Company Quick10K Filing
Six Flags Entertainment
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
SIX 2019-09-30
Part I - Financial Information
Item 1. Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II - Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 6. 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

Six Flags Entertainment Earnings 2019-09-30

SIX 10Q Quarterly Report

Balance SheetIncome StatementCash 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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Table of Contents

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

Graphic

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.

Table of Contents

SIX FLAGS ENTERTAINMENT CORPORATION

FORM 10-Q

INDEX

Cautionary Note Regarding Forward-Looking Statements

1

PART I.

FINANCIAL INFORMATION

Item 1.

Financial Statements

Condensed Consolidated Balance Sheets as of September 30, 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

1

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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

4

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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.

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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.

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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.

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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