Six Flags, Inc. (NYSE: PKS): -- Per Capita Revenue Up 13% as
Strategy to Diversify Entertainment Offering and Improve Guest
Experience Begins to Take Hold -- Quarterly Attendance Impacted by
Vacation Calendar and Fewer Operating Days -- Company Announces
Agreement to Sell Houston AstroWorld Site Six Flags, Inc. (NYSE:
PKS) today announced operating results for its first quarter ended
March 31, 2006. The first quarter historically represents less than
5% of the Company's full-year attendance and revenue. Total revenue
per capita for the quarter increased by $4.13, or 13%, to $37.13,
driven by solid double-digit percentage increases in both ticket
and in-park per capita spending. The first quarter 2006 attendance
reflects a difficult comparison to the first quarter 2005, which
benefited from the Easter vacation period and 19 (or 10%) more park
operating days. As a result, first quarter 2006 attendance declined
to 1.15 million from 1.50 million in first quarter 2005 (1.48
million excluding the New Orleans park, which will not open in
2006). Through April 30, 2006, which included the Easter vacation
period, attendance had stabilized and total revenues were up
approximately 4%, despite 9 fewer park operating days, compared to
the same period in 2005. Total revenues for the quarter were $42.7
million, compared to $49.5 million in 2005, a decrease of $6.8
million. The Company's net loss for the quarter was $241.0 million,
compared to a net loss of $178.7 million in the first quarter of
2005. Adjusted EBITDA(1) for the first quarter was a loss of $97.0
million, compared to a loss of $67.8 million in the first quarter
of 2005. Adjusted EBITDA includes approximately $11.6 million of
severance and other costs associated with senior management and
corporate strategy changes, including a non-cash pension
curtailment cost associated with the decision to freeze the
Company's defined benefit pension plan ("Management Change Costs").
Adjusted EBITDA excludes the operations of parks in Oklahoma City,
Oklahoma; Sacramento, California; and Columbus, Ohio ("Discontinued
Operations Parks") which have been classified as discontinued
operations due to the Company's intention to dispose of those
businesses.(2) The Company also announced that it has entered into
a contract to sell the 104-acre site of AstroWorld in Houston,
Texas. The property - which has been cleared of all buildings,
rides and structures in anticipation of sale - is being sold for
$77 million; the closing date is expected to be early June. The
sale is subject to customary closing conditions. Strategy to Drive
Increased Per Capita Revenue Showing Positive Results "The first
quarter results are quite encouraging with respect to our strategy
to drive per capita revenue growth," said Mark Shapiro, who was
named President and Chief Executive Officer of Six Flags in
December 2005. "While volume was down in the first quarter, it was
driven by the calendar more than anything else, and it was partly
offset by a significant increase in guest spending. Through the end
of April, we've seen that volume is stabilizing and revenues have
recovered to be up 4% over last year. When you consider that most
of our capital intensive attractions have yet to open, we believe
this bodes well for the summer months ahead." "Our strategy to
drive revenue growth depends as much on the marketing success of
our 45th anniversary and the results of new revenue stream
initiatives - Flash Pass, character brunches, parking services,
etc. - as it does on good weather. Our turnaround efforts
necessitate marketing aggressively to families to broaden our
customer base, diversifying in-park entertainment options, and
focusing on an improved guest experience - from keeping our parks
cleaner, to a more friendly and service-oriented staff." He added,
"However, in no way are we abandoning teens. To underscore our
commitment to teens and to reinforce our position as the market
leader in that demographic, four new roller coasters go on-line
around the same time that skateboard legend Tony Hawk tours our
parks this summer." Mr. Shapiro concluded, "Our previously
announced multi-year sponsorship and marketing alliances with Papa
John's, and most recently with The Home Depot, have our Corporate
Alliance program off and running, providing us with not only
sponsorship revenues but also significant marketing value through
in-store promotions, ticket sales, and out-of-home advertising. We
will continue to partner with smart marketers who are eager to have
their products and services in front of the tens of millions of Six
Flags guests who spend up to 10 hours per visit in our parks."
First Quarter Results First quarter 2006 total revenues were $42.7
million, compared to $49.5 million for the first quarter 2005, a
decrease of $6.8 million, or 14%. Attendance for the first quarter
2006 was 1.15 million, compared to 1.50 million in the first
quarter 2005, which benefited from the Easter vacation period and
19 additional park operating days. Total revenue per capita
increased 13% in the quarter, from $33.00 in 2005 to $37.13 in
2006, as guests spent more across-the-board on admissions, food and
beverage, merchandise, games, and parking. Total costs and
expenses, including cost of sales, depreciation, amortization, and
stock-based compensation were $192.9 million for the quarter,
compared to $157.6 million for the first quarter of 2005, an
increase of $35.3 million, or 22%. The increased costs were largely
driven by the Management Change Costs ($11.6 million), stock-based
compensation ($8.8 million) and anticipated increases in salaries,
wages and other expenses primarily associated with additional
staffing and services ($14.9 million). Net loss applicable to
common stock in the first quarter 2006 was $246.5 million, or $2.63
per share, compared to a first quarter 2005 loss of $184.2 million,
or $1.98 per common share. The increased net loss reflects
approximately $158.8 million, or $1.69 per common share, of
non-cash costs and other items not directly related to the ongoing
operation of the business. Excluding these charges, net loss
applicable to common stock would have been $0.94 per common share,
compared to $0.91 per common share in first quarter 2005. (See the
attached table for a reconciliation from net loss applicable to
common stock to net loss from continuing operations before these
non-cash and other items.) Adjusted EBITDA for the first quarter of
2006 was a loss of $97.0 million, compared to a loss of $67.8
million in 2005. Excluding Management Change Costs and including
the Discontinued Operations Parks, Adjusted EBITDA for the quarter
would have been a loss of $87.6 million, compared to a loss of
$70.1 million in the first quarter of 2005. Outlook The Company is
progressing with the implementation of its new operational strategy
and is encouraged by the per capita revenue growth to date,
although it remains too early in the season to draw meaningful
conclusions as to full-year results. Consistent with prior
guidance, the Company continues to target 2006 revenue growth of
8-9%, with that growth primarily coming from per capita spending.
Operating costs and expenses, excluding non-cash costs, Management
Change Costs, and including the Discontinued Operations Parks, are
expected to increase by approximately $45 million. These increased
costs are an integral part of new management's strategy, which is
intended to drive enhanced guest satisfaction, resulting in higher
per capita spending and greater attendance, particularly among
families. Based on the above revenue and cost growth targets, the
Company is maintaining its 2006 guidance of Adjusted EBITDA of $340
million, excluding Management Change Costs and including the
Discontinued Operations Parks. Business Developments In addition to
announcing the agreement to sell the Houston AstroWorld site, the
Company has also had several other developments since the end of
the first quarter: -- To further enhance the guest experience, the
Company's top priority this year, Six Flags is making its tickets
and season passes more easily available via AOL CityGuide, one of
the most visited local entertainment guides on the Web. Six Flags
guests now can visit http://www.aolcityguide.com, type in "Six
Flags" in the AOL CityGuide search window, and purchase
Print-at-Home tickets to any Six Flags park in the U.S. -- Six
Flags has reached a supply, marketing and sponsorship agreement in
principle with The Home Depot, which will become exclusive supplier
of commercial improvement, building supply, construction and repair
and maintenance products to Six Flags parks across North America.
The agreement in principle provides for extensive co-marketing
opportunities in Home Depot stores and Six Flags theme parks: Six
Flags tickets will be sold at Home Depot stores nationwide, Six
Flags will receive an annual sponsorship fee and a range of
promotional opportunities, Six Flags will receive preferential
pricing for the materials to construct and maintain its parks, and
Six Flags and The Home Depot will jointly construct several KaBOOM!
playgrounds for kids in cities near Six Flags parks. About Six
Flags Six Flags, Inc. is the world's largest regional theme park
company. Founded in 1961, Six Flags is celebrating its 45th
Anniversary in 2006. It is a publicly-traded corporation (NYSE:
PKS) headquartered in New York City. Forward Looking Statements:
The information contained in this news release, other than
historical information, consists of forward-looking statements
within the meaning of Section 27A of the Securities Act and Section
21E of the Securities Exchange Act. 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, among others, Six Flags' success in
implementing its new business strategy. Although Six Flags believes
that the expectations reflected in such forward-looking statements
are reasonable, it can give no assurance that such expectations
will prove to have been correct. Important factors, including
factors impacting attendance, such as local conditions, events,
disturbances and terrorist activities, risk of accidents occurring
at Six Flags' parks, adverse weather conditions, general economic
conditions (including consumer spending patterns), competition,
pending, threatened or future legal proceedings and other factors
could cause actual results to differ materially from Six Flags'
expectations. Reference is made to a more complete discussion of
forward-looking statements and applicable risks contained under the
caption "Cautionary Note Regarding Forward-Looking Statements" and
"Risk Factors" in Six Flags' Annual Report on Form 10-K for the
year ended December 31, 2005, which is available free of charge on
Six Flags' website http://www.sixflags.com. (1) See the following
tables and Note 2 to those tables for a discussion of EBITDA
(Modified), Adjusted EBITDA, and a reconciliation to these amounts
from net loss. (2) Six Flags AstroWorld in Houston, Texas is also
classified as a discontinued operation; however, it had no park
operations during the quarter as it is in the process of being
dismantled in order to sell the underlying land. -0- *T Six Flags,
Inc. Quarters Ended March 31, 2006 and 2005 (In Thousands, Except
Per Share Amounts) Statement of Operations (1) Quarter Ended March
31, ----------------------- 2006 2005 ---------- ---------- Revenue
$ 42,698 $ 49,541 Costs and expenses (including stock based
compensation of $9,063 in 2006 and $288 in 2005) 156,621 122,939
Depreciation 36,074 34,484 Amortization 219 223 ----------
---------- Loss from operations (150,216) (108,105) ----------
---------- Interest expense (net) 47,800 44,762 Minority interest
in loss (8,977) (6,563) Equity in operations of partnerships 128 -
Early repurchase of debt - 19,303 Other expense 19,034 2,901
---------- ---------- Loss from continuing operations before income
taxes (208,201) (168,508) Income tax (expense) (167) (955)
---------- ---------- Loss from continuing operations before
discontinued operations and cumulative effect of a change in
accounting principle (208,368) (169,463) Discontinued operations
(31,641) (9,256) ---------- ---------- Loss before cumulative
effect of a change in accounting principle (240,009) (178,719)
Cumulative effect of a change in accounting principle (1,038) -
---------- ---------- Net loss $(241,047) $(178,719) ==========
========== Net loss applicable to common stock $(246,540)
$(184,212) ========== ========== Per share - basic and diluted:
Loss from continuing operations $ (2.28) $ (1.88) Discontinued
operations (0.34) (0.10) Cumulative effect of a change in
accounting principle (0.01) - ---------- ---------- Net loss $
(2.63) $ (1.98) ========== ========== *T -0- *T Balance Sheet Data
(In Thousands) Balance Sheet Data March 31, December 31, 2006 2005
----------- ----------- Cash and cash equivalents (excluding
restricted cash) $ 10,423 $ 81,534 Total assets 3,393,327 3,491,922
Current portion of long-term debt 207,851 113,601 Long-term debt
(excluding current portion) 2,127,178 2,128,756 Mandatorily
redeemable preferred stock 283,653 283,371 Total Stockholders
equity 451,928 694,208 Quarter Ended March 31,
------------------------ 2006 2005 ---------- --------- Other Data:
EBITDA (Modified) (2) $ (104,860) $(73,110) Adjusted EBITDA (2) $
(97,000) $(67,767) Adjusted EBITDA (including Frontier City, White
Water Bay, Wyandot Lake, WaterWorld Sacramento, and excluding
Management Change Costs) $ (87,569) $(70,122) Average weighted
shares outstanding - basic and diluted 93,906 93,104 Net cash used
in operating activities $ (112,644) $(97,298) *T -0- *T The
following table sets forth a reconciliation of net loss to EBITDA
(Modified) and Adjusted EBITDA for the periods shown (in
thousands): Quarter Ended March 31, ----------------------- 2006
2005 ----------- ---------- Net loss $(241,047) $(178,719)
Cumulative effect of a change in accounting principle 1,038 -
Discontinued Operations 31,641 9,256 Income tax expense 167 955
Other expense 19,034 2,901 Early repurchase of debt - 19,303 Equity
in operations of partnerships 128 - Minority interest in loss
(8,977) (6,563) Interest expense (net) 47,800 44,762 Amortization
219 223 Depreciation 36,074 34,484 Stock-based compensation 9,063
288 ----------- ---------- EBITDA (Modified) (104,860) (73,110)
Third party interest in EBITDA of certain parks (3) 7,860 5,343
----------- ---------- Adjusted EBITDA $ (97,000) $ (67,767)
=========== ========== The following table sets forth a
reconciliation of Adjusted EBITDA to Adjusted EBITDA before giving
effect to the reclassification of Frontier City, White Water Bay,
Wyandot Lake, and WaterWorld Sacramento as Discontinued Operations
and the Management Change Costs. Quarter Ended March 31,
------------------------ 2006 2005 ---------- --------- Adjusted
EBITDA $(97,000) $(67,767) Frontier City (1,170) (1,137) White
Water Bay (273) (329) Wyandot Lake (487) (543) WaterWorld
Sacramento (235) (346) Management Change Costs 11,596 - -----------
--------- Adjusted EBITDA before Discontinued Operations
reclassification and Management Change Costs $(87,569) $(70,122)
========== ========= *T -0- *T The following table sets forth a
reconciliation of net loss applicable to common stock to net loss
from continuing operations before certain non-cash and other items.
(4) Quarter Ended March 31, ------------------------ 2006 2005
----------- ---------- Net Loss applicable to common stock
$(246,540) $(184,212) Write-off of fixed assets 19,001 3,362 Early
repurchase of debt - 19,303 Discontinued operations 31,641 9,256
Cumulative effect of change in accounting principle 1,038 -
Stock-based compensation 9,063 288 Management Change Costs 11,596 -
Tax valuation allowance 86,448 67,246 ------------ ----------
Sub-total 158,787 99,455 ------------ ---------- Net loss from
continuing operations before certain non-cash costs and other items
$ (87,753) $ (84,757) ============ ========== Per share - basic and
diluted: Net Loss applicable to common stock $ (2.63) $ (1.98)
Less: Certain non-cash costs and other items (1.69) (1.07)
----------- ---------- Net loss from continuing operations before
certain non-cash costs and other items $ (0.94) $ (0.91)
=========== ========== Notes (1) Revenues and expenses of
international operations are converted into U.S. dollars on a
current basis as provided by accounting principles generally
acceptable in the United States ("GAAP"). (2) EBITDA (Modified) a
non-GAAP measure, is defined as net loss before discontinued
operations, income tax expense (benefit), other expense, early
repurchase of debt (formerly an extraordinary loss), minority
interest in earnings (losses), interest expense (net),
amortization, depreciation, and stock-based compensation. Adjusted
EBITDA, also a non-GAAP measure, is defined as EBITDA (Modified)
minus the interests of third parties in EBITDA of the four parks
and one hotel that are less than wholly owned. The Company believes
that EBITDA (Modified) and Adjusted EBITDA (collectively,
"EBITDA-Based Measures") provide useful information to investors
regarding the Company's operating performance and its capacity to
incur and service debt and fund capital expenditures. The Company
believes that the EBITDA-Based Measures are used by many investors,
equity analysts and rating agencies as a measure of performance. In
addition, Adjusted EBITDA is approximately equal to "Consolidated
Cash Flow" as defined in the indentures relating to the Company's
senior notes. Neither of the EBITDA-Based Measures is defined by
GAAP and neither should be considered in isolation or as an
alternative to net income (loss), income (loss) from continuing
operations, net cash provided by (used in) operating, investing and
financing activities or other financial data prepared in accordance
with GAAP or as an indicator of the Company's operating
performance. EBITDA (Modified) and Adjusted EBITDA as defined in
this release may differ from similarly titled measures presented by
other companies. (3) Represents interest of third parties in EBITDA
of Six Flags Over Georgia, Six Flags Over Texas, Six Flags White
Water Atlanta, and Six Flags Marine World, and the Company's
interest in EBITDA of Six Flags Great Escape Lodge & Indoor
Waterpark. (4) The Company's reported results include items of
income and expense that the Company believes are typically excluded
by securities analysts in their published estimates for the
Company's financial results. The Company therefore believes that
presentation of net loss from continuing operations before certain
non-cash and other items is relevant and useful to investors.
Excluded items include non-cash write-off of assets, early
repurchases of debt, discontinued operations, cumulative effect of
change in accounting principle, stock-based compensation,
Management Change Costs and effects of deferred tax asset valuation
allowance. *T
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