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Six Flags Announces Full-Year and Fourth Quarter 2008 Results

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Press Release from Six Flags:

 

Six Flags Announces Full-Year and Fourth Quarter 2008 Results

Tuesday March 10, 8:30 am ET

 

- Full Year 2008 Adjusted EBITDA(1) Increases 45% to a Record $275.3 Million on 5% Revenue Growth and Reduced Costs and Expenses

 

- Full Year 2008 Operating Income More than Triples to $144.0 Million

 

- Positive Free Cash Flow(1) Achieved for Full Year 2008 for the First Time in the Company's History

 

- Fourth Quarter Adjusted EBITDA Reaches $5.2 Million and, Excluding Certain Non-Cash Items(2), Loss From Continuing Operations Per Share Improves to $0.83

 

NEW YORK, March 10 /PRNewswire-FirstCall/ -- Six Flags, Inc. (NYSE: SIX - News) announced today its operating results for the year and quarter ended December 31, 2008.(3)

 

Commenting on the Company's performance, Mark Shapiro, President and Chief Executive Officer of Six Flags, Inc., said: "The three-year turnaround for Six Flags required a great deal of patience. I am proud and grateful that the efforts and commitment of our workforce -- some 30,000 strong -- resulted in our best year ever, putting our operations back on solid footing. The remaining challenge is the inherited balance sheet and we are in comprehensive dialogue with our lenders to remedy that issue."

 

For the year ended December 31, 2008, total revenues increased $50.5 million, or 5%, to $1.02 billion from $970.8 million in the prior year. Attendance for the year was 25.3 million, an increase of 0.4 million, or 2%, compared to 24.9 million in the prior year. The attendance increase was driven by increased paid admissions, partially offset by planned reductions of approximately 0.5 million in complimentary and free promotional attendance.

 

Total revenue per capita for the year increased $1.31, or 3%, to $40.30 from $38.99 in the prior year, reflecting increased per capita guest spending as well as growth in sponsorship, licensing and other fees. Increased per capita guest spending of $0.53, or 1%, to $37.97 from $37.44 in the prior year was driven by increased rentals, food and beverages, parking, admissions and retail revenues. Sponsorship, licensing and other fees increased $20.4 million, or 53%, to $59.0 million.

 

Operating costs and expenses, including cost of sales, depreciation, amortization, stock-based compensation and loss on disposal of assets, decreased $55.4 million, or 6%, to $877.3 million for 2008, compared to $932.7 million in 2007. Key planned reductions were achieved in marketing, loss on disposal of assets, third party services, repairs and maintenance, travel-related expenses, supplies and seasonal labor.

 

Income from continuing operations before income taxes was $19.4 million, an improvement of $252.4 million over the prior year pre-tax loss of $233.0 million. The improved results reflect a net gain on debt extinguishment of $107.7 million compared to a $13.2 million loss on debt extinguishment for 2007, increased revenues of $50.5 million, reduced operating costs and expenses of $55.4 million, a $5.5 million reduction in net other expense, and reduced net interest expense of $21.5 million. The lower net other expense reflects the 2008 loss related to an interest rate hedge that no longer qualified for hedge accounting treatment, compared to the prior year's cost of settling a class-action labor lawsuit in California and costs associated with implementation of an early retirement plan. The reduced net interest expense resulted from lower long-term debt and interest rates in 2008.

 

Adjusted EBITDA for 2008 was $275.3 million, an $85.7 million improvement over the prior-year's Adjusted EBITDA of $189.6 million, reflecting increased revenues and reduced cash operating costs and expenses.

 

Three Month Results

 

For the fourth quarter of 2008, total revenues of $118.1 million increased 5% over the prior-year quarter's $112.3 million, while total attendance grew 9%, or 0.3 million. The attendance increase over the prior-year quarter was primarily due to strong Halloween and Christmas Holiday seasons, driven by an increased mix of season pass attendance.

 

Revenue growth for the fourth quarter also reflected growth in sponsorship, licensing and other fees, which increased $4.1 million over the prior-year period to $13.8 million. Total revenue per capita decreased 4% to $38.04 in the fourth quarter of 2008 from $39.45 in the prior-year quarter, reflecting reduced guest spending due in part to the increased mix of season pass attendees who tend to spend less in-park.

 

Mr. Shapiro added: "While the economic environment continued to tighten in the fourth quarter, our business remained resilient. Six Flags has effectively positioned itself as an affordable close-to-home entertainment destination for the entire family. With paid attendance, length of stay and in-park spending increases in 2008, it is clear that consumer confidence in our brand and the guest experience has returned."

 

Excluding the non-cash items resulting from the change in the Company's income tax valuation allowance and the mark-to-market charge related to an interest rate hedge that ceased to be an "effective hedge" for accounting purposes, the Company's loss from continuing operations in the fourth quarter of 2008 was $75.4 million, an improvement of $51.2 million over the prior-year quarter's loss of $126.6 million. Including the non-cash items, the Company recorded a loss of $201.2 million from continuing operations in the fourth quarter of 2008.

 

The improved operating results, excluding the non-cash charges, reflect revenue growth of $5.7 million and a reduction of $27.1 million in operating costs and expenses, which decreased from $183.0 million in the prior-year fourth quarter to $155.9 million for the fourth quarter of 2008, reflecting primarily a reduction in the loss on disposal of assets. Also included in the change in net income from continuing operations for the fourth quarter was a $7.3 million reduction in net interest expense, reflecting less long-term debt and lower interest rates compared to the fourth quarter of 2007.

 

Adjusted EBITDA for the fourth quarter of 2008 improved by $3.3 million, or 165%, to $5.2 million compared to $1.9 million for the prior-year quarter, driven primarily by the Company's revenue growth.

 

Cash and Liquidity

 

As of December 31, 2008, the Company had $210.3 million in unrestricted cash and $1.5 million available (after reduction for outstanding letters of credit of approximately $29.4 million) on its $275 million revolving credit facility.

 

The Company's Preferred Income Redeemable Shares ("PIERS") are required to be redeemed for cash on August 15, 2009 for $287.5 million plus accrued and unpaid dividends, which totaled $15.6 million at December 31, 2008. The Company does not expect to have sufficient cash to redeem the PIERS at their redemption date. The PIERS redemption is just one component of the comprehensive restructuring of the balance sheet that the Company is pursuing. Accordingly, the Company's 2008 Annual Report on Form 10-K will include the disclosure of risk factors associated with the Company's liquidity, pending PIERS maturity and the restructuring effort.

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I'm not so good with this stuff,but I'm guessing that is really good for Six Flags?I think it is so I have to say this.Way to go Six Flags,and Shapiro!

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Well it looks like all the "nickel & dimeing" us the last few years has paid off for them. It is good news for our park. Hopefully it will have a long and bright future ahead as the top park in the chain.

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I just finished listening to the conference call from this morning and there are only a couple of things to take note of:

 

--Preparations are already underway for the 2011 season when EVERY Six Flags park will be receiving a major new attraction to celebrate Six Flags 50th.

 

--Great Adventure went from being one of the worst parks in 2006 to being the company's best park last season.

 

--We may be seeing some tie in to the new movie version of Fame this summer (kind of Six Flags version of High School Musical)

 

--Despite the chatter of 15 year-olds on message boards everywhere there are absolutely

NO PLANS TO SELL ANY PARKS,

and daily operations are completely unaffected by the corporate finance restructuring.

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That's great that they won't be selling any parks! SFA and SFKK are nice little parks, despite what RCDB.com reveals. I worry about unused land in NJ though. GA being the worst park in 2006 wasn't a stretch. It reaffirms my faith in word of mouth. People who lived an hour away were telling me that 8 roller coasters were closed on their visits. Word traveled fast. I wish I worked with the public this past yea to hear what they were saying about the 2008 season.

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I just finished listening to the conference call from this morning and there are only a couple of things to take note of:

 

--Preparations are already underway for the 2011 season when EVERY Six Flags park will be receiving a major new attraction to celebrate Six Flags 50th.

 

--Great Adventure went from being one of the worst parks in 2006 to being the company's best park last season.

 

--We may be seeing some tie in to the new movie version of Fame this summer (kind of Six Flags version of High School Musical)

 

--Despite the chatter of 15 year-olds on message boards everywhere there are absolutely

NO PLANS TO SELL ANY PARKS,

and daily operations are completely unaffected by the corporate finance restructuring.

 

1. What do you mean by GADV being the worst park?

2. Do you know the announcements for 2011 :P

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This is great news! It's also a really good sign if they already started planning things in the future! I'm really excited now.

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After saying a major addition too every park in 2011,I'm thinking that the Dive Machine or big coaster like a Euro Fighter might not be so far fetched.

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Keep in mind that things like Wiggles World and The Dark Knight are considered "major additions". Don't set your sights too high this early in the game. Unless they can restructure debts and continue to improve in profitability, $20 million B&M coasters are out of the question.

 

What do you mean by GADV being the worst park?

 

When one of the investment analysts asked Shapiro to rank GA against other parks in the chain (since GA is the park that he and most of the investment people are familiar with since they're all based in NYC), he replied that he would consider GA one of the worst properties in 2006 when he came on board...bad morale, neglected maintenance, lack of family atmosphere. He explained that since Mark Kane moved from New England, the park has turned around and he now considers it one of the best parks. Last year it won park of the year in the company's Golden Flags Awards which were voted on by the corporate staff.

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That's good. I couldn't see anybody buying houses when 1/3 of houses in Florida alone are under forclosure. There's always hope for another gate!!

 

Big announcement could mean flat ride, dark ride or water ride or something that would round out the park experience; Hopefully it's not another coaster.

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Hopefully it's not another coaster.

 

I agree 100%, Dan; we're coaster-heavy and light on the family stuff: flats, dark rides, good show venues...

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Also noted in the conference call, with lower advertising rates this year, expect to see a lot of ads for the park in 2009 including on-line, TV, radio, and print.

 

 

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When Mr.Shapiro said Season pass sales are "brisk" what does that mean?Not so good or alright or what lol,but other wise it was an interesting conferance call.

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I agree 100%, Dan; we're coaster-heavy and light on the family stuff: flats, dark rides, good show venues...

 

We can never be too coaster-heavy! ;)

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We can use more Flat's definetely, and a really immersive Dark Ride would be awesome. But I do love a good Coaster as well. If we were to get any of those thing's, as long as it was good, I would be content.

Edited by Railer

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We can never be too coaster-heavy! ;)

 

What if a new coaster meant removing an existing coaster? Would it be worth it to lose something like GASM and get a Tony Hawk in its place?

 

I'm hoping for something like the Buccaneer Battle at SFGAm...a good themed family attraction bringing a new water ride to the park.

 

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I agree with how the park has changed from bad to great. I didn't even visit the park in 2003, 2004, 2005 or 2006 (except the Safari in 2006 because of the free tickets giveaway and the Friday night Safari tickets could be used all season since the Safari was open on Friday night), because of the crazy lines, horrible condition of the park and too many closed rides. While I don't like a lot of the changes the new management has made including policies, the park is cleaner then ever and I was very surprised about how great operations were last year.

 

I expected lines to be bad but with 3 trains running even when they weren't needed, lines were short for me all season (I avoided most of the summer and only went to Frightfest on Friday's and closing day).

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You know, when I really think about it, everyone is saying that we don't need a new coaster. But think about it.

 

Our last MAJOR coaster was El Toro in 2006. Sure we got TDK in 2008, but I don't consider that a major thrill ride.

I believe by counting El Toro as the park's last thrill ride addition, I'm pretty sure that 2011 would be a good year to add their next coaster. That's a 5 year difference, which is a reasonable amount of time in between coasters. If we should get any sort of family attractions, they should be added for next season.

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What if a new coaster meant removing an existing coaster? Would it be worth it to lose something like GASM and get a Tony Hawk in its place?

 

I'm hoping for something like the Buccaneer Battle at SFGAm...a good themed family attraction bringing a new water ride to the park.

 

I was being non-realistic. I'm more than satisfied with all the coaster we have. I 100% agree we need flats and family attractions more than anything else.

Edited by rcji

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