments with maturity dates in 2022 and thereafter:
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Share-Based Compensation (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jul. 04, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Share-based Payment Arrangement [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Summary of Share-Based Compensation | Share-based compensation during the 13 weeks and 26 weeks ended July 4, 2021 was recorded in the condensed consolidated statements of operations within general and administrative expense as shown in the following tables:
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Loss Per Share and Shareholders' Deficit (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 04, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stockholders' Equity Note [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Reconciliation of the Loss and Number of Shares Basic and Diluted Loss Per Shares | The tables below illustrate the reconciliation of the loss and the number of shares used in the calculations of basic and diluted loss per share:
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Segments (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 04, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Summary of disaggregated revenue | The following tables present disaggregated revenue for the 13 weeks and 26 weeks ended July 4, 2021 and June 28, 2020 and the key financial metrics reviewed by the Chief Operating Decision Maker (“CODM”) for the Company’s reportable segments:
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| Summary of reconciliation of reportable segment adjusted EBITDA to total consolidated segment revenue | The following tables present the reconciliation of reportable segment adjusted EBITDA to total consolidated segment revenue and the reconciliation of net loss to adjusted EBITDA:
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| Summary of long-lived asset information by geographic area | The following table presents long-lived asset information (which includes property and equipment, net, operating lease right-of-use
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Related Party Transactions (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 04, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Related Party Transactions [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Summary of details amounts owed by (to) equity method investees due within one year are as follows | The amounts owed by (to) equity method investees due within one year are as follows:
|
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Nature of the Business - Additional Information (Detail) |
Jul. 04, 2021 |
|---|---|
| Soho House Holdings Limited SHHL | |
| Business Acquisition [Line Items] | |
| Percentage of equity interest acquired | 100.00% |
Consolidated Variable Interest Entities - Additional Information (Detail) £ in Millions, $ in Millions |
3 Months Ended | 6 Months Ended | |||
|---|---|---|---|---|---|
|
Jun. 28, 2020
USD ($)
|
Jul. 04, 2021 |
Jun. 28, 2020
USD ($)
|
Aug. 18, 2020
USD ($)
|
Aug. 18, 2020
GBP (£)
|
|
| Soho Restaurants Limited [Member] | |||||
| Consolidated Variable Interest Entities [Line Items] | |||||
| Varible interest entity, Loss exposure amount | $ 1 | £ 1 | |||
| Soho Works Limited [Member] | |||||
| Consolidated Variable Interest Entities [Line Items] | |||||
| Varible interest entity, Size of VIE | The Soho Works Limited (“SWL”) joint venture develops and operates Soho-branded, membership-based co-working spaces, with two sites currently in operation in the UK. | ||||
| General and Administrative Expense [Member] | |||||
| Consolidated Variable Interest Entities [Line Items] | |||||
| Provision for loan, lease, and other losses | $ 5 | $ 5 | |||
Equity Method Investments - Summary of The Company's Maximum Exposure To Losses Related To Its Equity Method Investments (Detail) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | |||||
|---|---|---|---|---|---|---|---|
Jul. 04, 2021 |
Jun. 28, 2021 |
Apr. 04, 2021 |
Jun. 28, 2020 |
Mar. 29, 2020 |
Jul. 04, 2021 |
Jun. 28, 2020 |
|
| Shedule Of Equity Method Investment Summarized Statement Of Operations [Line Items] | |||||||
| Revenues | $ 124,079 | $ 57,004 | $ 196,480 | $ 198,556 | |||
| Operating loss | (46,860) | (58,089) | (110,420) | (85,241) | |||
| Net loss | (57,108) | $ (93,037) | $ (77,857) | $ (44,980) | (150,145) | (122,837) | |
| Equity Method Investment, Nonconsolidated Investee or Group of Investees [Member] | |||||||
| Shedule Of Equity Method Investment Summarized Statement Of Operations [Line Items] | |||||||
| Revenues | 6,407 | $ 3,959 | 13,051 | 15,465 | |||
| Operating loss | (1,614) | (5,072) | (3,178) | (4,416) | |||
| Net loss | $ (1,881) | $ (4,434) | $ (3,178) | $ (4,388) | |||
Equity Method Investments - Summary of Equity Method Investment Summarized Balance Sheet (Detail) - USD ($) $ in Thousands |
Jul. 04, 2021 |
Jan. 03, 2021 |
|---|---|---|
| Shedule Of Equity Method Investment Summarized Balance Sheet [Line Items] | ||
| Current assets | $ 157,190 | $ 135,743 |
| Non-current assets | 1,935,635 | 1,968,702 |
| Total assets | 2,092,825 | 2,104,445 |
| Current liabilities | 427,178 | 359,458 |
| Non-current liabilities | 1,759,377 | 1,943,875 |
| Total liabilities | 2,186,555 | 2,303,333 |
| Equity Method Investment, Nonconsolidated Investee or Group of Investees [Member] | ||
| Shedule Of Equity Method Investment Summarized Balance Sheet [Line Items] | ||
| Current assets | 26,343 | 25,075 |
| Non-current assets | 144,672 | 155,836 |
| Total assets | 171,015 | 180,911 |
| Current liabilities | 12,336 | 5,392 |
| Non-current liabilities | 123,966 | 124,725 |
| Total liabilities | $ 136,302 | $ 130,117 |
Equity Method Investments - Additional Information (Detail) $ in Thousands |
12 Months Ended |
|---|---|
|
Jan. 03, 2021
USD ($)
| |
| Equity Method Investments and Joint Ventures [Abstract] | |
| Equity method investment | $ 0 |
Leases - Summary of The Maturity of The Company's Operating and Finance Lease Liabilities (Detail) $ in Thousands |
Jul. 04, 2021
USD ($)
|
|---|---|
| Lessee, Operating Lease, Liability, Payment, Due [Abstract] | |
| Remainder of 2021 | $ 52,902 |
| 2022 | 113,067 |
| 2023 | 112,332 |
| 2024 | 110,872 |
| 2025 | 112,943 |
| Thereafter | 1,464,254 |
| Total undiscounted lease payments | 1,966,370 |
| Present value adjustment | 941,510 |
| Total net lease liabilities | 1,024,860 |
| Remainder of 2021 | 2,659 |
| 2022 | 5,331 |
| 2023 | 5,333 |
| 2024 | 5,335 |
| 2025 | 5,381 |
| Thereafter | 210,782 |
| Total undiscounted lease payments | 234,821 |
| Present value adjustment | 160,696 |
| Total net lease liabilities | $ 74,125 |
Leases - Summary of The Supplemental Disclosure For The Statement of Cash Flows Related to Operating and Finance Leases (Detail) - USD ($) $ in Thousands |
6 Months Ended | |
|---|---|---|
Jul. 04, 2021 |
Jun. 28, 2020 |
|
| Cash paid for amounts included in the measurement of lease liabilities: | ||
| Operating cash flows from operating leases | $ (22,434) | $ (23,416) |
| Interest payments for finance leases | (1,271) | (1,065) |
| Cash flows from financing activities related to leases | ||
| Principal payments for finance leases | (117) | (90) |
| Supplemental disclosures of non-cash investing and financing activities: | ||
| Operating lease assets obtained in exchange for new operating lease liabilities | $ 27,094 | $ 31,321 |
Leases - Summary of The Additional Information Related to Operating and Finance Leases (Detail) |
Jul. 04, 2021 |
Jun. 28, 2020 |
|---|---|---|
| Weighted-average remaining lease term | ||
| Finance leases | 44 years | 45 years |
| Operating leases | 18 years | 18 years |
| Weighted-average discount rate | ||
| Finance leases | 6.99% | 6.99% |
| Operating leases | 7.96% | 7.55% |
Leases - Summary of The Company's Estimated Future Undiscounted Lease Payments For Current Leases (Detail) $ in Thousands |
Jul. 04, 2021
USD ($)
|
|---|---|
| Operating Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract] | |
| Remainder of 2021 | $ 1,122 |
| 2022 | 10,890 |
| 2023 | 28,873 |
| 2024 | 37,202 |
| 2025 | 42,117 |
| Thereafter | 1,002,615 |
| Total undiscounted lease payments expected to be capitalized | $ 1,122,819 |
Revenue Recognition - Summary of Disaggregation of Revenue (Detail) - USD ($) $ in Thousands |
6 Months Ended | ||
|---|---|---|---|
Jul. 04, 2021 |
Jun. 28, 2020 |
Jan. 03, 2021 |
|
| Disaggregation of Revenue [Line Items] | |||
| Total future revenues | $ 49,601 | $ 23,399 | |
| Contract receivables | 17,560 | $ 8,367 | |
| Contract assets | 7,122 | 8,099 | |
| Contract liabilities | 112,765 | $ 97,497 | |
| Membership And Registration Fees [Member] | |||
| Disaggregation of Revenue [Line Items] | |||
| Total future revenues | $ 49,601 | $ 23,399 | |
Revenue Recognition - Additional Information (Detail) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
|---|---|---|---|---|
Jul. 04, 2021 |
Jun. 28, 2020 |
Jul. 04, 2021 |
Jun. 28, 2020 |
|
| Revenue Recognition [Abstract] | ||||
| Revenue recognized, contract liability | $ 21 | $ 17 | $ 37 | $ 36 |
Inventories, Prepaid Expenses and Other Current Assets - Prepaid Expenses And Other Current Assets (Detail) - USD ($) $ in Thousands |
Jul. 04, 2021 |
Apr. 04, 2021 |
Jan. 03, 2021 |
|---|---|---|---|
| Prepaid Expense and Other Assets, Current [Abstract] | |||
| Amounts owed by equity method investees | $ 785 | $ 2,350 | |
| Prepayments and accrued income | 27,692 | 13,789 | |
| Contract assets | 7,122 | 8,099 | |
| Other receivables | 20,683 | 19,325 | |
| Total prepaid expenses and other current assets | $ 56,282 | $ 56,282 | $ 43,563 |
Inventories, Prepaid Expenses and Other Current Assets - Additional Information (Detail) - USD ($) $ in Millions |
Jul. 04, 2021 |
Jan. 03, 2021 |
|---|---|---|
| Prepaid Expense and Other Assets, Current [Abstract] | ||
| Raw materials and service stock and supplies | $ 8 | $ 8 |
| Finished goods | $ 18 | $ 15 |
Property and Equipment, Net - Additional Information (Detail) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
|---|---|---|---|---|
Jul. 04, 2021 |
Jun. 28, 2020 |
Jul. 04, 2021 |
Jun. 28, 2020 |
|
| Property, Plant and Equipment [Abstract] | ||||
| Property, Plant and Equipment, Additions | $ 22 | $ 35 | $ 37 | $ 61 |
Goodwill and Intangible Assets - Summary of Goodwill (Detail) $ in Thousands |
6 Months Ended |
|---|---|
|
Jul. 04, 2021
USD ($)
| |
| Goodwill [Line Items] | |
| Beginning balance | $ 201,482 |
| Foreign currency translation adjustment | (1,224) |
| Ending balance | 219,325 |
| UK [Member] | |
| Goodwill [Line Items] | |
| Beginning balance | 101,602 |
| Foreign currency translation adjustment | 981 |
| Ending balance | 102,583 |
| US [Member] | |
| Goodwill [Line Items] | |
| Beginning balance | 28,780 |
| Ending balance | 47,847 |
| Europe and RoW [Member] | |
| Goodwill [Line Items] | |
| Beginning balance | 71,100 |
| Foreign currency translation adjustment | (2,205) |
| Ending balance | 68,895 |
| Cipura Acquisition [Member] | |
| Goodwill [Line Items] | |
| Acquisition | 17,024 |
| Cipura Acquisition [Member] | US [Member] | |
| Goodwill [Line Items] | |
| Acquisition | 17,024 |
| Line And Saguaro Acquisition [Member] | |
| Goodwill [Line Items] | |
| Acquisition | 2,043 |
| Line And Saguaro Acquisition [Member] | US [Member] | |
| Goodwill [Line Items] | |
| Acquisition | $ 2,043 |
Accrued Liabilities and Other Current Liabilities (Detail) - USD ($) $ in Thousands |
Jul. 04, 2021 |
Jan. 03, 2021 |
|---|---|---|
| Payables and Accruals [Abstract] | ||
| Accrued interest | $ 3,034 | $ 23,110 |
| Hotel deposits | 12,739 | 7,008 |
| Trade, capital and other accruals | 65,784 | 30,999 |
| Accrued Liabilities And Other Current Liabilities | $ 81,557 | $ 61,117 |
Accrued Liabilities and Other Current Liabilities - Additional Information (Detail) - USD ($) $ in Millions |
Jul. 04, 2021 |
Jan. 03, 2021 |
|---|---|---|
| Payables and Accruals [Abstract] | ||
| Social security taxes | $ 2 | $ 2 |
| Contingent liability | $ 12 | $ 12 |
Debt - Summary Of Future Principal Payments For The Company's Debt, Property Mortgage Loans, and Related Party Loans (Detail) $ in Thousands |
Jul. 04, 2021
USD ($)
|
|---|---|
| Debt Instruments [Abstract] | |
| Remainder of 2021 | $ 98,903 |
| 2022 | 19,601 |
| 2023 | 9,025 |
| 2024 | 117,809 |
| 2025 | 7,262 |
| Thereafter | 450,790 |
| Total | $ 703,390 |
Share-Based Compensation - Summary of Share-Based Compensation (Detail) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
|---|---|---|---|---|
Jul. 04, 2021 |
Jun. 28, 2020 |
Jul. 04, 2021 |
Jun. 28, 2020 |
|
| Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
| Total share-based compensation expense | $ 2,548 | $ 0 | $ 4,677 | $ 0 |
| Tax benefit for share-based compensation expense | ||||
| Share-based compensation expense, net of tax | 2,548 | 4,677 | ||
| Stock Appreciation Rights (SARs) [Member] | ||||
| Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
| Total share-based compensation expense | 1,893 | 3,374 | ||
| Growth Shares [Member] | ||||
| Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
| Total share-based compensation expense | $ 655 | $ 1,303 | ||
Commitments and Contingencies - Additional Information (Detail) - Soho House [Member] - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | |||
|---|---|---|---|---|---|
Jul. 04, 2021 |
Jun. 28, 2020 |
Jul. 04, 2021 |
Jun. 28, 2020 |
Jan. 03, 2021 |
|
| Other Commitments [Line Items] | |||||
| Long-term purchase commitment, amount | $ 25 | ||||
| Membership Credit To Be Given To Members [Member] | |||||
| Other Commitments [Line Items] | |||||
| Loss contingency accrual | $ 12 | 12 | $ 12 | ||
| Other Expense [Member] | Membership Credit To Be Given To Members [Member] | |||||
| Other Commitments [Line Items] | |||||
| Marketing expenses | 1 | $ 16 | 4 | $ 16 | |
| Austin [Member] | Expenditure To Be Incurred On Construction And Site Development [Member] | |||||
| Other Commitments [Line Items] | |||||
| Capital expenditure commitments contracted for but not yet incurred | $ 4 | $ 4 | |||
| HK [Member] | Expenditure To Be Incurred On Construction And Site Development [Member] | |||||
| Other Commitments [Line Items] | |||||
| Capital expenditure commitments contracted for but not yet incurred | $ 1 | ||||
Income Taxes - Additional Information (Detail) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
|---|---|---|---|---|
Jul. 04, 2021 |
Jun. 28, 2020 |
Jul. 04, 2021 |
Jun. 28, 2020 |
|
| Income Tax Contingency [Line Items] | ||||
| Effective tax rate | (0.01%) | 0.35% | 0.54% | 0.31% |
| Effective Income tax rate reconciliation, foreign income tax rate differential, percent | 19.00% | 19.00% | 19.00% | 19.00% |
| Increase decrease in unrecognized tax benefits | $ 2 | $ 3 | ||
| Increase decrease in net deferred tax assets, before valuation allowance | $ 21 | |||
| Minimum [Member] | ||||
| Income Tax Contingency [Line Items] | ||||
| Effective Income tax rate reconciliation, foreign income tax rate differential, percent | 19.00% | |||
| Maximum [Member] | ||||
| Income Tax Contingency [Line Items] | ||||
| Effective Income tax rate reconciliation, foreign income tax rate differential, percent | 25.00% | |||
Segments - Additional Information (Detail) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
|---|---|---|---|---|
Jul. 04, 2021 |
Jun. 28, 2020 |
Jul. 04, 2021 |
Jun. 28, 2020 |
|
| Segment Reporting Information [Line Items] | ||||
| Operating Expenses | $ (123,673) | $ (53,718) | $ (196,839) | $ (180,886) |
| Revenues | 124,079 | 57,004 | 196,480 | 198,556 |
| Other Expense [Member] | ||||
| Segment Reporting Information [Line Items] | ||||
| Payments of stock issuance costs | 7,000 | 7,000 | ||
| Restructuring costs | 2,000 | |||
| General and Administrative Expense [Member] | ||||
| Segment Reporting Information [Line Items] | ||||
| Provision for loan, lease, and other losses | 5,000 | 5,000 | ||
| Soho house Design [Member] | ||||
| Segment Reporting Information [Line Items] | ||||
| Operating Expenses | (6,310) | (3,802) | (13,261) | (8,408) |
| Revenues | 4,107 | 2,786 | 8,460 | 7,830 |
| Membership Credit [Member] | ||||
| Segment Reporting Information [Line Items] | ||||
| Operating Expenses | $ 1,000 | $ 16,000 | $ 4,000 | $ 16,000 |
Segments - Summary of Long-lived Asset Information By Geographic Area (Detail) - USD ($) $ in Thousands |
Jul. 04, 2021 |
Jan. 03, 2021 |
|---|---|---|
| Segment Reporting Information [Line Items] | ||
| Long-lived assets by geography | $ 1,578,968 | $ 1,655,539 |
| UNITED KINGDOM | ||
| Segment Reporting Information [Line Items] | ||
| Long-lived assets by geography | 577,577 | 567,093 |
| North America [Member] | ||
| Segment Reporting Information [Line Items] | ||
| Long-lived assets by geography | 763,704 | 760,864 |
| Non-US [Member] | ||
| Segment Reporting Information [Line Items] | ||
| Long-lived assets by geography | $ 237,687 | $ 327,582 |