See also: Nigerian Theme ParkPartnership
Six Flags, Inc. announced today its consolidated operating results for the third quarter and nine months ended September 30, 2009.
Three Month Results
Total revenues of $457.0 million decreased 7% from the prior-year quarter’s total of $489.3 million, primarily reflecting reduced attendance and guest spending. Attendance for the quarter was 12.0 million, down 1% comparing to 12.2 million in the third quarter of 2008. Although the Company benefitted from increased single-day ticket and season pass attendance, this was more than offset by a decline in group sales, reflecting cutbacks in outings by companies, schools and other organizations, and reduced complimentary and free promotional tickets.
Per capita guest spending decreased 5% to $36.93 from $38.67 in the third quarter of 2008, reflecting reduced in-park spending and admissions. Included in the lower guest spending is the impact of a weaker Mexican peso and Canadian dollar in the current-year quarter, affecting U.S. dollar translated results for the parks in Mexico City and Montreal. Exchange rates accounted for approximately one percentage point, or $0.45, of the guest spending per capita decline for the quarter compared to the prior year quarter.
Revenues for the quarter also were affected by a decline in sponsorship, licensing and other fees of $5.5 million compared to the prior-year quarter, primarily driven by lower international licensing fees.
Cash operating expenses(2) for the quarter of $232.5 million were down 1% from $234.6 million in the third quarter of 2008, reflecting reduced cash-based incentive compensation, favorable currency impacts at the Mexico City and Montreal parks, decreased consulting and outside services and lower cost of sales reflecting reduced in-park sales, partially offset by increased advertising expenses due to the timing of expenditures and higher park labor costs primarily reflecting increased minimum wage rates.
Non-cash operating expenses of depreciation, amortization, stock-based compensation and loss on disposal of assets decreased $8.9 million, or 19%, in the current-year quarter to $37.0 million, compared with $45.9 million in 2008, primarily driven by decreased loss on disposal of assets.
The Company’s results from continuing operations in the third quarter of 2009 decreased to $165.8 million compared to $166.5 million in the prior-year quarter. The decrease of $0.7 million was driven by a $21.3 million reduction in income from operations due primarily to reduced revenues partially offset by lower expenses, as well as a $28.7 million decrease in interest expense reflecting the cessation of interest accruals on the Company’s debt subject to compromise as a result of the chapter 11 filing on June 13, 2009 (see Recent Developments below) and lower effective rates, partially offset by $7.0 million in reorganization costs associated with the chapter 11 filing.
Adjusted EBITDA for the quarter decreased by $25.9 million, or 11%, to $209.7 million compared to $235.6 million for the prior-year quarter, reflecting the impact of reduced revenues partially offset by lower third party interest in the EBITDA of certain operations and reduced cash operating expenses.
Nine Month Results
For the nine months ended September 30, 2009, total revenues decreased $92.2 million, or 10%, to $811.0 million from $903.2 million in the prior-year period, primarily reflecting reduced attendance and guest spending. Attendance for the first nine months of 2009 was 21.2 million, down 5% from 22.2 million in the same period of 2008, benefitting from increased single-day tickets and season pass attendance, but more than offset by reductions in group sales along with decreased complimentary and free promotional tickets.
Guest spending per capita of $36.72 in the first nine months of 2009 was down 5% from the prior-year period’s guest spending per capita of $38.58, reflecting decreases in in-park spending and admissions. Included in the reduced guest spending is the impact of a weaker Mexican peso and Canadian dollar in the current-year period, affecting the U.S. dollar translated results for the parks in Mexico City and Montreal. Exchange rates accounted for approximately two percentage points, or $0.63, of the guest spending per capita decline for the first nine months of 2009 compared to the prior-year period.
Revenues for the nine months were also impacted by a decline in sponsorship, licensing and other fees of $12.3 million compared to the prior-year period, primarily driven by lower international licensing fees, partially offset by increased sponsorship revenue.
The overall negative macroeconomic environment impacted the first nine months of 2009. In addition, attendance in Mexico and Texas was adversely affected by the second quarter outbreak of the Swine flu. Also contributing to the first nine months attendance decline was the impact of adverse weather compared to the prior-year period.
Cash operating expenses(2) for the first nine months of 2009 were down 3% to $578.0 million from $596.1 million in the same period of 2008, reflecting favorable exchange rate impacts at the Mexico City and Montreal parks, lower cost of sales due to decreased in-park revenues, reduced cash-based incentive compensation, lower consulting and outside service costs, decreased insurance expenses and lower marketing expenses due in part to the timing of expenditures, partially offset by higher labor costs at the park primarily reflecting increased minimum wages.
Non-cash operating expenses of depreciation, amortization, stock-based compensation and loss on disposal of assets decreased $9.6 million, or 8%, in the first nine months of 2009 to $115.7 million, compared with $125.3 million in the 2008 period, driven by decreased loss on disposal of assets, as well as decreased stock-based compensation and employee benefit expenses.
The Company incurred a loss from continuing operations of $74.8 million in the current-year period compared to income from continuing operations of $147.3 million in the same period of 2008. The decrease of $222.1 million was driven by the prior-year debt extinguishment gain of $107.7 million, $85.8 million of reorganization items associated with the current-year chapter 11 filing, $64.5 million of reduced income from operations due primarily to reduced revenues partially offset by lower expenses, increased other expense of $17.2 million reflecting the termination of an interest rate swap, and $49.6 million of reduced net interest expense reflecting the cessation of interest accruals on the Company’s debt subject to compromise as a result of the chapter 11 filing, the write-off of discounts, premiums and deferred financing costs and lower effective interest rates.
Adjusted EBITDA for the first nine months of 2009 was $205.0 million, a decrease of $65.1 million from the Adjusted EBITDA of $270.1 million for the first nine months of 2008, reflecting the impact of reduced revenues partially offset by lower cash operating expenses and lower third party interest in the EBITDA of certain operations.
Full-Year Forecast
The Company is forecasting to finish 2009 with an Adjusted EBITDA of approximately $190 million, reflecting an Adjusted EBITDA loss of approximately $15 million in the fourth quarter of 2009 compared to a positive Adjusted EBITDA of $5.2 million in the fourth quarter of 2008. Driving the year-over-year change for the fourth quarter is the impact of declines in in-park guest spending and decreased revenues due to adverse weather conditions during October, especially on the east coast, which has led to a loss of approximately 450, 000 in attendance, compared to October 2008, as well as reduced international licensing fees. The Company also anticipates slightly higher cash operating expenses, reflecting the timing of specific promotional and repairs and maintenance programs.
Recent Developments
On June 13, 2009, Six Flags, Inc., Six Flags Operations Inc., Six Flags Theme Parks Inc. ("SFTP") and certain of SFTP’s domestic subsidiaries filed a voluntary petition for relief under chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware (Case No. 09-12019). As a result, the financial statements reflect the Company’s status as debtor in possession since that date.
As of September 30, 2009, the Company had unrestricted cash of $262.1 million available to pay administrative claims (i.e., those capital expenditures and expenses that have been incurred since the filing date) as well as liabilities from before the filing date that have been approved for payment by the Court. Based on the final orders by the Court with respect to the use of cash, the Company does not currently expect it will require debtor in possession financing during the chapter 11 proceedings.
It is expected that the Company’s existing common and preferred stockholders as well as certain unsecured creditors will have their claims compromised by order of the Court. As a result of this expected compromise, interest accruing after the filing date will not be recognized as interest expense, except for interest on the Company’s Senior Secured Credit Facility dated May 25, 2007, which is not expected to be compromised.
About Six Flags
Six Flags, Inc. is a publicly-traded corporation headquartered in New York City and is the world’s largest regional theme park company with 20 parks across the United States, Mexico and Canada.
