10-Q 1 six-20220403x10q.htm 10-Q
86197000852090000.761.12P9MP1YP1YP1YP1Y0000701374--01-012022Q1false8624854586162879853694340000701374six:March2017StockRepurchasePlanMember2022-04-030000701374six:March2017StockRepurchasePlanMember2017-03-300000701374six:March2017StockRepurchasePlanMember2022-01-032022-04-030000701374us-gaap:CommonStockMember2021-01-012021-04-040000701374us-gaap:RetainedEarningsMember2022-04-030000701374us-gaap:AdditionalPaidInCapitalMember2022-04-030000701374us-gaap:AccumulatedTranslationAdjustmentMember2022-04-030000701374us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-04-030000701374us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2022-04-030000701374us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2022-04-030000701374six:AccumulatedIncomeTaxesAdjustmentMember2022-04-030000701374us-gaap:RetainedEarningsMember2022-01-020000701374us-gaap:AdditionalPaidInCapitalMember2022-01-020000701374us-gaap:AccumulatedTranslationAdjustmentMember2022-01-020000701374us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-01-020000701374us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2022-01-020000701374us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2022-01-020000701374six:AccumulatedIncomeTaxesAdjustmentMember2022-01-020000701374us-gaap:RetainedEarningsMember2021-04-040000701374us-gaap:AdditionalPaidInCapitalMember2021-04-040000701374us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-04-040000701374us-gaap:RetainedEarningsMember2020-12-310000701374us-gaap:AdditionalPaidInCapitalMember2020-12-310000701374us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-12-310000701374us-gaap:CommonStockMember2022-01-032022-04-030000701374us-gaap:CommonStockMember2022-04-030000701374us-gaap:CommonStockMember2022-01-020000701374us-gaap:CommonStockMember2021-04-040000701374us-gaap:CommonStockMember2020-12-310000701374us-gaap:LongTermContractWithCustomerMember2026-01-012022-04-030000701374us-gaap:LongTermContractWithCustomerMember2022-04-042022-04-030000701374us-gaap:LongTermContractWithCustomerMember2025-01-012022-04-030000701374us-gaap:LongTermContractWithCustomerMember2024-01-012022-04-030000701374us-gaap:LongTermContractWithCustomerMember2023-01-022022-04-030000701374us-gaap:LongTermContractWithCustomerMember2022-04-030000701374us-gaap:LongTermContractWithCustomerMember2021-04-040000701374six:ThemeParkFoodMerchandiseAndOtherMemberus-gaap:ShortTermContractWithCustomerMember2022-01-032022-04-030000701374six:ThemeParkFoodMerchandiseAndOtherMemberus-gaap:LongTermContractWithCustomerMember2022-01-032022-04-030000701374six:ThemeParkAdmissionMemberus-gaap:ShortTermContractWithCustomerMember2022-01-032022-04-030000701374six:ThemeParkAdmissionMemberus-gaap:LongTermContractWithCustomerMember2022-01-032022-04-030000701374six:SponsorshipInternationalAgreementsAndAccommodationsMemberus-gaap:ShortTermContractWithCustomerMember2022-01-032022-04-030000701374six:SponsorshipInternationalAgreementsAndAccommodationsMemberus-gaap:LongTermContractWithCustomerMember2022-01-032022-04-030000701374us-gaap:ShortTermContractWithCustomerMember2022-01-032022-04-030000701374six:ThemeParkFoodMerchandiseAndOtherMember2022-01-032022-04-030000701374six:ThemeParkAdmissionMember2022-01-032022-04-030000701374six:SponsorshipInternationalAgreementsAndAccommodationsMember2022-01-032022-04-030000701374six:ThemeParkFoodMerchandiseAndOtherMemberus-gaap:ShortTermContractWithCustomerMember2021-01-012021-04-040000701374six:ThemeParkFoodMerchandiseAndOtherMemberus-gaap:LongTermContractWithCustomerMember2021-01-012021-04-040000701374six:ThemeParkAdmissionMemberus-gaap:ShortTermContractWithCustomerMember2021-01-012021-04-040000701374six:ThemeParkAdmissionMemberus-gaap:LongTermContractWithCustomerMember2021-01-012021-04-040000701374six:SponsorshipInternationalAgreementsAndAccommodationsMemberus-gaap:ShortTermContractWithCustomerMember2021-01-012021-04-040000701374six:SponsorshipInternationalAgreementsAndAccommodationsMemberus-gaap:LongTermContractWithCustomerMember2021-01-012021-04-040000701374us-gaap:ShortTermContractWithCustomerMember2021-01-012021-04-040000701374six:ThemeParkFoodMerchandiseAndOtherMember2021-01-012021-04-040000701374six:ThemeParkAdmissionMember2021-01-012021-04-040000701374six:SponsorshipInternationalAgreementsAndAccommodationsMember2021-01-012021-04-040000701374us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember2022-01-032022-04-030000701374us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2022-01-032022-04-030000701374us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember2021-01-012021-04-040000701374six:DividendEquivalentRightsMember2022-01-032022-04-030000701374six:DividendEquivalentRightsMember2021-01-012021-04-040000701374six:SixFlagsOverTexasMemberus-gaap:SubsequentEventMember2022-05-012022-05-310000701374us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-01-012021-04-040000701374six:AmendedAndRestatedTermLoanBMemberus-gaap:InterestRateSwapMemberus-gaap:DesignatedAsHedgingInstrumentMember2022-03-242022-03-240000701374us-gaap:AccumulatedTranslationAdjustmentMember2022-01-032022-04-030000701374us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-01-032022-04-030000701374us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2022-01-032022-04-030000701374six:AccumulatedIncomeTaxesAdjustmentMember2022-01-032022-04-030000701374us-gaap:InterestRateSwapMemberus-gaap:DesignatedAsHedgingInstrumentMember2022-01-032022-04-030000701374us-gaap:DesignatedAsHedgingInstrumentMember2022-01-032022-04-030000701374us-gaap:InterestRateSwapMemberus-gaap:DesignatedAsHedgingInstrumentMember2021-01-012021-04-040000701374us-gaap:DesignatedAsHedgingInstrumentMember2021-01-012021-04-040000701374us-gaap:NonUsMember2022-04-030000701374six:DomesticMember2022-04-030000701374us-gaap:NonUsMember2022-01-020000701374six:DomesticMember2022-01-020000701374us-gaap:NonUsMember2021-04-040000701374six:DomesticMember2021-04-040000701374us-gaap:RetainedEarningsMember2022-01-032022-04-030000701374us-gaap:RetainedEarningsMember2021-01-012021-04-040000701374six:StockholderDerivativeLawsuitsMemberus-gaap:PendingLitigationMember2020-04-012020-04-300000701374six:SecuritiesClassActionLawsuitsMemberus-gaap:PendingLitigationMember2020-03-022020-03-020000701374six:SecuritiesClassActionLawsuitsMemberus-gaap:PendingLitigationMember2020-02-012020-02-290000701374us-gaap:EstimateOfFairValueFairValueDisclosureMember2022-04-030000701374us-gaap:EstimateOfFairValueFairValueDisclosureMember2022-01-020000701374us-gaap:EstimateOfFairValueFairValueDisclosureMember2021-04-040000701374six:SecondAmendedAndRestatedRevolvingLoanMember2022-01-032022-04-030000701374six:SixFlagsOverTexasMember2022-01-032022-04-030000701374six:SixFlagsOverGeorgiaMember2022-01-032022-04-030000701374six:SecondAmendedAndRestatedRevolvingLoanMember2022-04-030000701374six:SecondAmendedAndRestatedRevolvingLoanMember2022-01-020000701374six:SecondAmendedAndRestatedRevolvingLoanMember2021-04-040000701374us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMemberus-gaap:AccumulatedGainLossCashFlowHedgeIncludingNoncontrollingInterestMember2022-01-032022-04-030000701374us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMemberus-gaap:AccumulatedDefinedBenefitPlansAdjustmentIncludingPortionAttributableToNoncontrollingInterestMember2022-01-032022-04-030000701374us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMemberus-gaap:AccumulatedGainLossCashFlowHedgeIncludingNoncontrollingInterestMember2021-01-012021-04-040000701374us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMemberus-gaap:AccumulatedDefinedBenefitPlansAdjustmentIncludingPortionAttributableToNoncontrollingInterestMember2021-01-012021-04-040000701374us-gaap:NonUsMember2022-01-032022-04-030000701374six:DomesticMember2022-01-032022-04-030000701374us-gaap:NonUsMember2021-01-012021-04-040000701374six:DomesticMember2021-01-012021-04-040000701374six:PartnershipsThatOwnPartnershipParksMember2022-04-030000701374six:PartnershipsThatOwnPartnershipParksMember2022-01-020000701374six:PartnershipsThatOwnPartnershipParksMember2021-04-040000701374six:InterestRateSwapAgreementsAugust2019Member2019-08-310000701374six:InterestRateSwapJune2019Member2019-06-300000701374us-gaap:InterestRateSwapMemberus-gaap:NondesignatedMember2022-01-020000701374us-gaap:InterestRateSwapMemberus-gaap:DesignatedAsHedgingInstrumentMember2022-01-020000701374us-gaap:InterestRateSwapMemberus-gaap:DesignatedAsHedgingInstrumentMember2021-04-040000701374us-gaap:InterestRateSwapMember2022-01-020000701374us-gaap:NondesignatedMember2022-01-032022-04-030000701374us-gaap:InterestRateSwapMemberus-gaap:DesignatedAsHedgingInstrumentMember2022-03-242022-03-240000701374us-gaap:InterestRateSwapMemberus-gaap:NondesignatedMember2022-04-030000701374us-gaap:InterestRateSwapMemberus-gaap:NondesignatedMember2021-04-040000701374us-gaap:InterestRateSwapMember2022-04-030000701374us-gaap:InterestRateSwapMember2021-04-040000701374six:SeniorUnsecured2027NotesMember2021-10-032021-10-030000701374six:SeniorUnsecured2025NotesMember2021-10-032021-10-030000701374six:SeniorUnsecured2024NotesMember2021-10-032021-10-030000701374srt:SubsidiariesMembersix:SeniorUnsecured2025NotesMember2020-04-300000701374six:SeniorUnsecured2027NotesMember2017-04-300000701374six:SeniorUnsecured2024NotesMember2017-04-300000701374six:SeniorUnsecured2024NotesMember2016-06-300000701374six:SeniorUnsecured2027NotesMember2022-04-030000701374six:SeniorUnsecured2025NotesMember2022-04-030000701374six:SeniorUnsecured2024NotesMember2022-04-030000701374six:SecondAmendedAndRestatedTermLoanBMember2022-04-030000701374six:SeniorUnsecured2027NotesMember2022-01-020000701374six:SeniorUnsecured2025NotesMember2022-01-020000701374six:SeniorUnsecured2024NotesMember2022-01-020000701374six:SecondAmendedAndRestatedTermLoanBMember2022-01-020000701374six:SeniorUnsecured2027NotesMember2021-10-030000701374six:SeniorUnsecured2025NotesMember2021-10-030000701374six:SeniorUnsecured2024NotesMember2021-10-030000701374six:SeniorUnsecured2027NotesMember2021-04-040000701374six:SeniorUnsecured2025NotesMember2021-04-040000701374six:SeniorUnsecured2024NotesMember2021-04-040000701374six:SecondAmendedAndRestatedTermLoanBMember2021-04-040000701374six:SecondAmendedAndRestatedTermLoanBMemberus-gaap:LondonInterbankOfferedRateLIBORMember2022-01-032022-04-030000701374us-gaap:LongTermContractWithCustomerMember2022-01-032022-04-030000701374us-gaap:LongTermContractWithCustomerMember2021-01-012021-04-040000701374us-gaap:LongTermContractWithCustomerMember2022-01-020000701374us-gaap:LongTermContractWithCustomerMember2021-01-0100007013742020-12-310000701374us-gaap:PerformanceSharesMembersix:EmployeeStockPurchasePlanMember2022-01-032022-04-030000701374six:LongTermIncentivePlanMember2022-01-032022-04-030000701374six:EmployeeStockPurchasePlanMember2022-01-032022-04-030000701374six:LongTermIncentivePlanMember2021-01-012021-04-040000701374six:EmployeeStockPurchasePlanMember2021-01-012021-04-040000701374us-gaap:AdditionalPaidInCapitalMember2021-01-012021-04-040000701374us-gaap:AdditionalPaidInCapitalMember2022-01-032022-04-030000701374six:SixFlagsOverTexasMember2022-04-030000701374six:SixFlagsOverGeorgiaMember2022-04-030000701374six:SixFlagsOverTexasAndGeorgiaMember2021-01-012022-01-0200007013742022-01-020000701374country:US2022-04-030000701374country:MX2022-04-030000701374country:CA2022-04-0300007013742022-04-0300007013742021-04-040000701374six:StockholderDerivativeLawsuitsMemberus-gaap:PendingLitigationMember2020-04-082020-04-0800007013742021-01-012021-04-040000701374six:SixFlagsOverTexasAndGeorgiaMember2022-01-032022-04-030000701374six:March2017StockRepurchasePlanMember2020-08-3100007013742022-05-0900007013742022-01-032022-04-03six:segmentxbrli:sharesiso4217:USDxbrli:puresix:claimsix:itemsix:multipleiso4217:USDxbrli:sharessix:agreementsix:lawsuit

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 April 3, 2022 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.)

1000 Ballpark Way Suite 400, Arlington, TX  76011
(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 May 9, 2022, Six Flags Entertainment Corporation had 86,443,033 outstanding shares of common stock, par value $0.025 per share.

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 April 3, 2022 (unaudited), January 2, 2022 and April 4, 2021 (unaudited)

3

Condensed Consolidated Statements of Operations (unaudited) for the Three Months Ended April 3, 2022 and April 4, 2021

4

Condensed Consolidated Statements of Comprehensive Loss (unaudited) for the Three Months Ended April 3, 2022 and April 4, 2021

5

Condensed Consolidated Statements of Stockholders’ Deficit (unaudited) for the Three Months Ended April 3, 2022 and April 4, 2021

6

Condensed Consolidated Statements of Cash Flows (unaudited) for the Three Months Ended April 3, 2022 and April 4, 2021

7

Notes to Condensed Consolidated Financial Statements

8

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

22

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

29

Item 4.

Controls and Procedures

29

PART II.

OTHER INFORMATION

Item 1.

Legal Proceedings

30

Item 1A.

Risk Factors

30

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

30

Item 6.

Exhibits

30

Signatures

32

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. These forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties, assumptions and other factors, some of which are beyond our control, which could cause actual results to differ materially from those expressed or implied by such forward-looking statements. These factors include (i) global coronavirus (“COVID-19”) pandemic-related business disruptions and economic uncertainty, (ii) the adequacy of our cash flows from operations, available cash and available amounts under our credit facilities to meet our liquidity needs, (iii) our expectations regardig the timing, costs, benefits and results of our strategic plan, (iv) our ability to implement our capital plans in a timely and cost effective manner, and our expectations regarding the anticipated costs, benefits and results of such capital plans, (v) the extent to which having parks in diverse geographical locations protects our consolidated results against the effects of adverse weather and other events, (vi) our ongoing compliance with laws and regulations, and the effect of, and cost and timing of compliance with, newly enacted laws and regulations, (vii) our ability to obtain additional financing, (viii) our expectations regarding future interest payments, (ix) our expectations regarding the effect of certain accounting pronouncements, (x) our expectations regarding the cost or outcome of any litigation or other disputes, (xi) our annual income tax liability and the availability and effect of net operating loss carryforwards and other tax benefits, and (xii) our expectations regarding uncertain tax positions.

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, they are, by their nature, subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. Additional risks and uncertainties that could cause actual results to differ materially from those described in such forward-looking statements include, among others, the following:

factors impacting attendance, such as local conditions, contagious diseases, including COVID-19, or the perceived threat of contagious diseases, events, disturbances and terrorist activities;
regulations and guidance of federal, state and local governments and health officials regarding the response to the COVID-19 pandemic, including, with respect to business operations, safety protocols and public gatherings (such as voluntary and, in some cases, mandatory, quarantines, as well as shut downs and other restrictions on travel and commercial, social and other activities);
global economic and political instability and conflicts, such as the conflict between Russia and Ukraine;
recall of food, toys and other retail products sold at our parks;
accidents or incidents involving the safety of guests and employees, or contagious disease outbreaks at our parks or other parks in our industry, and negative publicity about us or our industry;
availability of commercially reasonable insurance policies at reasonable rates;
inability to achieve desired improvements and financial performance targets;
adverse weather conditions, such as excess heat or cold, rain and storms;
general financial and credit market conditions, including our ability to access credit or raise capital;
economic conditions (including customer spending patterns);
changes in public and consumer tastes;
competition with other theme parks 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;
environmental laws and regulations;
laws and regulations affecting corporate taxation;
pending, threatened or future legal proceedings and the significant expenses associated with litigation;
cyber security risks; and

1

other factors or uncertainties described in "Item 1A. Risk Factors" set forth in our Annual Report on Form 10-K for the year ended January 2, 2022 (the "2021 Annual Report"), and in this Quarterly 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 provide 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 law, to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise. Additionally, the continued impact of COVID-19, virus variants, and the rate of vaccinations could heighten many of the risk factors described herein.

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, 1000 Ballpark Way Suite 400, Arlington, TX 76011, 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.

2

PART I — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

SIX FLAGS ENTERTAINMENT CORPORATION

Condensed Consolidated Balance Sheets

(Unaudited)

 

As of

    

April 3, 2022

    

January 2, 2022

    

April 4, 2021

(Amounts in thousands, except share data)

(unaudited)

(unaudited)

ASSETS

 

  

 

  

 

  

Current assets:

 

  

 

  

 

  

Cash and cash equivalents

$

252,203

$

335,585

$

62,905

Accounts receivable, net

 

86,461

 

97,722

 

46,420

Inventories

 

39,161

 

27,273

 

39,057

Prepaid expenses and other current assets

 

55,454

 

55,455

 

69,166

Total current assets

 

433,279

 

516,035

 

217,548

Property and equipment, net:

 

  

 

  

 

  

Property and equipment, at cost

 

2,528,135

 

2,501,829

 

2,427,318

Accumulated depreciation

 

(1,280,969)

 

(1,250,902)

 

(1,182,641)

Total property and equipment, net

 

1,247,166

 

1,250,927

 

1,244,677

Other assets:

 

  

 

  

 

  

Right-of-use operating leases, net

184,643

186,754

194,768

Debt issuance costs

 

4,365

 

4,899

 

6,501

Deposits and other assets

 

10,779

 

6,170

 

6,661

Goodwill

 

659,618

 

659,618

 

659,618

Intangible assets, net of accumulated amortization of $266, $261 and $244 as of April 3, 2022, January 2, 2022 and April 4, 2021, respectively

 

344,182

 

344,187

 

344,192

Total other assets

 

1,203,587

 

1,201,628

 

1,211,740

Total assets

$

2,884,032

$

2,968,590

$

2,673,965

LIABILITIES AND STOCKHOLDERS' DEFICIT

 

  

 

  

 

  

Current liabilities:

 

  

 

  

 

  

Accounts payable

$

65,652

$

38,251

$

31,771

Accrued compensation, payroll taxes and benefits

 

22,444

 

51,473

 

25,674

Accrued insurance reserves

 

32,423

 

32,182

 

27,568

Accrued interest payable

 

33,217

 

50,554

 

33,290

Other accrued liabilities

 

94,052

 

101,790

 

91,848

Deferred revenue

 

185,094

 

177,831

 

245,310

Short-term lease liabilities

11,383

11,158

10,547

Total current liabilities

 

444,265

 

463,239

 

466,008

Noncurrent liabilities:

 

  

 

  

 

  

Long-term debt

 

2,631,246

 

2,629,524

 

2,624,361

Long-term lease liabilities

180,464

178,200

190,362

Other long-term liabilities

 

10,502

 

9,469

 

35,337

Deferred income taxes

 

133,264

 

148,291

 

70,985

Total noncurrent liabilities

 

2,955,476

 

2,965,484

 

2,921,045

Total liabilities

 

3,399,741

 

3,428,723

 

3,387,053

Redeemable noncontrolling interests

 

522,067

 

522,067

 

523,376

Stockholders' deficit:

 

  

 

  

 

  

Preferred stock, $1.00 par value

 

 

 

Common stock, $0.025 par value, 280,000,000 shares authorized; 86,248,545, 86,162,879 and 85,369,434 shares issued and outstanding at April 3, 2022, January 2, 2022 and April 4, 2021, respectively

 

2,156

 

2,154

 

2,134

Capital in excess of par value

 

1,124,603

 

1,120,084

 

1,104,904

Accumulated deficit

 

(2,088,913)

 

(2,023,251)

 

(2,249,207)

Accumulated other comprehensive loss, net of tax

 

(75,622)

 

(81,187)

 

(94,295)

Total stockholders' deficit

 

(1,037,776)

 

(982,200)

 

(1,236,464)

Total liabilities and stockholders' deficit

$

2,884,032

$

2,968,590

$

2,673,965

See accompanying notes to unaudited condensed consolidated financial statements.

3

SIX FLAGS ENTERTAINMENT CORPORATION

Condensed Consolidated Statements of Operations

(Unaudited)

 

Three Months Ended

(Amounts in thousands, except per share data)

    

April 3, 2022

    

April 4, 2021

Park admissions

$

72,987

$

44,334

Park food, merchandise and other

 

54,269

 

31,224

Sponsorship, international agreements and accommodations

 

10,851

 

6,466

Total revenues

 

138,107

 

82,024

Operating expenses (excluding depreciation and amortization shown separately below)

 

109,944

 

92,643

Selling, general and administrative expenses (including stock-based compensation of $4,225 and $6,637 in 2022 and 2021, respectively, and excluding depreciation and amortization shown separately below)

 

39,332

 

36,126

Costs of products sold

 

10,115

 

7,215

Other net periodic pension benefit

 

(1,451)

 

(1,643)

Depreciation

 

29,043

 

28,827

Amortization

 

6

 

6

(Gain) loss on disposal of assets

 

(2,100)

 

520

Interest expense

 

37,857

 

38,460

Interest income

 

(327)

 

(40)

Other expense, net

 

463

 

7,619

Loss before income taxes

 

(84,775)

 

(127,709)

Income tax benefit

 

(19,113)

 

(31,870)

Net loss

$

(65,662)

$

(95,839)

Weighted-average common shares outstanding - basic and diluted:

 

86,197

 

85,209

Net loss per average common share outstanding - basic and diluted:

$

(0.76)

$

(1.12)

See accompanying notes to unaudited condensed consolidated financial statements.

4

SIX FLAGS ENTERTAINMENT CORPORATION

Condensed Consolidated Statements of Comprehensive Loss

(Unaudited)

 

Three Months Ended

(Amounts in thousands)

    

April 3, 2022

    

April 4, 2021

Net loss

$

(65,662)

$

(95,839)

Other comprehensive (loss) income, net of tax:

 

  

 

Foreign currency translation adjustment (1)

 

(4,085)

 

(1,973)

Defined benefit retirement plan (2)

 

171

 

255

Change in cash flow hedging (3)

 

9,479

 

3,927

Other comprehensive income, net of tax

 

5,565

 

2,209

Comprehensive loss

$

(60,097)

$

(93,630)

(1)  Foreign currency translation adjustment is presented net of tax benefit of $1.1 million for the three months ended April 3, 2022, and tax benefit of $0.4 million for the three months ended April 4, 2021.

(2)  Defined benefit retirement plan is presented net of tax expense of $0.1 million for the three months ended April 3, 2022 and April 4, 2021.

(3)  Change in cash flow hedging is presented net of tax expense of $3.1 million and $1.3 million for the three months ended April 3, 2022 and April 4, 2021, respectively.

See accompanying notes to unaudited condensed consolidated financial statements.

5

SIX FLAGS ENTERTAINMENT CORPORATION

Condensed 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, 2020

 

85,075,901

$

2,126

$

1,089,199

$

(2,153,368)

$

(96,504)

$

(1,158,547)

Issuance of common stock

 

293,597

 

8

 

9,071

 

 

 

9,079

Stock-based compensation

 

 

 

6,637

 

 

 

6,637

Employee stock purchase plan

(64)

(3)

(3)

Net loss attributable to Six Flags Entertainment Corporation

 

 

 

 

(95,839)

 

 

(95,839)

Net other comprehensive loss, net of tax

 

 

 

 

 

2,209

 

2,209

Balances at April 4, 2021

 

85,369,434

$

2,134

$

1,104,904

$

(2,249,207)

$

(94,295)

$

(1,236,464)

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 January 2, 2022

86,162,879

$

2,154

$

1,120,084

$

(2,023,251)

$

(81,187)

$

(982,200)

Issuance of common stock

87,702

2

297

299

Stock-based compensation

4,225

4,225

Payment of tax withholdings on equity-based compensation through shares withheld

(2,036)

(3)

(3)

Net loss attributable to Six Flags Entertainment Corporation

(65,662)

(65,662)

Net other comprehensive income, net of tax

5,565

5,565

Balances at April 3, 2022

86,248,545

$

2,156

$

1,124,603

$

(2,088,913)

$

(75,622)

$

(1,037,776)

See accompanying notes to unaudited condensed consolidated financial statements.

6

SIX FLAGS ENTERTAINMENT CORPORATION

Condensed Consolidated Statements of Cash Flows

(Unaudited)

 

Three Months Ended

(Amounts in thousands)

    

April 3, 2022

    

April 4, 2021

Cash flows from operating activities:

Net loss

$

(65,662)

$

(95,839)

Adjustments to reconcile net loss to net cash used in operating activities:

 

  

 

  

Depreciation and amortization

 

29,049

 

28,833

Stock-based compensation

 

4,225

 

6,637

Interest accretion on notes payable

 

278

 

277

Loss on debt extinguishment

 

 

Amortization of debt issuance costs

 

1,978

 

1,978

Other, including loss (gain) on disposal of assets

 

3,120

 

(931)

Change in accounts receivable

 

11,535

 

(9,897)

Change in inventories, prepaid expenses and other current assets

 

(11,512)

 

3,907

Change in deposits and other assets

 

(4,600)

 

436

Change in ROU operating leases

2,585

2,113

Change in accounts payable, deferred revenue, accrued liabilities and other long-term liabilities

 

6,815

 

42,146

Change in operating lease liabilities

2,161

(1,182)

Change in accrued interest payable

 

(17,337)

 

(26,894)

Deferred income taxes

 

(18,347)

 

(31,982)

Net cash used in operating activities

 

(55,712)

 

(80,398)

Cash flows from investing activities:

 

  

 

  

Additions to property and equipment

 

(32,071)

 

(23,133)

Property insurance recoveries

 

3,081

 

Proceeds from sale of assets

 

 

33

Net cash used in investing activities

 

(28,990)

 

(23,100)

Cash flows from financing activities:

 

  

 

  

Repayment of borrowings

 

 

(2,000)

Proceeds from borrowings

 

 

2,000

Payment of cash dividends

 

(14)

 

(201)

Proceeds from issuance of common stock

299

9,078

Reduction in finance lease liability

(201)

(76)

Stock repurchases

(3)

(3)

Net cash provided by financing activities

 

81

 

8,798

Effect of exchange rate on cash

 

1,239

 

(155)

Net change in cash and cash equivalents

 

(83,382)

 

(94,855)

Cash and cash equivalents at beginning of period

 

335,585

 

157,760

Cash and cash equivalents at end of period

$

252,203

$

62,905

Supplemental cash flow information

 

  

 

  

Cash paid for interest

$

52,157

$

63,937

Cash paid for income taxes

$

885

$

268

See accompanying notes to unaudited condensed consolidated financial statements.

7

1.  General — Basis of Presentation

We own and operate regional theme parks and waterparks. We are the largest regional theme park operator in the world, and we are the largest operator of waterparks in North America based on the number of parks we operate. Of the 27 parks we owned or operated as of April 3, 2022, 24 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.

Our current fiscal year will end on January 1, 2023. This Quarterly Report covers the period January 3, 2022 – April 3, 2022 (“the three months ended April 3, 2022”). The comparison period in the prior year covers the dates January 1, 2021 – April 4, 2021 (“the three months ended April 4, 2021”). The additional three days in the three months ended April 4, 2021 accounted for 89 thousand additional guests.

The 2021 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 three months ended April 3, 2022, are not indicative of the results expected for the full year. Our operations are highly seasonal, with approximately 75% of park attendance and revenues in a typical year occurring in the second and third calendar quarters of each year, with the most significant period falling between Memorial Day and Labor Day.

COVID-19 Pandemic

The COVID-19 pandemic continues to present material uncertainty and risk with respect to our performance and financial results. Significant government and private sector actions have been taken since 2020 and likely will continue to be taken intended to control the spread and mitigate the economic effects of the pandemic. Since early 2021, the availability and administration of vaccines against COVID-19 has increased, and there has been an easing of restrictions on social, business, travel and government activities and functions. On the other hand, infection rates and regulations continue to fluctuate in various regions and there are ongoing global impacts resulting from the pandemic, including challenges and increases in costs for logistics and supply chains, and wage rates. The duration and severity of the impact of the COVID-19 pandemic are currently unknown. The pandemic has impacted the Company and could materially impact our financial results in the future.

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.

8

b.  Income Taxes

We recorded a valuation allowance of $107.8 million, $107.4 million and $129.4 million as of April 3, 2022, January 2, 2022 and April 4, 2021, 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 indicates we will be able to use all of our federal net operating loss carryforwards before they expire.

We classify interest and penalties attributable to income taxes as part of income tax expense. As of April 3, 2022, January 2, 2022 and April 4, 2021, we had no recorded amounts for accrued interest or penalties.

c. Goodwill and Intangibles

Goodwill and intangible assets with indefinite lives are tested for impairment annually, or more frequently if events or circumstances indicate that the assets might be impaired. We identify our reporting unit and determine the carrying value of the reporting unit by assigning the assets and liabilities, including the existing goodwill and intangible assets, to the reporting unit. We then determine the fair value of the reporting unit and compare it to the carrying amount of the reporting unit. All of our parks are operated in a similar manner and have comparable characteristics in that they produce and distribute similar services and products using similar processes, have similar types of customers, are subject to similar regulations and exhibit similar economic characteristics. As such, we are a single reporting unit.

As of April 3, 2022, the fair value of the single reporting unit exceeded our carrying amount. We have one reporting unit at the same level for which Holdings common stock is traded and we believe our market capitalization is the best indicator of our reporting unit’s fair value. At April 3, 2022, we did not identify any triggering events that would require a full quantitative analysis to be performed.

d.  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. As of April 3, 2022, we did not identify any triggering events that would require a full quantitative analysis.

e.  Earnings Per Common Share

We incurred a net loss for the three months ended April 3, 2022 and April 4, 2021, therefore, diluted shares outstanding equaled basic shares outstanding for the purposes of determining loss per common share. The computation of diluted earnings per share excluded the effect of 2,744,000 and 6,199,000 antidilutive stock options, restricted stock units and performance stock units for the three months ended April 3, 2022 and April 4, 2021, respectively.

f.  Stock Benefit Plans

Pursuant to the Six Flags Entertainment Corporation Long-Term Incentive Plan (the "Long-Term Incentive Plan"), Holdings may grant stock options, stock appreciation rights, restricted stock, restricted stock units, unrestricted stock, deferred stock units, performance stock units, performance and cash-settled awards and dividend equivalent rights ("DERs") to select employees, officers, directors and consultants of Holdings and its affiliates.

Periodically, we will grant performance stock units to key employees. These awards vest on attainment of specific objectives most often related to Adjusted EBITDA or recognized revenue over a defined period. During the three months

9

ended April 3, 2022, it was determined that our March 8, 2021 grant was probable of achievement at the threshold level and stock compensation expense was recognized totaling $0.9 million.

During the three months ended April 3, 2022 and April 4, 2021, stock-based compensation expense consisted of the following:

 

Three Months Ended

(Amounts in thousands)

    

April 3, 2022

    

April 4, 2021

Long-Term Incentive Plan

$

4,150

$

6,562

Employee Stock Purchase Plan

 

75

 

75

Total Stock-Based Compensation

$

4,225

$

6,637

During the three months ended April 3, 2022 and April 4, 2021, we paid a nominal amount and $0.2 million, respectively, to employees with dividend equivalent rights for previously declared dividends due upon the vesting of the related shares of Holdings’ common stock. These dividends were declared prior to the suspension of dividend payments in connection with the increase in the Second Amended and Restated Revolving Loan in April 2020.

g.  Accounts Receivable, Net

Accounts receivable are reported at net realizable value and consist primarily of amounts due from guests for the sale of group outings and multi-use admission products, such as season passes and memberships. We are not exposed to a significant concentration of credit risk; however, based on the age of the receivables, our historical experience and other factors and assumptions we believe to be customary and reasonable, we record an allowance for doubtful accounts. As of April 3, 2022, January 2, 2022 and April 4, 2021, we have recorded an allowance for doubtful accounts of $5.7 million, $13.8 million and $8.5 million, respectively, which is primarily comprised of estimated payment defaults under our membership program. To the extent that payments under our membership program have not been recognized in revenue, the allowance for doubtful accounts recorded against our membership program is offset with a corresponding reduction in deferred revenue.

h.  Recently Adopted Accounting Pronouncements

In August 2018, FASB issued ASU 2018-14, Compensation - Retirement Benefits - Defined Benefit Plans - General (Subtopic 715-20): Disclosure Framework - Changes to the Disclosure Requirements for Defined Benefit Plans: (“Update 2018-14”), which modifies the disclosure requirements for employers that sponsor defined benefit pension or other post-retirement plans. Update 2018-14 is effective for annual periods beginning after January 1, 2021, with early adoption permitted. Adoption is required to be applied on a retrospective basis to all periods presented. Our adoption of ASU 2018-14 did not have a material impact on our condensed consolidated financial statements and related disclosures.

i. Recent Accounting Pronouncements Not Yet Adopted

In March 2020, FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“Update 2020-04”), which provides optional expedients and exceptions for applying U.S. GAAP principles to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments in Update 2020-04 apply only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. The expedients and exceptions provided by the amendments do not apply to contract modifications made and hedging relationships entered into or evaluated after December 31, 2022, except for hedging relationships existing as of December 31, 2022, that an entity has elected optional expedients for and that are retained through the end of the hedging relationship. The provisions in Update 2020-04 are effective upon issuance and can be applied prospectively through December 31, 2022. Interest on the Second Amended and Restated Credit Facility accrues at an annual rate based on LIBOR. We do not expect Update 2020-04 to have a material effect on our condensed consolidated financial statements.

10

2.  Revenue

Revenues are recognized when control of the promised goods or services is transferred to our customers in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services. Sales and other taxes we collect concurrent with revenue-producing activities are excluded from revenue. Incidental items that are immaterial in the context of the contract are recognized as expense.

The following tables present our revenues disaggregated by contract duration for the three months ended April 3, 2022 and April 4, 2021, respectively. Long-term and short-term contracts consist of our contracts with customers with terms greater than one year and less than or equal to one year, respectively. Sales and usage-based taxes are excluded from revenues.

Three Months Ended April 3, 2022

    

    

    

Sponsorship, 

Park Food, 

International 

Merchandise 

Agreements and 

(Amounts in thousands)

    

Park Admissions

    

and Other

    

Accommodations

    

Consolidated

Long-term contracts

$

3,951

$

782

$

6,528

$

11,261

Short-term contracts and other (a)

 

69,036

 

53,487

 

4,323

 

126,846

Total revenues

$

72,987

$

54,269

$

10,851

$

138,107

Three Months Ended April 4, 2021

    

    

    

Sponsorship,

    

 

Park Food, 

 

 International 

 

Merchandise

 

Agreements and 

(Amounts in thousands)

    

Park Admissions

    

and Other

    

Accommodations

    

Consolidated

Long-term contracts

$

7,010

$

997

$

4,163

$

12,170

Short-term contracts and other (a)

 

37,324

 

30,227

 

2,303

 

69,854

Total revenues

$

44,334

$

31,224

$

6,466

$

82,024

(a)Other revenues primarily include sales of single-use tickets and short-term transactional sales for which we have the right to invoice.

Long-term Contracts

Our long-term contracts consist of season passes purchased by customers in the year preceding the operating season to which they relate, sponsorship contracts and international agreements with third parties. We earn season pass revenue when our customers purchase a season pass for a fixed fee, which entitles the customer to visit our parks, including certain waterparks, throughout the duration of the parks’ operating season. We earn sponsorship revenue from separately-priced contracts with third parties pursuant to which we sell and advertise the third party’s products within the parks in exchange for consideration. Advertisements may include, but are not limited to, banners, signs, radio ads, association with certain events, sponsorship of rides within our parks and retail promotions. We earn international agreements revenue pursuant to arrangements in which we assist in the development and management of Six Flags-branded parks outside of North America. Within our international agreements, we have identified three distinct performance obligations as brand licensing, project services and management services. We do not consider revenue recognized for the performance obligations related to our international agreements to be significant, neither individually nor in the aggregate, to any period presented.

At January 2, 2022, $58.7 million of unearned revenue associated with outstanding long-term contracts was reported in "Deferred revenue," of which $12.2 million was recognized as revenue for long-term contracts during the three months ended April 3, 2022. As of April 3, 2022, the total unearned amount of revenue for remaining long-term contract performance obligations was $59.0 million. At January 1, 2021, $77.6 million of unearned revenue associated with outstanding long-term contracts was reported in "Deferred revenue," of which $8.4 million was recognized as revenue for long-term contracts during the three months ended April 4, 2021. As of April 4, 2021, the total unearned amount of revenue for remaining long-term contract performance obligations was $86.7 million.

11

As of April 3, 2022, we expect to recognize estimated revenue for partially or wholly unsatisfied performance obligations on long-term contracts of approximately $75.9 million in the remainder of 2022, $8.7 million in 2023, $1.9 million in 2024, $0.1 million in 2025, and $0.2 million in 2026 and thereafter.

Short-term Contracts and Other

Our short-term contracts consist primarily of season passes and memberships with customers, certain sponsorship contracts and international agreements with third parties. We earn revenue from a customer’s purchase of our season pass and membership products, which entitles the customer to visit our parks, including certain waterparks, throughout the duration of the parks’ operating season for a fixed fee. We earn sponsorship and international agreements revenue from contracts with third parties, pursuant to which we sell and advertise the third party’s products within our parks on a short-term basis that generally coincides with our annual operating season, and pursuant to certain activities in connection with our international agreements. The transaction price for our short-term contracts is explicitly stated within the contracts.

We generally recognize revenue from short-term contracts over the passage of time, with the exception of season pass and membership revenues. We recognize season pass and membership revenues in "Park admissions" over the estimated redemption rate, as we believe this appropriately depicts the transfer of service to our customers. We estimate the redemption rate based on historical experience and other factors and assumptions we believe to be customary and reasonable. We review the estimated redemption rate regularly and on an ongoing basis and revise it as necessary throughout the year. Amounts received for multi-use admissions in excess of redemptions are recognized in "Deferred revenue".

Other revenues consist primarily of revenues from single-use tickets for entrance to our parks, in-park services (such as the sale of food and beverages, merchandise, games and attractions, standalone parking sales and other services inside our parks), accommodations revenue, and other miscellaneous products and services. Due to the short-term transactional nature of such purchases, we apply the practical expedient to recognize revenue for single-use ticket sales, in-park services, accommodations, and other miscellaneous services and goods for which we have the right to invoice.

3. Long-Term Indebtedness

Credit Facility

As of April 3, 2022, our credit facility consisted of a $481.0 million revolving credit loan facility (the “Second Amended and Restated Revolving Loan”) and a $479.0 million Tranche B Term Loan facility (the “Second Amended and Restated Term Loan B”) pursuant to the amended and restated credit facility that we entered into in 2019 (the “Second Amended and Restated Credit Facility”) and further amended in both April 2020 and August 2020.

As of April 3, 2022, January 2, 2022 and April 4, 2021, we had no amounts outstanding under the Second Amended and Restated Revolving Loan (excluding amounts reserved for letters of credit in the amount of $21.0 million, $20.2 million and $20.2 million, respectively). Interest on the Second Amended and Restated Revolving Loan accrues at an annual rate of LIBOR plus an applicable margin with an unused commitment fee based on our senior secured leverage ratio. As of April 3, 2022, the Second Amended and Restated Revolving Loan unused commitment fee was 0.625%. The Second Amended and Restated Revolving Loan will mature on April 17, 2024.

As of April 3, 2022, January 2, 2022 and April 4, 2021, $479.0 million was outstanding under the Second Amended and Restated Term Loan B. Interest on the Second Amended and Restated Term Loan B accrues at an annual rate of LIBOR plus 1.75%. In June 2019, we entered into three separate interest rate swap agreements with a notional amount of $300.0 million (the “June 2019 Swap Agreements”) and, in August 2019, we entered into two separate interest rate swap agreements with a notional amount of $400.0 million (the “August 2019 Swap Agreements”). These swaps were entered into to mitigate the risk of an increase in the LIBOR interest rate on the Second Amended and Restated Term Loan B by exchanging the floating LIBOR rate for a negotiated fixed rate. On March 24, 2022, we terminated the August 2019

12

Swap Agreements. The June 2019 Swap Agreements expire in June 2023. The Second Amended and Restated Term Loan B now consists of only floating rate debt. As of April 3, 2022, the applicable interest rate on the Second Amended and Restated Term Loan B was 2.21%. The Second Amended and Restated Term Loan B will mature on April 17, 2026.

2024 Notes, 2025 Notes and 2027 Notes

In June 2016, Holdings issued $300.0 million of 4.875% senior unsecured notes due 2024 and, in April 2017, issued an additional $700.0 million of senior unsecured notes due 2024 (together, the “2024 Notes”). In April 2017, Holdings issued $500.0 million of 5.50% senior notes due 2027 (the "2027 Notes"). In April 2020, SFTP issued $725.0 million of 7.00% senior secured notes due 2025 (the “2025 Notes”). As of October 3, 2021, $949.5 million of the 2024 Notes, $725.0 million of the 2025 Notes, and $500.0 million of the 2027 Notes, were issued and outstanding. Interest payments of $23.1 million for the 2024 Notes are due semi-annually on January 31 and July 31 of each year. Interest payments of $25.4 million for the 2025 Notes are due semi-annually on January 1 and July 1 each year. Interest payments of $13.8 million for the 2027 Notes are due semi-annually on April 15 and October 15 of each year.

Long-Term Indebtedness Summary

As of April 3, 2022, January 2, 2022 and April 4, 2021, the principal balance of our long-term debt consisted of the following:

 

As of

(Amounts in thousands)

    

April 3, 2022

    

January 2, 2022

    

April 4, 2021

Second Amended and Restated Term Loan B

    

$

479,000

    

$

479,000

    

$

479,000

2024 Notes

 

949,490

 

949,490

 

949,490

2025 Notes

725,000

725,000

725,000

2027 Notes

 

500,000

 

500,000

 

500,000

Net discount

 

(2,972)

 

(3,249)

 

(4,080)

Deferred financing costs

 

(19,272)

 

(20,717)

 

(25,049)

Total long-term debt

$

2,631,246

$

2,629,524

$

2,624,361

Fair-Value of Long-Term Indebtedness

As of April 3, 2022, January 2, 2022 and April 4, 2021, the fair value of our long-term debt was $2,660.5 million, $2,703.5 million and $2,700.5 million, respectively.

13

4.  Accumulated Other Comprehensive Loss

Changes in the composition of Accumulated Other Comprehensive Loss ("AOCI") during the three months ended April 3, 2022, were as follows:

Accumulated

Cumulative

Other

Translation

Cash Flow

Defined Benefit

Income

Comprehensive

(Amounts in thousands)

    

Adjustment

    

Hedges

    

Plans

    

Taxes

    

Loss

Balances at January 2, 2022

$

(31,970)

$

(4,985)

$

(44,093)

$

(139)

$

(81,187)

Net current period change

 

(5,171)

 

11,540

 

 

(1,812)

 

4,557

Amounts reclassified from AOCI

 

 

1,117

 

229

 

(338)

 

1,008

Balances at April 3, 2022

$

(37,141)

$

7,672

$

(43,864)

$

(2,289)

$

(75,622)

Reclassifications out of AOCI during the three months ended April 3, 2022 and April 4, 2021:

Amount of Reclassification from AOCI

Year Ended

Component of AOCI

    

Location of Reclassification into (Loss) Income

    

April 3, 2022

April 4, 2021

Amortization of loss on interest rate hedge

Interest Expense

$

1,117

$

1,361

Income tax benefit

 

(281)

 

(342)

Net of tax

$

836

$

1,019

Amortization of deferred actuarial loss and prior service cost

 

Operating expenses

$

229

$

340

 

Income tax expense

 

(57)

 

(85)

 

Net of tax

$

172

$

255

Total reclassifications

 

  

$

1,008

$

1,274

14

5.  Derivative Financial Instruments

We hold interest rate swap agreements that mitigate the risk of an increase in the LIBOR rate in effect on the Second Amended and Restated Term Loan B. We enter into derivative contracts for risk management purposes only and do not utilize derivative instruments for trading or speculative purposes. As such, in conjunction with the repayment of a portion of the Second Amended and Restated Term Loan B in April 2020, certain of our interest rate swap agreements were de-designated as the hedged interest was no longer probable to occur.

Derivative assets and derivative liabilities that have maturity dates equal to or less than twelve months from the balance sheet date are included in “Prepaid expenses and other current assets” and “Other accrued liabilities,” respectively. Derivative assets and derivative liabilities that have maturity dates greater than twelve months from the balance sheet date are included in “Deposits and other assets” and “Other long-term liabilities,” respectively.

On March 24, 2022, we terminated the August 2019 Swap Agreements for net cash proceeds of $7.4 million. The swap agreements were used as economic hedges against rising interest rates and had been designated as cash flow hedges prior to termination. We recorded the settlement in accumulated other comprehensive income in the amount of $7.7 million which will be amortized through September 2024 until the maturity of the Second Amended and Restated Term Loan B.

Derivative assets recorded at fair value in our condensed consolidated balance sheets as of April 3, 2022, January 2, 2022 and April 4, 2021, respectively, consisted of the following:

Derivative Assets

(Amounts in thousands)

April 3, 2022

    

January 2, 2022

    

April 4, 2021

Derivatives Not Designated as Hedging Instruments

Interest Rate Swap Agreements — other current assets

 

 

 

801

Interest Rate Swap Agreements — other non-current assets

3,996

$

3,996

 

$

 

$

801

Derivative liabilities recorded at fair value in our condensed consolidated balance sheets as of April 3, 2022, January 2, 2022 and April 4, 2021, respectively, consisted of the following:

Derivative Liabilities

(Amounts in thousands)

April 3, 2022

    

January 2, 2022

    

April 4, 2021

Derivatives Designated as Cash Flow Hedges

Interest rate swap agreements — other accrued liabilities

$

 

$

(3,986)

 

$

(5,139)

Interest rate swap agreements — other long-term liabilities

(1,046)

(6,495)

Derivatives Not Designated as Hedging Instruments

Interest rate swap agreements — other accrued liabilities

 

(4,250)

 

(4,012)

 

(4,797)

Interest rate swap agreements — other long-term liabilities

(7,512)

(4,581)

(7,510)

$

(11,762)

 

$

(13,625)

 

$

(23,941)

Losses before taxes on derivatives not designated as a cash flow hedge of $0.1 million were presented in “Interest expense” in the condensed consolidated statement of operations for the three months ended April 3, 2022.

15

Gains and losses before taxes on derivatives designated as hedging instruments were presented in “Interest expense” in the condensed consolidated statements of operations for the three months ended April 3, 2022 and April 4, 2021:

Gain (Loss)

(Loss) Gain Reclassified from

Recognized in AOCL

AOCL into Operations

(Amounts in thousands)

    

2022

    

2021

    

2022

2021

Interest Rate Swap Agreements

$

11,540

 

$

3,883

 

$

(1,117)

 

$

(1,361)

Total

 

$

11,540

 

$

3,883

 

$

(1,117)

 

$

(1,361)

As of April 3, 2022, we expect to reclassify net losses of $3.3 million, currently recorded in AOCL, into “Interest expense, net” within the next twelve months. However, the actual amount reclassified could vary due to future changes in the fair value of these derivatives.

6.  Commitments and Contingencies

Partnership Parks

We have guaranteed the obligations of the general partners of those partnerships to (i) make minimum annual distributions (including rent) of approximately $80.5 million in 2022 (subject to cost of living adjustments) to the limited partners in the Partnership Parks (based on our ownership of units as of April 3, 2022, our share of the distribution will be approximately $35.8 million) and (ii) make minimum capital expenditures at each of the Partnership Parks during rolling five-year periods, based generally on 6.0% of the Partnership Parks’ revenues. Pursuant to the 2022 annual offer to purchase limited partnership units tendered by the unit holders (the "Partnership Park Put") in May 2022, we purchased 0.2536 limited partnership units from the Texas partnership for $0.6 million. As we purchase additional units, we are entitled to a proportionate increase in our share of the minimum annual distributions. The maximum unit purchase obligations for 2022 at both parks is approximately $522.1 million, representing approximately 68.5% of the outstanding units of SFOG and 46.0% of the outstanding units of SFOT.

The agreed price for units tendered in the Partnership Park Put is based on a valuation of each of the respective Partnership Parks (the "Specified Price") that is the greater of (a) a valuation for each of the respective Partnership Parks derived by multiplying such park’s weighted average four-year EBITDA (as defined in the agreements that govern the partnerships) by a specified multiple (8.0 in the case of SFOG and 8.5 in the case of SFOT) and (b) a valuation derived from the highest prices previously offered for the units of the Partnership Parks by certain entities. In light of the temporary suspension of operations of the parks due to the COVID-19 pandemic in March 2020, which would have caused the value of the Partnership Park units to decrease in 2021 and thereafter, we adjusted our annual offer to purchase these units to set a minimum price floor for all future purchases. Pursuant to the new minimum price floor, the Specified Price for the Partnership Parks, if determined as of April 3, 2022, is $409.7 million in the case of SFOG and $527.4 million in the case of SFOT. As of April 3, 2022, we owned approximately 31.5% and 54.0% of the Georgia limited partner interests and Texas limited partner interests, respectively. Our obligations with respect to SFOG and SFOT will continue until 2027 and 2028, respectively.

We incurred $25.5 million of capital expenditures at the Partnership Parks during the 2021 season and intend to incur approximately $19.8 million of capital expenditures at these parks for the 2022 season, an amount in excess of the minimum required expenditure. Cash flows from operations at the Partnership Parks will be used to satisfy the annual distribution and capital expenditure requirements, before any funds are required from us. The Partnership Parks generated approximately $73.8 million of cash in 2021 in operating activities, after deduction of capital expenditures and excluding the impact of short-term intercompany advances from or payments to Holdings. As of April 3, 2022, January 2, 2022 and April 4, 2021, we had total loans receivable outstanding of $288.3 million from the partnerships that own the Partnership Parks, primarily to fund the acquisition of Six Flags White Water Atlanta and to make capital improvements to the Partnership Parks and distributions to the limited partners in prior years.

16

Redeemable noncontrolling interests represent the non-affiliated parties’ share of the assets of the Partnership Parks that are less than wholly-owned: SFOT, SFOG and Six Flags White Water Atlanta, which is owned by the partnership that owns SFOG. As of April 3, 2022, redeemable noncontrolling interests of the SFOG and SFOT partnerships was $280.2 million and $241.9 million, respectively, which approximates redemption value.

Insurance

We maintain insurance of the types and in amounts that we believe are commercially reasonable and that are available to businesses in our industry.

The majority of our current insurance policies expire on December 31, 2022. We generally renegotiate our insurance policies on an annual basis. We cannot predict the level of the premiums that we may be required to pay for subsequent insurance coverage, the level of any self-insurance retention applicable thereto, the level of aggregate coverage available or the availability of coverage for specific risks.

Litigation

In the normal course of our business, we are involved from time to time in various arbitrations, class actions, commercial litigation, investigations and other legal, regulatory or governmental actions, including the matters described below. In many proceedings, including the specific matters described below, it is inherently difficult to determine whether any loss is probable or to estimate the size or range of the possible loss, and accruals for legal matters are when we believe a loss for a particular matter is considered probable and reasonably estimable. However, the outcome of such legal matters is subject to inherent uncertainties and management’s view of these matters may change in the future.

Securities Class Action Lawsuits

In February 2020, two putative securities class action complaints were filed against Holdings and certain of its former executive officers (collectively, the “defendants”) in the U.S. District Court for the Northern District of Texas. On March 2, 2020, the two cases were consolidated in an action captioned Electrical Workers Pension Fund Local 103 I.B.E.W. v. Six Flags Entertainment Corp., et al., Case No. 4:20-cv-00201-P (N.D. Tex.) (the “Electrical Workers litigation”), and an amended complaint was filed on March 20, 2020. On May 8, 2020, Oklahoma Firefighters Pension and Retirement System and Electrical Workers Pension Fund Local 103 I.B.E.W. were appointed as lead plaintiffs, Bernstein Litowitz Berger & Grossman LLP was appointed as lead counsel, and McKool Smith PC was appointed as liaison counsel. On July 2, 2020, lead plaintiffs filed a consolidated complaint. The consolidated complaint alleges, among other things, that the defendants made materially false or misleading statements or omissions regarding the Company’s business, operations and growth prospects, specifically with respect to the development of its Six Flags branded parks in China and the financial health of its former partner, Riverside Investment Group Co. Ltd., in violation of the federal securities laws. The consolidated complaint seeks compensatory damages and other relief on behalf of a putative class of purchasers of Holdings’ publicly traded common stock during the period between April 24, 2018 and February 19, 2020. On August 3, 2020, defendants filed a motion to dismiss the consolidated complaint. On March 3, 2021, the district court granted defendants’ motion, dismissing the complaint in its entirety and with prejudice. Plaintiffs filed a motion to amend or set aside judgment and for leave to file an amended complaint on March 31, 2021, which the district court denied on July 26, 2021. Plaintiffs filed a motion for leave to file a supplemental brief on June 17, 2021, which the district court denied on June 18, 2021.

On August 25, 2021, plaintiffs filed a notice of appeal to the U.S. Court of Appeals for the Fifth Circuit from the district court’s decisions granting defendants’ motion to dismiss, denying plaintiffs’ motion to amend or set aside judgment, and denying plaintiffs’ motion for leave to file a supplemental brief. Plaintiffs’ appeal is captioned Oklahoma Firefighters Pension & Ret. Sys. v. Six Flags Ent. Corp., et al., No. 21-10865 (5th Cir.). The appeal is fully briefed and oral argument was held on March 7, 2022.

We believe that these lawsuits are without merit and intend to defend this litigation vigorously. However, there can be no assurance regarding the ultimate outcome of the lawsuit.

17

Stockholder Derivative Lawsuits

On March 20, 2020, a putative stockholder derivative lawsuit was filed on behalf of nominal defendant Holdings, by Mr. Mark Schwartz in the U.S. District Court for the Northern District of Texas against certain of its current and former executive officers and directors (the “individual defendants”) in an action captioned Schwartz v. Reid-Anderson, et al., Case No. 4:20-cv-00262-P (N.D. Tex.). In April 2020, two additional stockholder derivative lawsuits, making substantially identical allegations as the Schwartz complaint, were filed on behalf of nominal defendant Holdings by Trustees of the St. Clair County Employees’ Retirement System and Mr. Mehmet Ali Albayrak in the U.S. District Court for the Northern District of Texas in actions captioned Martin, et al. v. Reid-Anderson, et al., Case No. 4:20-cv-00311-P (N.D. Tex.) and Albayrak v. Reid-Anderson, et al., Case No. 4:20-cv-00312-P (N.D. Tex.), respectively. On April 8, 2020, plaintiffs in all three of these putative derivative actions moved to consolidate the three actions and to appoint lead counsel. On May 8, 2020, the district court granted the plaintiffs’ motion to consolidate. The consolidated action is captioned In re Six Flags Entertainment Corp. Derivative Litigation, Case No. 4:20-cv-00262-P (N.D. Tex.). On August 10, 2020, plaintiffs filed a consolidated derivative complaint. The consolidated derivative complaint alleges breach of fiduciary duty, insider selling, waste of corporate assets, unjust enrichment, and contribution for violations of federal securities laws. The consolidated derivative complaint references, and makes many of the same allegations as are set forth in, the Electrical Workers litigation, alleging, among other things, that the individual defendants breached their fiduciary duties, committed waste, are liable for contribution for, or were unjustly enriched by making, failing to correct, or failing to implement adequate internal controls relating to alleged materially false or misleading statements or omissions regarding the Company’s business, operations and growth prospects, specifically with respect to the prospects of the development of its Six Flags branded parks in China and the financial health of its former partner, Riverside Investment Group Co. Ltd.

The consolidated derivative complaint also alleges that a former officer and director sold shares of the Company while allegedly in possession of material non-public information concerning the same. On September 9, 2020, Holdings and the individual defendants filed a motion to dismiss the consolidated complaint. On April 28, 2021, the district court granted defendants’ motion, dismissing the consolidated complaint in its entirety and with prejudice and denying leave to amend. Plaintiffs’ time to appeal the judgment dismissing this action in its entirety and with prejudice and denying leave to amend lapsed in May 2021.

On May 5, 2020, a putative stockholder derivative lawsuit was filed on behalf of nominal defendant Holdings, by Mr. Richard Francisco in the District Court for Dallas County, Texas, 160th Judicial District, against certain of i