As Of               Filer                 Filing    For·On·As Docs:Size             Issuer                      Filing Agent

11/07/11  Six Flags Entertainment Corp      10-Q        9/30/11   33:5.4M                                   Toppan Merrill/FA

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Table of Contents

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

 

 

FORM 10-Q

 

 

for the quarterly period ended September 30, 2011

 

OR

 

 

for the transition period from            to            

 

Commission file number: 1-13703

 

 

SIX FLAGS ENTERTAINMENT CORPORATION

(Exact Name of Registrant as Specified in Its Charter)

 

 

924 Avenue J East, Grand Prairie, TX  75050

(Address of Principal Executive Offices, Including Zip Code)

 

(972) 595-5000

(Registrant’s Telephone Number, Including Area Code)

 

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes x  No o

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes x  No o

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes o  No  x

 

Indicate by check mark whether the registrant has filed all documents and reports required to be filed under Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.  Yes x  No o

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:  At November 1, 2011, Six Flags Entertainment Corporation had 55,022,377 outstanding shares of common stock, par value $0.025 per share.

 

 

Table of Contents

 

SIX FLAGS ENTERTAINMENT CORPORATION

FORM 10-Q

 

INDEX

 

Cautionary Note Regarding Forward-Looking Statements		1
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements
	Condensed Consolidated Balance Sheets as of September 30, 2011 (unaudited) and December 31, 2010	3
	Condensed Consolidated Statements of Operations (unaudited)	4
	Condensed Consolidated Statements of Comprehensive Income (unaudited)	6
	Condensed Consolidated Statements of Equity (Deficit) (unaudited)	8
	Condensed Consolidated Statements of Cash Flows (unaudited)	10
	Notes to Condensed Consolidated Financial Statements	12
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	36
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	43
Item 4.	Controls and Procedures	43
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	44
Item 1A.	Risk Factors	44
Item 6.	Exhibits	45
Signatures		46

 

Table of Contents

 

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

 

This document and the documents incorporated herein by reference contain “forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995.  Forward-looking statements can be identified by words such as “anticipates,” “intends,” “plans,” “seeks,” “believes,” “estimates,” “expects” and similar references to future periods.

 

Forward-looking statements are based on our current expectations and assumptions regarding our business, the economy and other future conditions.  Because forward-looking statements relate to the future, by their nature, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict.  Our actual results may differ materially from those contemplated by the forward-looking statements.  We caution you therefore that you should not rely on any of these forward-looking statements as statements of historical fact or as guarantees or assurances of future performance.  These risks and uncertainties include, but are not limited to, statements we make regarding: (i) the adequacy of cash flows from operations, available cash and available amounts under our credit facilities to meet our future liquidity needs, (ii) our ability to improve operating results by implementing strategic cost reductions, and organizational and personnel changes without adversely affecting our business, or (iii) our operations and results of operations.  Additional important factors that could cause actual results to differ materially from those in the forward-looking statements include regional, national or global political, economic, business, competitive, market and regulatory conditions and include the following:

 

·                                    factors impacting attendance, such as local conditions, contagious diseases, events, disturbances and terrorist activities;

·                                    accidents occurring at our parks;

·                                    adverse weather conditions;

·                                    competition with other theme parks and other entertainment alternatives;

·                                    changes in consumer spending patterns;

·                                    pending, threatened or future legal proceedings; and

·                                    other factors that are described in “Item 1A. Risk Factors” set forth in our Annual Report on Form 10-K for the year ended December 31, 2010 (the “2010 Annual Report”).

 

A more complete discussion of these factors and other risks applicable to our business is contained in “Item 1A. Risk Factors” of the 2010 Annual Report.

 

Any forward-looking statement made by us in this Quarterly Report on Form 10-Q (this “Quarterly Report”), or on our behalf by our directors, officers or employees related to the information contained herein, speaks only as of the date of this Quarterly Report.  Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them.  We do not intend to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise.

 

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Table of Contents

 

Available Information

 

Copies of our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports, if applicable, are available free of charge through our website at www.sixflags.com.  References to our website in this Quarterly Report are provided as a convenience and do not constitute an incorporation by reference of the information contained on, or accessible through, the website.  Therefore, such information should not be considered part of this Quarterly Report.  These reports, and any amendments to these reports, are made available on our website as soon as reasonably practicable after we electronically file such reports with, or furnish them to, the Securities and Exchange Commission (the “SEC”).  Copies are also available, without charge, by sending a written request to Six Flags Entertainment Corporation, 924 Avenue J East, Grand Prairie, TX 75050, Attn:  Investor Relations.

 

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PART I — FINANCIAL INFORMATION

 

Item 1.        Financial Statements

 

SIX FLAGS ENTERTAINMENT CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)

 

		September 30,			December 31,
		2011			2010
		(unaudited)
ASSETS
Current assets:
Cash and cash equivalents		$	304,763		$	187,061
Accounts receivable		50,706			20,255
Inventories		26,380			23,542
Prepaid expenses and other current assets		40,869			36,055
Total current assets		422,718			266,913
Other assets:
Debt issuance costs		34,748			40,675
Restricted-use investment securities		308			2,938
Deposits and other assets		10,841			16,639
Total other assets		45,897			60,252
Property and equipment, at cost		1,525,081			1,470,986
Less accumulated depreciation		(216,969		)	(105,901		)
Total property and equipment		1,308,112			1,365,085
Goodwill		630,248			630,248
Intangible assets, net of accumulated amortization		397,061			410,755
Total assets		$	2,804,036		$	2,733,253
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable		$	25,785		$	33,342
Accrued compensation, payroll taxes and benefits		38,089			34,563
Accrued insurance reserves		35,835			36,546
Accrued interest payable		10,270			3,413
Other accrued liabilities		37,747			39,175
Deferred income		48,764			25,251
Current portion of long-term debt		31,679			32,959
Total current liabilities		228,169			205,249
Long-term debt		939,600			938,195
Other long-term liabilities		40,243			42,482
Deferred income taxes		216,331			237,509
Total liabilities		1,424,343			1,423,435
Redeemable noncontrolling interests		458,421			441,655
Stockholders’ equity:
Preferred stock, $1.00 par value		—			—
Common stock, $0.025 par value, 140,000,000 shares and 60,000,000 shares authorized at September 30, 2011 and December 31, 2010, respectively; 54,941,577 and 55,728,218 shares issued and outstanding at September 30, 2011 and December 31, 2010, respectively (1)		1,374			697
Capital in excess of par value		829,966			818,799
Retained earnings		97,052			48,404
Accumulated other comprehensive loss		(11,860		)	(4,192		)
Total Six Flags Entertainment Corporation stockholders’ equity		916,532			863,708
Noncontrolling interests		4,740			4,455
Total equity		921,272			868,163
Total liabilities and equity		$	2,804,036		$	2,733,253

 

(1)   Issued and outstanding common stock amounts at December 31, 2010 have been retroactively adjusted to reflect Holdings’ two-for-one stock split in June 2011, as described in Note 2 to these condensed consolidated financial statements.

 

See accompanying notes to condensed consolidated financial statements.

 

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Item 1.   Financial Statements (Continued)

 

SIX FLAGS ENTERTAINMENT CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

(in thousands, except per share data)

 

		Three Months Ended September 30,
		2011			2010
Theme park admissions		$	263,388		$	259,592
Theme park food, merchandise and other		194,634			196,631
Sponsorship, licensing and other fees		12,927			14,762
Accommodations revenue		4,656			4,602
Total revenue		475,605			475,587
Operating expenses (excluding depreciation and amortization shown separately below)		130,417			136,616
Selling, general and administrative (including stock-based compensation of $6,652 in 2011 and $5,221 in 2010, and excluding depreciation and amortization shown separately below)		48,431			52,686
Costs of products sold		34,594			36,253
Depreciation		37,320			39,419
Amortization		4,512			4,512
Loss on disposal of assets		2,190			1,004
Interest expense		16,682			20,672
Interest income		(186		)	(259		)
Equity in loss of investees		766			721
Loss on debt extinguishment		—			957
Other (income) expense, net		(340		)	4,467
Restructure (recovery) costs		(202		)	14,990
Income from continuing operations before reorganization items, income taxes and discontinued operations		201,421			163,549
Reorganization items, net		609			3,993
Income from continuing operations before income taxes and discontinued operations		200,812			159,556
Income tax (benefit) expense		(10,376		)	8,034
Income from continuing operations before discontinued operations		211,188			151,522
(Loss) income from discontinued operations		(11		)	156
Net income		211,177			151,678
Less: Net income attributable to noncontrolling interests		(18,307		)	(18,143		)
Net income attributable to Six Flags Entertainment Corporation		$	192,870		$	133,535
Net income applicable to Six Flags Entertainment Corporation common stockholders		$	192,870		$	133,535
Weighted average common shares outstanding(1):
Basic		54,694			55,170
Diluted		56,238			55,170
Net income per average common share outstanding — basic(1):
Income from continuing operations applicable to Six Flags Entertainment Corporation common stockholders		$	3.53		$	2.42
(Loss) income from discontinued operations applicable to Six Flags Entertainment Corporation common stockholders		—			—
Net income applicable to Six Flags Entertainment Corporation common stockholders		$	3.53		$	2.42
Net income per average common share outstanding — diluted(1):
Income from continuing operations applicable to Six Flags Entertainment Corporation common stockholders		$	3.43		$	2.42
(Loss) income from discontinued operations applicable to Six Flags Entertainment Corporation common stockholders		—			—
Net income applicable to Six Flags Entertainment Corporation common stockholders		$	3.43		$	2.42
Cash dividends declared per common share(1)		$	0.06		—
Amounts attributable to Six Flags Entertainment Corporation:
Income from continuing operations		$	192,881		$	133,379
(Loss) income from discontinued operations		(11		)	156
Net income		$	192,870		$	133,535

(1)   All share and per share amounts have been retroactively adjusted to reflect Holdings’ two-for-one split in June 2011, as described in Note 2 to these condensed consolidated financial statements.

 

See accompanying notes to condensed consolidated financial statements.

 

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Item 1.   Financial Statements (Continued)

 

SIX FLAGS ENTERTAINMENT CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

 

		Successor							Predecessor
		Nine Months Ended September 30, 2011			Period from May 1 through September 30, 2010				Period from January 1 through April 30, 2010
		(unaudited)			(unaudited)
Theme park admissions		$	473,287		$	392,218			$	59,270
Theme park food, merchandise and other		358,218			300,939				52,054
Sponsorship, licensing and other fees		31,418			26,071				11,259
Accommodations revenue		12,690			6,795				5,494
Total revenue		875,613			726,023				128,077
Operating expenses (excluding depreciation and amortization shown separately below)		328,125			225,821				115,636
Selling, general and administrative (including stock-based compensation of $34,316 in 2011, $5,221 in the five months ended September 30, 2010 and $718 in the four months ended April 30, 2010 and excluding depreciation and amortization shown separately below)		166,185			99,736				47,608
Costs of products sold		67,481			57,557				12,132
Depreciation		113,821			66,508				45,373
Amortization		13,540			7,523				302
Loss on disposal of assets		6,105			1,128				1,923
Interest expense (contractual interest expense was $65,820 for the four months ended April 30, 2010)		49,960			34,821				74,375
Interest income		(682		)	(333		)		(241		)
Equity in loss (income) of investees		3,013			1,029				(594		)
Loss on debt extinguishment		—			957				—
Other (income) expense, net		(193		)	5,660				(802		)
Restructure costs		25,146			31,462				—
Income (loss) from continuing operations before reorganization items, income taxes and discontinued operations		103,112			194,154				(167,635		)
Reorganization items, net		1,443			4,970				(819,473		)
Income from continuing operations before income taxes and discontinued operations		101,669			189,184				651,838
Income tax (benefit) expense		(14,065		)	8,543				112,648
Income from continuing operations before discontinued operations		115,734			180,641				539,190
(Loss) income from discontinued operations		(113		)	(615		)		9,759
Net income		115,621			180,026				548,949
Less: Net income attributable to noncontrolling interests		(36,273		)	(35,679		)		(76		)
Net income attributable to Six Flags Entertainment Corporation		$	79,348		$	144,347			$	548,873
Net income applicable to Six Flags Entertainment Corporation common stockholders		$	79,348		$	144,347			$	548,873
Weighted average common shares outstanding (1):
Basic		55,101			55,032				98,054
Diluted		56,539			55,032				98,054
Net income per average common share outstanding — basic(1):
Income from continuing operations applicable to Six Flags Entertainment Corporation common stockholders		$	1.44		$	2.63			$	5.50
Income (loss) from discontinued operations applicable to Six Flags Entertainment Corporation common stockholders		—			(0.01		)		0.10
Net income applicable to Six Flags Entertainment Corporation common stockholders		$	1.44		$	2.62			$	5.60
Net income per average common share outstanding —diluted(1):
Income from continuing operations applicable to Six Flags Entertainment Corporation common stockholders		$	1.40		$	2.63			$	5.50
Income (loss) from discontinued operations applicable to Six Flags Entertainment Corporation common stockholders		—			(0.01		)		0.10
Net income applicable to Six Flags Entertainment Corporation common stockholders		$	1.40		$	2.62			$	5.60
Cash dividends declared per common share(1)		$	0.12		—				—
Amounts attributable to Six Flags Entertainment Corporation:
Income from continuing operations		$	79,461		$	144,962			$	539,114
(Loss) income from discontinued operations		(113		)	(615		)		9,759
Net income		$	79,348		$	144,347			$	548,873

 

(1)   All Successor share and per share amounts have been retroactively adjusted to reflect Holdings’ two-for-one stock split in June 2011, as described in Note 2 to these condensed consolidated financial statements.

 

See accompanying notes to condensed consolidated financial statements.

 

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Item 1.       Financial Statements (Continued)

 

SIX FLAGS ENTERTAINMENT CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)

(in thousands)

 

		Three Months Ended September 30,
		2011			2010
Net income		$	211,177		$	151,678
Other comprehensive (loss) income:
Foreign currency translation adjustment		(12,329		)	3,012
Net other comprehensive (loss) income		(12,329		)	3,012
Comprehensive income		198,848			154,690
Comprehensive income attributable to noncontrolling interests		(18,307		)	(18,143		)
Comprehensive income attributable to Six Flags Entertainment Corporation		$	180,541		$	136,547

 

See accompanying notes to condensed consolidated financial statements.

 

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Item 1.       Financial Statements (Continued)

 

SIX FLAGS ENTERTAINMENT CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands)

 

		Successor							Predecessor
		Nine Months Ended September 30, 2011			Period from May 1 through September 30, 2010				Period from January 1 through April 30, 2010
		(unaudited)			(unaudited)
Net income		$	115,621		$	180,026			$	548,949
Other comprehensive (loss) income:
Foreign currency translation adjustment		(7,668		)	175				5,419
Defined benefit retirement plan		—			—				1,902
Change in cash flow hedging		—			—				(559		)
Net other comprehensive (loss) income		(7,668		)	175				6,762
Comprehensive income		107,953			180,201				555,711
Comprehensive income attributable to noncontrolling interests		(36,273		)	(35,679		)		(76		)
Comprehensive income attributable to Six Flags Entertainment Corporation		$	71,680		$	144,522			$	555,635

 

See accompanying notes to condensed consolidated financial statements.

 

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