Six Flags Entertainment Earnings 2019-09-30

SIX 10Q Quarterly Report

Balance Sheet	Income Statement	Cash Flow

Comparables ($MM TTM)
Ticker	M Cap	Assets	Liab	Rev	G Profit	Net Inc	EBITDA	EV	G Margin	EV/EBITDA	ROA
MSG	6,475	3,764	1,057	1,631	0	11	152	5,412	0%	35.5	0%
CHDN	4,519	2,588	2,035	1,183	0	186	384	4,663	0%	12.1	7%
SIX	4,317	2,938	3,142	1,495	595	315	644	6,481	40%	10.1	11%
WBAI	3,050	1,247	112	0	0	0	0	2,617			0%
IGT	2,930	13,649	10,897	0	0	0	0	10,493			0%
SEAS	2,470	2,296	2,165	1,390	0	101	382	4,086	0%	10.7	4%
ISCA	1,956	2,322	669	675	0	76	223	1,874	0%	8.4	3%
EVRI	913	1,596	1,681	493	0	18	115	1,952	0%	16.9	1%
TRK	751	1,469	520	471	0	37	124	845	0%	6.8	3%
GDEN	377	1,695	1,392	908	0	-51	60	1,414	0%	23.5	-3%

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

for the quarterly period ended September 30, 2019 or

☐ 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 Entertainment Corporation

(Exact Name of Registrant as Specified in Its Charter)


Delaware (State or Other Jurisdiction of Incorporation or Organization)		13-3995059 (I.R.S. Employer Identification No.)

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)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, $0.025 par value per share	SIX	New York Stock Exchange

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 ⌧ No ◻

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). Yes ⌧ No ◻

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


Large Accelerated Filer¹ ⌧		Accelerated Filer ◻		Non-accelerated Filer ◻		Smaller Reporting Company ☐		Emerging Growth Company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) 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 ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: At October 18, 2019, Six Flags Entertainment Corporation had 84,524,441 outstanding shares of common stock, par value $0.025 per share.

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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, 2019 (unaudited) and December 31, 2018	3

	Condensed Consolidated Statements of Operations (unaudited) for the Three Months Ended September 30, 2019 and 2018	4

	Condensed Consolidated Statements of Operations (unaudited) for the Nine Months Ended September 30, 2019 and 2018	5

	Condensed Consolidated Statements of Comprehensive Income (unaudited) for the Three Months Ended September 30, 2019 and 2018	6

	Condensed Consolidated Statements of Comprehensive Income (unaudited) for the Nine Months Ended September 30, 2019 and 2018	7

	Condensed Consolidated Statements of Stockholders’ Deficit (unaudited) for the Three Months Ended September 30, 2019 and 2018	8

	Condensed Consolidated Statements of Stockholders’ Deficit (unaudited) for the Nine Months Ended September 30, 2019 and 2018	9

	Condensed Consolidated Statements of Cash Flows (unaudited) for the Nine Months Ended September 30, 2019 and 2018	10

	Notes to Condensed Consolidated Financial Statements	11

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	30

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	37

Item 4.	Controls and Procedures	38

PART II.	OTHER INFORMATION

Item 1.	Legal Proceedings	38

Item 1A.	Risk Factors	38

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	38

Item 6.	Exhibits	40

Signatures		41

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q (this "Quarterly Report") and the documents incorporated herein by reference contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements include all statements that are not historical facts and can be identified by words such as "anticipates," "intends," "plans," "seeks," "believes," "estimates," "expects," "may," "should," "could" and variations of such words or similar expressions. Forward-looking statements are based on our current beliefs, expectations and assumptions regarding our business, the economy and other future conditions. Because forward-looking statements relate to the future, they are, by their nature, 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. Therefore, we caution you 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 statements may involve risks and uncertainties that could cause actual results to differ materially from those described in such statements. 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 plans and ability to roll out our capital enhancements and planned initiatives in a timely and cost effective manner, (iii) our ability to improve operating results by implementing strategic cost reductions and organizational and personnel changes without adversely affecting our business, (iv) our dividend policy and ability to pay dividends on our common stock, (v) the effect of and cost and timing of compliance with newly enacted laws, regulations and accounting policies, (vi) our ability to realize future growth and execute and deliver on our strategic initiatives, (vii) our expectations regarding uncertain tax positions, (viii) our expectations regarding our deferred revenue growth, and (ix) 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, but are not limited to, the following:

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

●recall of food, toys and other retail products sold at our parks;

●accidents occurring at our parks or other parks in the industry and adverse publicity concerning our parks or other parks in the industry;

●inability to achieve desired improvements and our aspirational financial performance goals;

●adverse weather conditions such as excess heat or cold, rain and storms;

●general financial and credit market conditions;

●economic conditions (including customer spending patterns);

●changes in public and consumer tastes;

●construction delays in capital improvements and ride downtime;

●competition with other theme parks and waterparks and entertainment alternatives;

●dependence on a seasonal workforce;

●unionization activities and labor disputes;

●laws and regulations affecting labor and employee benefit costs, including increases in state and federally mandated minimum wages, and healthcare reform;

●pending, threatened or future legal proceedings and the significant expenses associated with litigation;

●cybersecurity risks; and

●other factors described in "Item 1A. Risk Factors" set forth in our Annual Report on Form 10-K for the year ended December 31, 2018 (the "2018 Annual Report").

A more complete discussion of these factors and other risks applicable to our business is contained in "Part I, Item 1A. Risk Factors" of the 2018 Annual Report. All forward-looking statements in this Quarterly Report, or that are made on our behalf by our directors, officers or employees related to the information contained herein, apply only as of the date of this Quarterly Report or as of the date they were made. While we believe that the expectations reflected in such forward-looking statements are reasonable, we can give no assurance that such expectations will be realized and actual results could vary materially. 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, except as required by applicable

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law, to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise.

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, are available free of charge through our website at investors.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 United States 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.

* * * * *

As used herein, unless the context requires otherwise, the terms "we," "our," "Company" and "Six Flags" refer collectively to Six Flags Entertainment Corporation and its consolidated subsidiaries, and "Holdings" refers only to Six Flags Entertainment Corporation, without regard to its consolidated subsidiaries.

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PART I — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

SIX FLAGS ENTERTAINMENT CORPORATION

Condensed Consolidated Balance Sheets

(Unaudited)


	As of
	September 30, 2019		December 31, 2018
(Amounts in thousands, except share data)	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	211,797	$	44,608
Accounts receivable, net		199,127		116,043
Inventories		36,953		28,779
Prepaid expenses and other current assets		60,508		52,499
Total current assets		508,385		241,929
Property and equipment, net:
Property and equipment, at cost		2,322,291		2,204,678
Accumulated depreciation		(1,032,914)		(950,996)
Total property and equipment, net		1,289,377		1,253,682
Other assets:
Right-of-use operating leases, net		202,935		—
Debt issuance costs		3,836		1,793
Deposits and other assets		10,740		11,277
Goodwill		659,618		659,618
Intangible assets, net of accumulated amortization of $22,623 and $21,133 as of September 30, 2019 and December 31, 2018, respectively		345,812		349,029
Total other assets		1,222,941		1,021,717
Total assets	$	3,020,703	$	2,517,328

LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable	$	51,428	$	32,905
Accrued compensation, payroll taxes and benefits		23,994		30,468
Accrued insurance reserves		37,108		39,183
Accrued interest payable		20,819		30,697
Other accrued liabilities		61,038		45,880
Deferred revenue		197,674		146,227
Short-term borrowings		—		43,000
Current portion of long-term debt		8,000		—
Short-term operating lease liabilities		10,585		—
Total current liabilities		410,646		368,360
Noncurrent liabilities:
Long-term debt		2,268,704		2,063,512
Long-term operating lease liabilities		185,365		—
Other long-term liabilities		22,133		29,280
Deferred income taxes		223,656		173,998
Total noncurrent liabilities		2,699,858		2,266,790
Total liabilities		3,110,504		2,635,150

Redeemable noncontrolling interests		545,386		525,271

Stockholders' deficit:
Preferred stock, $1.00 par value		—		—
Common stock, $0.025 par value, 140,000,000 shares authorized; 84,516,567 and 83,962,182 shares issued and outstanding at September 30, 2019 and December 31, 2018, respectively		2,113		2,099
Capital in excess of par value		1,066,312		1,037,640
Accumulated deficit		(1,628,394)		(1,611,334)
Accumulated other comprehensive loss, net of tax		(75,218)		(71,498)
Total stockholders' deficit		(635,187)		(643,093)
Total liabilities and stockholders' deficit	$	3,020,703	$	2,517,328

See accompanying notes to unaudited condensed consolidated financial statements.

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SIX FLAGS ENTERTAINMENT CORPORATION

Condensed Consolidated Statements of Operations

(Unaudited)


	Three Months Ended
(Amounts in thousands, except per share data)	September 30, 2019		September 30, 2018
Park admissions	$	352,664	$	350,977
Park food, merchandise and other		242,059		232,952
Sponsorship, international agreements and accommodations		26,457		35,891
Total revenues		621,180		619,820
Operating expenses (excluding depreciation and amortization shown separately below)		189,820		188,704
Selling, general and administrative expenses (including stock-based compensation of $3,903 and $10,183 in 2019 and 2018, respectively, and excluding depreciation and amortization shown separately below)		55,144		65,783
Costs of products sold		53,508		50,081
Other net periodic pension benefit		(1,038)		(1,290)
Depreciation		30,084		29,008
Amortization		601		612
Loss on disposal of assets		2,659		386
Interest expense		28,686		27,142
Interest income		(350)		(157)
Other expense (income), net		231		(130)
Income before income taxes		261,835		259,681
Income tax expense		61,626		55,260
Net income		200,209		204,421
Less: Net income attributable to noncontrolling interests		(20,376)		(20,004)
Net income attributable to Six Flags Entertainment Corporation	$	179,833	$	184,417

Weighted-average common shares outstanding:
Basic:		84,413		84,143
Diluted:		85,045		85,516

Net income per average common share outstanding:
Basic:	$	2.13	$	2.19
Diluted:	$	2.11	$	2.16

Cash dividends declared per common share	$	0.82	$	0.78

See accompanying notes to the unaudited condensed consolidated financial statements

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SIX FLAGS ENTERTAINMENT CORPORATION

Condensed Consolidated Statements of Operations

(Unaudited)


	Nine Months Ended
(Amounts in thousands, except per share data)	September 30, 2019		September 30, 2018
Park admissions	$	671,252	$	657,769
Park food, merchandise and other		472,692		451,253
Sponsorship, international agreements and accommodations		82,639		85,182
Total revenues		1,226,583		1,194,204
Operating expenses (excluding depreciation and amortization shown separately below)		482,690		455,168
Selling, general and administrative expenses (including stock-based compensation of $11,347 and $30,772 in 2019 and 2018, respectively, and excluding depreciation and amortization shown separately below)		154,977		175,507
Costs of products sold		107,296		100,064
Other net periodic pension benefit		(3,148)		(3,844)
Depreciation		87,228		84,335
Amortization		1,805		1,835
Loss on disposal of assets		3,105		2,551
Interest expense		86,965		80,820
Interest income		(709)		(470)
Loss on debt extinguishment		6,231		—
Other (income) expense, net		(1,474)		2,159
Income before income taxes		301,617		296,079
Income tax expense		70,644		59,498
Net income		230,973		236,581
Less: Net income attributable to noncontrolling interests		(40,753)		(40,007)
Net income attributable to Six Flags Entertainment Corporation	$	190,220	$	196,574

Weighted-average common shares outstanding:
Basic:		84,276		84,087
Diluted:		84,938		85,504

Net income per average common share outstanding:
Basic:	$	2.26	$	2.34
Diluted:	$	2.24	$	2.30

Cash dividends declared per common share	$	2.46	$	2.34

See accompanying notes to unaudited condensed consolidated financial statements.

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SIX FLAGS ENTERTAINMENT CORPORATION

Condensed Consolidated Statements of Comprehensive Income

(Unaudited)


	Three Months Ended
(Amounts in thousands)	September 30, 2019		September 30, 2018
Net income	$	200,209	$	204,421
Other comprehensive (loss) income, net of tax:
Foreign currency translation adjustment ⁽¹⁾		(1,466)		3,338
Defined benefit retirement plan ⁽²⁾		151		135
Change in cash flow hedging ⁽³⁾		(2,268)		—
Other comprehensive (loss) income, net of tax		(3,583)		3,473
Comprehensive income		196,626		207,894
Less: Comprehensive income attributable to noncontrolling interests		(20,376)		(20,004)
Comprehensive income attributable to Six Flags Entertainment Corporation	$	176,250	$	187,890

(1) Foreign currency translation adjustment is presented net of tax benefit of $0.4 million for the three months ended September 30, 2019 and tax expense of $0.9 million for the three months ended September 30, 2018, respectively.

(2) Defined benefit retirement plan is presented net of tax expense of $0.1 million for the three months ended September 30, 2019 and net of nominal tax expense for the three months ended September 30, 2018, respectively.

(3) Change in fair value of cash flow hedging is presented net of tax benefit of $0.8 million for the three months ended September 30, 2019.

See accompanying notes to unaudited condensed consolidated financial statements

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SIX FLAGS ENTERTAINMENT CORPORATION

Condensed Consolidated Statements of Comprehensive Income

(Unaudited)


	Nine Months Ended
(Amounts in thousands)	September 30, 2019		September 30, 2018
Net income	$	230,973	$	236,581
Other comprehensive (loss) income, net of tax:
Foreign currency translation adjustment ⁽¹⁾		249		4,413
Defined benefit retirement plan ⁽²⁾		440		401
Change in cash flow hedging ⁽³⁾		(4,409)		—
Other comprehensive (loss) income, net of tax		(3,720)		4,814
Comprehensive income		227,253		241,395
Less: Comprehensive income attributable to noncontrolling interests		(40,753)		(40,007)
Comprehensive income attributable to Six Flags Entertainment Corporation	$	186,500	$	201,388

(1) Foreign currency translation adjustment is presented net of tax expense of $0.1 million and $1.2 million for the nine months ended September 30, 2019 and September 30, 2018, respectively.

(2) Defined benefit retirement plan is presented net of tax expense of $0.1 million for the nine months ended September 30, 2019 and 2018.

(3) Change in fair value of cash flow hedging is presented net of tax benefit of $1.5 million for the nine months ended September 30, 2019.

See accompanying notes to unaudited condensed consolidated financial statements.

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SIX FLAGS ENTERTAINMENT CORPORATION

Consolidated Statements of Stockholders’ Deficit

(Unaudited)


								Accumulated
				Capital in				other		Total
	Common stock			excess of		Accumulated		comprehensive		stockholders'
(Amounts in thousands, except share data)	Shares issued	Amount		par value		deficit		loss		deficit
Balances at June 30, 2018	83,910,255	$	2,098	$	1,118,411	$	(1,714,524)	$	(71,979)	$	(665,994)
Issuance of common stock	484,657		12		18,437		—		—		18,449
Stock-based compensation	—		—		10,183		—		—		10,183
Dividends declared to common shareholders	—		—		—		(65,699)		—		(65,699)
Repurchase of common stock	(684)		—		(45)		(1)		—		(46)
Employee stock purchase plan	64		—		4		—		—		4
Net income attributable to Six Flags Entertainment Corporation	—		—		—		184,417		—		184,417
Net other comprehensive income, net of tax	—		—		—		—		3,473		3,473
Balances at September 30, 2018	84,394,292	$	2,110	$	1,146,990	$	(1,595,807)	$	(68,506)	$	(515,213)


								Accumulated
				Capital in				other		Total
	Common stock			excess of		Accumulated		comprehensive		stockholders'
(Amounts in thousands, except share data)	Shares issued	Amount		par value		deficit		loss		deficit
Balances at June 30, 2019	84,334,531	$	2,108	$	1,058,675	$	(1,738,955)	$	(71,635)	$	(749,807)
Issuance of common stock	182,851		5		3,782		—		—		3,787
Stock-based compensation	—		—		3,903		—		—		3,903
Dividends declared to common shareholders	—		—		—		(69,272)		—		(69,272)
Repurchase of common stock	(815)		—		(48)		—		—		(48)
Net income attributable to Six Flags Entertainment Corporation	—		—		—		179,833		—		179,833
Net other comprehensive loss, net of tax	—		—		—		—		(3,583)		(3,583)
Balances at September 30, 2019	84,516,567	$	2,113	$	1,066,312	$	(1,628,394)	$	(75,218)	$	(635,187)

See accompanying notes to unaudited condensed consolidated financial statements.

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SIX FLAGS ENTERTAINMENT CORPORATION

Consolidated Statements of Stockholders’ Deficit

(Unaudited)


								Accumulated
				Capital in				other		Total
	Common stock			excess of		Accumulated		comprehensive		stockholders'
(Amounts in thousands, except share data)	Shares issued	Amount		par value		deficit		loss		deficit
Balances at December 31, 2017	84,488,433	$	2,112	$	1,086,265	$	(1,529,608)	$	(63,881)	$	(505,112)
Cumulative effect adjustment - adoption of ASU 2018-02 and ASU 2014-09	—		—		—		4,557		(9,439)		(4,882)
Balances at January 1, 2018	84,488,433	$	2,112	$	1,086,265	$	(1,525,051)	$	(73,320)	$	(509,994)
Issuance of common stock	1,190,870		30		39,357		—		—		39,387
Stock-based compensation	—		—		30,772		—		—		30,772
Dividends declared to common shareholders	—		—		—		(196,944)		—		(196,944)
Repurchase of common stock	(1,303,122)		(33)		(10,493)		(70,466)		—		(80,992)
Employee stock purchase plan	18,111		1		1,089		—		—		1,090
Fresh start valuation adjustment for SFOT units purchased	—		—		—		80		—		80
Net income attributable to Six Flags Entertainment Corporation	—		—		—		196,574		—		196,574
Net other comprehensive income, net of tax	—		—		—		—		4,814		4,814
Balances at September 30, 2018	84,394,292	$	2,110	$	1,146,990	$	(1,595,807)	$	(68,506)	$	(515,213)


								Accumulated
				Capital in				other		Total
	Common stock			excess of		Accumulated		comprehensive		stockholders'
(Amounts in thousands, except share data)	Shares issued	Amount		par value		deficit		loss		deficit
Balances at December 31, 2018	83,962,182	$	2,099	$	1,037,640	$	(1,611,334)	$	(71,498)	$	(643,093)
Issuance of common stock	528,330		13		16,173		—		—		16,186
Stock-based compensation	—		—		11,347		—		—		11,347
Dividends declared to common shareholders	—		—		—		(207,325)		—		(207,325)
Repurchase of common stock	(882)		—		(52)		—		—		(52)
Employee stock purchase plan	26,937		1		1,204		—		—		1,205
Fresh start valuation adjustment for SFOT units purchased	—		—		—		45		—		45
Net income attributable to Six Flags Entertainment Corporation	—		—		—		190,220		—		190,220
Net other comprehensive loss, net of tax	—		—		—		—		(3,720)		(3,720)
Balances at September 30, 2019	84,516,567	$	2,113	$	1,066,312	$	(1,628,394)	$	(75,218)	$	(635,187)

See accompanying notes to unaudited condensed consolidated financial statements.

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SIX FLAGS ENTERTAINMENT CORPORATION

Condensed Consolidated Statements of Cash Flows

(Unaudited)


	Nine Months Ended
(Amounts in thousands)	September 30, 2019		September 30, 2018
Cash flows from operating activities:
Net income	$	230,973	$	236,581
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		89,033		86,170
Stock-based compensation		11,347		30,772
Interest accretion on notes payable		988		1,007
Loss on debt extinguishment		6,231		—
Amortization of debt issuance costs		2,703		2,972
Other, including loss on disposal of assets		3,773		5,755
Gain on sale of investee		(724)		—
Increase in accounts receivable		(83,061)		(94,567)
Increase in inventories, prepaid expenses and other current assets		(19,188)		(24,614)
Decrease in deposits and other assets		242		515
Decrease in ROU operating leases		6,030		—
Increase in accounts payable, deferred revenue, accrued liabilities and other long-term liabilities		62,266		68,786
Decrease in operating lease liabilities		(10,823)		—
Decrease in accrued interest payable		(9,878)		(5,020)
Deferred income taxes		50,953		33,654
Net cash provided by operating activities		340,865		342,011

Cash flows from investing activities:
Additions to property and equipment		(123,662)		(112,242)
Property insurance recoveries		1,637		—
Acquisition of park assets, net of cash acquired		—		(19,059)
Proceeds from sale of assets		24		55
Net cash used in investing activities		(122,001)		(131,246)

Cash flows from financing activities:
Repayment of borrowings		(800,750)		(257,000)
Proceeds from borrowings		970,000		296,000
Payment of debt issuance costs		(8,927)		(793)
Payment of cash dividends		(208,740)		(198,245)
Proceeds from issuance of common stock		17,391		40,477
Stock repurchases		(52)		(80,992)
Purchase of redeemable noncontrolling interest		(217)		(353)
Distributions to noncontrolling interests		(20,376)		(20,003)
Net cash used in financing activities		(51,671)		(220,909)

Effect of exchange rate on cash		(4)		1,205

Net increase (decrease) in cash and cash equivalents		167,189		(8,939)
Cash and cash equivalents at beginning of period		44,608		77,496
Cash and cash equivalents at end of period	$	211,797	$	68,557

Supplemental cash flow information
Cash paid for interest	$	93,153	$	81,861
Cash paid for income taxes	$	24,953	$	24,659

See accompanying notes to unaudited condensed consolidated financial statements.

Table of Contents

1. General — Basis of Presentation

We own and operate regional theme parks and waterparks and are the largest regional theme park operator in the world and the largest operator of waterparks in North America based on the number of parks we operate. Of the 26 parks we owned or operated as of September 30, 2019, 23 parks are located in the United States, two are located in Mexico and one is located in Montreal, Canada.

The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States ("U.S. GAAP"). Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed, or omitted, pursuant to the rules and regulations of the SEC.

"Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations" contains a discussion of our results of operations and our financial position and should be read in conjunction with the unaudited condensed consolidated financial statements and notes. The 2018 Annual Report includes additional information about us, our operations and our financial position, and should be referred to in conjunction with this Quarterly Report. The information furnished in this Quarterly Report reflects all normal and recurring adjustments that are, in the opinion of management, necessary to present a fair statement of the results for the periods presented.

Results of operations for the nine months ended September 30, 2019 are not indicative of the results expected for the full year. In particular, our park operations contribute more than half of their annual revenue during the period from Memorial Day to Labor Day each year, while expenses are incurred year-round. Additionally, we had increased costs in the current year related to the operations of the five new parks that we began operating on June 1, 2018, and Magic Waters, a waterpark in Rockford, Illinois that we began operating on April 1, 2019.

a. Consolidated U.S. GAAP Presentation

Our accounting policies reflect industry practices and conform to U.S. GAAP.

The unaudited condensed consolidated financial statements include our accounts and the accounts of our wholly owned subsidiaries. We also consolidate the partnerships that own Six Flags Over Texas ("SFOT") and Six Flags Over Georgia (including Six Flags White Water Atlanta) ("SFOG", and together with SFOT, the "Partnership Parks") as subsidiaries in our unaudited condensed consolidated financial statements, as we have determined that we have the power to direct the activities of the Partnership Parks that most significantly impact their economic performance and we have the obligation to absorb losses and receive benefits from the Partnership Parks that can be potentially significant to these entities. The equity interests owned by non-affiliated parties in the Partnership Parks are reflected in the accompanying unaudited condensed consolidated balance sheets as redeemable noncontrolling interests. See Note 6 for a description of the partnership agreements applicable to the Partnership Parks and Note 8 for further discussion on the non-affiliated parties’ share of the earnings of the Partnership Parks.

b. Income Taxes

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, including net operating loss and other tax carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in operations in the period that includes the enactment date. We recorded a valuation allowance of $116.4 million and $115.2 million as of September 30, 2019 and December 31, 2018, respectively, due to uncertainties related to our ability to use some of our deferred tax assets, primarily consisting of certain state net operating loss and other tax carryforwards, before they expire. The valuation allowance was based on our estimates of taxable income by jurisdiction in which we operate and the period over which our deferred tax assets were recoverable. Our projected taxable income over the foreseeable future gives us comfort that we will be able to use all of our federal net operating loss carryforwards before they expire.

Table of Contents

In determining the effective tax rate for interim periods, we consider the expected changes in our valuation allowance from current year originating or reversing timing differences between financial accounting and tax purposes and the taxable income or loss expected for the current year. For interim periods, we also account for the tax effect of significant non-recurring items in the period in which they occur as well as changes in the valuation allowance relating to a change in the assessment of the probability of utilization of the deferred income tax assets.

Our liability for income taxes is finalized as auditable tax years pass their respective statutes of limitations in the various jurisdictions in which we are subject to tax. However, taxing authorities of these jurisdictions may audit prior years for which the statute of limitations is closed for the purpose of making an adjustment to our taxable income in a year for which the statute of limitations has not closed. Accordingly, taxing authorities of these jurisdictions may audit prior years of the Company and its predecessors for the purpose of adjusting net operating loss carryforwards to years for which the statute of limitations has not closed.

We classify interest and penalties attributable to income taxes as part of income tax expense. As of September 30, 2019 and December 31, 2018, we had no recorded amounts for accrued interest or penalties.

Because we do not permanently reinvest foreign earnings, United States deferred income taxes have been provided on unremitted foreign earnings to the extent that such foreign earnings are expected to be taxable upon repatriation.

c. Long-Lived Assets

We review long-lived assets, including finite-lived intangible assets subject to amortization, for impairment upon the occurrence of events or changes in circumstances that would indicate that the carrying value of the asset or group of assets may not be recoverable. Recoverability of assets to be held and used is measured by comparing the carrying amount of the asset or group of assets to the future net cash flows expected to be generated by the asset or group of assets. If such assets are not considered to be fully recoverable, any impairment to be recognized is measured by the amount by which the carrying amount of the asset or group of assets exceeds its respective fair value. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell.

d. Earnings Per Common Share

Basic earnings per common share is computed by dividing net income attributable to Holdings’ common stockholders by the weighted average number of common shares outstanding for the period. Diluted earnings per common share is computed by dividing net income attributable to Holdings’ common stockholders by the weighted average number of common shares outstanding during the period, including the effect of all dilutive common stock equivalents using the treasury stock method. In periods for which there is a net loss, diluted loss per common share is equal to basic loss per common share, since the effect of including any common stock equivalents would be antidilutive.

Table of Contents

Earnings per common share for the three and nine months ended September 30, 2019 and September 30, 2018 was calculated as follows:


	Three Months Ended				Nine Months Ended
(Amounts in thousands, except per share data)	September 30, 2019		September 30, 2018		September 30, 2019		September 30, 2018
Net income attributable to Six Flags Entertainment Corporation	$	179,833	$	184,417	$	190,220	$	196,574

Weighted-average common shares outstanding - basic:		84,413		84,143		84,276		84,087
Effect of dilutive stock options and restricted stock units		632		1,373

Closing Price ($)	Shares Out (MM)	Market Cap ($MM)
$0.00	85	$4,317

10-Q	2019-10-23	Quarter: 2019-09-30
10-Q	2019-07-24	Quarter: 2019-06-30
10-Q	2019-04-24	Quarter: 2019-03-31
10-K	2019-02-20	Annual: 2018-12-31
10-Q	2018-10-24	Quarter: 2018-09-30
10-Q	2018-07-25	Quarter: 2018-06-30
10-Q	2018-04-25	Quarter: 2018-03-31
10-K	2018-02-20	Annual: 2017-12-31
10-Q	2017-10-25	Quarter: 2017-09-30
10-Q	2017-07-26	Quarter: 2017-06-30
10-Q	2017-04-26	Quarter: 2017-03-31
10-K	2017-02-23	Annual: 2016-12-31
10-Q	2016-10-26	Quarter: 2016-09-30
10-Q	2016-07-27	Quarter: 2016-06-30
10-Q	2016-04-27	Quarter: 2016-03-31
10-K	2016-02-18	Annual: 2015-12-31
10-Q	2015-10-20	Quarter: 2015-09-30
10-Q	2015-07-22	Quarter: 2015-06-30
10-Q	2015-04-22	Quarter: 2015-03-31
10-K	2015-02-19	Annual: 2014-12-31
10-Q	2014-10-21	Quarter: 2014-09-30
10-Q	2014-07-25	Quarter: 2014-06-30
10-Q	2014-04-30	Quarter: 2014-03-31
10-K	2014-02-20	Annual: 2013-12-31
10-Q	2013-10-30	Quarter: 2013-09-30
10-Q	2013-08-02	Quarter: 2013-06-30
10-Q	2013-05-01	Quarter: 2013-03-31
10-K	2013-02-27	Annual: 2012-12-31
10-Q	2012-11-02	Quarter: 2012-09-30
10-Q	2012-07-31	Quarter: 2012-06-30
10-Q	2012-05-01	Quarter: 2012-03-31
10-K	2012-02-27	Annual: 2011-12-31
10-Q	2011-11-07	Quarter: 2011-09-30
10-Q	2011-08-08	Quarter: 2011-06-30
10-Q	2011-05-10	Quarter: 2011-03-31
10-K	2011-03-10	Annual: 2010-12-31
10-Q	2010-11-12	Quarter: 2010-09-30
10-Q	2010-08-16	Quarter: 2010-06-30
10-Q	2010-05-17	Quarter: 2010-03-31
10-K	2010-03-05	Annual: 2009-12-31

8-K	2020-01-10	Other Events
8-K	2019-11-18	Other Events, Exhibits
8-K	2019-11-13	Officers, Exhibits
8-K	2019-10-24	Officers, Regulation FD, Exhibits
8-K	2019-08-23	Other Events, Exhibits
8-K	2019-07-24	Earnings, Exhibits
8-K	2019-05-01	Shareholder Vote, Other Events, Exhibits
8-K	2019-04-23	Earnings, Exhibits
8-K	2019-04-17	Enter Agreement, Off-BS Arrangement
8-K	2019-03-07	Officers, Exhibits
8-K	2019-02-14	Earnings, Exhibits
8-K	2019-02-06	Other Events, Exhibits
8-K	2018-11-14	Other Events, Exhibits
8-K	2018-10-23	Earnings, Exhibits
8-K	2018-08-16	Other Events, Exhibits
8-K	2018-07-25	Earnings, Exhibits
8-K	2018-05-22	Officers, Regulation FD, Exhibits
8-K	2018-05-02	Shareholder Vote, Other Events, Exhibits
8-K	2018-04-24	Earnings, Exhibits
8-K	2018-03-26	Enter Agreement, Exhibits
8-K	2018-02-20	Earnings, Exhibits
8-K	2018-02-07	Amend Bylaw, Other Events, Exhibits

EX-31.(A)	six-20190930xex31a.htm
EX-31.(B)	six-20190930xex31b.htm
EX-32.(A)	six-20190930xex32a.htm
EX-32.(B)	six-20190930xex32b.htm