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

 3/16/05  Six Flags Entertainment Corp      10-K       12/31/04    8:2.1M                                   Merrill Corp-MD/FA

Document/Exhibit                   Description                      Pages   Size 

 1: 10-K        Annual Report                                       HTML   1.34M 
 2: EX-12       Statement re: Computation of Ratios                 HTML     45K 
 3: EX-21       Subsidiaries of the Registrant                      HTML     44K 
 4: EX-23.1     Consent of Experts or Counsel                       HTML      8K 
 5: EX-31.1     Certification per Sarbanes-Oxley Act (Section 302)  HTML     16K 
 6: EX-31.2     Certification per Sarbanes-Oxley Act (Section 302)  HTML     16K 
 7: EX-32.1     Certification per Sarbanes-Oxley Act (Section 906)  HTML     10K 
 8: EX-32.2     Certification per Sarbanes-Oxley Act (Section 906)  HTML     10K 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C.  20549

 

FORM 10-K

(Mark One)

ý		ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended: December 31, 2004
OR
o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from                  to                  

 

Commission File Number:  1-13703

 

SIX FLAGS, INC.
(Exact Name of Registrant as Specified in Its Charter)
Delaware		13-3995059
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)
11501 Northeast Expressway, Oklahoma City, Oklahoma 73131
(Address of Principal Executive Offices)
Registrant’s Telephone Number, Including Area Code: (405) 475-2500
Securities registered pursuant to Sec. 12(b) of the Act:

 

 

Securities registered pursuant to Sec. 12(g) of the Act: NONE

 

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  ý   No  o

 

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the Registrant’s knowledge, in the definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.               ý

 

Indicate by check mark whether the Registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2). Yes ý  No o

 

State the aggregate market value of the voting and non-voting common equity held by non-affiliates (assuming, solely for the purposes of this Form, that all the directors and officers of the Registrant are affiliates) computed by reference to the price at which the common equity was last sold or the average bid and asked price of such common equity, as of the last business day of the Registrant’s most recently completed second fiscal quarter:

 

Approximately $661,962,000 as of June 30, 2004 (based on the last sales price on such date as reported on the New York Stock Exchange).  See “Item 5. —Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.”

 

Indicate the number of shares outstanding of each of the Registrant’s classes of common stock, as of the latest most practicable date:

 

The number of shares of Common Stock of the Registrant outstanding as of March 1, 2005 was 93,106,528 shares.

 

DOCUMENTS INCORPORATED BY REFERENCE

 

The information required in Part III by Item 10, as to directors, and by Items 11, 12, 13 and 14 is incorporated by reference to the Registrant’s proxy statement in connection with the annual meeting of stockholders to be held in June 2005, which will be filed by the Registrant within 120 days after the close of its 2004 fiscal year.

 

 

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

 

This document contains “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.  Examples of forward-looking statements include, but are not limited to, statements we make regarding (i) our belief that cash flows from operations, available cash and available amounts under our credit agreement will be adequate to meet our future liquidity needs for at least the next several years and (ii) our expectation to refinance all or a portion of our existing debt on or prior to maturity.

 

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.  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, events, disturbances and terrorist activities;

•                                          accidents occurring at our parks;

•                                          adverse weather conditions;

•                                          competition with other theme parks and other recreational alternatives;

•                                          changes in consumer spending patterns;

•                                          pending, threatened or future legal proceedings; and

•                                          the other factors that are described in “Business—Risk Factors.”

 

Any forward-looking statement made by us in this document speaks only as of the date on which we make it.  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 undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise.

 

*      *      *      *      *

 

•                  As used in this Report, unless the context requires otherwise, the terms “we,” “our” or “Six Flags” refer to Six Flags, Inc. and its consolidated subsidiaries.

•                  Looney Tunes, characters, names and all related indicia are trademarks of Warner Bros. © 2005, a division of Time Warner Entertainment Company, L.P. (“TWE”).  Batman and Superman and all related characters, names and indicia are copyrights and trademarks of DC Comics © 2005, Cartoon Network and logo are trademarks of Cartoon Network © 2005.  Six Flags and all related indicia are federally registered trademarks of Six Flags Theme Parks Inc. © 2005, a subsidiary of Six Flags.  Fiesta Texas and all related indicia are trademarks of Fiesta Texas, Inc. © 2005, a subsidiary of Six Flags.

 

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PART I

ITEM 1.                             BUSINESS

 

Introduction

 

We are the largest regional theme park operator in the world, engaged solely in the theme park business.  The 30 parks we operate had attendance during 2004 of approximately 33.5 million.  These parks include 14 of the 50 most highly attended theme parks in North America and the largest paid admission theme park in Mexico.  These theme parks serve nine of the 10 largest metropolitan areas in the United States. We estimate that approximately two-thirds of the population of the continental United States live within a 150-mile radius of one of these parks.  In April 2004, prior to the commencement of our 2004 operating season, we sold our park outside Cleveland, Ohio, and seven parks in Europe, which we refer to as our “European Parks.”  See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Results of Discontinued Operations” and Note 2 to Notes to Consolidated Financial Statements.

 

In 1998, we acquired the former Six Flags, which had operated regional theme parks under the Six Flags name for nearly forty years and established a nationally recognized brand name. We have worldwide ownership of the “Six Flags” brand name.  To capitalize on this name recognition, 24 of our parks are branded as “Six Flags” parks, including thirteen parks that we have rebranded since the 1998 acquisition.

 

We hold exclusive long-term licenses for theme park usage throughout the United States (except the Las Vegas metropolitan area), Canada, Mexico and other countries of certain Warner Bros. and DC Comics characters.  These characters include Bugs Bunny, Daffy Duck, Tweety Bird, Yosemite Sam, Batman, Superman and others.  In addition, our international license with Warner Bros. include the Hanna-Barbera and Cartoon Network characters, including Yogi Bear, Scooby-Doo, Flintstones and others.  We use these characters to market our parks and to provide an enhanced family entertainment experience. Our licenses include the right to sell merchandise featuring the characters at the parks, and to use the characters in our advertising, as walk-around characters and in theming for rides, attractions and retail outlets.  We believe using these characters promotes increased attendance, supports higher ticket prices, increases lengths-of-stay and enhances in-park spending.

 

Our parks are located in geographically diverse markets across North America. Our theme parks offer a complete family-oriented entertainment experience. Our theme parks generally offer a broad selection of state-of-the-art and traditional thrill rides, water attractions, themed areas, concerts and shows, restaurants, game venues and merchandise outlets.  In the aggregate, during 2004 our theme parks offered more than 1,150 rides, including over 150 roller coasters, making us the leading provider of “thrill rides” in the industry.

 

We believe that our parks benefit from limited direct competition, since the combination of a limited supply of real estate appropriate for theme park development, high initial capital investment, long development lead-time and zoning restrictions provides each of our parks with a significant degree of protection from competitive new theme park openings. Based on our knowledge of the development of other theme parks in the United States, we estimate that it would cost at least $200 million and would take a minimum of two years to construct a new regional theme park comparable to one of our Six Flags theme parks.

 

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Recent Developments

 

Amendment to Credit Agreement

 

On November 5, 2004, we entered into an amendment to our senior secured credit agreement (the “Credit Agreement”) pursuant to which we amended the covenants relating to the leverage ratio through 2006 and the fixed charge coverage ratio through 2007 in order to provide us with additional financial flexibility given the operating conditions we have been experiencing over the past few years. In exchange for our lenders’ consent to the amendment, we agreed to an increase of 0.25% in certain circumstances in the interest rates we are charged on our borrowings under the Credit Agreement. We also agreed to pay a 1% prepayment penalty if we refinance all or any portion of the term loans outstanding under our Credit Agreement prior to November 5, 2005. See Note 6(a) to Notes to Consolidated Financial Statements.

 

Convertible Notes Offering

 

In November 2004, we consummated the public offering (the ‘‘Convertible Notes Offering’’) of $299.0 million aggregate principal amount of our 4.50% Convertible Senior Notes due 2015 (the ‘‘Convertible Notes’’). Except during specified non-convertibility periods, the Convertible Notes are convertible into our common stock at an initial conversion rate of 157.4803 shares of common stock for each $1,000 principal amount of notes (approximately 47.1 million shares assuming full conversion), subject to adjustment, representing an initial conversion price of $6.35 per share. Upon conversion of the notes, we have the option to deliver common stock, cash or a combination of cash and common stock.

 

Prior to December 30, 2004, net proceeds from the Convertible Notes Offering were used to repurchase $44.3 million aggregate principal amount of our outstanding 9 ½% Senior Notes due 2009 (the ‘‘2009 Notes’’) and $102.7 million aggregate principal amount of our outstanding 8 7/8% Senior Notes due 2010 (the ‘‘2010 Notes’’). In addition, on February 1, 2005, we redeemed $123.5 million aggregate principal amount of the 2009 Notes with the remaining net proceeds from the Convertible Notes Offering. See Note 6(g) to Notes to Consolidated Financial Statements.

 

Senior Note Offering

 

In January 2005, we issued (the “Senior Note Offering”) $195.0 million aggregate principal amount of our 9 5/8% Senior Notes due 2014 (the “2014 Notes”). The net proceeds from the Senior Note Offering were used to fund the redemption of the remaining $181.2 million aggregate principal amount of outstanding 2009 Notes on February 7, 2005, at the applicable redemption premium of 104.750%, plus accrued and unpaid interest to the redemption date. The notes were issued as additional notes under an indenture, dated as of December 5, 2003, between us and The Bank of New York, as trustee, pursuant to which on December 5, 2003, we initially issued $325.0 million aggregate principal amount of the 2014 Notes.  See Note 6(f) to Notes to Consolidated Financial Statements.

 

Termination of Warner Bros. Movie World Madrid Relationship

 

In November 2004, we entered into definitive termination and release agreements with respect to our involvement with Warner Bros. Movie World Madrid, a park in Madrid, Spain that we had managed since its opening in April 2002.  We recognized a $15.0 million loss on the transaction.  See Note 2 to Notes to Consolidated Financial Statements.

 

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Description of Parks

 

Six Flags America

 

Six Flags America, a combination theme and water park located in Largo, Maryland (approximately 15 miles east of Washington, D.C. and 30 miles southwest of Baltimore, Maryland) is the 48^th largest theme park in North America. The park’s primary market includes Maryland, northern Virginia, Washington, D.C. and parts of Pennsylvania and Delaware.  This market provides the park with a permanent resident population base of approximately 7.4 million people within 50 miles and 12.4 million people within 100 miles.  Based on a 2004 survey of television households within designated market areas (“DMAs”) published by A.C. Nielsen Media Research, the Washington, D.C. and Baltimore markets are the number 8 and number 23 DMAs in the United States, respectively.(1)

 

We own a site of 515 acres, with 131 acres currently used for park operations.  The remaining 384 acres, which are zoned for entertainment and recreational uses, provide us with ample expansion opportunity, as well as the potential to develop complementary operations.  We may also determine to dispose of some of the additional acreage not necessary for the park’s operations.

 

Six Flags America’s principal competitors are King’s Dominion Park, located in Doswell, Virginia (near Richmond); Hershey Park, located in Hershey, Pennsylvania; and Busch Gardens, located in Williamsburg, Virginia.  These parks are located approximately 120, 125 and 175 miles, respectively, from Six Flags America.

 

Six Flags AstroWorld and Six Flags Splashtown

 

Six Flags AstroWorld, the 39^th largest theme park in North America is a combination theme and water park located in Houston, Texas.  In May 1999, we acquired Six Flags Splashtown, a water park located approximately 30 miles from Six Flags AstroWorld.  The Houston, Texas market provides the parks with a permanent resident population of 5.1 million people within 50 miles and 6.0 million people within 100 miles.  The Houston market is the number 11 DMA in the United States.

 

We own sites of approximately 100 acres used for the theme and water park and approximately 60 acres for Six Flags Splashtown.  Six Flags Splashtown competes with the water park at Six Flags AstroWorld.  Six Flags AstroWorld primarily competes with Sea World of Texas and our Six Flags Fiesta Texas park, both located in San Antonio, Texas, approximately 200 miles from the park. In addition, the park competes with Six Flags Over Texas, our park located in Arlington, Texas, approximately 250 miles from the park and Six Flags New Orleans, approximately 360 miles from the park.

 

Six Flags Darien Lake & Camping Resort

 

Six Flags Darien Lake, a combination theme and water park, is the largest theme park in the State of New York and the 44^th largest theme park in North America.  Six Flags Darien Lake is located off Interstate 90 in Darien Center, New York, approximately 30, 40 and 120 miles from Buffalo, Rochester and Syracuse, New York, respectively.  The park’s primary market includes upstate New York, western and northern Pennsylvania and southern Ontario, Canada.  This market provides the park with a permanent resident population base of approximately 2.2 million people within 50 miles of the park and 3.1 million within 100 miles.  The Buffalo, Rochester and Syracuse markets are the number 46, number 75 and number 77 DMAs in the United States, respectively.

 

(1)                                  Park rankings are based on 2004 attendance as published in Amusement Business, an industry trade publicaton. All DMA rankings are based on the referenced survey.

4

 

Six Flags Over Georgia’s primary competitors include Carowinds in Charlotte, North Carolina, located approximately 250 miles from the park, Visionland in Birmingham, Alabama, located approximately 160 miles from the park, Dollywood in Pigeon Forge, Tennessee, located approximately 200 miles from the park and Wild Adventures in Valdosta, Georgia, located approximately 240 miles from the park.  Six Flags White Water’s primary competitors include Sun Valley Beach, Atlanta Beach and Lake Lanier Islands.  These competitors are located approximately 15, 40 and 45 miles away from the water park, respectively.  The Georgia Limited Partner (as defined below) owns the theme park site of approximately 280 acres, including approximately 85 acres of undeveloped land, all of which is leased to Six Flags Over Georgia II, L.P. (the “Georgia Partnership”).

 

Partnership Structure.  On March 18, 1997, Six Flags completed arrangements pursuant to which we will manage the Georgia park through 2026.  Under these arrangements, the Georgia park is owned (excluding real property) by the Georgia Partnership of which our subsidiary is the managing general partner.  In the second quarter of 1997, Six Flags made a tender offer for partnership interests (“LP Units”) in the 99% limited partner of the Georgia Partnership (the “Georgia Limited Partner”), that valued the Georgia park at $250 million.  Six Flags purchased approximately 25% of the LP Units in the 1997 tender offer at an aggregate price of $62.7 million.  See “Business - Partnership Park Arrangements” for a more detailed discussion of our obligations under the Georgia partnership arrangements.

 

By virtue of our adoption in the fourth quarter of 2003 of FIN 46, we now consolidate the operations of the Georgia park and Six Flags White Water Atlanta in our consolidated financial statements.  See Notes 1(b), 4 and 12 to Notes to Consolidated Financial Statements.

 

Six Flags Over Texas and Six Flags Hurricane Harbor

 

Six Flags Over Texas, the 26^th largest theme park in North America, and the separately gated Six Flags Hurricane Harbor, the 10^th largest water park in the United States, are located across Interstate 30 from each other in Arlington, Texas, between Dallas and Fort Worth, Texas.  The Dallas/Fort Worth market provides the parks with a permanent resident population of approximately 5.6 million people within 50 miles and approximately 6.7 million people within 100 miles.  The Dallas/Fort Worth market is the number 7 DMA in the United States.

 

Six Flags Over Texas’ principal competitors include Sea World of Texas and our Six Flags Fiesta Texas park, both located in San Antonio, Texas, approximately 285 miles from the park and Six Flags AstroWorld, approximately 250 miles from the park. Six Flags Hurricane Harbor has no direct competitors in the area other than a municipal water park.  The Texas Limited Partner (as defined below) owns a site of approximately 200 acres used for the theme park.  We own directly approximately 47 acres, of which approximately 45 acres are currently used for Hurricane Harbor and 2 acres remain undeveloped.

 

Partnership Structure.  Six Flags Over Texas is owned (excluding real property) by Texas Flags, Ltd. (the “Texas Partnership”), a Texas limited partnership of which the 1% general partner is our wholly-owned subsidiary, and the 99% limited partner is Six Flags Fund II, Ltd., a Texas limited partnership (the “Texas Limited Partner”) which is unaffiliated with us except that we own approximately 37% of the limited partnership units in the Texas Limited Partner.  We purchased approximately 33% of the units in a tender offer in 1998 at an aggregate price of $126.2 million.  Six Flags Hurricane Harbor is 100% owned by us and is not included in these partnership arrangements.  See “Business - Partnership Park Arrangements” for a more detailed discussion of our obligations under the Texas partnership arrangements.

 

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Frontier City

 

Frontier City is a western theme park located along Interstate 35 in northeast Oklahoma City, Oklahoma, approximately 100 miles from Tulsa.  The park’s market includes nearly all of Oklahoma and certain parts of Texas and Kansas, with its primary market in Oklahoma City and Tulsa.  This market provides the park with a permanent resident population base of approximately 1.3 million people within 50 miles of the park and 2.6 million people within 100 miles.  The Oklahoma City and Tulsa markets are the number 45 and number 60 DMAs in the United States, respectively.

 

We own a site of approximately 109 acres, with 55 acres currently used for park operations.  Frontier City’s only significant competitor is Six Flags Over Texas, located in Arlington, Texas, approximately 225 miles from Frontier City.

 

La Ronde

 

La Ronde, a theme park located in the City of Montreal, is the 46^th largest theme park in North America. The park is located on the 146 acre site of the 1967 Montreal Worlds Fair.  Montreal has a metropolitan population of approximately 3.7 million and is a major tourist destination.  This market provides the park with a permanent resident population base of approximately 4.3 million people within 50 miles of the park and 5.8 million people within 100 miles.  The park’s only competitors are our park at Lake George, The Great Escape, and Paramount Canada’s Wonderland, approximately 170 miles and 370 miles, respectively, from La Ronde.

 

The Great Escape

 

The Great Escape, which opened in 1954, is a combination theme and water park located off Interstate 87 in the Lake George, New York resort area, 180 miles north of New York City and 40 miles north of Albany.  The park’s primary market includes the Lake George tourist population and the upstate New York and western New England resident population.  This market provides the park with a permanent resident population base of approximately 1.1 million people within 50 miles of the park and  3.2 million people within 100 miles.  According to information released by local governmental agencies, approximately 4.5 million tourists visited the Lake George area in 2002.  The Albany market is the number 55 DMA in the United States

 

We hold a 41% interest in a joint venture that is constructing a hotel and indoor water park across from the park.  We will manage the facility once it opens, which is expected to occur in early 2006.  Along with one of our other partners in the joint venture, we have guaranteed the payment of a $31.0 million construction loan incurred by the joint venture.  See “Management’s Discussion and Analysis of Financial Condition and Results of Operation - Liquidity, Capital Commitments and Resources - Off-balance sheet arrangements and aggregate contractual obligations.”

 

The Great Escape is located on a site of approximately 357 acres, with 132 acres currently used for park operations.  Approximately 32 of the undeveloped acres are suitable for park expansion.  The Great Escape’s only significant direct competitor is Six Flags New England, our park located in Springfield, Massachusetts, approximately 150 miles from The Great Escape.  In addition, there is a smaller water park located in Lake George.

 

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as combination tickets with a complementary location.

 

Licenses

 

We have the exclusive right on a long-term basis to theme park usage of the Warner Bros. and DC Comics animated characters throughout the United States (except for the Las Vegas metropolitan area), Canada, Mexico and other countries.  In particular, our license agreements entitle us to use, subject to customary approval rights of Warner Bros. and, in limited circumstances, approval rights of certain third parties, all animated cartoon and comic book characters that Warner Bros. and DC Comics have the right to license, including Batman, Superman, Bugs Bunny, Daffy Duck, Tweety Bird and Yosemite Sam, and include the right to sell merchandise using the characters. In addition, the Cartoon Network and Hanna-Barbera characters including Yogi Bear, Scooby-Doo and The Flintstones are available for our use at theme parks throughout Europe and in Mexico and Latin and South America. In addition to basic license fees, we are required to pay a royalty fee on merchandise manufactured by or for us and sold that uses the licensed characters.  The royalty fee is generally equal to 12% of the cost to the Company of the merchandise.  Warner Bros. has the right to terminate the license agreements under certain circumstances including if any persons involved in the movie or television industries obtain control of us and upon a default under the Subordinated Indemnity Agreement.

 

Park Operations

 

We currently operate in geographically diverse markets in North America.  Each of our parks is operated to the extent practicable as a separate operating division in order to maximize local marketing opportunities and to provide flexibility in meeting local needs. Each park is managed by a general manager who reports to one of our regional Executive Vice Presidents (each of whom reports to our Chief Executive Officer). The general manager is responsible for all operations and management of the individual park. We also have an Executive Vice President responsible for retail and in-park spending at all of our parks. Local advertising, ticket sales, community relations and hiring and training of personnel are the responsibility of individual park management in coordination with corporate support teams.

 

Each of our parks is managed by a full-time, on-site management team under the direction of the general manager. Each management team includes senior personnel responsible for operations and maintenance, marketing and promotion, human resources, finance and merchandising. Park management compensation structures are designed to provide incentives (including stock options and cash bonuses) for individual park managers to execute our strategy and to maximize revenues and operating cash flow.

 

Our parks are generally open daily from Memorial Day through Labor Day. In addition, most of our parks are open during weekends prior to and following their daily seasons, often in conjunction with themed events (such as Hallowscream, Fright Fest©, Oktoberfest and Holiday in the Park©). Due to their location, certain parks have longer operating seasons. Typically, the parks charge a basic daily admission price, which allows unlimited use of all rides and attractions, although in certain cases special rides and attractions require the payment of an additional fee.

 

Capital Improvements

 

We regularly make capital investments in the introduction of new rides and attractions at our parks. We purchase both new and used rides and attractions. In addition, we rotate rides among parks to provide fresh attractions. We believe that the introduction of new rides and attractions is an important factor in promoting each of the parks in order to achieve market penetration and encourage

 

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2001, 2002 and 2003 the premiums payable with respect to our insurance increased significantly.  However, our current property and liability insurance policies, which expire in October 2005, do not require higher aggregate premiums than the prior policies that expired in 2004.

 

Competition

 

Our parks compete directly with other theme parks, water and amusement parks and indirectly with all other types of recreational facilities and forms of entertainment within their market areas, including movies, sports attractions and vacation travel.  Accordingly, our business is and will continue to be subject to factors affecting the recreation and leisure time industries generally, such as general economic conditions and changes in discretionary consumer spending habits.  Within each park’s regional market area, the principal factors affecting competition include location, price, the uniqueness and perceived quality of the rides and attractions in a particular park, the atmosphere and cleanliness of a park and the quality of its food and entertainment. We believe our parks generally feature a sufficient variety of rides and attractions, restaurants, merchandise outlets and family orientation to enable them to compete effectively.

 

Seasonality

 

Our operations are highly seasonal, with more than 85% of park attendance occurring in the second and third calendar quarters of each year and the most active period falling between Memorial Day and Labor Day.  More than 85% of our revenues are earned in the second and third quarters of each year.

 

Environmental and Other Regulation

 

Our operations are subject to federal, state and local environmental laws and regulations including laws and regulations governing water discharges, air emissions, soil and groundwater contamination, the maintenance of underground and above-ground storage tanks and the disposal of waste and hazardous materials. In addition, our operations are subject to other local, state and federal governmental regulations including, without limitation, labor, health, safety, zoning and land use and minimum wage regulations applicable to theme park operations, and local and state regulations applicable to restaurant operations at each park. We believe that we are in substantial compliance with applicable environmental and other laws and regulations and, although no assurance can be given, we do not foresee the need for any significant expenditures in this area in the near future.

 

In addition, portions of the undeveloped areas at certain of our parks are classified as wetlands. Accordingly, we may need to obtain governmental permits and other approvals prior to conducting development activities that affect these areas, and future development may be prohibited in some or all of these areas.

 

Employees

 

At February 15, 2005, we employed approximately 2,370 full-time employees, and we employed approximately 34,900 seasonal employees during the 2004 operating season.  In this regard, we compete with other local employers for qualified student and other candidates on a season-by-season basis.  As part of the seasonal employment program, we employ a significant number of teenagers, which subjects us to child labor laws.

 

Approximately 14.4% of our full-time and approximately 6.9% of our seasonal employees are subject to labor agreements with local chapters of national unions.  These labor agreements expire in December 2005 (Six Flags Over Georgia, Six Flags Great Adventure and Six Flags Magic Mountain),

 

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Almost all of our parks feature “thrill rides.” While we carefully maintain the safety of our rides, there are inherent risks involved with these attractions. An accident or an injury at any of our parks or at parks operated by our competitors may reduce attendance at our parks, causing a decrease in revenues.  On May 2, 2004, a fatality occurred on a roller coaster at Six Flags New England, which we believe contributed to a decline in attendance and, as a result, adversely impacted performance at that park during the 2004 operating season.

 

We maintain insurance of the type and in amounts that we believe are commercially reasonable and that are available to businesses in our industry. We maintain multi-layered general liability policies that provide for excess liability coverage of up to $100.0 million per occurrence. For incidents occurring at our domestic parks after November 15, 2003, our self-insured retention is $2.5 million per occurrence. For incidents at those parks during the twelve months prior to that date, the retention is $2.0 million per occurrence. For incidents during the twelve months ended November 15, 2002, the retention is $1.0 million per occurrence. For most prior incidents, our policies did not provide for a self-insured retention.  The self-insured retention relating to our international parks is nominal with respect to all applicable periods.

 

ADVERSE WEATHER CONDITIONS — BAD WEATHER CAN ADVERSELY IMPACT ATTENDANCE AT OUR PARKS.

 

Because most of the attractions at our theme parks are outdoors, attendance at our parks is adversely affected by bad weather.  The effects of bad weather on attendance can be more pronounced at our water parks.  Bad weather and forecasts of bad or mixed weather conditions can reduce the number of people who come to our parks, which negatively affects our revenues. Although we believe that our ownership of many parks in different geographic locations reduces the effect that adverse weather can have on our consolidated results, we believe that our 2003 and 2004 operating results were adversely affected by abnormally cold and wet weather in a number of our major U.S. markets.

 

SEASONALITY — OUR OPERATIONS ARE SEASONAL.

 

Our operations are seasonal. More than 85% of our annual park attendance occurs during the second and third quarters of each year. By comparison, most of our expenses for maintenance and costs of adding new attractions are incurred when the parks are closed in the mid to late autumn and winter months. For this reason, a sequential quarter to quarter comparison is not a good indication of our performance or of how we will perform in the future.

 

COMPETITION — THE THEME PARK INDUSTRY COMPETES WITH NUMEROUS ENTERTAINMENT ALTERNATIVES.

 

Our parks compete with other theme, water and amusement parks and with other types of recreational facilities and forms of entertainment, including movies, sports attractions and vacation travel. Our business is also subject to factors that affect the recreation and leisure industries generally, such as general economic conditions, including relative fuel prices, and changes in consumer spending habits. The principal competitive factors of a park include location, price, the uniqueness and perceived quality of the rides and attractions, the atmosphere and cleanliness of the park and the quality of its food and entertainment.

 

 

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In addition to making interest payments on debt and dividend payments on our preferred stock, we must satisfy the following obligations with respect to Six Flags Over Georgia and Six Flags Over Texas, which we refer to as the Partnership Parks:

 

• We must make annual distributions to our partners in these Partnership Parks, which will amount to approximately $54.9 million in 2005 (of which we will receive approximately $17.7 million in 2005 as a result of our ownership interest in the parks) with similar amounts (adjusted for changes in cost of living) payable in future years.

 

• We must spend a minimum of approximately 6% of each park’s annual revenues over specified periods for capital expenditures.

 

• Each year we must offer to purchase a specified maximum number of partnership units from our partners in the Partnership Parks, which in 2003 resulted in an aggregate payment by us of approximately $5.7 million. There were no purchases of units in 2004.  The maximum number of units that we could be required to purchase in 2005 would result in an aggregate payment by us of approximately $215.5 million.  The annual incremental unit purchase obligation (without taking into account accumulation from prior years) aggregates approximately $31.1 million for both parks based on current purchase prices. As we purchase additional units, we are entitled to a proportionate increase in our share of the minimum annual distributions.

 

We expect to use cash flow from the operations at these parks to satisfy our annual distribution and capital expenditure obligations with respect to these parks before we use any of our other funds. The two partnerships generated approximately $58.7 million of aggregate net cash provided by operating activities during 2004.  The obligations relating to Six Flags Over Georgia continue until 2027 and those relating to Six Flags Over Texas continue until 2028.

 

In December 2004, we guaranteed the payment of a $31.0 million construction term loan incurred by HWP Development LLC (a joint venture in which we own a 41% interest) for the purpose of financing the construction and development of a hotel and indoor water park project to be located adjacent to our Great Escape park near Lake George, New York.  The loan was also guaranteed by one of our venture partners. The guarantee will be released upon full payment and discharge of the loan, which matures on December 17, 2009. As security for the guarantee, we deposited $8.0 million in a cash collateral account.

 

Although we are contractually committed to make approximately $25.0 million of capital expenditures at one park over the next several years, the vast majority of our capital expenditures in 2005 and beyond will be made on a discretionary basis. We plan on spending approximately $135 million on capital expenditures for the 2005 season, adding a wide array of attractions at many of our parks.

 

Our high level of debt and other obligations could have important negative consequences to us and investors in our securities. These include:

 

• We may not be able to satisfy all of our obligations, including, but not limited to, our obligations under the instruments governing our outstanding debt.

 

• We could have difficulties obtaining necessary financing in the future for working capital, capital expenditures, debt service requirements, Partnership Park obligations, refinancings or other purposes.

 

23

 

• We will have to use a significant part of our cash flow to make payments on our debt, to pay the dividends on preferred stock (if we choose to pay them in cash), and to satisfy the other obligations set forth above, which may reduce the capital available for operations and expansion.

 

• Adverse economic or industry conditions may have more of a negative impact on us.

 

We cannot be sure that cash generated from our parks will be as high as we expect or that our expenses will not be higher than we expect.  Because a large portion of our expenses are fixed in any given year, our operating cash flow margins are highly dependent on attendance levels and in-park spending.

 

We expect to refinance all or some of our debt or secure new financing. We cannot be sure that we will be able to obtain the refinancing or new financing on reasonable terms or at all. We have agreed in our credit agreement and the indentures covering our outstanding notes to limit the amount of additional debt we will incur.

 

Due to the seasonal nature of our business, we are largely dependent upon the $300.0 million working capital revolving credit facility under the credit agreement to fund off-season expenses. Our ability to borrow under the working capital revolving credit facility is dependent upon compliance with certain conditions, including satisfying certain financial ratios and the absence of any material adverse change. Although we are currently in compliance with all of these conditions, on November 5, 2004, we entered into an amendment to the Credit Agreement which relaxed the leverage ratio through 2006 and the fixed charge coverage ratio through 2007.  If we were to become unable to borrow under the facility, we would likely be unable to pay our off-season obligations in full and may be unable to meet our repurchase obligations (if any) in respect of repurchases of partnership units in the Partnership Parks.

 

If we breach any of the covenants contained in our credit agreement or the indentures governing our senior notes, the principal of and accrued interest on the applicable debt would become due and payable. In addition, that default could constitute a cross-default under the instruments governing all of our other indebtedness.  If a cross-default occurs, the maturity of almost all of our indebtedness could be accelerated and become immediately due and payable. If that happens, we would not be able to satisfy our debt obligations, which would have a substantial material adverse effect on the value of the notes and our ability to continue as a going concern. We cannot assure you that we will be able to comply with these restrictions in the future or that our compliance would not cause us to forego opportunities that might otherwise be beneficial to us.

 

RESTRICTIVE COVENANTS – OUR FINANCIAL AND OPERATING ACTIVITIES ARE LIMITED BY RESTRICTIONS CONTAINED IN THE TERMS OF OUR FINANCINGS.

 

The terms governing our indebtedness impose significant operating and financial restrictions on us. These restrictions may significantly limit or prohibit us from engaging in certain types of transactions, including the following:

 

•  incurring additional indebtedness;

 

•  creating liens on our assets;

 

•  paying dividends;

 

•  selling assets;

 

•  engaging in mergers or acquisitions; and

 

•  making investments.

 

24

 

Our failure to comply with the terms and covenants in our indebtedness could lead to a default under the terms of those documents, which would entitle the lenders to accelerate the indebtedness and declare all amounts owed due and payable. Moreover, the instruments governing almost all of our indebtedness contain cross-default provisions so that a default under any of our indebtedness will be considered a default under all of our other indebtedness. If a cross-default occurs, the maturity of almost all of our indebtedness could be accelerated and become immediately due and payable. If that happens, we would not be able to satisfy our debt obligations, which would have a substantial material adverse effect on our ability to continue as a going concern. We cannot assure you that we will be able to comply with these restrictions in the future or that our compliance would not cause us to forego opportunities that might otherwise be beneficial to us.

 

Further, under the Credit Agreement, our principal direct wholly owned subsidiary, Six Flags Operations, and its subsidiaries are required to comply with specified consolidated financial ratios and tests, including:

 

•  interest expense;

 

•  fixed charges;

 

•  debt service; and

 

•  total debt.

 

Although we are currently in compliance with all of these financial covenants and restrictions, on November 5, 2004, we entered into an amendment to the Credit Agreement which relaxed the leverage ratio through 2006 and the fixed charge coverage ratio through 2007. However, events beyond our control, such as weather and economic, financial and industry conditions, may affect our ability to continue meeting these financial tests and ratios. The need to comply with these financial covenants and restrictions could limit our ability to expand our business or prevent us from borrowing more money when necessary.

 

HOLDING COMPANY STRUCTURE — ACCESS TO CASH FLOW OF MOST OF OUR SUBSIDIARIES IS LIMITED

 

We are a holding company whose primary assets consist of shares of stock or other equity interests in our subsidiaries, and we conduct substantially all of our current operations through our subsidiaries. Almost all of our income is derived from our subsidiaries. Accordingly, we will be dependent on dividends and other distributions from our subsidiaries to generate the funds necessary to meet our obligations, including the payment of principal and interest on our indebtedness.  We had $68.8 million of cash and cash equivalents on a consolidated basis at December 31, 2004 (excluding restricted cash held exclusively to retire debt which had been called for prepayment), of which $28.9 million was held at the holding company level.

 

25

 

Other than our holdings in the Partnership Parks, all of our current operations are conducted by subsidiaries of Six Flags Operations, our principal direct wholly-owned subsidiary. We may, in the future, transfer other assets to Six Flags Operations or other entities owned by us. Our credit agreement limits the ability of Six Flags Operations to pay dividends or make other distributions to us.  Six Flags Operations may not make cash distributions to us unless it is in compliance with the financial and other covenants set forth in the credit agreement and it is not otherwise in default thereunder. If it is in compliance, Six Flags Operations is permitted to make dividends to us from cash generated by operations of up to $75.0 million (of which $8.9 million has been dividended as of December 31, 2004 and $66.1 million remains available) in order to enable us to pay amounts in respect of any refinancing or repayment of debt under the indentures governing our outstanding notes.  Similarly, if it is in compliance, Six Flags Operations may make additional cash contributions to us generally limited to an amount equal to the sum of:

 

•  cash interest payments on the public notes issued by Six Flags, Inc.;

 

•  payments we are required to make under our agreements with our partners in the Partnership Parks; and

 

•  cash dividends on our preferred stock.

 

SHARES ELIGIBLE FOR FUTURE SALE - THE PRICE OF OUR COMMON STOCK MAY DECLINE DUE TO POSSIBLE SALES OF SHARES

 

As of March 1, 2005, there were approximately 93.1 million shares of our common stock outstanding, all of which are transferable without restriction or further registration under the Securities Act of 1933, except for any shares held by our affiliates.  We also have outstanding options held by management and directors to purchase approximately 4.2 million shares and under our current option plans we may issue options to purchase an additional 5.4 million shares.

 

In addition, our outstanding shares of preferred stock are convertible at the option of the holders into 13.8 million shares of common stock, and our Convertible Notes are convertible into 47.1 million shares, although we can elect to deliver cash to satisfy note conversions.  We may also issue additional shares of common stock to pay quarterly dividend payments on our outstanding preferred stock.  The sale or expectation of sales of a large number of shares of common stock or securities convertible into common stock in the public market might negatively affect the market price of our common stock.

 

RATINGS OF THE COMPANY — CHANGES IN OUR CREDIT RATINGS MAY ADVERSELY AFFECT THE PRICE OF OUR SECURITIES, INCLUDING OUR COMMON STOCK AND THE NOTES.

 

Credit rating agencies continually review their ratings for the companies that they follow, including us. Standard & Poor’s Ratings Service (“S&P”) recently announced that it has lowered its ratings on us, including our corporate credit rating which was lowered to “B-” from “B.” Moody’s Investor Service (“Moody’s) also recently downgraded our senior implied rating to “B2” from “B1” and our senior unsecured issuer rating to “Caa1” from “B3.” Moody’s also downgraded our (i) senior unsecured indebtedness to “Caa1” from “B3,” (ii) preferred stock to “Caa2” from “Caa1” and (iii) Credit Agreement to “B1” from “Ba3.” Furthermore, although S&P upgraded our ratings outlook from negative to stable, Moody’s kept our ratings outlook on negative. A further negative change in our ratings or the perception that such a change could occur may adversely affect the market price of our securities, including our common stock and the public notes.

 

26

 

ITEM 2.                                                     PROPERTIES

 

Set forth below is a brief description of our material real estate at March 1, 2005:

 

Six Flags America, Largo, Maryland — 515 acres (fee ownership)

Six Flags AstroWorld, Houston, Texas — 99 acres (fee ownership)

Six Flags Darien Lake, Darien Center, New York — 980 acres (fee ownership)

Six Flags Elitch Gardens, Denver, Colorado - 67 acres (fee ownership)

Six Flags Fiesta Texas, San Antonio, Texas — 206 acres (fee ownership)

Six Flags Great Adventure, Hurricane Harbor & Wild Safari, Jackson, New Jersey — 2,200 acres (fee ownership)

Six Flags Great America, Gurnee, Illinois — 300 acres (fee ownership)

Six Flags Hurricane Harbor, Arlington, Texas — 47 acres (fee ownership)

Six Flags Hurricane Harbor, Valencia, California — 12 acres (fee ownership)

Six Flags Kentucky Kingdom, Louisville, Kentucky — 58 acres (fee ownership and leasehold interest)(1)

Six Flags Magic Mountain, Valencia, California — 260 acres (fee ownership)

Six Flags Marine World, Vallejo, California — 138 acres (long-term leasehold interest at nominal rent)

Six Flags Mexico, Mexico City, Mexico - 107 acres (occupied pursuant to concession agreement)(2)

Six Flags New England, Agawam, Massachusetts — 230 acres (substantially all fee ownership)

Six Flags New Orleans, New Orleans, Louisiana — 206 acres (fee ownership and leasehold interest)(3)

Six Flags Over Georgia, Atlanta, Georgia - 280 acres (leasehold interest)(4)

Six Flags Over Texas, Arlington, Texas - 200 acres (leasehold interest)(4)

Six Flags Splashtown, Spring, Texas - 60 acres (fee ownership)

Six Flags St. Louis, Eureka, Missouri  — 497 acres (fee ownership)

Six Flags Waterworld USA/Concord, Concord, California — 21 acres (leasehold interest)(5)

Six Flags Waterworld USA/Sacramento, Sacramento, California — 14 acres (leasehold interest)(6)

Six Flags White Water Atlanta, Marietta, Georgia — 69 acres (fee ownership)(7)

Enchanted Village and Wild Waves, Seattle, Washington — 65 acres (leasehold interest)(8)

Frontier City, Oklahoma City, Oklahoma — 109 acres (fee ownership)

La Ronde, Montreal, Canada — 146 acres (leasehold interest)(9)

The Great Escape, Lake George, New York — 357 acres (fee ownership)

White Water Bay, Oklahoma City, Oklahoma — 22 acres (fee ownership)

Wyandot Lake, Columbus, Ohio — 18 acres (leasehold interest)(10)

 

(1)               Approximately 38 acres are leased under ground leases with terms (including renewal options) expiring between 2021 and 2049, with the balance owned by us.

(2)               The concession agreement is with the Federal District of Mexico City.  The agreement expires in 2017.

(3)               The site on which the park is located is leased from the Industrial Development Board of the City of New Orleans.  The lease expires in 2077.  We own a separate parcel of 66 acres.

(4)               Lessor is the limited partner of the partnership that owns the park.  The Six Flags Over Georgia and Six Flags Over Texas leases expire in 2027 and 2028, respectively, at which time we have the option to acquire all of the interests in the respective lessor that we have not previously acquired.

(5)               The site is leased from the City of Concord.  The lease expires in 2025 and we have five five-year renewal options.

(6)               The site is leased from the California Exposition and State Fair.  The lease expires in 2015 and, subject to the satisfaction of certain conditions, may be renewed by us for an additional ten-year term.

(7)               Owned by the partnership that operates Six Flags Over Georgia.

(8)               The site is leased from the prior owner.  The base term of the lease expires in 2030 and we have renewal options covering an additional 46 years.

(9)               The site is leased from the City of Montreal.  The lease expires in 2065.

(10)         The site is subleased from the Columbus Zoo.  The lease expires in 2005 and we have renewal options with an aggregate 3 year term.  Acreage for this site does not include approximately 30 acres of parking which is shared with the Columbus Zoo.

 

We have granted to our lenders under our $1.0 billion credit facility a mortgage on substantially all of our United States properties.

 

In addition to the foregoing, we lease office space and a limited number of rides and attractions at our parks.  See Note 12 to Notes to Consolidated Financial Statements.

 

We consider our properties to be well-maintained, in good condition and adequate for their present uses and business requirements.

 

28

 

ITEM 3.                             LEGAL PROCEEDINGS

 

The nature of the industry in which we operate tends to expose us to claims by visitors, generally for injuries.  Historically, the great majority of these claims have been minor.  Although we believe that we are adequately insured against visitors’ claims, if we become subject to damages that cannot by law be insured against, such as punitive damages or certain intentional misconduct by employees, there may be a material adverse effect on our operations.

 

ITEM 4.                             SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

 

None.

 

29

 

PART II

 

ITEM 5.                       MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

 

Our Common Stock is listed on the New York Stock Exchange (the “NYSE”) under the symbol “PKS.” Set forth below are the high and low sales prices for the Common Stock as reported by the NYSE since January 1, 2002.

 

Year		Quarter		High		Low
2005		First (through March 1, 2005)		5 3/4		3 15/16
2004		Fourth		5 3/4		4 7/16
		Third		7 1/4		3 3/8
		Second		8 5/16		6 5/8
		First		8 13/16		6 7/8
2003		Fourth		8		5 5/16
		Third		7 1/8		4
		Second		9		5 1/2
		First		7		4 13/16

 

As of March 1, 2005, there were 901 holders of record of our Common Stock. We paid no cash dividends on our Common Stock during the three years ended December 31, 2004. We do not anticipate paying any cash dividends on our Common Stock during the foreseeable future.  The indentures relating to our public debt limit the payment of cash dividends to common stockholders.  See Note 6 to Notes to Consolidated Financial Statements.

 

Set forth below is information regarding our equity compensation plans at December 31, 2004:

 

Plan Category		Number of shares of common stock to be issued upon exercise of outstanding options, warrants and rights		Weighted-average exercise price of outstanding options, warrants and rights			Number of shares of common stock remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))(1)
		(a)		(b)			(c)
Equity compensation plans approved by security holders		4,154,000		$	18.18		5,388,874
Equity compensation plans not approved by security holders		—		—			—
Total		4,154,000		$	18.18		5,388,874

 

See Note 1(o) to Notes to Consolidated Financial Statements.

 

(1)                                 Plans applicable to 4,539,874 remaining shares of Common Stock permit, in addition to grant of stock options and stock appreciation rights, the issuance of shares of Common Stock.

 

30

 

ITEM 6.                             SELECTED FINANCIAL DATA

 

The selected financial data below as of and for each of the years in the five-year period ended December 31, 2004 are derived from our audited financial statements. Our audited financial statements for the three-year period ended December 31, 2004 are included elsewhere in this report.

 

Our audited financial statements for the three-year period ended December 31, 2004 included herein and the following selected historical financial data for the five-year period ended on that date reflect the effects of our reclassification of the assets, liabilities and results of Six Flags Worlds of Adventure (a park located outside Cleveland, Ohio) and our European parks as discontinued operations.  These parks were sold in April 2004.

 

We adopted FIN 46 in the fourth quarter of 2003. Under FIN 46, the results of Six Flags Over Georgia, Six Flags White Water Atlanta, Six Flags Over Texas and Six Flags Marine World were consolidated in our financial statements for the years ended December 31, 2003 and 2004 and will be consolidated in our financial statements for future periods. In addition, our financial statements for the years ended December 31, 2001 and 2002, and the following selected historical financial data for the year ended December 31, 2000 have been reclassified to reflect the adoption of FIN 46 in order to enable meaningful year-to-year comparisons.  Historical results for the year ended December 31, 2000 include the operations of Enchanted Village and Wild Waves from the date of their acquisition in December 2000.  Historical results for the year ended December 31, 2001 include the operations of La Ronde from the date of its acquisition in May 2001. Historical results for the year ended December 31, 2002 include the operations of Jazzland (now Six Flags New Orleans) from the date of its acquisition on August 23, 2002.

 

31

 

		Year Ended December 31,
		2004			2003			2002			2001			2000
		(in thousands, except per share amounts)
Statement of Operations Data:
Revenue:
Theme park admissions		$	556,092		$	572,152		$	583,649		$	596,462		$	572,214
Theme park food, merchandise and other		481,600			476,491			475,446			479,527			468,983
Total revenue		1,037,692			1,048,643			1,059,095			1,075,989			1,041,197
Operating costs and expenses:
Operating expenses		445,724			424,319			406,701			398,564			388,199
Selling, general and administrative		202,993			206,109			188,926			186,787			170,064
Noncash compensation (primarily selling, general and administrative)		643			101			9,256			8,616			12,584
Costs of products sold		87,337			83,938			85,942			86,723			95,252
Depreciation and amortization		151,422			145,453			137,881			189,845			179,412
Total operating costs and expenses		888,119			859,920			828,706			870,535			845,511
Income from operations		149,573			188,723			230,389			205,454			195,686
Other expense:
Interest expense, net		(191,581		)	(213,311		)	(228,109		)	(223,834		)	(226,866		)
Minority interest in earnings		(37,686		)	(35,997		)	(36,760		)	(39,056		)	(34,998		)
Early repurchase of debt		(37,731		)	(27,592		)	(29,895		)	(13,756		)	—
Other expense		(27,839		)	(2,445		)	(6,000		)	(4,639		)	(8,026		)
Total other income (expense)		(294,837		)	(279,345		)	(300,764		)	(281,285		)	(269,890		)
Loss from continuing operations before income taxes		(145,264		)	(90,622		)	(70,375		)	(75,831		)	(74,204		)
Income tax (expense) benefit		(31,984		)	28,564			21,899			5,607			606
Loss from continuing operations		(177,248		)	(62,058		)	(48,476		)	(70,224		)	(73,598		)
Cumulative effect of a change in accounting principle		—			—			(61,054		)	—			—
Discontinued operations, net of tax benefit of $57,387 in 2004, $4,572 in 2003, tax expense of $6,473 in 2002, tax benefit of $6,815 in 2001 and tax benefit of $6,228 in 2000		(287,561		)	345			3,832			12,122			21,639
Net loss		$	(464,809	)	$	(61,713	)	$	(105,698	)	$	(58,102	)	$	(51,959	)
Net loss applicable to common stock		$	(486,777	)	$	(83,683	)	$	(127,668	)	$	(84,617	)	$	(75,247	)
Net loss per average common share outstanding —basic and diluted:
Loss from continuing operations		$	(2.14	)	$	(0.90	)	$	(0.76	)	$	(1.09	)	$	(1.23	)
Cumulative effect of a change in accounting principle		—			—			(0.66		)	—
Discontinued operations		(3.09		)	—			0.04			0.14			0.27
Net loss		$	(5.23	)	$	(0.90	)	$	(1.38	)	$	(0.95	)	$	(0.96	)
Weighted average number of common shares outstanding — basic and diluted		93,036			92,617			92,511			89,221			78,735

 

		As of December 31,
		2004			2003			2002			2001			2000
		(in thousands )
Balance Sheet Data:
Cash and cash equivalents (1)		$	68,807		$	98,189		$	31,307		$	45,582		$	44,794
Total assets		$	3,642,227		$	4,682,771		$	4,371,293		$	4,370,872		$	4,328,214
Total long-term debt (excluding current maturities) (2)		$	2,125,121		$	2,354,194		$	2,305,221		$	2,229,810		$	2,324,358
Total debt(2)		$	2,149,515		$	2,373,205		$	2,339,716		$	2,268,240		$	2,336,844
Mandatorily redeemable preferred stock (represented by the PIERS)		$	282,245		$	281,119		$	279,993		$	278,867		—
Stockholders’ equity		$	826,065		$	1,362,050		$	1,359,692		$	1,446,622		$	1,544,987

 

(1)                                  Excludes restricted cash.

(2)                                  Excludes $123.1 million at December 31, 2004 of indebtedness which had been called for prepayment.  Assuming the 2004 Refinancing had been completed by such date, total long-term debt and total debt at such date would be $2,138.6 million and $2,163.0 million, respectively.  Also excludes $301.2 million at December 31, 2003 of indebtedness which had been called for prepayment.

 

32

 

ITEM 7.                             MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

The following discussion and analysis presents information that we believe is relevant to an assessment and understanding of our consolidated financial position and results of operations.  This information should be read in conjunction with our consolidated financial statements and the notes thereto included in Item 8. We adopted FIN 46 during the fourth quarter of 2003.  As a result, the results of Six Flags Over Georgia, Six Flags Over Texas, Six Flags Marine World and Six Flags White Water Atlanta, which were previously accounted for by the equity method, are now consolidated.  Our consolidated financial statements and this discussion and analysis reflect our retroactive reclassification of our prior year results upon the 2003 adoption of FIN 46 to enable meaningful year-to-year comparisons and also reflects the effects of our reclassification of the assets, liabilities and results of our park located outside Cleveland, Ohio and our European parks which were sold in April 2004 as discontinued operations.

 

General

 

Our revenue is primarily derived from the sale of tickets for entrance to our parks (approximately 53.6% of revenues in 2004) and the sale of food, merchandise, games and attractions inside our parks.  Our 2004 results were negatively affected by adverse weather in several of our major parks and the continuing effects of a sluggish economy, which affected both group sales attendance and individual visitations.  Attendance for 2004 declined by 3.4% compared to the prior year.  Our attendance decline in 2004 was partially offset by a 2.4% increase in per capita revenue.

 

Our principal costs of operations include salaries and wages, employee benefits, advertising, outside services, maintenance, utilities and insurance. Our expenses are relatively fixed. Costs for full-time employees, maintenance, utilities, advertising and insurance do not vary significantly with attendance.  In addition, we increased operating expenses in 2004 in order to provide enhanced guest service, which exacerbated the impact of the revenue decline on our cash flow.

 

Despite our disappointing performance in 2004, we were able to reduce the aggregate level of our indebtedness during the year using part of the net cash proceeds from the sale of our Cleveland park and our European parks.  We were also able to effect an amendment to our Credit Agreement and refinance two series of long-term debt.  The amendment relaxed covenants relating to the leverage ratio through 2006 and the fixed charge coverage ratio through 2007, providing us additional financial flexibility in light of recent operating conditions.  By virtue of the 2004 Refinancings, the nearest maturity of our public debt is February 2010.

 

We plan to make approximately $135 million of capital expenditures for the 2005 season adding a wide array of attractions at many of our parks. These additions include a major expansion to our New Jersey facility, which will include the introduction of a major new roller coaster, and the addition of a water park to our Chicago park. We plan to showcase the new rides and attractions in the second year of the new marketing and advertising campaigns we launched in 2004. We also plan to continue in 2005 the guest service enhancements we introduced in 2004.

 

33

 

Results of Operations

 

Summary data for the years ended December 31 were as follows (in thousands, except per capital revenue):

 

Summary of Operations											Percentage Changes
		2004			2003			2002			2004 v. 2003		2003 v. 2002
Total revenue		$	1,037,692		$	1,048,643		$	1,059,095		(1.0	)	(1.0	)%
Operating expenses		445,724			424,319			406,701			5.0		4.3
Selling, general and administrative		202,993			206,109			188,926			(1.5	)	9.1
Non-cash compensation		643			101			9,256			536.6		(98.9	)
Costs of products sold		87,337			83,938			85,942			4.0		(2.3	)
Depreciation and amortization		151,422			145,453			137,881			4.1		5.5
Income from operations		149,573			188,723			230,389			(20.7	)	(18.1	)
Interest expense, net		191,581			213,311			228,109			(10.2	)	(6.5	)
Minority interest in earnings		37,686			35,997			36,760			4.7		(2.1	)
Early repurchase of debt		37,731			27,592			29,895			36.7		(7.7	)
Other expense		27,839			2,445			6,000			1,038.6		(59.3	)
Loss from continuing operations before income taxes		(145,264		)	(90,622		)	(70,375		)	60.3		28.8
Income tax expense (benefit)		31,984			(28,564		)	(21,899		)	N/A		30.4
Income (loss) from continuing operations		$	(177,248	)	$	(62,058	)	$	(48,476	)	185.6		28.0	%
Other Data:
Attendance		33,486			34,649			34,963			(3.4	)%	(0.9	)%
Per capita revenue		$	30.99		$	30.26		$	30.29		2.4		(0.1	)

 

Years Ended December 31, 2004 and 2003

 

Revenue. Revenue in 2004 totaled $1,037.7 million compared to $1,048.6 million for 2003. The decrease in 2004 resulted from a 3.4% decrease in attendance offset in part by a 2.4% increase in per capita revenue. We believe that the attendance decline is largely attributable to adverse weather in several of our major markets and the continuing effects of a challenging economic environment for our target audience.

 

Operating expenses. Operating expenses for 2004 increased $21.4 million (5.0%) compared to expenses for 2003. The increase primarily reflects planned increases in salary and wage and fringe benefit expense (approximately $15.4 million) and repair and maintenance expenditures (approximately $3.1 million) as part of the implementation of our plan to enhance guest services generally.

 

Selling, general and administrative; noncash compensation. Selling, general and administrative expenses for 2004 decreased $3.1 million (1.5%) compared to comparable expenses for 2003. The decrease primarily relates to a reduction in certain insurance expenses (approximately $5.9 million), arising out of lower premiums and improved loss experiences, and a reduction in legal and other services (approximately $1.1 million), offset by a planned increase in advertising expense ($3.1 million).

 

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The $0.5 million increase in 2004 in non-cash compensation reflects the grant in January 2004 of a total of 425,000 shares of restricted stock to our Chief Executive Officer and Chief Financial Officer pursuant to new employment agreements.

 

Costs of products sold. Costs of products sold in 2004 increased $3.4 million (4.0%) compared to costs for 2003, reflecting our increased costs for food, merchandise and games inventories, as well as higher freight costs. As a percentage of theme park food, merchandise and other revenue, costs of products sold increased to 18.1% in 2004 compared to 17.6% in the prior year.

 

Depreciation and amortization. Depreciation and amortization expense for 2004 increased $6.0 million (4.1%) compared to 2003. The increase compared to the 2003 level was attributable to our on-going capital program.

 

Interest expense, net of interest income; early repurchase of debt. Interest expense, net decreased $21.7 million (10.2%) compared to 2003, reflecting primarily lower debt levels. The expense in 2004 for early repurchase of debt reflects the redemption in January 2004 of our 9 ¾% Senior Notes due 2007 from the proceeds of our 2014 Notes, the repayment of a portion of our term loan, and the repayment of $248.6 million principal amount of debt from a portion of the proceeds of the sale in April 2004 of the discontinued operations and the repurchase of $147.0 million principal amount of the 2009 Notes and 2010 Notes prior to year-end from a portion of the proceeds of the Convertible Note Offering. The expense in 2003 reflects the retirement of $401.0 million of our senior discount notes in that year, principally from the proceeds of the issuance of our 9 ¾% Senior Notes due 2013. See Note 6 to Notes to Consolidated Financial Statements.

 

Minority interest in earnings. Minority interest reflects third party share of the operations of the parks that are not wholly-owned by us, Six Flags Over Georgia (including White Water Atlanta), Six Flags Over Texas and Six Flags Marine World. Cash distributions to our partners and joint venturer were $42.9 million in 2004 and $42.3 million in 2003.

 

Other expense. The increase in other expense in 2004 primarily reflects both the $14.4 million write-off of the book value of our investment in the owner of the Madrid park we managed prior to November 2004 and related intangible assets (see Note 2 to Notes to Consolidated Financial Statements) and the $13.5 million write-off of the remaining book value of certain assets replaced as part of our 2004 and 2005 capital programs or otherwise determined to no longer be useable in our business.

 

Income tax (expense) benefit. Income tax expense was $32.0 million for 2004 compared to a benefit of $28.6 million for 2003. Income tax expense in 2004 was adversely affected by the valuation allowance applied to our U.S. net deferred tax assets during that period and income tax expense attributable to our Canadian and Mexican operations. See “— Critical Accounting Issues” and Note 1(m) to Notes to Consolidated Financial Statements.

 

At December 31, 2004, we estimated that we had approximately $1,628.3 million of net operating losses (‘‘NOLs’’) carryforwards for Federal income tax purposes. The NOLs are subject to review and potential disallowance by the Internal Revenue Service upon audit of our Federal income tax returns and those of our subsidiaries. In addition, the use of NOLs is subject to limitations on the amount of taxable income that can be offset with the NOLs. Some of the NOLs also are subject to a limitation as to which of the subsidiaries’ income the NOLs are permitted to offset. During 2004, we determined that it was no longer likely that all of the NOLs will be utilized prior to their expiration. See Note 8 to Notes to Consolidated Financial Statements.

 

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Years Ended December 31, 2003 and 2002

 

Revenue. Revenue in 2003 totaled $1,048.6 million compared to $1,059.1 million for 2002. The 2003 performance reflects the inclusion of Six Flags New Orleans (which was acquired in August 2002) for the full year. Excluding the New Orleans park from both years, revenue decreased by $33.7 million (3.2%) in 2003, with attendance down by 3.4% and per capita revenues up by 0.2%.

 

Operating expenses. Operating expenses for 2003 increased $17.6 million (4.3%) compared to expenses for 2002. Excluding the expenses at the New Orleans park from both years, operating expenses in 2003 increased $8.0 million (2.0%) as compared to the prior-year primarily reflecting increased wage expense and fringe benefit expense relating to pension and medical benefits and the impact of exchange rates.

 

Selling, general and administrative; noncash compensation. Selling, general and administrative expenses for 2003 increased $17.2 million compared to comparable expenses for 2002. Excluding the expenses at the New Orleans park from both years, selling, general and administrative expenses in 2003 increased $12.8 million (6.8%) as compared to the prior year largely as a result of increased expenditures in advertising, insurance and real estate taxes and the impact of exchange rates. Noncash compensation in 2002 primarily reflects the final amortization of shares of restricted stock previously granted.

 

Costs of products sold. Costs of products sold in 2003 decreased $2.0 million compared to costs for 2002, notwithstanding a small increase in theme park food, merchandise and other revenue in 2003. As a percentage of theme park food, merchandise and other revenue, costs of products sold were approximately 17.6% and 18.1%, respectively, in 2003 and 2002.

 

Depreciation and amortization. Depreciation and amortization expense for 2003 increased $7.6 million compared to 2002. The increase compared to the 2002 level was attributable to additional expense associated with Six Flags New Orleans as well as our on-going capital program.

 

Interest expense, net of interest income; early repurchase of debt. Interest expense, net decreased $14.8 million compared to 2002, reflecting lower cost of funds and the incurrence of additional interest expense in 2002 related to a new note issue, the proceeds of which were applied to retire other outstanding notes approximately 45 days after issuance of the new notes. Expenses relating to early repurchase of debt (which are now shown before giving effect to the related tax benefit and were formerly accounted for as an extraordinary loss and shown on a net basis) were $2.3 million less in 2003 than in the prior year. The expenses in both years reflect the refinancing of public debt. We refinance our public debt primarily to extend maturities.

 

Minority interest in earnings. Minority interest reflects third party share of the operations of the parks that are not wholly-owned by us, Six Flags Over Georgia (including White Water Atlanta), Six Flags Over Texas and Six Flags Marine World. Cash distributions to our partners and joint venturer were $42.3 million in 2003 and $42.6 million in 2002.

 

Income tax benefit. Income tax benefit was $28.6 million for 2003 compared to a $21.9 million benefit for 2002. The effective tax rate for 2003 and 2002 was 31.5% and 31.1%, respectively. The effective tax rate is impacted by the level of income or loss in each jurisdiction and each jurisdiction’s tax rate. In 2002, the tax rate was also negatively impacted by nondeductible compensation expense.

 

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Set forth below is certain information regarding our debt, preferred stock and lease obligations at December 31, 2004 (in thousands):

 

		Payment Due by Period
		2005			2006-2008		2009-2011		2012 and beyond		Total
Contractual Obligations
Long term debt(1)		$	19,894		334,930		614,700		1,190,650		2,160,174
PIERS(2)		—			—		287,500		—		287,500
Real estate and operating leases(3)		9,998			27,868		27,094		182,414		247,374
Purchase Obligations(4)		168,768			12,000		12,000		—		—
Total		$	198,660		374,798		941,294		1,373,064		2,695,048

 

Included under “purchase obligations” above are commitments for license fees to Warner Bros. and commitments relating to capital expenditures.  License fees to Warner Bros. for our domestic parks aggregate $2.5 million annually through May 2005.  Effective June 1, 2005, the license fee is payable based upon the number of domestic parks utilizing the licensed characters. Based on current usage, the annual fee will increase to approximately $4.0 million at that time. In addition to the licensee fee, we also pay a royalty fee on merchandise sold using the licensed characters, generally equal to 12% of the cost of the merchandise.

 

During the years ended December 31, 2004 and 2003, we made contributions to our defined benefit pension plan of $3.1 million and $3.3 million, respectively.  We expect to make contributions of approximately $9.4 million in 2005 in respect to our pension plans and and $2.3 million in 2005 to 401(k) plan.  Our estimated expense for employee health insurance for 2005 is $7.5 million. We do not expect our pension and 401(k) contributions to increase materially during the next several years. See Note 10 to Notes to Consolidated Financial Statements.

 

Although we are contractually committed to make approximately $25.0 million of capital expenditures at one park over the next several years, the vast majority of our capital expenditures in 2005 and beyond will be made on a discretionary basis.  We plan on spending approximately $135 million on capital expenditures for the 2005 season.

 

(1)                                  Assumes that the 2004 Refinancings had been completed by December 31, 2004.  Also includes capital lease obligations.  Payments are shown at principal amount.  Payments shown do not include interest payments or principal payments on our working capital revolver, no borrowings under which were outstanding at December 31, 2004.  The $300.0 million working capital revolver must be repaid in full for 30 consecutive days in each year.  Interest paid on the borrowings under the revolver for 2004 was $1.2 million.

(2)                                  Amount shown excludes annual dividends of approximately $20.8 million, which we are permitted to pay in either cash or common stock.  The amount shown for the 2009 cash redemption obligations assumes no conversion of PIERS prior thereto.

(3)                                  Assumes for lease payments based on a percentage of revenues, future payments at 2004 revenue levels. Also does not give effect to cost of living adjustments.  Obligations not denominated in U.S. Dollars have been converted based on the exchange rates existing on December 31, 2004.

(4)                                  Represents obligations at December 31, 2004 with respect to insurance, inventory, media and advertising commitments, computer systems and hardware, estimated license fees to Warner Bros. (through 2011) and new rides and attractions.  Of the amount shown for 2005, approximately $124.8 million represents capital items.  The amounts in respect of new rides and attractions were computed at January 25, 2005 and include estimates by us of costs needed to complete such improvements that, in certain cases, were not legally committed at that date.  Amounts shown do not include obligations to employees that can not be quantified at December 31, 2004 which are discussed below. Amounts shown also do not include purchase obligations existing at the individual park-level for supplies and other miscellaneous items since such amount was not readily available. None of the park-level obligations is material.

 

42

 

Significant management judgment is required in determining our provision or benefit for income taxes, our deferred tax assets and liabilities and any valuation allowance recorded against our net deferred tax assets. We have recorded a valuation allowance of $153.4 million as of December 31, 2004, due to uncertainties related to our ability to utilize some of our deferred tax assets, primarily consisting of certain net operating loss carryforwards and tax credits, before they expire. The valuation allowance is based on our estimates of taxable income by jurisdiction in which we operate and the period over which our deferred tax assets will be recoverable. In the event that actual results differ from these estimates or we adjust these estimates in future periods, we may need to establish an additional valuation allowance which could materially impact our consolidated financial position and results of operations.

 

The variables that will impact whether our deferred tax assets will be utilized prior to their expiration include attendance, capital expenditures, interest rates, labor and insurance expenses, and changes in state or federal tax laws. In determining the valuation allowance we do not consider, and under generally accepted accounting principles cannot consider, the possible changes in state or federal tax laws until the laws change. We reduced our level of capital expenditures in 2004 and, although we will invest at higher levels in 2005 and 2006, we expect to invest thereafter at lower levels than had been the case in prior years. To the extent we reduce capital expenditures, our future accelerated tax deductions for our rides and equipment will be reduced, and our interest expense deductions would decrease as the debt balances are reduced by cash flow that previously would have been utilized for capital expenditures. Increases in capital expenditures without corresponding increases in net revenues would reduce short-term taxable income and increase the likelihood of additional valuation allowances being required as net operating loss carryforwards expire prior to their utilization. Conversely, increases in revenues in excess of operating expenses would reduce the likelihood of additional valuation allowances being required as the short-term taxable income would increase and we may be able to utilize net operating loss carryforwards prior to their expiration. See Note 1(m) to Notes to Consolidated Financial Statements.

 

Valuation of long-lived and intangible assets and goodwill

 

Through December 31, 2001, we had assessed the impairment of long-lived assets and goodwill whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Factors we considered important which could have triggered an impairment review included the following:

 

•                                          significant underperformance relative to expected historical or projected future operating results;

•                                          significant changes in the manner of our use of the acquired assets or the strategy for our overall business;

•                                          significant negative industry or economic trends;

•                                          significant decline in our stock price for a sustained period; and

•                                          our market capitalization relative to net book value.

 

Through that date, when we determined that the carrying value of long-lived assets and related goodwill may not have been recoverable based upon the existence of one or more of the above indicators of impairment, we measured any impairment based on a projected discounted cash flow method using a discount rate determined by our management to be commensurate with the risk inherent in our current business model.  Long-lived assets were $3,254.8 million including goodwill and other intangible assets of $1,234.7 million as of December 31, 2004.  Long-lived assets included property and equipment and intangible assets.

 

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financial statements, using the Black-Scholes method of determining fair value in the past would have increased our noncash compensation expense by approximately $13.2 million in 2003 and approximately $2.2 million in 2004. The provisions of the instruments governing our credit facilities and outstanding notes do not include noncash compensation expenses in the determination of financial covenants. As a result, the effects of the adoption of Statement 123(R) will not have a significant impact on our financial condition or resources.

 

 

ITEM 7A.                    QUANTITIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

Reference is made to the information appearing under the subheading “Market Risks and Sensitivity Analyses” under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations” on page 45 of this Report.

 

ITEM 8.                             FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

 

The financial statements and schedules listed in Item 15(a)(1) and (2) are included in this Report beginning on page F-1.

 

ITEM 9.                             CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

 

None.

 

ITEM 9A.                    CONTROLS AND PROCEDURES

 

Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures

 

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation as of December 31, 2004 of the design and operation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) or 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Based on this evaluation, our Chief Executive Officer and our Chief Financial Officer concluded that our disclosure controls and procedures were effective.

 

Management’s Report on Internal Control Over Financial Reporting

 

See Item 8.

 

Report of Independent Registered Public Accounting Firm

 

See Item 8.

 

Changes in Internal Control Over Financial Reporting During the Quarter Ended December 31, 2004

 

There were no changes in our internal control over financial reporting that occurred during the quarter ended December 31, 2004 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

ITEM 9B.                    OTHER INFORMATION

 

None.

 

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PART III

 

ITEM 10.                                              DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

 

(a)                                  Identification of Directors

 

Incorporated by reference from the information captioned “Proposal 1: Election of Directors” included in our Proxy Statement in connection with the annual meeting of stockholders to be held in June 2005.

 

(b)                                 Identification of Executive Officers

 

Information regarding executive officers is included in Item 1 of Part I herein.

 

(c)                                  Code of Ethics

 

The Company has adopted a Code of Business Conduct which applies to its chief executive officer, chief financial officer and all of its other employees, as well as the members of its board of directors.  The Code of Business Conduct is published in the investors section of the Company’s website at www.sixflags.com.  Any amendments or waivers to the Code of Business Conduct applicable to the Company’s chief executive officer or chief financial officer must be approved by the audit committee of the Company’s board of directors and will be promptly disclosed.

 

ITEM 11.                                              EXECUTIVE COMPENSATION

 

Incorporated by reference from the information captioned “Executive Compensation” included in our Proxy Statement in connection with the annual meeting of stockholders to be held in June 2005.

 

 

ITEM 12.                                              SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

 

(a)  Incorporated by reference from the information captioned “Stock Ownership of Management and Certain Beneficial Holders” included in our Proxy Statement in connection with the annual meeting of stockholders to be held in June 2005.

 

(b)  Changes in Control

 

      None.

 

ITEM 13.                                              CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

 

Incorporated by reference from the information captioned “Certain Transactions” included in our Proxy Statement in connection with the annual meeting of stockholders to be held in June 2005.

 

ITEM 14.                                              PRINCIPAL ACCOUNTANT FEES AND SERVICES

 

Incorporated by reference from the information captioned “Principal Accountant Fees and Services” included in our Proxy Statement in connection with the annual meeting of stockholders to be held in June 2005.

 

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PART IV

 

ITEM 15.               EXHIBITS AND FINANCIAL STATEMENT SCHEDULES,

 

(a)(1) and (2) Financial Statements and Financial Statement Schedules

 

The following consolidated financial statements of Six Flags, Inc. and subsidiaries, the notes thereto, the related report thereon of independent auditors, and financial statement schedules are filed under Item 8 of this Report:

 

 

Management’s Report on Internal Control Over Financial Reporting
Report of Independent Registered Public Accounting Firm (Internal Controls)
Report of Independent Registered Public Accounting Firm (Financial Statements)
Consolidated Balance Sheets - December 31, 2004 and 2003
Consolidated Statements of Operations Years ended December 31, 2004, 2003 and 2002
Consolidated Statements of Stockholders’ Equity and Other Comprehensive Income (Loss) Years ended December 31, 2004, 2003 and 2002
Consolidated Statements of Cash Flows Years ended December 31, 2004, 2003 and 2002
Notes to Consolidated Financial Statements

 

Schedules for which provision is made in the applicable accounting regulations of the Securities and Exchange Commission are omitted because they either are not required under the related instructions, are inapplicable, or the required information is shown in the financial statements or notes thereto.

 

(a)(3)       See Exhibit Index.

 

(b)           Exhibits

 

See Item 15(a)(3) above.

 

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