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Press Release: Six Flags, Inc.
November 14, 2002
NEW YORK, NY -- Six Flags, Inc. (the "Company") (NYSE:PKS) announced yesterday its results of operations
for the nine months and quarter ended September 30, 2002.
Nine Months Results
For the first nine months of 2002, revenues were $955.2 million, compared to $963.4 million for the comparable
period of 2001, representing a 0.9% decrease, driven by a 7.1% increase in total per capita spending at the consolidated
parks, offset by a 7.4% decline in attendance at those parks.
Operating costs and expenses, including depreciation and other non-cash charges, were $710.2 million in the 2002
nine-month period, as compared to $742.5 million in 2001, reflecting the elimination of goodwill amortization in
the 2002 period under new accounting rules. Approximately $42.3 million of goodwill amortization was expensed in
the nine months ended September 30, 2001. Total operating costs and expenses in the 2001 period absent goodwill
amortization would have been $700.2 million, or $10.0 million less than in the 2002 period.
Excluding depreciation and amortization and non-cash compensation expense, cash operating costs and expenses were
$589.8 million in 2002 and $588.6 million in 2001. All of the increase is attributable to the inclusion for the
full 2002 period of the two parks acquired during the first nine months of 2001 and to the inclusion of the results
of our New Orleans park since its acquisition on August 23, 2002. One of the acquired parks, the former Sea World
of Ohio, now operates together with the previously owned adjacent Six Flags facility. Assuming the acquired park
in Montreal and the combined Ohio facility had been owned for the full 2001 period and excluding New Orleans from
2002, cash operating costs and expenses in the 2002 period decreased $4.6 million (0.7%) as compared to the pro
forma prior-year period.
EBITDA from consolidated operations was $365.4 million as compared to $374.8 million in the prior-year period.(1)
Adjusted EBITDA for the 2002 nine-month period, including the Company's share of EBITDA from the parks accounted
for by the equity method, was $395.9 million as compared to $418.3 million in the prior-year period.(2) Assuming
the acquired park in Montreal and the combined Ohio facility had been owned for the full 2001 period and excluding
New Orleans from 2002, EBITDA and Adjusted EBITDA for the 2002 period were approximately $4.1 million (1.1%) and
$17.1 million (4.1%) lower, respectively, than in the prior-year pro forma period.
During the nine-month period, we recognized a $61.1 million loss from the goodwill impairment at our European operations
as a cumulative effect of a change in accounting principle under the provisions of SFAS No. 142 "Goodwill
and Intangible Assets." Income before extraordinary loss and this cumulative effect of change in accounting
principle was $44.1 million in the 2002 period versus income of $39.2 million in 2001, reflecting the elimination
of goodwill amortization in 2002. There was an extraordinary loss net of tax benefit of $18.5 million in 2002,
and of $8.5 million in 2001. Net loss applicable to common stock was $52.0 million in the 2002 period, as compared
to income of $9.6 million in 2001, reflecting the impact of the impairment recognition in 2002.
Three Month Results
Revenues for the 2002 third quarter were $558.1 million, compared to $571.8 million for the comparable quarter
of 2001, representing a 2.4% decrease. The 2002 performance reflects a 5.1% increase in total per capita spending
at the consolidated parks, offset by a drop in attendance at those parks of 7.2% compared to the 2001 quarter.
Operating costs and expenses, including depreciation and other non-cash charges, were $280.3 million in the 2002
quarter and $300.4 million in the year ago period, reflecting the elimination of goodwill amortization in the quarter
under new accounting rules. Approximately $14.1 million of goodwill amortization was expensed in the third quarter
of 2001. Total operating costs and expenses in the 2001 quarter absent goodwill amortization would have been $286.3
million, or $6.0 million more than in 2002.
Excluding depreciation and amortization and non-cash compensation expense, cash operating costs and expenses were
$239.1 million in the third quarter of 2002, compared to $248.3 million in the prior-year quarter, a decrease of
3.7%. Excluding the New Orleans park from 2002, cash operating costs and expenses in the 2002 period decreased
4.3% as compared to the prior-year period. EBITDA from consolidated operations was $319.0 million as compared to
$323.5 million in the 2001 quarter. Adjusted EBITDA for the third quarter, including the Company's share of the
EBITDA from parks accounted for by the equity method, was $345.6 million as compared to $356.1 million for the
third quarter of 2001. Net income was $139.7 million in 2002 versus $148.0 million in the year ago quarter, reflecting
the impact of the lower revenues offset by the elimination of goodwill amortization in 2002. Net income applicable
to common stock was $134.2 million in the 2002 quarter, as compared to net income applicable to common stock of
$142.5 million in the 2001 period.
Discussion
Kieran E. Burke, Chairman and Chief Executive Officer, stated, "The results for the three and nine month periods
reflect the performance issues we have previously discussed, which affected us in three or four markets primarily
in July. We experienced an improved performance trend through the balance of the third quarter, including at our
New Jersey, Cleveland and Dallas parks. This improved performance in the latter months offset a significant portion
of our earlier difficulties. As a result, revenues for the quarter at our consolidated operations trailed the prior
year by 2.4%. For the nine month period, revenues were less than 1.0% behind the prior year at the consolidated
parks, 2% systemwide. We experienced strong per capita spending gains throughout the year at our parks, with total
revenue per guest up 7.1% for the nine months, reflecting solid gains in both admission per capita and in in-park
spending. These gains bode well for our ability to achieve future increases in years to come."
"We also continued to carefully control expenses, with cash operating costs and expenses on a same park basis
lower in the third quarter and year to date than last year."
"All of our parks have now concluded their operating seasons, with the exception of various weekend and holiday
operations in four markets. Our October operations were not as strong as we had expected they would be, reflecting
the impact of difficult weather in several markets, which constrained what would otherwise have been strong growth
over last year. As a result, we now expect full year operations, excluding New Orleans, to generate consolidated
revenues of approximately $1.04 billion, approximately 1% less than last year, EBITDA from consolidated operations
of approximately $350 million and Adjusted EBITDA of approximately $385 million."
"As to next year, we are planning to implement a capital investment program entailing expenditures of approximately
$125 million, including major attractions at each of our four largest parks and an array of additions in other
markets. We have ample available liquidity and committed financing lines to pursue that plan, which should generate
meaningfully improved performance and substantial free cash flow."
FASB Statement 142
"We have concluded the second step of the goodwill impairment test mandated by Statement 142 of the Financial
Accounting Standards Board. We have concluded that we do not have any goodwill impairment in our North American
business, but do have an impairment in our European operations, primarily attributable to the November 1999 transaction
involving the acquisition of Movie World Germany. The impairment is $61.1 million, representing all of the goodwill
attributable to our European business. We have recognized the impairment in the results for the nine months ended
September 30, 2002 as a cumulative effect of an accounting change, consistent with the provisions of Statement
142. The loss is to be retroactively recognized in the first quarter of this year."
Six Flags, Inc. is the world's largest regional theme park company, with thirty-nine parks in markets throughout
North America and Europe.
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 Exchange Act. These statements
may involve risks and uncertainties that could cause actual results to differ materially from those described in
such statements. Although the Company 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 general economic conditions, consumer spending levels, adverse weather conditions, terrorist activities
and other factors could cause actual results to differ materially from the Company's expectations.
This release and prior releases are available on the KCSA Public Relations Worldwide Web site at www.kcsa.com.
You may register to receive Six Flags' future press releases or to download a complete Digital Investor Kit(TM)
including press releases, regulatory filings and corporate materials by clicking on the "KCSA Interactive
Platform" icon at www.kcsa.com.
(1) See note 1 to the following table for a discussion of EBITDA.
(2) See note 2 to the following table for a discussion of Adjusted EBITDA.
Six Flags, Inc.
Statement of Operations Data
For the Three and Nine Months Ended September 30, 2002
(In Thousands, Except Per Share Amounts)
(Unaudited)
Three Months Ended Nine Months Ended
------------------ -----------------
September 30, September 30,
----------------- -----------------
2002 2001 2002 2001
------ ------ ------ ------
Revenue 558,099 571,784 955,162 963,411
(excluding depreciation and
non-cash compensation) 239,114 248,261 589,797 588,647
Depreciation and amortization 38,758 49,701 112,953 147,643
Noncash compensation expense 2,446 2,420 7,495 6,196
-------- -------- -------- --------
Income from operations 277,781 271,402 244,917 220,925
Interest expense (net) (56,494) (55,299) (172,938) (167,929)
Equity in operations of
theme park partnerships 22,008 26,467 16,776 26,390
Other income (expense) (1,000) 461 (1,615) (1,714)
-------- -------- -------- --------
Income before income taxes 242,295 243,031 87,140 77,672
Income tax expense 102,631 94,987 43,077 38,431
-------- -------- -------- --------
Income before extraordinary loss 139,664 148,044 44,063 39,241
Extraordinary loss on
extinguishment of debt
(net of
income tax benefit) -- -- (18,535) (8,529)
-------- -------- -------- --------
Income before cumulative effect
of change in accounting 139,664 148,044 25,528 30,712
principle
Cumulative effect of change
in accounting principle -- -- (61,054) --
-------- -------- -------- --------
Net income (loss) 139,664 148,044 (35,526) 30,712
Net income (loss) applicable
to common stock 134,170 142,483 (52,005) 9,630
Net income (loss) per
share - basic 1.45 1.54 (0.56) 0.11
Net income (loss) per
share - diluted 1.31 1.39 (0.56) 0.11
Net income per share before
extraordinary loss and
cumulative effect of change
in accounting principle - basic 1.45 1.54 0.30 0.21
Net income per share before
extraordinary loss and
cumulative effect of change in
accounting principle - diluted 1.31 1.39 0.30 0.20
Other Data
EBITDA(1) 318,985 323,523 365,365 374,764
Adjusted EBITDA(2) 345,619 356,111 395,933 418,348
Average weighted shares
outstanding - basic 92,535 92,314 92,476 88,149
Average weighted shares
outstanding -diluted 106,325 106,453 92,579 88,872
(1) EBITDA is defined as income before extraordinary loss, before
interest expense, net, income tax expense (benefit), noncash
compensation, depreciation and amortization and other income
(expense). Information concerning EBITDA is included because
it is used by certain investors as a measure of a company's
ability to service and/or incur debt. EBITDA is not required
by GAAP and should not be considered in isolation or as an
alternative to net income (loss), net cash provided by
operating, investing and financing activities or other
financial data prepared in accordance with GAAP or as an
indicator of operating performance.
(2) Adjusted EBITDA is defined as EBITDA from consolidated
operations plus the Company's share (based on ownership
interests) of the EBITDA of the unconsolidated parks. This is
calculated by adding the interest and depreciation and
amortization expense associated with those parks to the
Company's equity in operations of theme park partnerships.
Balance Sheet Data
(In Thousands)
September 30, 2002 December 31, 2001
------------------ -----------------
(unaudited)
Total assets $ 4,360,034 $ 4,246,142
Current portion of
long-term debt 4,850 24,627
Total long-term debt 2,299,962 2,222,442
Mandatorily redeemable
preferred stock 279,711 278,867
Total stockholders' equity 1,422,218 1,446,622
----------------------------------------------------
Contact:
Six Flags, Inc.
Jim Dannhauser, 212/599-4693
or
KCSA CONTACTS:
Joseph A. Mansi / Elizabeth Mwangi
212/896-1205 / 212/896-1242
jmansi@kcsa.com / emwangi@kcsa.com
Source: Six Flags, Inc.