– 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
Six Flags, Inc. (NYSE: SIX) 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.
The Company will host a teleconference for analysts and investors on Monday, March 16, 2009 at 9:00 AM Eastern. Participants in the call will include President and Chief Executive Officer, Mark Shapiro, and Executive Vice President and Chief Financial Officer, Jeffrey R. Speed.
The teleconference will be broadcast live to all interested persons as a listen-only Web cast on nvestors.sixflags.com/. The Web cast will be archived for one year.
About Six Flags
Six Flags, Inc. is the world’s largest regional theme park company with 20 parks across the United States, Mexico and Canada, and soon will be expanding beyond North America with destinations in Dubai and Qatar. Since 1961, hundreds of millions of families have trusted Six Flags to combine friendly-clean-fast-safe service with affordable, value-packed thrills, record-shattering roller coasters and special events like the Summer Concert Series, Fright Fest and Holiday in the Park. Six Flags’ wide array of entertainment options reaches all demographics — families, teens, tweens and thrill seekers alike — featuring themed attractions based on skateboarding legend Tony Hawk, the ultimate daredevil Evel Knievel, movie franchises The Dark Knight and The Mummy; as well as world-renowned, kid-friendly brands including Looney Tunes, the Justice League of America, The Wiggles and Thomas the Tank Engine.
Six Flags continues to develop new avenues for growth, acquiring ownership and management of Dick Clark Productions, producer of such perennial television hits as the American Music Awards, the Golden Globe Awards, the Academy of Country Music Awards, Dick Clark’s New Year’s Rockin’ Eve and So You Think You Can Dance. Six Flags, Inc. is a publicly-traded corporation (NYSE: SIX) 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 captions "Cautionary Note Regarding Forward-Looking Statements" and "Risk Factors" in Six Flags’ Annual Report on Form 10-K for the year ended December 31, 2007, and the Quarterly Reports on Form 10-Q for the first three quarters of 2008, which are available free of charge on Six Flags’ website sixflags.com.
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