Report of Independent Registered Public Accounting Firm
The Board of Directors and Stockholders
Six Flags Entertainment Corporation:
We have audited the accompanying consolidated balance sheets of Six Flags Entertainment Corporation and subsidiaries (the Company) as of December 31, 2016 and 2015, and the related consolidated statements of operations, comprehensive income, equity (deficit), and cash flows for each of the years in the three-year period ended December 31, 2016. We also have audited the Company’s internal control over financial reporting as of December 31, 2016, based on criteria established in
Internal Control - Integrated Framework (2013)
issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company’s management is responsible for these consolidated
financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on these consolidated financial statements and an opinion on the Company’s internal control over financial reporting based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the consolidated financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2016 and 2015, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2016, in conformity with U.S. generally accepted accounting principles. Also in our opinion, Six Flags Entertainment Corporation maintained, in all material respects, effective internal control over financial reporting as of December 31, 2016, based on (criteria established in
Internal Control - Integrated Framework (2013)
issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
KPMG LLP
Dallas, Texas
February 23, 2017
SIX FLAGS ENTERTAINMENT CORPORATION
Consolidated Balance Sheets
|
|
|
|
|
|
|
|
|
|
December 31,
|
(Amounts in thousands, except share data)
|
2016
|
|
2015
|
ASSETS
|
|
|
|
Current assets:
|
|
|
|
Cash and cash equivalents
|
$
|
137,385
|
|
|
$
|
99,760
|
|
Restricted-use investment securities
|
3,926
|
|
|
—
|
|
Accounts receivable, net
|
69,018
|
|
|
63,803
|
|
Inventories
|
24,156
|
|
|
21,535
|
|
Prepaid expenses and other current assets
|
44,306
|
|
|
42,879
|
|
Total current assets
|
278,791
|
|
|
227,977
|
|
Property and equipment, net:
|
|
|
|
Property and equipment, at cost
|
1,968,565
|
|
|
1,862,764
|
|
Accumulated depreciation
|
(757,310
|
)
|
|
(664,610
|
)
|
Total property and equipment, net
|
1,211,255
|
|
|
1,198,154
|
|
Other assets:
|
|
|
|
Debt issuance costs
|
4,188
|
|
|
5,386
|
|
Restricted-use investment securities
|
—
|
|
|
3,036
|
|
Deposits and other assets
|
9,218
|
|
|
7,211
|
|
Goodwill
|
630,248
|
|
|
630,248
|
|
Intangible assets, net of accumulated amortization
|
353,972
|
|
|
356,428
|
|
Total other assets
|
997,626
|
|
|
1,002,309
|
|
Total assets
|
$
|
2,487,672
|
|
|
$
|
2,428,440
|
|
|
|
|
|
LIABILITIES AND EQUITY (DEFICIT)
|
|
|
|
Current liabilities:
|
|
|
|
Accounts payable
|
$
|
26,209
|
|
|
$
|
25,570
|
|
Accrued compensation, payroll taxes and benefits
|
31,039
|
|
|
46,583
|
|
Accrued insurance reserves
|
42,443
|
|
|
40,796
|
|
Accrued interest payable
|
27,684
|
|
|
19,555
|
|
Other accrued liabilities
|
35,461
|
|
|
34,714
|
|
Deferred revenue
|
123,955
|
|
|
97,334
|
|
Current portion of long-term debt
|
29,161
|
|
|
7,506
|
|
Total current liabilities
|
315,952
|
|
|
272,058
|
|
Noncurrent Liabilities:
|
|
|
|
Long-term debt
|
1,624,486
|
|
|
1,498,022
|
|
Other long-term liabilities
|
48,568
|
|
|
58,150
|
|
Deferred income taxes
|
199,280
|
|
|
140,273
|
|
Total noncurrent liabilities
|
1,872,334
|
|
|
1,696,445
|
|
Total liabilities
|
2,188,286
|
|
|
1,968,503
|
|
|
|
|
|
Redeemable noncontrolling interests
|
485,876
|
|
|
435,721
|
|
|
|
|
|
Stockholders' equity (deficit):
|
|
|
|
Preferred stock, $1.00 par value
|
—
|
|
|
—
|
|
Common stock, $0.025 par value, 140,000,000 shares authorized and 90,849,428 and 91,550,851 shares issued and outstanding at December 31, 2016 and December 31, 2015, respectively
|
2,271
|
|
|
2,289
|
|
Capital in excess of par value
|
1,116,227
|
|
|
1,041,710
|
|
Accumulated deficit
|
(1,237,804
|
)
|
|
(953,225
|
)
|
Accumulated other comprehensive loss, net of tax
|
(67,184
|
)
|
|
(66,558
|
)
|
Total stockholders' (deficit) equity
|
(186,490
|
)
|
|
24,216
|
|
Total liabilities and equity (deficit)
|
$
|
2,487,672
|
|
|
$
|
2,428,440
|
|
See accompanying notes to consolidated financial statements.
SIX FLAGS ENTERTAINMENT CORPORATION
Consolidated Statements of Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
(Amounts in thousands, except per share data)
|
2016
|
|
2015
|
|
2014
|
Theme park admissions
|
$
|
715,413
|
|
|
$
|
687,819
|
|
|
$
|
641,535
|
|
Theme park food, merchandise and other
|
521,167
|
|
|
500,190
|
|
|
460,131
|
|
Sponsorship, licensing and other fees
|
66,329
|
|
|
59,133
|
|
|
57,250
|
|
Accommodations revenue
|
16,489
|
|
|
16,796
|
|
|
16,877
|
|
Total revenue
|
1,319,398
|
|
|
1,263,938
|
|
|
1,175,793
|
|
Operating expenses (excluding depreciation and amortization shown separately below)
|
489,407
|
|
|
465,219
|
|
|
437,431
|
|
Selling, general and administrative (including stock-based compensation of $116,339, $56,233 and $140,038 in 2016, 2015 and 2014, respectively, and excluding depreciation and amortization shown separately below)
|
291,794
|
|
|
234,810
|
|
|
310,955
|
|
Costs of products sold
|
109,579
|
|
|
100,709
|
|
|
90,515
|
|
Depreciation
|
104,290
|
|
|
104,788
|
|
|
105,449
|
|
Amortization
|
2,603
|
|
|
2,623
|
|
|
2,658
|
|
Loss on disposal of assets
|
1,968
|
|
|
9,882
|
|
|
5,860
|
|
Gain on sale of investee
|
—
|
|
|
—
|
|
|
(10,031
|
)
|
Interest expense
|
82,377
|
|
|
76,205
|
|
|
73,057
|
|
Interest income
|
(505
|
)
|
|
(302
|
)
|
|
(468
|
)
|
Loss on debt extinguishment
|
2,935
|
|
|
6,557
|
|
|
—
|
|
Other expense, net
|
1,684
|
|
|
223
|
|
|
356
|
|
Income from continuing operations before income taxes and discontinued operations
|
233,266
|
|
|
263,224
|
|
|
160,011
|
|
Income tax expense
|
76,539
|
|
|
70,369
|
|
|
46,522
|
|
Income from continuing operations before discontinued operations
|
156,727
|
|
|
192,855
|
|
|
113,489
|
|
Income from discontinued operations
|
—
|
|
|
—
|
|
|
545
|
|
Net income
|
156,727
|
|
|
192,855
|
|
|
114,034
|
|
Net income attributable to noncontrolling interests
|
(38,425
|
)
|
|
(38,165
|
)
|
|
(38,012
|
)
|
Net income attributable to Six Flags Entertainment Corporation
|
$
|
118,302
|
|
|
$
|
154,690
|
|
|
$
|
76,022
|
|
|
|
|
|
|
|
Amounts attributable to Six Flags Entertainment Corporation:
|
|
|
|
|
|
|
|
|
Income from continuing operations
|
$
|
118,302
|
|
|
$
|
154,690
|
|
|
$
|
75,477
|
|
Income from discontinued operations
|
—
|
|
|
—
|
|
|
545
|
|
Net income
|
$
|
118,302
|
|
|
$
|
154,690
|
|
|
$
|
76,022
|
|
|
|
|
|
|
|
Weighted-average common shares outstanding:
|
|
|
|
|
|
Weighted-average common shares outstanding—basic:
|
92,349
|
|
|
93,580
|
|
|
94,477
|
|
Weighted-average common shares outstanding—diluted:
|
94,398
|
|
|
97,981
|
|
|
98,139
|
|
|
|
|
|
|
|
Net income per average common share outstanding—basic:
|
|
|
|
|
|
|
|
|
Income from continuing operations
|
$
|
1.28
|
|
|
$
|
1.65
|
|
|
$
|
0.79
|
|
Income from discontinued operations
|
—
|
|
|
—
|
|
|
0.01
|
|
Net income
|
$
|
1.28
|
|
|
$
|
1.65
|
|
|
$
|
0.80
|
|
|
|
|
|
|
|
Net income per average common share outstanding—diluted:
|
|
|
|
|
|
|
|
|
Income from continuing operations
|
$
|
1.25
|
|
|
$
|
1.58
|
|
|
$
|
0.76
|
|
Income from discontinued operations
|
—
|
|
|
—
|
|
|
0.01
|
|
Net income
|
$
|
1.25
|
|
|
$
|
1.58
|
|
|
$
|
0.77
|
|
|
|
|
|
|
|
Cash dividends declared per common share
|
$
|
2.38
|
|
|
$
|
2.14
|
|
|
$
|
1.93
|
|
See accompanying notes to consolidated financial statements.
SIX FLAGS ENTERTAINMENT CORPORATION
Consolidated Statements of Comprehensive Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
(Amounts in thousands)
|
2016
|
|
2015
|
|
2014
|
Net income
|
$
|
156,727
|
|
|
$
|
192,855
|
|
|
$
|
114,034
|
|
Other comprehensive (loss) income, net of tax:
|
|
|
|
|
|
Foreign currency translation adjustment
(1)
|
(4,639
|
)
|
|
(8,195
|
)
|
|
(6,803
|
)
|
Defined benefit retirement plan
(2)
|
3,543
|
|
|
1,769
|
|
|
(19,872
|
)
|
Change in cash flow hedging
(3)
|
470
|
|
|
(503
|
)
|
|
(257
|
)
|
Other comprehensive loss, net of tax
|
(626
|
)
|
|
(6,929
|
)
|
|
(26,932
|
)
|
Comprehensive income
|
156,101
|
|
|
185,926
|
|
|
87,102
|
|
Comprehensive income attributable to noncontrolling interests
|
(38,425
|
)
|
|
(38,165
|
)
|
|
(38,012
|
)
|
Comprehensive income attributable to Six Flags Entertainment Corporation
|
$
|
117,676
|
|
|
$
|
147,761
|
|
|
$
|
49,090
|
|
________________________________________
|
|
(1)
|
Foreign currency translation adjustment is presented net of tax benefit of
$2.5 million
,
$4.4 million
and
$3.7 million
for the years ended December 31,
2016
,
2015
and
2014
, respectively.
|
|
|
(2)
|
Defined benefit retirement plan is presented net of tax expense of
$2.3 million
and
$1.0 million
for the years ended December 31,
2016
and
2015
, respectively, and net of tax benefit of
$13.0 million
for the year ended December 31,
2014
.
|
|
|
(3)
|
Change in cash flow hedging is presented net of tax expense of
$0.3 million
for the year ended December 31,
2016
, and net of tax benefit of
$0.4 million
and
$0.2 million
for the years ended
December 31, 2015
and
2014
, respectively.
|
See accompanying notes to consolidated financial statements.
SIX FLAGS ENTERTAINMENT CORPORATION
Consolidated Statements of Equity (Deficit)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock
|
|
Capital in excess of par value
|
|
Accumulated deficit
|
|
Accumulated other comprehensive loss
|
|
Total Equity (Deficit)
|
(Amounts in thousands, except share data)
|
Shares issued
|
|
Amount
|
|
Balances at December 31, 2013
|
94,857,347
|
|
|
$
|
2,371
|
|
|
$
|
842,488
|
|
|
$
|
(438,825
|
)
|
|
$
|
(32,697
|
)
|
|
$
|
373,337
|
|
Issuance of common stock
|
3,206,272
|
|
|
80
|
|
|
37,583
|
|
|
—
|
|
|
—
|
|
|
37,663
|
|
Stock-based compensation
|
—
|
|
|
—
|
|
|
140,038
|
|
|
—
|
|
|
—
|
|
|
140,038
|
|
Dividends declared to common shareholders
|
—
|
|
|
—
|
|
|
—
|
|
|
(182,062
|
)
|
|
—
|
|
|
(182,062
|
)
|
Repurchase of common stock
|
(5,159,329
|
)
|
|
(129
|
)
|
|
(37,968
|
)
|
|
(157,256
|
)
|
|
—
|
|
|
(195,353
|
)
|
Employee stock purchase plan
|
33,329
|
|
|
1
|
|
|
1,176
|
|
|
—
|
|
|
—
|
|
|
1,177
|
|
Fresh start valuation adjustment for SFOT units purchased
|
—
|
|
|
—
|
|
|
—
|
|
|
5
|
|
|
—
|
|
|
5
|
|
Net income attributable to Six Flags Entertainment Corporation
|
—
|
|
|
—
|
|
|
—
|
|
|
76,022
|
|
|
—
|
|
|
76,022
|
|
Other comprehensive loss, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(26,932
|
)
|
|
(26,932
|
)
|
Balances at December 31, 2014
|
92,937,619
|
|
|
$
|
2,323
|
|
|
$
|
983,317
|
|
|
$
|
(702,116
|
)
|
|
$
|
(59,629
|
)
|
|
$
|
223,895
|
|
Issuance of common stock
|
3,737,155
|
|
|
94
|
|
|
38,925
|
|
|
—
|
|
|
—
|
|
|
39,019
|
|
Stock-based compensation
|
—
|
|
|
—
|
|
|
56,233
|
|
|
—
|
|
|
—
|
|
|
56,233
|
|
Dividends declared to common shareholders
|
—
|
|
|
—
|
|
|
—
|
|
|
(199,362
|
)
|
|
—
|
|
|
(199,362
|
)
|
Repurchase of common stock
|
(5,161,803
|
)
|
|
(129
|
)
|
|
(38,276
|
)
|
|
(206,709
|
)
|
|
—
|
|
|
(245,114
|
)
|
Employee stock purchase plan
|
37,880
|
|
|
1
|
|
|
1,511
|
|
|
—
|
|
|
—
|
|
|
1,512
|
|
Fresh start valuation adjustment for SFOG units purchased
|
—
|
|
|
—
|
|
|
—
|
|
|
272
|
|
|
—
|
|
|
272
|
|
Net income attributable to Six Flags Entertainment Corporation
|
—
|
|
|
—
|
|
|
—
|
|
|
154,690
|
|
|
—
|
|
|
154,690
|
|
Other comprehensive loss, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(6,929
|
)
|
|
(6,929
|
)
|
Balances at December 31, 2015
|
91,550,851
|
|
|
$
|
2,289
|
|
|
$
|
1,041,710
|
|
|
$
|
(953,225
|
)
|
|
$
|
(66,558
|
)
|
|
$
|
24,216
|
|
Issuance of common stock
|
3,004,648
|
|
|
75
|
|
|
34,606
|
|
|
—
|
|
|
—
|
|
|
34,681
|
|
Stock-based compensation
|
—
|
|
|
—
|
|
|
116,339
|
|
|
—
|
|
|
—
|
|
|
116,339
|
|
Dividends declared to common shareholders
|
—
|
|
|
—
|
|
|
—
|
|
|
(219,093
|
)
|
|
—
|
|
|
(219,093
|
)
|
Repurchase of common stock
|
(3,742,275
|
)
|
|
(94
|
)
|
|
(27,833
|
)
|
|
(183,824
|
)
|
|
—
|
|
|
(211,751
|
)
|
Employee stock purchase plan
|
36,204
|
|
|
1
|
|
|
1,819
|
|
|
—
|
|
|
—
|
|
|
1,820
|
|
Fresh start valuation adjustment for SFOG units purchased
|
—
|
|
|
—
|
|
|
—
|
|
|
36
|
|
|
—
|
|
|
36
|
|
Change in redemption value of partnership units
|
—
|
|
|
—
|
|
|
(50,414
|
)
|
|
—
|
|
|
—
|
|
|
(50,414
|
)
|
Net income attributable to Six Flags Entertainment Corporation
|
—
|
|
|
—
|
|
|
—
|
|
|
118,302
|
|
|
—
|
|
|
118,302
|
|
Other comprehensive loss, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(626
|
)
|
|
(626
|
)
|
Balances at December 31, 2016
|
90,849,428
|
|
|
$
|
2,271
|
|
|
$
|
1,116,227
|
|
|
$
|
(1,237,804
|
)
|
|
$
|
(67,184
|
)
|
|
$
|
(186,490
|
)
|
See accompanying notes to consolidated financial statements.
SIX FLAGS ENTERTAINMENT CORPORATION
Consolidated Statements of Cash Flows
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
(Amounts in thousands)
|
2016
|
|
2015
|
|
2014
|
Cash flow from operating activities:
|
|
|
|
|
|
|
|
|
Net income
|
$
|
156,727
|
|
|
$
|
192,855
|
|
|
$
|
114,034
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
106,893
|
|
|
107,411
|
|
|
108,107
|
|
Stock-based compensation
|
116,339
|
|
|
56,233
|
|
|
140,038
|
|
Interest accretion on notes payable
|
413
|
|
|
856
|
|
|
1,221
|
|
Loss on debt extinguishment
|
2,935
|
|
|
6,557
|
|
|
—
|
|
Amortization of debt issuance costs
|
4,503
|
|
|
4,518
|
|
|
4,748
|
|
Other, including loss on disposal of assets
|
992
|
|
|
17,278
|
|
|
1,672
|
|
Gain on sale of investee
|
—
|
|
|
—
|
|
|
(10,031
|
)
|
Increase in accounts receivable
|
(6,157
|
)
|
|
(6,072
|
)
|
|
(7,764
|
)
|
(Increase) decrease in inventories, prepaid expenses and other current assets
|
(4,948
|
)
|
|
306
|
|
|
(5,744
|
)
|
Increase in deposits and other assets
|
(2,011
|
)
|
|
(2,465
|
)
|
|
(486
|
)
|
Increase in accounts payable, deferred revenue, accrued liabilities and other long-term liabilities
|
16,134
|
|
|
41,775
|
|
|
13,293
|
|
Increase (decrease) in accrued interest payable
|
8,129
|
|
|
13
|
|
|
(56
|
)
|
Deferred income tax expense
|
63,286
|
|
|
54,496
|
|
|
33,291
|
|
Net cash provided by operating activities
|
463,235
|
|
|
473,761
|
|
|
392,323
|
|
Cash flow from investing activities:
|
|
|
|
|
|
|
|
|
Additions to property and equipment
|
(129,258
|
)
|
|
(114,370
|
)
|
|
(108,660
|
)
|
Property insurance recovery
|
320
|
|
|
173
|
|
|
850
|
|
Purchase of identifiable intangible assets
|
(125
|
)
|
|
(29
|
)
|
|
(49
|
)
|
Purchase of restricted-use investments, net
|
(890
|
)
|
|
(565
|
)
|
|
(648
|
)
|
Proceeds from sale of DCP
|
—
|
|
|
—
|
|
|
10,031
|
|
Proceeds from sale of assets
|
2,212
|
|
|
5,123
|
|
|
148
|
|
Net cash used in investing activities
|
(127,741
|
)
|
|
(109,668
|
)
|
|
(98,328
|
)
|
Cash flow from financing activities:
|
|
|
|
|
|
|
|
|
Repayment of borrowings
|
(333,426
|
)
|
|
(710,565
|
)
|
|
(62,308
|
)
|
Proceeds from borrowings
|
481,170
|
|
|
834,250
|
|
|
56,000
|
|
Payment of debt issuance costs
|
(6,278
|
)
|
|
(11,916
|
)
|
|
—
|
|
Net proceeds from issuance of common stock
|
36,501
|
|
|
40,531
|
|
|
38,840
|
|
Stock repurchases
|
(211,751
|
)
|
|
(245,114
|
)
|
|
(195,353
|
)
|
Payment of cash dividends
|
(220,314
|
)
|
|
(200,957
|
)
|
|
(184,300
|
)
|
Purchase of redeemable noncontrolling interest
|
(223
|
)
|
|
(1,552
|
)
|
|
(19
|
)
|
Noncontrolling interest distributions
|
(38,425
|
)
|
|
(38,165
|
)
|
|
(38,012
|
)
|
Net cash used in financing activities
|
(292,746
|
)
|
|
(333,488
|
)
|
|
(385,152
|
)
|
Effect of exchange rate on cash
|
(5,123
|
)
|
|
(4,729
|
)
|
|
(4,269
|
)
|
Increase (decrease) in cash and cash equivalents
|
37,625
|
|
|
25,876
|
|
|
(95,426
|
)
|
Cash and cash equivalents at beginning of period
|
99,760
|
|
|
73,884
|
|
|
169,310
|
|
Cash and cash equivalents at end of period
|
$
|
137,385
|
|
|
$
|
99,760
|
|
|
$
|
73,884
|
|
|
|
|
|
|
|
Supplemental cash flow information
|
|
|
|
|
|
|
|
|
Cash paid for interest
|
$
|
69,320
|
|
|
$
|
70,818
|
|
|
$
|
67,145
|
|
Cash paid for income taxes
|
$
|
17,267
|
|
|
$
|
14,975
|
|
|
$
|
16,772
|
|
See accompanying notes to consolidated financial statements.
SIX FLAGS ENTERTAINMENT CORPORATION
Notes to Consolidated Financial Statements
|
|
1
.
|
Description of Business
|
We own and operate regional theme and water parks and are the largest regional theme park operator in the world. Of the
18
parks we currently own or operate,
16
parks are located in the United States,
one
park is located in Mexico City and
one
park is located in Montreal, Canada.
On April 1, 1998, we acquired the former Six Flags Entertainment Corporation ("Former SFEC", a corporation that has been merged out of existence and that has always been a separate corporation from the current Six Flags Entertainment Corporation ("Holdings")), which had operated regional theme parks under the Six Flags name for nearly
40
years, and established an internationally recognized brand name. We own the "Six Flags" brand name in the United States and foreign countries throughout the world. To capitalize on this name recognition,
16
of our current parks are branded as "Six Flags" parks and beginning in 2014 we also began the development, with third-party partners, of Six Flags-branded theme parks outside of North America.
|
|
2
.
|
Summary of Significant Accounting Policies
|
The consolidated financial statements include our accounts and the accounts of our wholly owned subsidiaries. We also consolidate the partnerships that own Six Flags Over Texas ("SFOT") and Six Flags Over Georgia (including Six Flags White Water Atlanta) ("SFOG", and together with SFOT, the "Partnership Parks") as subsidiaries in our consolidated financial statements as we have determined that we have the power to direct the activities of those entities that most significantly impact the entities' economic performance and we have the obligation to absorb losses and receive benefits from the entities that can be potentially significant to these entities. The equity interests owned by non-affiliated parties in the Partnership Parks are reflected in the accompanying consolidated balance sheets as redeemable noncontrolling interests. The portion of earnings or loss attributable to non-affiliated parties in the Partnership Parks is reflected as net income attributable to noncontrolling interests in the accompanying consolidated statements of operations. See Note
5
for further discussion.
Intercompany transactions and balances have been eliminated in consolidation.
The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. We evaluate our estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment, which we believe to be reasonable under the circumstances. We adjust such estimates and assumptions when facts and circumstances dictate. As future events and their effects cannot be determined with precision, actual results could differ significantly from these estimates. Changes in those estimates resulting from continuing changes in the economic environment will be reflected in the financial statements in future periods.
|
|
c.
|
Fair Value Measurement
|
Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 820,
Fair Value Measurement
, defines fair value as the exchange prices that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The guidance also specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect our market assumptions. In accordance with FASB ASC Topic 820,
Fair Value Measurement
, these two types of inputs have created the following fair value hierarchy:
|
|
•
|
Level 1:
quoted prices in active markets for identical assets;
|
|
|
•
|
Level 2:
inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the instrument; and
|
|
|
•
|
Level 3:
inputs to the valuation methodology are unobservable for the asset or liability.
|
SIX FLAGS ENTERTAINMENT CORPORATION
Notes to Consolidated Financial Statements
This hierarchy requires the use of observable market data when available. See Note
10
for disclosure of methods and assumptions used to estimate the fair value of financial instruments by classification.
Cash equivalents consists of short-term highly liquid investments with a remaining maturity as of the date of purchase of
three months
or less, which are readily convertible into cash. For purposes of the consolidated statements of cash flows, we consider all highly liquid debt instruments with remaining maturities as of their date of purchase of three months or less to be cash equivalents. Cash equivalents were not significant as of December 31,
2016
and
2015
.
Inventories are stated at weighted average cost or market value and primarily consist of products purchased for resale, including merchandise, food and miscellaneous supplies. Products are removed from inventory at weighted average cost. We have recorded a valuation allowance for slow moving inventory of
$0.3 million
as of December 31,
2016
and
2015
.
|
|
f.
|
Prepaid Expenses and Other Current Assets
|
Prepaid expenses and other current assets include
$21.4 million
and
$22.1 million
of spare parts inventory for existing rides and attractions as of December 31,
2016
and
2015
, respectively. These items are expensed as the repair or maintenance of rides and attractions occur.
Production costs of commercials and programming are charged to operations in the year first aired. The costs of other advertising, promotion, and marketing programs are charged to operations when incurred with the exception of direct-response advertising which is charged to the period it will benefit. As of December 31,
2016
and
2015
, we had
$1.8 million
and
$2.0 million
in prepaid advertising, respectively. The amounts capitalized are included in prepaid expenses.
Advertising and promotions expense was
$62.8 million
during the years ended December 31,
2016
and
2015
, respectively and
$63.2 million
for the year ended December 31,
2014
.
We capitalize costs related to the issuance of debt. In June
2016
, in connection with entering into an amendment to the Amended and Restated Credit Facility and the issuance of
$300.0 million
of
4.875%
senior unsecured notes due July 31, 2024 (the "2024 Notes"), we capitalized
$1.0 million
and
$4.7 million
of debt issuance costs directly associated with the issuance of the amendment and the 2024 Notes, respectively. The amortization of such costs is recognized as interest expense using the interest method over the term of the respective debt issue. Amortization related to deferred debt issuance costs was
$4.5 million
for the years ended December 31,
2016
and
2015
and
$4.7 million
for the year ended December 31,
2014
.
|
|
i.
|
Property and Equipment
|
Property and equipment additions are recorded at cost and the carrying value is depreciated using the straight-line method over the estimated useful lives of the assets. Maintenance and repair costs that do not improve service potential or extend economic life are charged directly to expense as incurred, while betterments and renewals are generally capitalized as property and equipment. When an item is retired or otherwise disposed of, the cost and applicable accumulated depreciation are removed and the resulting gain or loss is recognized. See Note
3
for further detail of the components of our property and equipment.
The estimated useful lives of the assets are as follows:
|
|
|
Rides and attractions
|
5 - 25 years
|
Land improvements
|
10 - 15 years
|
Buildings and improvements
|
Approximately 30 years
|
Furniture and equipment
|
5 - 10 years
|
|
|
j.
|
Goodwill and Indefinite-Lived Intangible Assets
|
Goodwill and intangible assets with indefinite useful lives are tested for impairment annually, or more frequently if events or circumstances indicate that the assets might be impaired. We identify our reporting units and determine the carrying value of each reporting unit by assigning the assets and liabilities, including the existing goodwill and intangible assets, to those
SIX FLAGS ENTERTAINMENT CORPORATION
Notes to Consolidated Financial Statements
reporting units. We then determine the fair value of each reporting unit and compare it to the carrying amount of the reporting unit. All of our parks are operated in a similar manner and have comparable characteristics in that they produce and distribute similar services and products using similar processes, have similar types of customers, are subject to similar regulations and exhibit similar economic characteristics. As such, we are a single reporting unit. For each year, the fair value of the single reporting unit exceeded our carrying amount (based on a comparison of the market price of our common stock to the carrying amount of our stockholders' equity). In September 2012, the FASB amended FASB ASC Topic 350,
Intangibles - Goodwill and Other
, which permits entities to perform a qualitative analysis on indefinite-lived intangible assets to determine if it is more likely than not that the asset is impaired. We adopted this amendment in September 2012 and have performed a qualitative analysis on our indefinite-lived trade name intangible asset during the fourth quarter of each year. If as a result of this qualitative analysis we determine that it is more likely than not that an asset is impaired, quantitative impairment testing is required.
The fair value of indefinite-lived intangible assets is generally determined based on a discounted cash flow analysis. An impairment loss occurs to the extent that the carrying value exceeds the fair value. Further testing of goodwill occurs in a two-step process in which the fair value of each reporting unit, determined using an analysis of future cash flows, is compared to its carrying amount, including goodwill. If the fair value of the reporting unit were to be less than the carrying amount, the implied fair value of the reporting unit's goodwill would then be compared with the carrying amount of that goodwill. The implied fair value of goodwill is determined by allocating the fair value of the reporting unit to all of the assets (recognized and unrecognized) and liabilities of the reporting unit in a manner similar to a purchase price allocation. The residual fair value after this allocation is the implied fair value of the reporting unit goodwill. An impairment loss is recognized to the extent that the carrying amount of goodwill exceeds its implied fair value.
|
|
k.
|
Valuation of Long-Lived Assets
|
We review long-lived assets, including finite-lived intangible assets subject to amortization, for impairment upon the occurrence of events or changes in circumstances that would indicate that the carrying value of the asset or group of assets may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset or group of assets to the future net cash flows expected to be generated by the asset or group of assets. If such assets are not considered to be fully recoverable, any impairment to be recognized is measured by the amount by which the carrying amount of the asset or group of assets exceeds its respective fair value. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell.
We recognize revenue upon admission into our parks, provision of our services or when products are delivered to our guests. Revenues are presented in the accompanying consolidated statements of operations net of sales taxes collected from our guests and remitted or payable to government taxing authorities. In contrast to our season pass and other multi-use offerings (such as our all-season dining pass program, which enables season pass holders and members to eat meals and snacks any day they visit the park for one upfront payment) that expire at the end of each operating season, the membership program continues on a month-to-month basis after the initial twelve-month membership term and can be canceled any time after the initial term pursuant to the terms of the membership program. Guests enrolled in the membership program can visit our parks an unlimited number of times anytime they are open as long as the guest remains enrolled in the membership program. For season passes, memberships in the initial twelve-month term and other multi-use admissions, we estimate a redemption rate based on historical experience and other factors and assumptions we believe to be customary and reasonable and recognize a pro-rata portion of the revenue as the guest attends our parks. We review the estimated redemption rate regularly and on an ongoing basis and revise it as necessary throughout the year. Amounts received for multi-use admissions in excess of redemptions are recognized in deferred revenue. For active memberships after the initial twelve-month term, we recognize revenue monthly as payments are received. As of December 31,
2016
, deferred revenue was primarily comprised of (i) advance sales of season passes, all season dining passes and other admissions for the 2017 operating season, (ii) unredeemed portions of the membership program that will be recognized in 2017, (iii) sponsorship revenue that will be recognized in 2017 and (iv) a nominal amount for the remaining unredeemed season pass revenue and pre-sold single day admissions revenue for the 2016 operating season that was redeemed during the completion of the 2016 operating season, which ended the first week of 2017.
We have entered into multiple agreements to assist third parties in the planning, design, development and operation of Six Flags-branded theme parks outside of North America. Pursuant to these agreements, we provide exclusivity, brand licensing, and other services to assist in the design, development, and project management of Six Flags-branded theme parks, as well as initial and ongoing management services. Each significant deliverable qualifies as a separate unit of accounting. We recognize revenue under these agreements over the relevant service period of each unit of accounting based on its relative selling price, as determined by our best estimate of selling price. Our best estimate of selling price is established consistent with our overall
SIX FLAGS ENTERTAINMENT CORPORATION
Notes to Consolidated Financial Statements
pricing strategy and includes, but is not limited to, consideration of current market conditions, various risk factors and our required return and profit objectives. We review the service period of each unit of accounting on an ongoing basis and revise it as necessary throughout the year. Revisions to the relevant service periods of the units of accounting may result in revisions to revenue in future periods and are recognized in the period in which the change is identified.
|
|
m.
|
Accounts Receivable, Net
|
Accounts receivable are reported at net realizable value and consist primarily of amounts due from guests for the sale of group outings and multi-use admission products, including season passes and the membership program. We are not exposed to a significant concentration of credit risk, however, based on the age of the receivables, our historical experience and other factors and assumptions we believe to be customary and reasonable, we do record an allowance for doubtful accounts. As of December 31,
2016
and
2015
, we have recorded an allowance for doubtful accounts of
$3.0 million
and
$2.4 million
, respectively. The allowance for doubtful accounts is primarily comprised of estimated defaults under our membership plans.
|
|
n.
|
Derivative Instruments and Hedging Activities
|
We account for derivatives and hedging activities in accordance with FASB ASC Topic 815,
Derivatives and Hedging
. This accounting guidance establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities. It requires an entity to recognize all derivatives as either assets or liabilities in the consolidated balance sheet and measure those instruments at fair value. If certain conditions are met, a derivative may be specifically designated as a hedge for accounting purposes. The accounting for changes in the fair value of a derivative (e.g., gains and losses) depends on the intended use of the derivative and the resulting designation.
We formally document all relationships between hedging instruments and hedged items, as well as our risk-management objective and our strategy for undertaking various hedge transactions. This process includes linking all derivatives that are designated as cash flow hedges to forecasted transactions. We also assess, both at the hedge's inception and on an ongoing basis, whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in cash flows of hedged items.
Changes in the fair value of a derivative that is effective and that is designated and qualifies as a cash-flow hedge are recorded in other comprehensive income (loss) until operations are affected by the variability in cash flows of the designated hedged item, at which point they are reclassified to interest expense. Changes in fair value of a derivative that is not designated as a hedge are recorded in other income (expense), net in the consolidated statements of operations on a current basis. See Note
6
for further discussion.
|
|
o.
|
Commitments and Contingencies
|
We are involved in various lawsuits and claims that arise in the normal course of business. Amounts associated with lawsuits or claims are reserved for matters in which it is believed that losses are probable and can be reasonably estimated. In addition to matters in which it is believed that losses are probable, disclosure is also provided for matters in which the likelihood of an unfavorable outcome is at least reasonably possible but for which a reasonable estimate of loss or range of loss is not possible. Legal fees are expensed as incurred. See Note
15
for further discussion.
Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, including net operating loss and other tax carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in operations in the period that includes the enactment date. We recorded a valuation allowance of
$92.3 million
and
$88.4 million
as of December 31,
2016
and
2015
, respectively, due to uncertainties related to our ability to utilize some of our deferred tax assets, primarily consisting of certain state net operating loss and other tax carryforwards, before they expire. The valuation allowance was based on our estimates of taxable income by jurisdiction in which we operate and the period over which our deferred tax assets were recoverable. For the foreseeable future, we project taxable income that will allow for the utilization of all of our federal net operating loss carryforwards before they expire.
Our liability for income taxes is finalized as auditable tax years pass their respective statutes of limitations in the various jurisdictions in which we are subject to tax. However, these jurisdictions may audit prior years for which the statute of limitations is closed for the purpose of making an adjustment to our taxable income in a year for which the statute of limitations
SIX FLAGS ENTERTAINMENT CORPORATION
Notes to Consolidated Financial Statements
has not closed. Accordingly, taxing authorities of these jurisdictions may audit prior years of the group and its predecessors for the purpose of adjusting net operating loss carryforwards to years for which the statute of limitations has not closed.
We classify interest and penalties attributable to income taxes as part of income tax expense. As of December 31,
2016
and
2015
, we had
no
accrued interest and penalties liability.
Because we do not permanently reinvest foreign earnings, United States deferred income taxes have been provided on unremitted foreign earnings to the extent that such foreign earnings are expected to be taxable upon repatriation.
|
|
q.
|
Earnings Per Common Share
|
Basic earnings per common share is computed by dividing net income attributable to Holdings' common stockholders by the weighted average number of common shares outstanding for the period. Diluted earnings per common share is computed by dividing net income attributable to Holdings' common stockholders by the weighted average number of common shares outstanding during the period including the effect of all dilutive common stock equivalents using the treasury stock method. In periods for which there is a net loss, diluted loss per common share is equal to basic loss per common share, since the effect of including any common stock equivalents would be antidilutive.
|
|
r.
|
Stock-Based Compensation
|
Pursuant to the Six Flags Entertainment Corporation Long-Term Incentive Plan (the "Long-Term Incentive Plan"), Holdings may grant stock options, stock appreciation rights, restricted stock, restricted stock units, unrestricted stock, deferred stock units, performance and cash-settled awards and dividend equivalents to select employees, officers, directors and consultants of Holdings and its affiliates. We recognize the fair value of each grant as compensation expense on a straight-line basis over the vesting period using the graded vesting terms of the respective grant. The fair value of stock option grants is estimated on the date of grant using the Black-Scholes option pricing valuation model. The fair value of stock, restricted stock units and restricted stock awards is the quoted market price of Holdings' stock on the date of grant. See Note
9
for further discussion of stock-based compensation and related disclosures.
Comprehensive income consists of net income, changes in the foreign currency translation adjustment, changes in the fair value of derivatives that are designated as hedges and changes in the net actuarial gains (losses) and amortization of prior service costs on our defined benefit retirement plan.
|
|
t.
|
Redeemable Noncontrolling Interest
|
We record the carrying amount of our redeemable noncontrolling interests at their fair value at the date of issuance. We recognize the changes in their redemption value immediately as they occur and adjust the carrying value of these redeemable noncontrolling interests to equal the redemption value at the end of each reporting period, if greater than the redeemable noncontrolling interest carrying value.
This method would view the end of the reporting period as if it were also the redemption date for the redeemable noncontrolling interests. We conduct an annual review to determine if the fair value of the redeemable units is less than the redemption amount. If the fair value of the redeemable units is less than the redemption amount, there would be a charge to earnings per share allocable to common stockholders. The redemption amount at the end of each reporting period did not exceed the fair value of the redeemable units.
Reclassifications have been made to certain amounts reported in 2015 and 2014 to conform to the 2016 presentation.
|
|
v.
|
Recent Accounting Pronouncements
|
In May 2014, the FASB issued Accounting Standards Update No. 2014-09,
Revenue from Contracts with Customers
("ASU 2014-09"). The amendments in ASU 2014-09 provide for a single, principles-based model for revenue recognition that replaces the existing revenue recognition guidance. In August 2015, the FASB issued Accounting Standards Updated 2015-14,
Revenue from Contracts with Customers - Deferral of the Effective Date
, to defer the effective date of ASU 2014-09 for one year. Therefore, the new guidance will be effective for annual and interim periods beginning after December 15, 2017 and will replace most existing revenue recognition guidance under U.S. GAAP when it becomes effective. In March and April 2016, the FASB issued Accounting Standards Update No. 2016-08 and No. 2016-10,
Revenue from Contracts with
SIX FLAGS ENTERTAINMENT CORPORATION
Notes to Consolidated Financial Statements
Customers (Topic 606)
and
Principal versus Agent Considerations and Identifying Performance Obligations and Licensing
, respectively (together, “ASU 2016-08/10”). The amendments in ASU 2016-08/10 state that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The effective date and transition requirements for the amendments in ASU 2016-08/10 are the same as the effective date and transition requirements in ASU 2015-14. It permits the use of either a retrospective or cumulative effect transition method and early adoption is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. We have undertaken a review of the Company’s key revenue drivers as it relates to ASU 2014-9. The Company will not be early adopting these standards and has not selected a transition method upon adoption. Based on our initial evaluation of in-park related revenue, the Company has determined that performance obligation under the revenue standard will not change how we currently recognize revenue. As it relates to admissions, sponsorship, and international licensing, the Company continues to evaluate the impact of the standards on these revenue accounts.
In February 2016, the FASB issued Accounting Standards Update No. 2016-02
, Leases (Topic 842)
(“ASU 2016-02”). The main amendments in ASU 2016-02 require recognition on the balance sheet of lease assets and lease liabilities by lessees for those leases classified as operating leases. ASU 2016-02 is effective for annual periods beginning after December 15, 2018, including interim periods within those fiscal years, with early application permitted. We have not yet selected a transition method; however, we note that with the adoption of the amendments in ASU 2016-02, operating leases related to certain of our land leases will require recognition in our consolidated balance sheet under ASU 2016-02. This could have a material effect on our consolidated statement of financial position, but we do not anticipate this will have a material effect on our results of operations or cash flows.
In March 2016, the FASB issued Accounting Standards Update No. 2016-09,
Improvements to Employee Share-Based Payment Accounting
(“ASU 2016-09”). The amendments in ASU 2016-09 intend to improve the accounting for share-based payment transactions as part of the FASB’s simplification initiative. The areas for simplification in ASU 2016-09 involve several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. ASU 2016-09 is effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods, with early application permitted. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. An entity that elects early adoption must adopt all of the amendments in the same period. In conjunction with the adoption of ASU 2016-09, which we plan on adopting in the first quarter of 2017, we anticipate a retrospective adjustment to beginning equity and deferred tax liabilities of
$98.7 million
for income tax deductions related to share-based payments in excess of amounts recognized in the accompanying financial statements as of December 31,
2016
. Additionally, for periods subsequent to the retrospective adjustment, we anticipate adjustments to previously reported amounts for income tax expense and deferred tax liabilities to account for the recognition of the income tax consequences of share-based payment transactions.
In August 2016, the FASB issued Accounting Standards Update No. 2016-15,
Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments
("ASU 2016-15"). The amendments in ASU 2016-15 address eight classification issues related to the statement of cash flows:
|
|
•
|
debt prepayment or debt extinguishment costs;
|
|
|
•
|
settlement of zero-coupon bonds;
|
|
|
•
|
contingent consideration payments made after a business combination;
|
|
|
•
|
proceeds from the settlement of insurance claims;
|
|
|
•
|
proceeds from the settlement of corporate-owned life insurance policies, including bank-owned life insurance policies;
|
|
|
•
|
distributions received from equity method investees;
|
|
|
•
|
beneficial interests in securitization transactions; and
|
|
|
•
|
separately identifiable cash flows and application of the predominance principle.
|
ASU 2016-15 is effective for annual periods beginning after December 15, 2017, and interim periods within those annual periods, with early application permitted. An entity should apply ASU 2016-15 using a retrospective transition method to each period presented. We do not anticipate that the adoption of this pronouncement will result in a material impact to the presentation of our statement of cash flows.
In November 2016, the FASB issued Accounting Standards Update No. 2016-18,
Statement of Cash Flows (Topic 230): Restricted Cash
("ASU 2016-18"). The amendments in ASU 2016-18 require that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with
SIX FLAGS ENTERTAINMENT CORPORATION
Notes to Consolidated Financial Statements
cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. ASU 2016-18 is effective for annual periods beginning after December 15, 2017, and interim periods within those annual periods, with early application permitted. An entity should apply ASU 2016-18 using a retrospective transition method to each period presented. We do not anticipate that the adoption of this pronouncement will result in a material impact to the presentation of our statement of cash flows.
|
|
3
.
|
Property and Equipment
|
As of December 31,
2016
and
2015
, property and equipment was classified as follows:
|
|
|
|
|
|
|
|
|
|
December 31,
|
(Amounts in thousands)
|
2016
|
|
2015
|
Land
|
$
|
221,468
|
|
|
$
|
221,665
|
|
Land improvements
|
215,112
|
|
|
199,515
|
|
Buildings and improvements
|
279,052
|
|
|
270,758
|
|
Rides and attractions
|
985,406
|
|
|
941,550
|
|
Equipment and other
|
267,527
|
|
|
229,276
|
|
Property and equipment, at cost
|
1,968,565
|
|
|
1,862,764
|
|
Accumulated depreciation
|
(757,310
|
)
|
|
(664,610
|
)
|
Property and equipment, net
|
$
|
1,211,255
|
|
|
$
|
1,198,154
|
|
|
|
4
.
|
Goodwill and Intangible Assets
|
We assess goodwill and intangible assets with indefinite lives for impairment annually during the fourth quarter or when an event occurs or circumstances change that would indicate potential impairment. For the year ended December 31,
2016
, we performed a qualitative analysis of our goodwill and indefinite-lived intangible assets and noted no indicators of impairment. Through that analysis, we determined that it is more likely than not that the carrying value of goodwill and indefinite-lived intangible assets exceeded their respective fair values. As of December 31,
2016
and
2015
, the carrying amount of goodwill was
$630.2 million
.
As of December 31,
2016
and
2015
, intangible assets, net consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of December 31, 2016
|
(Amounts in thousands, except years)
|
Weighted-Average Remaining Amortization Period
(Years)
|
|
Gross
Carrying Value
|
|
Accumulated Amortization
|
|
Net
Carrying Value
|
Indefinite-lived intangible assets:
|
|
|
|
|
|
|
|
Trade names, trademarks and other
|
|
|
$
|
344,075
|
|
|
$
|
—
|
|
|
$
|
344,075
|
|
|
|
|
|
|
|
|
|
Finite-lived intangible assets:
|
|
|
|
|
|
|
|
Third party licensing rights
|
3.5
|
|
24,461
|
|
|
(16,091
|
)
|
|
8,370
|
|
Other
|
30.6
|
|
2,571
|
|
|
(1,044
|
)
|
|
1,527
|
|
|
|
|
|
|
|
|
|
Total intangible assets, net
|
|
|
$
|
371,107
|
|
|
$
|
(17,135
|
)
|
|
$
|
353,972
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of December 31, 2015
|
(Amounts in thousands, except years)
|
Weighted-Average Remaining Amortization Period
(Years)
|
|
Gross
Carrying Value
|
|
Accumulated Amortization
|
|
Net
Carrying Value
|
Indefinite-lived intangible assets:
|
|
|
|
|
|
|
|
Trade names, trademarks and other
|
|
|
$
|
344,075
|
|
|
$
|
—
|
|
|
$
|
344,075
|
|
|
|
|
|
|
|
|
|
Finite-lived intangible assets:
|
|
|
|
|
|
|
|
Third party licensing rights
|
4.5
|
|
24,461
|
|
|
(13,664
|
)
|
|
10,797
|
|
Other
|
29.8
|
|
2,568
|
|
|
(1,012
|
)
|
|
1,556
|
|
|
|
|
|
|
|
|
|
Total intangible assets, net
|
|
|
$
|
371,104
|
|
|
$
|
(14,676
|
)
|
|
$
|
356,428
|
|
SIX FLAGS ENTERTAINMENT CORPORATION
Notes to Consolidated Financial Statements
Amortization expense related to finite-lived intangible assets totaled
$2.6 million
for the years ended December 31,
2016
and
2015
and
$2.7 million
for the year ended December 31,
2014
. We expect that amortization expense on our existing intangible assets subject to amortization for the succeeding five years and thereafter will approximate the following:
|
|
|
|
|
(Amounts in thousands)
|
|
For the year ending December 31:
|
|
2017
|
$
|
2,488
|
|
2018
|
2,443
|
|
2019
|
2,437
|
|
2020
|
1,049
|
|
2021
|
57
|
|
2022 and thereafter
|
1,423
|
|
|
$
|
9,897
|
|
|
|
5
.
|
Noncontrolling Interests, Partnerships and Joint Ventures
|
Redeemable Noncontrolling Interests
Redeemable noncontrolling interests represent the non-affiliated parties' share of the assets of the Partnership Parks that are less than wholly-owned: SFOT, SFOG and Six Flags White Water Atlanta, which is owned by the partnership that owns SFOG.
The following table presents a rollforward of redeemable noncontrolling interests in the Partnership Parks:
|
|
|
|
|
|
|
|
|
|
|
|
|
(Amounts in thousands)
|
SFOT
|
|
SFOG
|
|
Total
|
Balance at December 31, 2014
|
$
|
227,620
|
|
|
$
|
209,925
|
|
|
$
|
437,545
|
|
Fresh start accounting fair market value adjustment for purchased units
|
—
|
|
|
(272
|
)
|
|
(272
|
)
|
Purchases of redeemable units of SFOG
|
—
|
|
|
(1,552
|
)
|
|
(1,552
|
)
|
Net income attributable to noncontrolling interests
|
19,173
|
|
|
18,992
|
|
|
38,165
|
|
Distributions to noncontrolling interests
|
(19,173
|
)
|
|
(18,992
|
)
|
|
(38,165
|
)
|
Balance at December 31, 2015
|
227,620
|
|
|
208,101
|
|
|
435,721
|
|
Fresh start accounting fair market value adjustment for purchased units
|
—
|
|
|
(36
|
)
|
|
(36
|
)
|
Purchases of redeemable units of SFOG
|
—
|
|
|
(223
|
)
|
|
(223
|
)
|
Change in redemption value of partnership units
|
—
|
|
|
50,414
|
|
|
50,414
|
|
Net income attributable to noncontrolling interests
|
19,312
|
|
|
19,113
|
|
|
38,425
|
|
Distributions to noncontrolling interests
|
(19,312
|
)
|
|
(19,113
|
)
|
|
(38,425
|
)
|
Balance at December 31, 2016
|
$
|
227,620
|
|
|
$
|
258,256
|
|
|
$
|
485,876
|
|
See Note
15
for a description of the partnership arrangements applicable to the Partnership Parks, the accounts of which are included in the accompanying consolidated financial statements. As of December 31,
2016
, the redemption value of the noncontrolling partnership units in SFOT and SFOG was approximately
$203.6 million
and
$258.3 million
, respectively.
Other
During the third quarter of 2012, our interest in dick clark productions, inc. ("DCP") was sold to a third party. In connection with the sale, a portion of the proceeds remained in escrow pending the resolution of certain items. Due to the contingent nature of the amounts that remained in escrow, we did not record a receivable for the additional proceeds and these amounts were not included in our calculation of the gain we recognized upon the sale of DCP during 2012. During 2014, all of these items were favorably resolved and, as such, we received
$10.0 million
of additional proceeds and recognized the incremental gain on the sale of DCP.
|
|
6
.
|
Derivative Financial Instruments
|
In March 2012, we entered into a floating-to-fixed interest rate agreement (the "Interest Rate Cap Agreement") with a notional amount of
$470.0 million
in order to limit exposure to an increase in the London Interbank Offered Rate ("
LIBOR
") interest rate of the Term Loan B (see Note
7
). Our Term Loan B borrowings bear interest based on
LIBOR
plus an applicable margin. The Interest Rate Cap Agreement capped the LIBOR component of the interest rate at
1.00%
. Upon execution, we designated and documented the Interest Rate Cap Agreement as a cash flow hedge. The term of the Interest Rate Cap Agreement began in March 2012 and expired in March 2014.
SIX FLAGS ENTERTAINMENT CORPORATION
Notes to Consolidated Financial Statements
In April 2014, we entered into three separate interest rate swap agreements (collectively, the "Interest Rate Swap Agreements") with an aggregate notional amount of
$200.0 million
to mitigate the risk of an increase in the
LIBOR
interest rate above the
0.75%
minimum LIBOR rate in effect on the Term Loan B. The term of the Interest Rate Swap Agreements began in June 2014 and expires in December 2017. Upon execution, we designated and documented the Interest Rate Swap Agreements as cash flow hedges. The Interest Rate Swap Agreements will continue to mitigate risk in connection with the interest rate for the Amended and Restated Term Loan B (as defined in Note
7
).
By utilizing a derivative instrument to hedge our exposure to LIBOR rate changes, we are exposed to credit risk and market risk. Credit risk is the failure of the counterparty to perform under the terms of the derivative contract. To mitigate this risk, the hedging instrument was placed with counterparties that we believe pose minimal credit risk. Market risk is the adverse effect on the value of a financial instrument that results from a change in interest rates, commodity prices or currency exchange rates. We manage the market risk associated with the Interest Rate Swap Agreements by establishing and monitoring parameters that limit the types and degree of market risk that we may undertake. We hold and issue derivative instruments for risk management purposes only and do not utilize derivatives for trading or speculative purposes.
We record derivative instruments at fair value on our consolidated balance sheets with the effective portion of all cash flow designated derivatives deferred in other comprehensive income and the ineffective portion, if any, recognized immediately in earnings. Our derivatives are measured on a recurring basis using Level 2 inputs. The fair value measurements of our derivatives are based on market prices that generally are observable for similar assets or liabilities at commonly quoted intervals. Derivative assets and derivative liabilities that have maturity dates equal to or less than twelve months from the balance sheet date are included in prepaid and other current assets and other accrued liabilities, respectively. Derivative assets and derivative liabilities that have maturity dates greater than twelve months from the balance sheet date are included in deposits and other assets and other long-term liabilities, respectively.
Derivative instruments recorded at fair value in our consolidated balance sheets as of December 31,
2016
and
2015
consisted of the following:
|
|
|
|
|
|
|
|
|
|
Derivative Liabilities
|
(Amounts in thousands)
|
December 31, 2016
|
|
December 31, 2015
|
Derivatives Designated as Cash Flow Hedges
|
|
|
|
Interest Rate Swap Agreements - Current
|
$
|
871
|
|
|
$
|
1,372
|
|
Interest Rate Swap Agreements - Noncurrent
|
—
|
|
|
226
|
|
|
$
|
871
|
|
|
$
|
1,598
|
|
As of December 31,
2016
and
2015
, we held
no
derivatives not designated as hedging instruments.
Effective changes in the fair value of derivatives that are designated as hedges are recorded in accumulated other comprehensive income ("AOCI") on the consolidated balance sheet when in qualifying relationships and are reclassified to interest expense when the forecasted transaction takes place. Ineffective changes, if any, and changes in the fair value of derivatives that are not designated as hedges are recorded directly in interest expense and other (income) expense, net, respectively.
Gains and losses, net of tax, on derivatives designated as cash flow hedges included in our consolidated statements of operations for the years ended December 31,
2016
,
2015
and
2014
were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss Recognized in AOCI
(Effective Portion)
|
|
Loss Reclassified from
AOCI into Operations
(Effective Portion)
|
|
Loss Recognized in
Operations on Derivatives
(Ineffective Portion and Amount Excluded from Effectiveness Testing)
|
(Amounts in thousands)
|
2016
|
|
2015
|
|
2014
|
|
2016
|
|
2015
|
|
2014
|
|
2016
|
|
2015
|
|
2014
|
Interest Rate Cap Agreement
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(301
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Interest Rate Swap Agreements
|
(944
|
)
|
|
(2,671
|
)
|
|
(1,604
|
)
|
|
(1,716
|
)
|
|
(1,799
|
)
|
|
(878
|
)
|
|
(45
|
)
|
|
—
|
|
|
—
|
|
Total
|
$
|
(944
|
)
|
|
$
|
(2,671
|
)
|
|
$
|
(1,604
|
)
|
|
$
|
(1,716
|
)
|
|
$
|
(1,799
|
)
|
|
$
|
(1,179
|
)
|
|
$
|
(45
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
As of December 31,
2016
, approximately
$0.8 million
of unrealized losses associated with the Interest Rate Swap Agreements are expected to be reclassified from AOCI to operations during the next twelve months. Transactions and events expected to occur over the next twelve months that will necessitate reclassifying these unrealized losses to operations are the periodic interest payments that are required to be made on the Amended and Restated Term Loan B. For the year ended December 31,
2016
, we recorded a nominal amount of hedge ineffectiveness for the Interest Rate Swap Agreements.
SIX FLAGS ENTERTAINMENT CORPORATION
Notes to Consolidated Financial Statements
|
|
7
.
|
Long-Term Indebtedness
|
Credit Facility
On December 20, 2011, we entered into a
$1,135.0 million
credit agreement (the "2011 Credit Facility") with several lenders including Wells Fargo Bank National Association, as administrative agent, and related loan and security documentation agents. The 2011 Credit Facility was comprised of a
5
-year
$200.0 million
revolving credit loan facility (the "Revolving Loan"), a
5
-year
$75.0 million
Tranche A Term Loan facility ("Term Loan A") and a
7
-year
$860.0 million
Tranche B Term Loan facility ("Term Loan B" and together with the Term Loan A, the "Term Loans"). In certain circumstances, the Term Loan B could be increased by
$300.0 million
. The proceeds from the
$935.0 million
Term Loans were used, along with
$15.0 million
of existing cash, to retire the
$950.0 million
senior term loan from the prior facility. Interest on the 2011 Credit Facility accrued based on pricing rates corresponding with the senior secured leverage ratios of Six Flags Theme Parks Inc. ("SFTP") as set forth in the credit agreement.
On December 21, 2012, we entered into an amendment to the 2011 Credit Facility (the "2012 Credit Facility Amendment") that among other things, permitted us to (i) issue
$800.0 million
of senior unsecured notes (see
2021 Notes
below), (ii) use
$350.0 million
of the proceeds of the senior unsecured notes to repay the
$72.2 million
that was outstanding under the Term Loan A and
$277.8 million
of the outstanding balance of the Term Loan B, (iii) use the remaining
$450.0 million
of proceeds for share repurchases and other corporate matters and (iv) reduce the interest rate payable on the Term Loan B by
25
basis points.
On December 23, 2013, we entered into an amendment to the 2011 Credit Facility (the "2013 Credit Facility Amendment") that reduced the overall borrowing rate on the Term Loan B by
50
basis points through (i) a
25
basis point reduction in the applicable margin from
3.00%
plus
LIBOR
to
2.75%
plus
LIBOR
and (ii) a
25
basis point reduction in the minimum LIBOR rate from
1.00%
to
0.75%
. Additionally, the 2013 Credit Facility Amendment permitted us to use up to
$200.0 million
of our excess cash on hand, over time, for general corporate purposes, including potential share repurchases. In connection with the 2013 Credit Facility Amendment, we capitalized
$2.4 million
of debt issuance costs directly associated with the issuance of the amendment. Additionally, we recorded a
$0.8 million
loss on debt extinguishment for the year ended December 31, 2013 as portions of the Term Loan B were retired and subsequently repurchased by certain lenders as a part of the 2013 Credit Facility Amendment.
On June 30, 2015, we amended and restated the 2011 Credit Facility (as amended by the 2012 Credit Facility Amendment and the 2013 Credit Facility Amendment, the "Amended and Restated Credit Facility"). The Amended and Restated Credit Facility is comprised of a
$250.0 million
revolving credit loan facility (the "Amended and Restated Revolving Loan") and a
$700.0 million
Tranche B Term Loan facility (the "Amended and Restated Term Loan B"). Additionally, the Amended and Restated Credit Facility increased the additional flexibility under the Amended and Restated Term Loan B to
$350.0 million
. In connection with entering into the Amended and Restated Credit Facility, we repaid the outstanding Term Loan B and we recognized a loss on debt extinguishment of
$6.6 million
, and capitalized
$11.4 million
of debt issuance costs directly associated with the issuance of the amendment. The remaining proceeds from the Amended and Restated Credit Facility were used for share repurchases and payment of refinancing fees.
On June 16, 2016, we entered into an amendment to the Amended and Restated Credit Facility that reduced the overall borrowing rate on the Amended and Restated Term Loan B by
25
basis points through a reduction in the applicable margin from
2.75%
plus
LIBOR
to
2.50%
plus
LIBOR
. We capitalized
$1.0 million
of debt issuance costs directly associated with the issuance of this amendment. Additionally, we used
$150.0 million
of the proceeds from the issuance of the 2024 Notes discussed below to reduce our borrowings under the Amended and Restated Term Loan B and recognized a loss on debt extinguishment of
$2.4 million
. The paydown of borrowings under the Amended and Restated Term Loan B eliminated any required quarterly amortization payments thereunder until its final maturity on June 30, 2022.
On December 20, 2016, we entered into an amendment to the Amended and Restated Credit Facility that reduced the overall borrowing rate on the Amended and Restated Term Loan B by
25
basis points through a reduction in the applicable margin from
2.50%
plus
LIBOR
to
2.25%
plus
LIBOR
, with the elimination of the minimum LIBOR rate requirement. We capitalized a nominal amount of debt issuance costs directly associated with the issuance of this amendment and recognized a loss on debt extinguishment of
$0.5 million
.
As of December 31,
2016
and
2015
,
no
advances under the Amended and Restated Revolving Loan were outstanding (excluding amounts reserved for letters of credit in the amount of
$19.7 million
and
$20.1 million
, respectively). Interest on the Amended and Restated Revolving Loan accrues at an
annual
rate of
LIBOR
plus an applicable margin with an unused commitment fee based on our senior secured leverage ratio. As of December 31,
2016
and
2015
, the Amended and Restated
SIX FLAGS ENTERTAINMENT CORPORATION
Notes to Consolidated Financial Statements
Revolving Loan unused commitment fee was
0.375%
. The principal amount of the Amended and Restated Revolving Loan is due and payable on June 30, 2020.
As of December 31,
2016
and
2015
,
$544.8 million
and
$696.5 million
was outstanding under the Amended and Restated Term Loan B, respectively. Interest on the Amended and Restated Term Loan B accrues at an
annual
rate of
LIBOR
plus an applicable margin, based on our consolidated leverage ratio. In April 2014, we entered into the Interest Rate Swap Agreements with a notional amount of
$200.0 million
to mitigate the risk of an increase in the LIBOR interest rate above the
0.75%
minimum LIBOR rate in effect on the Term Loan B. The Interest Rate Swap Agreements continue to mitigate an increase in the LIBOR rate in effect on the Amended and Restated Term Loan B. See Note
6
for further discussion. As of December 31,
2016
and
2015
, the applicable interest rate on the Amended and Restated Term Loan B was
3.16%
and
3.50%
, respectively. Beginning on September 30, 2015, the Amended and Restated Term Loan B became payable in equal quarterly installments of
$1.8 million
, but the
$150.0 million
prepayment with proceeds from the 2024 Notes discussed below was applied to the quarterly amortization payments and eliminated the future quarterly amortization payments until maturity. All remaining outstanding principal of the Amended and Restated Term Loan B is due and payable on June 30, 2022.
Amounts outstanding under the Amended and Restated Credit Facility are guaranteed by Holdings, Six Flags Operations Inc. ("SFO") and certain of the domestic subsidiaries of SFTP (collectively, the "Loan Parties"). The Amended and Restated Credit Facility is secured by a first priority security interest in substantially all of the assets of the Loan Parties. The Amended and Restated Credit Facility agreement contains certain representations, warranties, affirmative covenants and financial covenants (specifically, (i) a minimum interest coverage covenant and (ii) a maximum senior leverage maintenance covenant). In addition, the Amended and Restated Credit Facility agreement contains restrictive covenants that, subject to certain exceptions, limit or restrict, among other things, the incurrence of indebtedness and liens, fundamental changes, restricted payments, capital expenditures, investments, prepayments of certain indebtedness, transactions with affiliates, changes in fiscal periods, modifications of certain documents, activities of the Company and SFO and hedging agreements, subject, in each case, to certain carve-outs.
2021 Notes and 2024 Notes
On December 21, 2012, Holdings issued
$800.0 million
of
5.25%
senior unsecured notes due January 15, 2021 (the "2021 Notes"). The proceeds from the 2021 Notes were used to repay the
$72.2 million
that was outstanding under the Term Loan A and to repay
$277.8 million
of the outstanding balance of the Term Loan B. The remaining proceeds were used for share repurchases. Interest payments of
$21.0 million
are due
semi-annually
on January 15 and July 15 (except in 2013 when we only made one interest payment of
$22.3 million
on July 15 and in 2021 when we will only make one payment of
$21.0 million
on January 15).
On June 16, 2016, Holdings issued
$300.0 million
of
4.875%
senior unsecured notes due July 31, 2024 (the "2024 Notes"). We capitalized
$4.7 million
of debt issuance costs directly associated with the issuance of the 2024 Notes. We used approximately
$150.0 million
of the proceeds from the issuance of the 2024 Notes to reduce our borrowings under the Amended and Restated Term Loan B. We intend to use the remaining net proceeds of the sale of the 2024 Notes for general corporate and working capital purposes, which we expect to primarily include repurchases of our common stock from time to time, subject to compliance with our financing agreements, and to the extent we do not use such net proceeds for that purpose, we may use such amounts for strategic initiatives that we may undertake from time to time. Interest payments of
$7.3 million
are due
semi-annually
on January 31 and July 31 of each year, with the exception of the first payment on January 31, 2017, which was
$9.1 million
.
The 2021 Notes and the 2024 Notes are guaranteed by the Loan Parties. The 2021 Notes and the 2024 Notes contain restrictive covenants that, subject to certain exceptions, limit or restrict, among other things, the ability of the Loan Parties to incur additional indebtedness, create liens, engage in mergers, consolidations and other fundamental changes, make investments, engage in transactions with affiliates, pay dividends and repurchase capital stock. The 2021 Notes and the 2024 Notes contain certain events of default, including payment, breaches of covenants and representations, cross defaults to other material indebtedness, judgment, and changes of control and bankruptcy events of default.
HWP Refinance Loan
On November 5, 2007, HWP entered into a
$33.0 million
term loan (the "Refinance Loan"). Borrowings under the Refinance Loan bear interest at
6.72%
. Monthly payments of principal and interest of
$0.2 million
are payable through November 1, 2017. On December 1, 2017, all unpaid principal and interest is due and payable. Due to significant early pre-payment penalties under the Refinance Loan, we do not currently intend to pre-pay the Refinance Loan prior to its scheduled maturity. HWP is subject to various covenants under the Refinance Loan that place certain restrictions limiting or prohibiting engaging in certain types of transactions. Pursuant to the Refinance Loan, HWP deposited into escrow
$3.9 million
and
$3.0
SIX FLAGS ENTERTAINMENT CORPORATION
Notes to Consolidated Financial Statements
million
as of December 31,
2016
and
2015
, respectively, and will make additional monthly deposits to cover annual amounts owed for insurance, taxes and furniture, fixture and equipment purchases.
Long-Term Indebtedness Summary
As of December 31,
2016
and
2015
, long-term debt consisted of the following:
|
|
|
|
|
|
|
|
|
|
December 31,
|
(Amounts in thousands)
|
2016
|
|
2015
|
Amended and Restated Term Loan B
|
$
|
544,750
|
|
|
$
|
696,500
|
|
2024 Notes
|
300,000
|
|
|
—
|
|
2021 Notes
|
800,000
|
|
|
800,000
|
|
HWP Refinance Loan
|
29,161
|
|
|
29,667
|
|
Net discount
|
(2,192
|
)
|
|
(3,281
|
)
|
Deferred financing costs
|
(18,072
|
)
|
|
(17,358
|
)
|
Long-term debt
|
1,653,647
|
|
|
1,505,528
|
|
Less current portion
|
(29,161
|
)
|
|
(7,506
|
)
|
Total long-term debt
|
$
|
1,624,486
|
|
|
$
|
1,498,022
|
|
As of December 31,
2016
, annual maturities of long-term debt, assuming no acceleration of maturities, were as follows:
|
|
|
|
|
(Amounts in thousands)
|
|
For the year ending December 31:
|
|
2017
|
$
|
29,161
|
|
2018
|
—
|
|
2019
|
—
|
|
2020
|
—
|
|
2021
|
800,000
|
|
2022 and thereafter
|
844,750
|
|
|
$
|
1,673,911
|
|
|
|
8
.
|
Selling, General and Administrative Expenses
|
Selling, general and administrative expenses comprised the following for the years ended December 31,
2016
,
2015
and
2014
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
(Amounts in thousands)
|
2016
|
|
2015
|
|
2014
|
Park
|
$
|
124,019
|
|
|
$
|
119,411
|
|
|
$
|
122,322
|
|
Corporate
|
167,775
|
|
|
115,399
|
|
|
188,633
|
|
Total selling, general and administrative expenses
|
$
|
291,794
|
|
|
$
|
234,810
|
|
|
$
|
310,955
|
|
Corporate, selling, general and administrative expense includes stock-based compensation of
$116.3 million
,
$56.2 million
and
$140.0 million
for the years ended December 31,
2016
,
2015
and
2014
, respectively.
Pursuant to the Long-Term Incentive Plan, Holdings may grant stock options, stock appreciation rights, restricted stock, restricted stock units, unrestricted stock, deferred stock units, performance and cash-settled awards and dividend equivalents to select employees, officers, directors and consultants of Holdings and its affiliates. In May 2015, our stockholders approved an amendment to the Long-Term Incentive Plan that increased the number of shares available for issuance under the Long-Term Incentive Plan by
5,000,000
shares.
During the years ended December 31,
2016
,
2015
and
2014
, stock-based compensation expense related to the Long-Term Incentive Plan was
$116.0 million
,
$55.9 million
and
$139.8 million
, respectively.
As of December 31,
2016
, options to purchase approximately
5,679,000
shares of common stock of Holdings and approximately
10,000
shares of restricted stock or restricted stock units were outstanding under the Long-Term Incentive Plan and approximately
1,724,000
shares were available for future grant.
SIX FLAGS ENTERTAINMENT CORPORATION
Notes to Consolidated Financial Statements
Stock Options
Options granted under the Long-Term Incentive Plan are designated as either incentive stock options or non-qualified stock options. Options are generally granted with an exercise price equal to the fair market value of the common stock of Holdings on the date of grant. While certain stock options are subject to acceleration in connection with a change in control, options are generally cumulatively exercisable in
four
equal annual installments commencing one year after the date of grant with a
ten
-year term. Generally, the unvested portion of stock option awards is forfeited upon termination of employment. Stock option compensation is recognized over the vesting period using the graded vesting terms of the respective grant.
The estimated fair value of the majority of our options granted was calculated using the Black-Scholes option pricing valuation model. This model takes into account several factors and assumptions. The risk-free interest rate is based on the yield on United States Treasury zero-coupon issues with a remaining term equal to the expected term assumption at the time of grant. Prior to 2015, the simplified method was used to calculate the expected term (estimated period of time outstanding) because our historical data from our pre-confirmation equity grants was not representative or sufficient to be used to develop an expected term assumption. Beginning in 2015, we have sufficient historical data to develop an expected term assumption and we calculated the expected term using a mid-point scenario with a one-year grant date filter to exclude grants for which vesting could not have yet occurred. Expected volatility of options granted prior to 2013 was based on the historical volatility of similar companies' common stock for a period equal to the stock option's expected term, calculated on a daily basis. Expected volatility of options granted in 2013 and 2014 was based two-thirds on the historical volatility of similar companies' common stock and one-third on our historical volatility for a period equal to the stock option's expected term, calculated on a daily basis. Beginning in 2015, expected volatility is based three-fourths on the term-matching historical volatility of our stock and one-fourth on the weighted-average implied volatility based on forward-looking pricing data on exchange-traded options for our stock. The expected dividend yield is based on our current quarterly dividend and a three-month average stock price. The fair value of stock options on the date of grant is expensed on a straight line basis over the requisite service period of the graded vesting term as if the award was, in substance, multiple awards.
The following weighted-average assumptions were utilized in the Black-Scholes model to value the stock options granted during the years ended December 31,
2016
,
2015
and
2014
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2016
|
|
December 31, 2015
|
|
December 31, 2014
|
|
CEO
|
|
Employees
|
|
CEO
|
|
Employees
|
|
CEO
|
|
Employees
|
Risk-free interest rate
|
1.05
|
%
|
|
1.00
|
%
|
|
1.80
|
%
|
|
1.13
|
%
|
|
1.96
|
%
|
|
1.96
|
%
|
Expected life (in years)
|
3.85
|
|
|
3.85
|
|
|
6.25
|
|
|
3.91
|
|
|
6.25
|
|
|
6.25
|
|
Expected volatility
|
24.30
|
%
|
|
23.17
|
%
|
|
36.04
|
%
|
|
24.85
|
%
|
|
38.69
|
%
|
|
38.81
|
%
|
Expected dividend yield
|
4.47
|
%
|
|
4.15
|
%
|
|
4.28
|
%
|
|
4.46
|
%
|
|
4.78
|
%
|
|
4.87
|
%
|
The following table summarizes stock option activity for the year ended December 31,
2016
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Amounts in thousands, expect per share data)
|
Shares
|
|
Weighted Avg. Exercise Price
($)
|
|
Weighted Avg. Remaining Contractual Term
|
|
Aggregate Intrinsic Value
($)
|
Balance at December 31, 2015
|
5,862
|
|
|
$
|
30.89
|
|
|
|
|
|
|
Granted
|
1,324
|
|
|
$
|
50.93
|
|
|
|
|
|
|
Exercised
|
(1,355
|
)
|
|
$
|
25.60
|
|
|
|
|
|
|
Canceled or exchanged
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
Forfeited
|
(152
|
)
|
|
$
|
38.40
|
|
|
|
|
|
|
Expired
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
Balance at December 31, 2016
|
5,679
|
|
|
$
|
36.63
|
|
|
7.28
|
|
$
|
132,508
|
|
Vested and expected to vest at December 31, 2016
|
5,487
|
|
|
$
|
36.33
|
|
|
7.23
|
|
$
|
129,643
|
|
Options exercisable at December 31, 2016
|
2,474
|
|
|
$
|
26.59
|
|
|
5.73
|
|
$
|
82,574
|
|
The weighted average grant date fair value of the options granted during the years ended December 31,
2016
,
2015
and
2014
was
$5.84
,
$6.14
and
$8.86
, respectively.
The total intrinsic value of options exercised for the years ended December 31,
2016
,
2015
and
2014
was
$37.8 million
,
$51.1 million
and
$70.1 million
, respectively. The total fair value of options that vested during the years ended December 31,
2016
,
2015
and
2014
was
$10.7 million
,
$13.9 million
and
$19.8 million
, respectively.
As of December 31,
2016
, there was
$10.4 million
of unrecognized compensation expense related to option awards. The weighted-average period over which that cost is expected to be recognized is
2.74
years.
SIX FLAGS ENTERTAINMENT CORPORATION
Notes to Consolidated Financial Statements
Cash received from the exercise of stock options during the years ended December 31,
2016
,
2015
and
2014
was
$34.7 million
,
$39.0 million
and
$37.7 million
, respectively.
Stock, Restricted Stock and Restricted Stock Units
Stock, restricted stock and restricted stock units granted under the Long-Term Incentive Plan may be subject to transfer and other restrictions as determined by the compensation committee of Holdings' Board of Directors. Generally, the unvested portion of restricted stock and restricted stock unit awards is forfeited upon termination of employment. The fair value of stock, restricted stock and restricted stock unit awards on the date of grant is expensed on a straight line basis over the requisite service period of the graded vesting term as if the award was, in substance, multiple awards.
During the year ended December 31, 2011, a performance award was established based on our goal to achieve Modified EBITDA of
$500 million
by 2015 (the "2015 Performance Award"). "Modified EBITDA” is defined as the Company’s consolidated income from continuing operations: excluding the cumulative effect of changes in accounting principles; discontinued operations gains or losses; income tax expense or benefit; restructure costs or recoveries; reorganization items (net); other income or expense; gain or loss on early extinguishment of debt; equity in income or loss of investees; interest expense (net); gain or loss on disposal of assets; gain or loss on the sale of investees; amortization; depreciation; stock-based compensation; and fresh start accounting valuation adjustments. Based on the results of operations for the years ended
December 31, 2014
and
2015
, the 2015 Performance Award was issued, resulting in the issuance of
1,511,100
shares and
1,314,000
shares, plus associated DERs, in February 2015 and 2016, respectively. During the
twelve months ended
December 31, 2016
, we recognized a reduction in stock-based compensation expense of
$1.6 million
as a result of the decline in the closing market price of Holdings' common stock on the date of issuance in February
2016
relative to
December 31, 2015
.
During the year ended December 31, 2014, a performance award was established based on our goal to achieve Modified EBITDA of
$600 million
by 2017 (the "2017 Performance Award"). If the target is achieved in 2017, an aggregate payout under this award to key employees would be approximately
2,300,000
shares but could be more or fewer shares depending on the level of achievement and the timing thereof. During the third quarter of 2016, it was determined that achievement of the Modified EBITDA performance target is probable by 2017, primarily based on the success of our fall sales campaign for 2017 season passes, memberships and all-season dining pass sales, as well as a growth in deferred revenue along with growth in our business once weather normalized in the second half of the third quarter. As such, in accordance with FASB ASC Topic 718, Stock Compensation, we have accrued
$91.4 million
, plus an additional
$11.0 million
for the associated DERs, for stock-based compensation expense related to the 2017 Performance Award as of
December 31, 2016
. Based on the closing market price of Holdings' common stock on the last trading day of the quarter ended
December 31, 2016
, the total unrecognized compensation expense related to the 2017 Performance Award was
$44.5 million
, plus approximately
$5.8 million
for the associated DERs, that will be expensed over the remaining service period.
During the year ended December 31, 2016, an additional performance award was established based on our aspirational goal to achieve Modified EBITDA of
$750 million
by 2020 (the "2020 Performance Award"). The aggregate payout under the performance award to key employees if the target is achieved in 2020 would be
900,000
shares plus associated DERs but could be more or less depending on the level of achievement and the timing thereof. There has been no stock-based compensation expense recorded for this performance award because it is not deemed probable that we will achieve the specified performance targets as of December 31, 2016. Based on the closing market price of Holdings' common stock on the last trading day of the quarter ended December 31, 2016, the total unrecognized compensation expense related to this award at target achievement in 2020 is
$54.0 million
that will be expensed over the service period if it becomes probable of achieving the performance condition. We will continue to evaluate the probability of achieving the performance condition going forward and record the appropriate expense if necessary
The following table summarizes stock, restricted stock and restricted stock unit activity for the year ended December 31,
2016
:
|
|
|
|
|
|
|
|
(Amounts in thousands, except per share amounts
)
|
Shares
|
|
Weighted Average Grant Date Fair Value Per Share
($)
|
Non-vested balance at December 31, 2015
|
14
|
|
|
$
|
46.60
|
|
Granted
|
1,326
|
|
|
$
|
51.46
|
|
Vested
|
(1,330
|
)
|
|
$
|
51.35
|
|
Forfeited
|
—
|
|
|
$
|
—
|
|
Canceled
|
—
|
|
|
$
|
—
|
|
Non-vested balance at December 31, 2016
|
10
|
|
|
$
|
58.46
|
|
SIX FLAGS ENTERTAINMENT CORPORATION
Notes to Consolidated Financial Statements
The weighted average grant date fair value per share of stock awards granted during the years ended December 31,
2016
,
2015
and
2014
was
$51.46
,
$46.31
and
$41.14
, respectively.
The total grant date fair value of the stock awards granted was
$68.2 million
,
$70.7 million
and
$0.7 million
for the years ended December 31,
2016
,
2015
and
2014
, respectively. The total fair value of stock awards that vested during the years ended December 31,
2016
,
2015
and
2014
was
$68.3 million
,
$70.6 million
and
$3.9 million
, respectively.
Exclusive of the unrecognized stock-based compensation expense related to the 2017 Performance Award and the 2020 Performance Award discussed above, there was
$0.2 million
of total unrecognized stock-based compensation expense related to stock, restricted stock and restricted stock units as of December 31,
2016
that is expected to be recognized over a weighted-average period of
0.25
years.
Deferred Share Units
Non-employee directors can elect to receive the value of their annual cash retainer as a deferred share unit award ("DSU") under the Long-Term Incentive Plan whereby the non-employee director is granted DSUs in an amount equal to such director's annual cash retainer divided by the closing price of Holdings' common stock on the date of the annual stockholders meeting. Each DSU represents Holdings' obligation to issue
one
share of common stock. The shares are delivered approximately
thirty
days following the cessation of the non-employee director's service as a director of Holdings'.
DSUs vest consistent with the manner in which non-employee directors' cash retainers are paid. The fair value of the DSUs on the date of grant is expensed on a straight line basis over the requisite service period.
During each of the years ended December 31,
2016
,
2015
and
2014
, approximately
3,000
DSUs were granted at a weighted-average grant date fair value of
$54.16
,
$46.60
and
$41.14
per DSU, respectively. The total grant date fair value of DSUs granted was
$0.2 million
during the year ended December 31,
2016
and
$0.1 million
during the years ended December 31,
2015
and
2014
.
As of December 31,
2016
, there was
no
unrecognized compensation expense related to the outstanding DSUs.
Dividend Equivalent Rights
On February 8, 2012, Holdings' Board of Directors granted DERs to holders of unvested stock options, at which time, approximately
10.0 million
unvested stock options were outstanding. The DERs accrue dividends as of the record date of each of Holdings' dividends that will be distributed to stock option holders upon the vesting of their stock option award. Holdings will distribute the accumulated accrued dividends pursuant to the DERs in either cash or shares of common stock. Generally, holders of stock options for fewer than
1,000
shares of stock will receive their accumulated accrued dividends in cash and holders of stock options for
1,000
shares of stock or greater will receive their accumulated accrued dividends in shares of common stock. In addition, Holdings' Board of Directors granted similar DERs payable in shares of common stock if and when any shares are granted under the 2015 Performance Award, the 2017 Performance Award and the 2020 Performance Award.
Holdings' Board of Directors granted approximately
1.3 million
,
1.2 million
and
1.7 million
additional options to the majority of full-time employees of the Company as well as DERs in connection with such options during the years ended December 31,
2016
,
2015
and
2014
, respectively. Exclusive of stock-based compensation recognized for the DER grants associated with the 2015 Performance Award and 2017 Performance Award discussed above, we recorded stock-based compensation for DER grants of
$5.1 million
,
$4.5 million
and
$6.0 million
for the years ended December 31,
2016
,
2015
and
2014
, respectively.
Employee Stock Purchase Plan
The Six Flags Entertainment Corporation Employee Stock Purchase Plan (the "ESPP") allows eligible employees to purchase Holdings' common stock at
90%
of the lower of the market value of the common stock at the beginning or end of each successive six-month offering period. Amounts accumulated through participants' payroll deductions ("purchase rights") are used to purchase shares of common stock at the end of each purchase period. Pursuant to the ESPP, no more than
2,000,000
shares of common stock of Holdings may be issued. Holdings' common stock may be issued by either authorized and unissued shares, treasury shares or shares purchased on the open market. As of December 31,
2016
, we had
1,775,000
shares available for purchase pursuant to the ESPP
In accordance with FASB ASC Topic 718,
Stock Based Compensation
, stock-based compensation related to purchase rights is recognized based on the intrinsic value of each respective six-month ESPP offering period. As of December 31,
2016
and
2015
, no purchase rights were outstanding under the ESPP.
SIX FLAGS ENTERTAINMENT CORPORATION
Notes to Consolidated Financial Statements
Stock-based compensation expense consisted of the following for the years ended December 31,
2016
,
2015
and
2014
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
(Amounts in thousands)
|
2016
|
|
2015
|
|
2014
|
Long-Term Incentive Plan
|
$
|
116,028
|
|
|
$
|
55,862
|
|
|
$
|
139,788
|
|
Employee Stock Purchase Plan
|
311
|
|
|
371
|
|
|
250
|
|
Total stock-based compensation
|
$
|
116,339
|
|
|
$
|
56,233
|
|
|
$
|
140,038
|
|
|
|
10
.
|
Fair Value of Financial Instruments
|
The fair value of a financial instrument is the amount at which the instrument could be exchanged in a current transaction between willing parties. The following table and accompanying information present the estimated fair values and classifications of our financial instruments in accordance with FASB ASC Topic 820,
Fair Value Measurement
, as of December 31,
2016
and
2015
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of
|
|
December 31, 2016
|
|
December 31, 2015
|
(Amounts in thousands)
|
Carrying
Value
|
|
Fair
Value
|
|
Carrying
Value
|
|
Fair
Value
|
Financial assets (liabilities):
|
|
|
|
|
|
|
|
Restricted-use investment securities
|
$
|
3,926
|
|
|
$
|
3,926
|
|
|
$
|
3,036
|
|
|
$
|
3,036
|
|
Interest Rate Swap Agreements liabilities
|
(871
|
)
|
|
(871
|
)
|
|
(1,598
|
)
|
|
(1,598
|
)
|
Long-term debt (including current portion)
|
(1,653,647
|
)
|
|
(1,679,525
|
)
|
|
(1,505,528
|
)
|
|
(1,510,304
|
)
|
The following methods and assumptions were used to estimate the fair value of each class of financial instruments:
|
|
•
|
The carrying values of cash and cash equivalents, accounts receivable, notes receivable, accounts payable and accrued liabilities approximate fair value because of the short maturity of these instruments.
|
|
|
•
|
Restricted-use investment securities consist of interest bearing bank accounts for which their carrying value approximates their fair value because of their short term maturity. The measurement of restricted-use investment securities is considered a Level 2 fair value measurement.
|
|
|
•
|
The measurement of the fair value of derivative assets and liabilities is based on market prices that generally are observable for similar assets and liabilities at commonly quoted intervals and is considered a Level 2 fair value measurement. Derivative assets and liabilities that have maturity dates equal to or less than twelve months from the balance sheet date are included in prepaid and other current assets and other accrued liabilities, respectively. Derivative assets and liabilities that have maturity dates greater than twelve months from the balance sheet date are included in deposits and other assets and other long-term liabilities, respectively. See Note
6
for additional information on our derivative instruments and related Company policies.
|
|
|
•
|
The measurement of the fair value of long-term debt is based on market prices that generally are observable for similar liabilities at commonly quoted intervals and is considered a Level 2 fair value measurement.
|
SIX FLAGS ENTERTAINMENT CORPORATION
Notes to Consolidated Financial Statements
The following table summarizes the domestic and foreign components of income from continuing operations before income taxes for the years ended December 31,
2016
,
2015
and
2014
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
(Amounts in thousands)
|
2016
|
|
2015
|
|
2014
|
Domestic
|
$
|
216,205
|
|
|
$
|
238,416
|
|
|
$
|
145,622
|
|
Foreign
|
17,061
|
|
|
24,808
|
|
|
14,389
|
|
Income from continuing operations before income taxes
|
$
|
233,266
|
|
|
$
|
263,224
|
|
|
$
|
160,011
|
|
The following table summarizes the components of income tax expense (benefit) from continuing operations for the years ended December 31,
2016
,
2015
and
2014
:
|
|
|
|
|
|
|
|
|
|
|
|
|
(Amounts in thousands)
|
Current
|
|
Deferred
|
|
Total
|
2016:
|
|
|
|
|
|
U.S. federal
|
$
|
(41
|
)
|
|
$
|
57,950
|
|
|
$
|
57,909
|
|
Foreign
|
6,206
|
|
|
(427
|
)
|
|
5,779
|
|
State and local
|
7,088
|
|
|
5,763
|
|
|
12,851
|
|
Income tax expense
|
$
|
13,253
|
|
|
$
|
63,286
|
|
|
$
|
76,539
|
|
2015:
|
|
|
|
|
|
U.S. federal
|
$
|
(119
|
)
|
|
$
|
61,583
|
|
|
$
|
61,464
|
|
Foreign
|
9,656
|
|
|
(2,399
|
)
|
|
7,257
|
|
State and local
|
6,336
|
|
|
(4,688
|
)
|
|
1,648
|
|
Income tax expense
|
$
|
15,873
|
|
|
$
|
54,496
|
|
|
$
|
70,369
|
|
2014:
|
|
|
|
|
|
U.S. federal
|
$
|
(57
|
)
|
|
$
|
31,757
|
|
|
$
|
31,700
|
|
Foreign
|
6,260
|
|
|
46
|
|
|
6,306
|
|
State and local
|
7,028
|
|
|
1,488
|
|
|
8,516
|
|
Income tax expense
|
$
|
13,231
|
|
|
$
|
33,291
|
|
|
$
|
46,522
|
|
Recorded income tax expense allocated to income from continuing operations differed from amounts computed by applying the U.S. federal income tax rate of
35%
to income before income taxes and discontinued operations as a result of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
(Amounts in thousands)
|
2016
|
|
2015
|
|
2014
|
Computed "expected" federal income tax expense
|
$
|
81,643
|
|
|
$
|
92,128
|
|
|
$
|
56,004
|
|
Effect of noncontrolling interest income distribution
|
(13,449
|
)
|
|
(13,358
|
)
|
|
(13,114
|
)
|
Change in valuation allowance
|
648
|
|
|
896
|
|
|
1,413
|
|
Effect of state and local income taxes, net of federal tax benefit
|
8,353
|
|
|
1,072
|
|
|
5,535
|
|
Nondeductible compensation
|
2,127
|
|
|
435
|
|
|
2,271
|
|
Effect of foreign income taxes
|
380
|
|
|
741
|
|
|
635
|
|
Effect of foreign earnings earned and remitted in the same year
|
6,000
|
|
|
5,155
|
|
|
11,126
|
|
Effect of foreign tax credits
|
(9,405
|
)
|
|
(4,432
|
)
|
|
(15,571
|
)
|
Effect of change in accounting method related to recoverable bankruptcy costs
|
—
|
|
|
(9,603
|
)
|
|
—
|
|
Effect of additional basis due to amended returns, net of NOL reduction
|
—
|
|
|
—
|
|
|
(3,532
|
)
|
Other, net
|
242
|
|
|
(2,665
|
)
|
|
1,755
|
|
Income tax expense
|
$
|
76,539
|
|
|
$
|
70,369
|
|
|
$
|
46,522
|
|
In connection with emergence from Chapter 11, the Company's prepetition debt securities, primarily the prepetition notes issued by SFI and SFO, were extinguished. Absent an exception, a debtor recognizes cancellation of debt income ("CODI") upon discharge of its outstanding indebtedness for an amount of consideration that is less than its adjusted issue price. The Internal Revenue Code ("IRC") provides that a debtor in a bankruptcy case may exclude CODI from income but must reduce certain of its tax attributes by the amount of any CODI realized as a result of the consummation of a plan of reorganization. The amount of CODI realized by a taxpayer is the adjusted issue price of any indebtedness discharged less the sum of (i) the amount of cash paid, (ii) the issue price of any new indebtedness issued and (iii) the fair market value of any other consideration, including equity, issued. As a result of the market value of our equity upon emergence from Chapter 11 bankruptcy proceedings, we were able to retain a significant portion of our federal NOLs and state NOLs (collectively, the "Tax Attributes") after reduction of the Tax Attributes for CODI realized on emergence from Chapter 11. As a result of emergence from Chapter 11, the Company's NOLs were reduced by approximately
$804.8 million
of CODI.
SIX FLAGS ENTERTAINMENT CORPORATION
Notes to Consolidated Financial Statements
Sections 382 and 383 of the IRC impose an annual limitation on the utilization of NOLs and other favorable Tax Attribute carryforwards that a corporation has at the time of a so-called "ownership change" within the meaning of IRC Section 382. The Company's issuance of stock pursuant to its reorganization under Chapter 11 resulted in such an ownership change. The limitation amount is the product of the value of the Company, computed under special rules that apply to a bankruptcy reorganization, and a published rate that applied for the month the Company emerged from Chapter 11. The Company's limitation amount is approximately
$32.5 million
for each year to which NOLs and other Tax Attribute carryforwards that existed at emergence are carried, increased by the portion of the net built-in income and gain that existed at emergence and that IRS pronouncements permit a taxpayer to treat as recognized during the five year period following the ownership change. This has allowed the Company to increase its annual limitation by approximately
$696.0 million
through the end of 2015. Annual limitation amounts accumulate for future use to the extent they are not utilized in a given year. As a result of the Section 382 limitation, the Company may have a cash tax liability in future years even though its deferred tax assets have not been exhausted. A subsequent ownership change could further limit the Company's utilization of NOLs and other Tax Attributes if a smaller limitation resulted from the subsequent ownership change or applied to NOLs and other Tax Attributes accumulated after emergence from Chapter 11.
Substantially all of our future taxable temporary differences (deferred tax liabilities) relate to the different financial accounting and tax depreciation methods and periods for property and equipment (
20
to
25
years for financial reporting purposes and
7
to
12
years for tax reporting purposes) and intangibles. Our net operating loss carryforwards, foreign tax credits, alternative minimum tax credits, accrued insurance expenses and deferred compensation amounts represent future income tax benefits (deferred tax assets). The following table summarizes the components of deferred income tax assets and deferred tax liabilities as of December 31,
2016
and
2015
:
|
|
|
|
|
|
|
|
|
|
December 31,
|
(Amounts in thousands)
|
2016
|
|
2015
|
Deferred tax assets
|
$
|
312,349
|
|
|
$
|
362,733
|
|
Less: Valuation allowance
|
92,272
|
|
|
88,398
|
|
Net deferred tax assets
|
220,077
|
|
|
274,335
|
|
Deferred tax liabilities
|
419,357
|
|
|
414,608
|
|
Net deferred tax liability
|
$
|
199,280
|
|
|
$
|
140,273
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
(Amounts in thousands)
|
2016
|
|
2015
|
Deferred tax assets:
|
|
|
|
Federal net operating loss carryforwards
|
$
|
40,352
|
|
|
$
|
106,418
|
|
State net operating loss carryforwards
|
96,356
|
|
|
96,811
|
|
Deferred compensation
|
50,067
|
|
|
41,241
|
|
Foreign tax credits
|
46,795
|
|
|
37,390
|
|
Alternative minimum tax credits
|
6,591
|
|
|
6,591
|
|
Accrued insurance, pension liability and other
|
72,188
|
|
|
74,282
|
|
Total deferred tax assets
|
$
|
312,349
|
|
|
$
|
362,733
|
|
|
|
|
|
Deferred tax liabilities:
|
|
|
|
Property and equipment
|
$
|
294,050
|
|
|
$
|
288,504
|
|
Intangible assets and other
|
125,307
|
|
|
126,104
|
|
Total deferred tax liabilities
|
$
|
419,357
|
|
|
$
|
414,608
|
|
In addition to the net operating losses recognized under financial accounting principles and included in deferred income tax assets in the above table, we had approximately
$272.8 million
of income tax deductions related to share-based payments that are in excess of the amount recognized in the accompanying financial statements as of December 31,
2016
. When these benefits are realized in our tax returns as a reduction of taxes that otherwise would have been required to be paid in cash, then, in accordance with FASB ASC Topic 718,
Compensation - Stock Compensation
, we will recognize these excess benefits as an increase in additional paid in capital on an after-tax basis, which at current income tax rates would approximate
$98.7 million
. We use the "with and without" method when determining when excess tax benefits have been realized.
As of December 31,
2016
and
2015
, we had approximately
$6.6 million
of alternative minimum tax credits that have no expiration date.
As of December 31,
2016
, we had approximately
$0.2 billion
and
$4.2 billion
of net operating loss carryforwards available for U.S. federal income tax and state income tax purposes, respectively, that expire through 2030 and 2035, respectively. We have recorded a valuation allowance of
$92.3 million
and
$88.4 million
as of December 31,
2016
and
2015
,
SIX FLAGS ENTERTAINMENT CORPORATION
Notes to Consolidated Financial Statements
respectively, due to uncertainties related to our ability to utilize some of our deferred tax assets before they expire. The valuation allowance at December 31,
2016
and December 31,
2015
was based on our inability to use state deferred tax assets related to NOLs that were generated in states where we no longer do business or where we have consistently not generated taxable income. During the year ended December 31, 2014, certain of these fully valued deferred tax assets related to NOL carryforwards were written off or written down as a result of changes in state tax laws. In particular, fully valued NOL carryforwards related to past operations in Ohio were written off since our operations in that state are no longer subject to corporate income tax in that state. Additionally, due to a change in New York tax law, certain NOL carryforwards were converted from pre-apportionment NOL carryforwards to post-apportionment NOL carryforwards, resulting in a write down of these fully valued NOLs in 2015. In conjunction with each of these changes, a corresponding reduction in valuation allowance was recorded. These changes did not impact our results of operations.
The change in valuation allowance attributable to income from continuing operations, discontinued operations and other comprehensive loss and equity is presented below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
(Amounts in thousands)
|
2016
|
|
2015
|
|
2014
|
Continuing operations
|
$
|
648
|
|
|
$
|
896
|
|
|
$
|
1,413
|
|
Discontinued operations
|
—
|
|
|
—
|
|
|
(207
|
)
|
Total change in valuation allowance
|
$
|
648
|
|
|
$
|
896
|
|
|
$
|
1,206
|
|
Our unrecognized tax benefit as of December 31,
2016
and
2015
was
$44.6 million
and
$43.9 million
, respectively. We classify interest and penalties attributable to income taxes as part of income tax expense. Due to the Company's NOL position, we have not accrued any penalties and interest.
|
|
12
.
|
Preferred Stock, Common Stock and Other Stockholders' Equity
|
Common Stock
As of December 31,
2016
, the number of authorized shares of common stock was
140,000,000
shares, of which
90,849,428
shares were outstanding,
1,724,000
shares were reserved for future issuance through our Long-Term Incentive Plan, and
1,775,000
shares were reserved for future issuance through the ESPP. Pursuant to the ESPP, Holdings' common stock may be issued by either authorized and unissued shares, treasury shares or shares purchased on the open market.
On November 20, 2013, Holdings' Board of Directors approved a new stock repurchase program that permitted Holdings to repurchase up to
$500.0 million
in shares of Holdings' common stock over a
four
-year period (the "November 2013 Stock Repurchase Plan"). Holdings fully utilized the availability under the November 2013 Stock Repurchase Plan by August 2016. Throughout the program, Holdings repurchased
11,428,000
shares at a cumulative price of approximately
$500.0 million
and an average price per share of
$43.75
.
On June 7, 2016, Holdings announced that its Board of Directors approved a new stock repurchase program that permits Holdings to repurchase an incremental
$500.0 million
in shares of Holdings' common stock (the "June 2016 Stock Repurchase Plan"). As of
February 16, 2017
, Holdings had repurchased
2,790,000
shares at a cumulative price of approximately
$157.8 million
and an average price per share of
$56.56
under the June 2016 Stock Repurchase Plan, leaving approximately
$342.2 million
available for permitted repurchases.
SIX FLAGS ENTERTAINMENT CORPORATION
Notes to Consolidated Financial Statements
During the years ended December 31,
2016
,
2015
and
2014
, Holdings' Board of Directors declared and paid quarterly cash dividends per share of common stock as follows:
|
|
|
|
|
|
Dividends
Paid
Per Share
|
2016:
|
|
Fourth Quarter
|
$
|
0.64
|
|
Third Quarter
|
$
|
0.58
|
|
Second Quarter
|
$
|
0.58
|
|
First Quarter
|
$
|
0.58
|
|
2015:
|
|
Fourth Quarter
|
$
|
0.58
|
|
Third Quarter
|
$
|
0.52
|
|
Second Quarter
|
$
|
0.52
|
|
First Quarter
|
$
|
0.52
|
|
2014:
|
|
Fourth Quarter
|
$
|
0.52
|
|
Third Quarter
|
$
|
0.47
|
|
Second Quarter
|
$
|
0.47
|
|
First Quarter
|
$
|
0.47
|
|
Preferred Stock
As of December 31,
2016
, the number of authorized shares of preferred stock was
5,000,000
, none of which have been issued or reserved for future issuance. The authorization of preferred shares empowers Holdings' Board of Directors, without further stockholder approval, to issue preferred shares with dividend, liquidation, conversion, voting or other rights which could adversely affect the voting power or other rights of the holders of Holdings' common stock. If issued, the preferred stock could also dilute the holders of Holdings' common stock and could be used to discourage, delay or prevent a change of control.
Accumulated Other Comprehensive (Loss) Income
The balances for each component of accumulated other comprehensive (loss) income are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Currency Translation Adjustment
|
|
Cash Flow
Hedges
|
|
Defined Benefit Plans
|
|
Income
Taxes
|
|
Accumulated Other Comprehensive Income (Loss)
|
Balance as of December 31, 2013
|
$
|
(1,710
|
)
|
|
$
|
(301
|
)
|
|
$
|
(19,705
|
)
|
|
$
|
(10,981
|
)
|
|
$
|
(32,697
|
)
|
Net current period change
|
(10,488
|
)
|
|
(1,604
|
)
|
|
(32,880
|
)
|
|
17,327
|
|
|
(27,645
|
)
|
Amounts reclassified from AOCI
|
—
|
|
|
1,179
|
|
|
—
|
|
|
(466
|
)
|
|
713
|
|
Balance as of December 31, 2014
|
$
|
(12,198
|
)
|
|
$
|
(726
|
)
|
|
$
|
(52,585
|
)
|
|
$
|
5,880
|
|
|
$
|
(59,629
|
)
|
Net current period change
|
(12,602
|
)
|
|
(2,671
|
)
|
|
1,934
|
|
|
4,819
|
|
|
(8,520
|
)
|
Amounts reclassified from AOCI
|
—
|
|
|
1,799
|
|
|
879
|
|
|
(1,087
|
)
|
|
1,591
|
|
Balance as of December 31, 2015
|
$
|
(24,800
|
)
|
|
$
|
(1,598
|
)
|
|
$
|
(49,772
|
)
|
|
$
|
9,612
|
|
|
$
|
(66,558
|
)
|
Net current period change
|
(7,142
|
)
|
|
(944
|
)
|
|
4,881
|
|
|
965
|
|
|
(2,240
|
)
|
Amounts reclassified from AOCI
|
—
|
|
|
1,716
|
|
|
931
|
|
|
(1,033
|
)
|
|
1,614
|
|
Balance as of December 31, 2016
|
$
|
(31,942
|
)
|
|
$
|
(826
|
)
|
|
$
|
(43,960
|
)
|
|
$
|
9,544
|
|
|
$
|
(67,184
|
)
|
SIX FLAGS ENTERTAINMENT CORPORATION
Notes to Consolidated Financial Statements
The Company had the following reclassifications out of accumulated other comprehensive income (loss) during the years ended December 31,
2016
,
2015
and
2014
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Location of
|
|
Amount of Reclassification from AOCI
|
|
|
Reclassification
|
|
Year Ended December 31,
|
Component of AOCI
|
|
into Income
|
|
2016
|
|
2015
|
|
2014
|
|
|
|
|
(Amounts in thousands)
|
Amortization of loss on interest rate hedge
|
|
Interest expense
|
|
$
|
1,716
|
|
|
$
|
1,799
|
|
|
$
|
1,179
|
|
|
|
Income tax benefit
|
|
(669
|
)
|
|
(761
|
)
|
|
(466
|
)
|
|
|
Net of tax
|
|
$
|
1,047
|
|
|
$
|
1,038
|
|
|
$
|
713
|
|
|
|
|
|
|
|
|
|
|
Amortization of deferred actuarial loss and prior service cost
|
|
Operating expenses
|
|
$
|
931
|
|
|
$
|
879
|
|
|
$
|
—
|
|
|
|
Income tax benefit
|
|
(364
|
)
|
|
(326
|
)
|
|
—
|
|
|
|
Net of tax
|
|
$
|
567
|
|
|
$
|
553
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
Total reclassifications
|
|
|
|
$
|
1,614
|
|
|
$
|
1,591
|
|
|
$
|
713
|
|
As part of the acquisition of Former SFEC, we assumed the obligations related to the SFTP Defined Benefit Plan (the "SFTP Benefit Plan"). The SFTP Benefit Plan covered substantially all of SFTP's employees. During 1999, the SFTP Benefit Plan was amended to cover substantially all of our domestic full-time employees. During 2004, the SFTP Benefit Plan was further amended to cover certain seasonal workers, retroactive to January 1, 2003. The SFTP Benefit Plan permits normal retirement at age
65
, with early retirement at ages
55
through
64
upon attainment of
10
years of credited service. The early retirement benefit is reduced for benefits commencing before age
62
. Plan benefits are calculated according to a benefit formula based on age, average compensation over the highest consecutive
five
-year period during the employee's last
ten
years of employment and years of service. The SFTP Benefit Plan assets are invested primarily in equity and fixed income securities, as well as alternative investments, such as hedge funds. The SFTP Benefit Plan does not have significant liabilities other than benefit obligations. Under our funding policy, contributions to the SFTP Benefit Plan are determined using the projected unit credit cost method. This funding policy meets the requirements under the Employee Retirement Income Security Act of 1974.
We froze our pension plan effective March 31, 2006, pursuant to which most participants no longer earned future pension benefits. Effective February 16, 2009, the remaining participants in the pension plan no longer earned future benefits.
Obligations and Funded Status
The following table sets forth the change in our benefit plan obligation and fair value of plan assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
(Amounts in thousands)
|
2016
|
|
2015
|
|
2014
|
Change in benefit obligation:
|
|
|
|
|
|
|
|
|
Beginning balance
|
$
|
223,389
|
|
|
$
|
246,653
|
|
|
$
|
211,813
|
|
Interest cost
|
8,901
|
|
|
9,116
|
|
|
9,686
|
|
Actuarial (gain) loss
|
(828
|
)
|
|
(17,869
|
)
|
|
40,422
|
|
Benefits paid
|
(14,891
|
)
|
|
(14,511
|
)
|
|
(15,268
|
)
|
Benefit obligation at end of period
|
$
|
216,571
|
|
|
$
|
223,389
|
|
|
$
|
246,653
|
|
|
|
|
|
|
|
Change in fair value of plan assets:
|
|
|
|
|
|
|
|
|
Beginning balance
|
$
|
173,123
|
|
|
$
|
186,131
|
|
|
$
|
176,706
|
|
Actual return on assets
|
15,949
|
|
|
(2,767
|
)
|
|
20,342
|
|
Employer contributions
|
6,000
|
|
|
6,000
|
|
|
6,000
|
|
Administrative fees
|
(1,806
|
)
|
|
(1,730
|
)
|
|
(1,649
|
)
|
Benefits paid
|
(14,891
|
)
|
|
(14,511
|
)
|
|
(15,268
|
)
|
Fair value of plan assets at end of period
|
$
|
178,375
|
|
|
$
|
173,123
|
|
|
$
|
186,131
|
|
Employer contributions and benefits paid in the above table include only those amounts contributed directly to, or paid directly from, plan assets. As of December 31,
2016
and
2015
, the SFTP Benefit Plan's projected benefit obligation exceeded the fair value of SFTP Benefit Plan assets resulting in the SFTP Benefit Plan being underfunded by
$38.2 million
and
$50.3 million
, respectively. The underfunded amount is recognized in other long-term liabilities in our consolidated balance sheets.
SIX FLAGS ENTERTAINMENT CORPORATION
Notes to Consolidated Financial Statements
We use December 31 as our measurement date. The weighted average assumptions used to determine benefit obligations are as follows:
|
|
|
|
|
|
|
|
December 31,
|
|
2016
|
|
2015
|
Discount rate
|
3.90
|
%
|
|
4.10
|
%
|
Rate of compensation increase
|
N/A
|
|
|
N/A
|
|
Net periodic benefit cost and other comprehensive income (loss)
The following table sets forth the components of net periodic benefit cost and other comprehensive income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
(Amounts in thousands)
|
2016
|
|
2015
|
|
2014
|
Net periodic benefit cost:
|
|
|
|
|
|
|
|
|
Service cost
|
$
|
2,400
|
|
|
$
|
2,000
|
|
|
$
|
1,600
|
|
Interest cost
|
8,901
|
|
|
9,116
|
|
|
9,687
|
|
Expected return on plan assets
|
(12,490
|
)
|
|
(13,438
|
)
|
|
(12,752
|
)
|
Amortization of net actuarial loss
|
931
|
|
|
879
|
|
|
—
|
|
Total net periodic benefit
|
$
|
(258
|
)
|
|
$
|
(1,443
|
)
|
|
$
|
(1,465
|
)
|
|
|
|
|
|
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
|
Current year actuarial gain (loss)
|
$
|
4,881
|
|
|
$
|
1,934
|
|
|
$
|
(32,880
|
)
|
Recognized net actuarial loss
|
931
|
|
|
879
|
|
|
—
|
|
Total other comprehensive gain (loss)
|
$
|
5,812
|
|
|
$
|
2,813
|
|
|
$
|
(32,880
|
)
|
As of December 31,
2016
and
2015
, we have recorded
$43.6 million
(net of tax benefit of
$0.3 million
) and
$47.2 million
(net of tax benefit of
$2.6 million
) in accumulated other comprehensive loss in our consolidated balance sheets, respectively.
We anticipate that
$0.8 million
will be amortized from accumulated other comprehensive loss into net periodic benefit cost in
2017
.
The weighted average assumptions used to determine net costs are as follows:
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
2016
|
|
2015
|
|
2014
|
Discount rate
|
4.10
|
%
|
|
3.80
|
%
|
|
4.70
|
%
|
Rate of compensation increase
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
Expected return on plan assets
|
7.25
|
%
|
|
7.25
|
%
|
|
7.25
|
%
|
Corridor
|
10.00
|
%
|
|
10.00
|
%
|
|
10.00
|
%
|
Average future life expectancy (in years)
|
27.79
|
|
|
29.39
|
|
|
30.19
|
|
The discount rate assumption was developed based on high-quality corporate bond yields as of the measurement date. High quality corporate bond yield indices on over
500
AA high grade bonds are considered when selecting the discount rate.
The return on plan assets assumption was developed based on consideration of historical market returns, current market conditions, and the SFTP Benefit Plan's past experience. Estimates of future market returns by asset category are reflective of actual long-term historical returns. Overall, it was projected that the SFTP Benefit Plan could achieve a
7.25%
net return over time based on a consistent application of the existing asset allocation strategy and a continuation of the SFTP Benefit Plan's policy of monitoring manager performance.
Description of Investment Committee and Strategy
The Committee is responsible for managing the investment of SFTP Benefit Plan assets and ensuring that the SFTP Benefit Plan's investment program is in compliance with all provisions of ERISA, other relevant legislation, related SFTP Benefit Plan documents and the Statement of Investment Policy. The Committee has retained several mutual funds, commingled funds and/or investment managers to manage SFTP Benefit Plan assets and implement the investment process. The investment managers, in implementing their investment processes, have the authority and responsibility to select appropriate investments in the asset classes specified by the terms of the applicable prospectus or other investment manager agreements with the SFTP Benefit Plan.
SIX FLAGS ENTERTAINMENT CORPORATION
Notes to Consolidated Financial Statements
The primary financial objective of the SFTP Benefit Plan is to secure participant retirement benefits. To achieve this, the key objective in the SFTP Benefit Plan's financial management is to promote stability and, to the extent appropriate, growth in funded status. Other related and supporting financial objectives are also considered in conjunction with a comprehensive review of current and projected SFTP Benefit Plan financial requirements.
The assets of the fund are invested to achieve the greatest reward for the SFTP Benefit Plan consistent with a prudent level of risk. The asset return objective is to achieve, as a minimum over time, the passively managed return earned by market index funds, weighted in the proportions outlined by the asset class exposures in the SFTP Benefit Plan's long-term target asset allocation.
The SFTP Benefit Plan's portfolio may be allocated across several hedge fund styles and strategies.
Plan Assets
The target allocations for plan assets are
16%
domestic equity securities,
48%
fixed income securities,
13%
international equity securities, and
23%
alternative investments. Equity securities primarily include investments in large-cap companies located in the United States and abroad. Fixed income securities include bonds and debentures issued by domestic and foreign private and governmental issuers. Alternative investments are comprised of hedge fund of funds. The following table presents the categories of our plan assets and the related levels of inputs in the fair value hierarchy used to determine the fair value, as defined in Note
2
(c):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value Measurements as of December 31, 2016
|
(Amounts in thousands)
|
Total
|
|
Quoted Prices in Active Markets for Identical Assets
(Level 1)
|
|
Significant
Observable
Inputs
(Level 2)
|
|
Significant Unobservable Inputs
(Level 3)
|
ASSET CATEGORY:
|
|
|
|
|
|
|
|
Equity Securities:
|
|
|
|
|
|
|
|
Large-Cap Disciplined Equity
(a)
|
$
|
32,365
|
|
|
$
|
32,365
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Small/Mid-Cap Equity
(a)
|
5,425
|
|
|
5,425
|
|
|
—
|
|
|
—
|
|
International Equity
(b)
|
22,598
|
|
|
22,598
|
|
|
—
|
|
|
—
|
|
Fixed Income:
|
|
|
|
|
|
|
|
Long Duration Fixed Income
(c)
|
69,583
|
|
|
69,583
|
|
|
—
|
|
|
—
|
|
High Yield
(d)
|
8,918
|
|
|
8,918
|
|
|
—
|
|
|
—
|
|
Emerging Markets Debt
(e)
|
6,360
|
|
|
6,360
|
|
|
—
|
|
|
—
|
|
Alternatives:
|
|
|
|
|
|
|
|
Hedge Fund of Funds
(f)
|
9,967
|
|
|
—
|
|
|
—
|
|
|
9,967
|
|
Other Investments
(g) (h)
|
23,159
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Fair Value of Plan Assets
|
$
|
178,375
|
|
|
$
|
145,249
|
|
|
$
|
—
|
|
|
$
|
9,967
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value Measurements as of December 31, 2015
|
(Amounts in thousands)
|
Total
|
|
Quoted Prices in Active Markets for Identical Assets
(Level 1)
|
|
Significant
Observable
Inputs
(Level 2)
|
|
Significant Unobservable Inputs
(Level 3)
|
ASSET CATEGORY:
|
|
|
|
|
|
|
|
Equity Securities:
|
|
|
|
|
|
|
|
Large-Cap Disciplined Equity
(a)
|
$
|
30,693
|
|
|
$
|
30,693
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Small/Mid-Cap Equity
(a)
|
4,515
|
|
|
4,515
|
|
|
—
|
|
|
—
|
|
International Equity
(b)
|
19,902
|
|
|
19,902
|
|
|
—
|
|
|
—
|
|
Fixed Income:
|
|
|
|
|
|
|
|
Long Duration Fixed Income
(c)
|
74,073
|
|
|
74,073
|
|
|
—
|
|
|
—
|
|
High Yield
(d)
|
7,587
|
|
|
7,587
|
|
|
—
|
|
|
—
|
|
Emerging Markets Debt
(e)
|
6,055
|
|
|
6,055
|
|
|
—
|
|
|
—
|
|
Alternatives:
|
|
|
|
|
|
|
|
Hedge Fund of Funds
(f)
|
9,987
|
|
|
—
|
|
|
—
|
|
|
9,987
|
|
Other Investments
(g) (h)
|
20,311
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Fair Value of Plan Assets
|
$
|
173,123
|
|
|
$
|
142,825
|
|
|
$
|
—
|
|
|
$
|
9,987
|
|
________________________________________
|
|
(a)
|
These categories are comprised of mutual funds actively traded on the registered exchanges or over the counter markets. The mutual funds are invested in equity securities of U.S. issuers.
|
SIX FLAGS ENTERTAINMENT CORPORATION
Notes to Consolidated Financial Statements
|
|
(b)
|
This category consists of mutual funds invested primarily in equity securities (common stocks, securities that are convertible into common stocks, preferred stocks, warrants and rights to subscribe to common stocks) of non-U.S. issuers purchased in foreign markets. The mutual funds are actively traded on U.S. or foreign registered exchanges, or the over-the-counter markets.
|
|
|
(c)
|
The assets are comprised of U.S. Treasury Separate Trading of Registered Interest and Principal of Securities ("U.S. Treasury STRIPS") and mutual funds which are actively traded on the registered exchanges. The mutual funds are invested primarily in high quality government and corporate fixed income securities, as well as synthetic instruments or derivatives having economic characteristics similar to fixed income securities.
|
|
|
(d)
|
The high yield portion of the fixed income portfolio consists of mutual funds invested primarily in fixed income securities that are rated below investment grade. The mutual funds are actively traded on the registered exchanges.
|
|
|
(e)
|
The emerging debt portion of the portfolio consists of mutual funds primarily invested in the debt securities of government, government-related and corporate issuers in emerging market countries and of entities organized to restructure outstanding debt of such issuers. The mutual funds are actively traded on the registered exchanges.
|
|
|
(f)
|
Hedge Fund of Funds consists primarily of investments in underlying hedge funds. Management of the hedge funds has the ability to choose and combine hedge funds in order to target the fund's return objectives. Individual hedge funds hold their assets primarily in investment funds and engage in investment strategies that include temporary or dedicated directional market exposures.
|
|
|
(g)
|
This category is comprised of investments in common collective trusts with the underlying assets invested in asset-backed securities, money market funds, corporate bonds and bank notes. The underlying assets are actively traded on the registered exchanges.
|
|
|
(h)
|
Common/collective trust investments that are measured at fair value using the net asset value per share practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the total fair value of plan assets. The Company has participant redemptions restricted to the last business day of the quarter, with either a 65 or 90 day period redemption notice.
|
The following table represents a rollforward of the December 31,
2016
and
2015
balances of our plan assets that are valued using Level 3 inputs:
|
|
|
|
|
(Amounts in thousands)
|
Hedge Fund
of Funds
|
Balance as of December 31, 2014
|
$
|
10,174
|
|
Actual return on plan assets:
|
|
Relating to assets still held at the reporting date
|
(187
|
)
|
Relating to assets sold during the period
|
—
|
|
Purchases, sales and settlements, net
|
—
|
|
Balance as of December 31, 2015
|
9,987
|
|
Actual return on plan assets:
|
|
Relating to assets still held at the reporting date
|
(20
|
)
|
Relating to assets sold during the period
|
—
|
|
Purchases, sales and settlements, net
|
—
|
|
Balance as of December 31, 2016
|
$
|
9,967
|
|
Expected Cash Flows
The following table summarizes expected employer contributions and future benefit payments:
|
|
|
|
|
(Amounts in thousands)
|
|
Expected contributions to plan trusts
|
|
2017
|
$
|
6,000
|
|
Total expected contributions
|
$
|
6,000
|
|
|
|
Expected benefit payments:
|
|
2017
|
$
|
9,512
|
|
2018
|
10,292
|
|
2019
|
10,722
|
|
2020
|
11,033
|
|
2021
|
11,365
|
|
2022 through 2026
|
61,930
|
|
Total expected benefit payments
|
$
|
114,854
|
|
|
|
14
.
|
Earnings Per Common Share
|
Basic earnings per common share is computed by dividing net income attributable to Holdings' common stockholders by the weighted average number of common shares outstanding for the period. Diluted earnings per common share is computed by dividing net income attributable to Holdings' common stockholders by the weighted average number of common shares outstanding during the period and the effect of all dilutive common stock equivalents. In periods where there is a net loss,
SIX FLAGS ENTERTAINMENT CORPORATION
Notes to Consolidated Financial Statements
diluted loss per common share is equal to basic loss per common share, since the effect of including any common stock equivalents would be antidilutive.
For the years ended December 31,
2016
,
2015
and
2014
, the computation of diluted earnings per share included the effect of
2.0 million
,
4.4 million
and
3.7 million
dilutive stock options and restricted stock units, respectively. For the years ended December 31,
2016
,
2015
and
2014
, the computation of diluted earnings per share excluded the effect of
0.4 million
,
0.2 million
and
1.8 million
antidilutive stock options and restricted stock units, respectively. Earnings per common share for the years ended December 31,
2016
,
2015
and
2014
was calculated as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the year ended December 31,
|
(Amounts in thousands, except per share amounts)
|
2016
|
|
2015
|
|
2014
|
Net income attributable to Six Flags Entertainment Corporation common stockholders
|
$
|
118,302
|
|
|
$
|
154,690
|
|
|
$
|
76,022
|
|
|
|
|
|
|
|
Weighted-average common shares outstanding—basic
|
92,349
|
|
|
93,580
|
|
|
94,477
|
|
Effect of dilutive stock options and restricted stock units
|
2,049
|
|
|
4,401
|
|
|
3,662
|
|
Weighted-average common shares outstanding—diluted
|
94,398
|
|
|
97,981
|
|
|
98,139
|
|
|
|
|
|
|
|
Earnings per share—basic
|
$
|
1.28
|
|
|
$
|
1.65
|
|
|
$
|
0.80
|
|
Earnings per share—diluted
|
$
|
1.25
|
|
|
$
|
1.58
|
|
|
$
|
0.77
|
|
|
|
15
.
|
Commitments and Contingencies
|
Partnership Parks
On April 1, 1998, we acquired all of the capital stock of Former SFEC for
$976.0 million
, paid in cash. In addition to our obligations under outstanding indebtedness and other securities issued or assumed in the Former SFEC acquisition, we also guaranteed certain contractual obligations relating to the Partnership Parks. Specifically, we guaranteed the obligations of the general partners of those partnerships to (i) make minimum annual distributions (including rent) of approximately
$69.7 million
in
2017
(subject to cost of living adjustments) to the limited partners in the Partnership Parks (based on our ownership of units as of December 31,
2016
, our share of the distribution will be approximately
$30.4 million
) and (ii) make minimum capital expenditures at each of the Partnership Parks during rolling five-year periods, based generally on
6%
of the Partnership Parks' revenues. Cash flow from operations at the Partnership Parks is used to satisfy these requirements first, before any funds are required from us. We also guaranteed the obligation of our subsidiaries to annually purchase all outstanding limited partnership units to the extent tendered by the unit holders (the "Partnership Park Put"). The agreed price for units tendered in the Partnership Park Put is based on a valuation of each of the respective Partnership Parks (the "Specified Price") that is the greater of (a) a valuation for each of the respective Partnership Parks derived by multiplying such park's weighted average
four
year EBITDA (as defined in the agreements that govern the partnerships) by a specified multiple (
8.0
in the case of SFOG and
8.5
in the case of SFOT) and (b) a valuation derived from the highest prices previously paid for the units of the Partnership Parks by certain entities. Pursuant to the valuation methodologies described in the preceding sentence, the Specified Price for the Partnership Parks, if determined as of December 31,
2016
, is
$374.6 million
in the case of SFOG and
$433.8 million
in the case of SFOT. As of December 31,
2016
, we owned approximately
31.0%
and
53.1%
of the Georgia limited partner interests and Texas limited partner interests, respectively. Our obligations with respect to SFOG and SFOT will continue until 2027 and 2028, respectively.
In 2027 and 2028, we will have the option to purchase all remaining units in the Georgia limited partner and the Texas limited partner, respectively, at a price based on the Specified Price, increased by a cost of living adjustment. Pursuant to the 2015 annual offer, we did not purchase any units from the Texas partnership and we purchased
0.5000
units from the Georgia partnership for approximately
$1.6 million
in May 2015. Pursuant to the
2016
annual offer, we did not purchase any units from the Texas partnership and we purchased
0.0650
units from the Georgia partnership for approximately
$0.2 million
in May
2016
. As we purchase additional units, we are entitled to a proportionate increase in our share of the minimum annual distributions. The maximum unit purchase obligations for 2016 at both parks aggregated approximately
$461.8 million
, representing approximately
69.0%
of the outstanding units of SFOG and
46.9%
of the outstanding units of SFOT. The
$350.0 million
accordion feature on the Amended and Restated Term Loan B under the Amended and Restated Credit Facility is available for borrowing for future "put" obligations if necessary.
In connection with our acquisition of the Former SFEC, we entered into the Subordinated Indemnity Agreement with certain of the Company's entities, Time Warner and an affiliate of Time Warner, pursuant to which, among other things, we transferred to Time Warner (which has guaranteed all of our obligations under the Partnership Park arrangements) record title to the corporations which own the entities that have purchased and will purchase limited partnership units of the Partnership
SIX FLAGS ENTERTAINMENT CORPORATION
Notes to Consolidated Financial Statements
Parks, and we received an assignment from Time Warner of all cash flow received on such limited partnership units, and we otherwise control such entities. In addition, we issued preferred stock of the managing partner of the partnerships to Time Warner. In the event of a default by us under the Subordinated Indemnity Agreement or of our obligations to our partners in the Partnership Parks, these arrangements would permit Time Warner to take full control of both the entities that own limited partnership units and the managing partner. If we satisfy all such obligations, Time Warner is required to transfer to us the entire equity interests of these entities.
We incurred
$27.8 million
of capital expenditures at these parks during the
2016
season and intend to incur approximately
$17.0 million
of capital expenditures at these parks for the
2017
season, an amount in excess of the minimum required expenditure. Cash flows from operations at the Partnership Parks will be used to satisfy the annual distribution and capital expenditure requirements, before any funds are required from us. The Partnership Parks generated approximately
$79.5 million
of cash in
2016
from operating activities after deduction of capital expenditures and excluding the impact of short-term intercompany advances from or payments to Holdings. As of December 31,
2016
and
2015
, we had total loans receivable outstanding of
$239.3 million
from the partnerships that own the Partnership Parks, primarily to fund the acquisition of Six Flags White Water Atlanta, and to make capital improvements and distributions to the limited partners in prior years.
Operating Leases
We lease under long-term leases the sites of Six Flags Mexico, Six Flags Hurricane Harbor Oaxtepec, La Ronde and a small parcel near Six Flags New England. In certain cases, rent is based upon a percentage of the revenues earned by the applicable park. Under these rent agreements we recognized rental expense of approximately
$5.1 million
for the years ended December 31,
2016
and
2015
and
$6.3 million
for the year ended December 31,
2014
.
Total rental expense from continuing operations, including office space and park sites, was approximately
$12.9 million
,
$11.9 million
and
$12.8 million
for the years ended December 31,
2016
,
2015
and
2014
, respectively.
Future minimum obligations under non-cancelable operating leases, including site leases, as of December 31,
2016
, are summarized as follows:
|
|
|
|
|
(Amounts in thousands)
|
|
For the year ending December 31:
|
|
2017
|
$
|
7,267
|
|
2018
|
7,045
|
|
2019
|
7,860
|
|
2020
|
7,471
|
|
2021
|
6,385
|
|
2022 and thereafter
|
125,651
|
|
|
$
|
161,679
|
|
License Agreements
We are party to a license agreement pursuant to which we have the exclusive right on a long term basis to theme park use in the United States and Canada (excluding the Las Vegas, Nevada metropolitan area) of all animated, cartoon and comic book characters that Warner Bros. and DC Comics have the right to license for such use. The license fee is subject to periodic scheduled increases and is payable on a per-theme park basis.
In November 1999, we entered into license agreements (collectively, the "International License Agreements") pursuant to which we have the exclusive right on a long term basis to theme parks use in Europe, Central and South America of all animated, cartoon and comic book characters that Warner Bros., DC Comics and the Cartoon Network have the right to license for such use. Under the International License Agreements, the license fee is based on specified percentages of the gross revenues of the applicable parks.
Insurance
We maintain insurance of the types and in amounts that we believe are commercially reasonable and that are available to businesses in our industry. We maintain multi-layered general liability policies that provide for excess liability coverage of up to
$100.0 million
per occurrence. For incidents arising after November 15, 2003 but prior to December 31, 2008, our self-insured retention is
$2.5 million
per occurrence (
$2.0 million
per occurrence for the twelve months ended November 15, 2003 and
$1.0 million
per occurrence for the twelve months ended November 15, 2002) for our domestic parks and a nominal amount per occurrence for our international parks. For incidents arising after November 1, 2004 but prior to December 31, 2008, we have a one-time additional
$0.5 million
self-insured retention, in the aggregate, applicable to all claims in the policy year. For incidents arising on or after December 31, 2008, our self-insured retention is
$2.0 million
, followed by a
$0.5 million
deductible per occurrence applicable to all claims in the policy year for our domestic parks and our park in Canada and a
SIX FLAGS ENTERTAINMENT CORPORATION
Notes to Consolidated Financial Statements
nominal amount per occurrence for our parks in Mexico. Defense costs are in addition to these retentions. Our general liability policies cover the cost of punitive damages only in certain jurisdictions. Based upon reported claims and an estimate for incurred, but not reported claims, we accrue a liability for our self-insured retention contingencies. For workers' compensation claims arising after November 15, 2003, our deductible is
$0.75 million
(
$0.5 million
deductible for the period from November 15, 2001 to November 15, 2003). We also maintain fire and extended coverage, business interruption, terrorism and other forms of insurance typical to businesses in this industry. The all peril property coverage policies insure our real and personal properties (other than land) against physical damage resulting from a variety of hazards. Additionally, we maintain information security and privacy liability insurance in the amount of
$10.0 million
with a
$0.25 million
self-insured retention per event.
We generally renegotiate our insurance policies on an annual basis. The majority of our current insurance policies expire on
December 31, 2017
. We cannot predict the level of the premiums that we may be required to pay for subsequent insurance coverage, the level of any self-insurance retention applicable thereto, the level of aggregate coverage available or the availability of coverage for specific risks.
Capital Expenditures
We currently plan on spending approximately 9% of annual revenues on capital expenditures during the
2017
calendar year plus approximately half of the $18 million in attractions and planned improvements for our newest waterpark in Oaxtepec, Mexico. The waterpark is expected to open to the public in early 2017.
Litigation
We are party to various legal actions arising in the normal course of business, including the cases discussed below. Matters that are probable of unfavorable outcome to us and which can be reasonably estimated are accrued. Such accruals are based on information known about the matters, our estimate of the outcomes of such matters and our experience in contesting, litigating and settling similar matters. None of the actions are believed by management to involve amounts that would be material to our consolidated financial position, results of operations or liquidity after consideration of recorded accruals.
On January 6, 2009, a civil action against us was commenced in the State Court of Cobb County, Georgia. The plaintiff sought damages for personal injuries, including an alleged brain injury, as a result of an altercation with a group of individuals on property adjacent to SFOG on July 3, 2007. Certain of the individuals were employees of the park, but were off-duty and not acting within the course or scope of their employment with SFOG at the time the altercation occurred. The plaintiff, who had exited the park, claimed that we were negligent in our security of the premises.
Four
of the individuals who allegedly participated in the altercation were also named as defendants in the litigation. Our motion for summary judgment was denied by the trial court on May 19, 2011. Pursuant to the trial that concluded on November 20, 2013, the jury returned a verdict in favor of the plaintiff for
$35.0 million
. The jury allocated
92%
of the verdict against Six Flags and the judgment was entered on February 11, 2014. A notice of appeal was filed on September 19, 2014, which our insurers are pursuing on Six Flags' and the insurers' behalf, and on October 2, 2014, the plaintiff filed a notice of cross appeal. On November 20, 2015, the Georgia Court of Appeals reversed the jury verdict and remanded for a new trial on both liability and damages. On December 16, 2015, the Georgia Court of Appeals denied the parties’ various motions for reconsideration. A petition for writ of certiorari in the Georgia Supreme Court was filed on behalf of Six Flags on January 19, 2016. The Six Flags petition asks the Georgia Supreme Court to grant further review and rule that Six Flags is entitled to judgment as a matter of law without the need for a new trial. On January 19, 2016, the plaintiff also filed a petition for writ of certiorari asking the Georgia Supreme Court to review the Court of Appeals’ reversal of the jury verdict. We have paid the full amount of our
$2.5 million
self-insurance retention to our insurers.
On June 27, 2012, Wishtoyo Foundation and its Ventura Coastkeeper program, Los Angeles Coastkeeper d/b/a Santa Monica Baykeeper, and Friends of the Santa Clara River, all non-profit corporations, filed a complaint against Holdings, SFTP and Magic Mountain LLC in the United States District Court for the Central District of California seeking declaratory and injunctive relief and civil penalties under, among others, the Federal Water Pollution Control Act (more commonly known as the Clean Water Act). The plaintiffs allege that Six Flags Magic Mountain discharged water in violation of its water discharge permits into the Santa Clara River. In January 2015, the parties to the lawsuit entered into a consent decree to settle the lawsuit, and on March 26, 2015, the consent decree was approved and entered by the District Court. In connection with settlement of the lawsuit, we intend to install at Six Flags Magic Mountain an on-site infiltration basin to retain, manage and infiltrate stormwater runoff from the park in certain instances.
On July 3, 2012, a civil action was commenced against us in the Superior Court of Solano County, California. The plaintiffs sought damages for personal injuries when a guest at Six Flags Discovery Kingdom jumped on a swinging gate arm that entered a passing tram carrying the plaintiffs on July 3, 2010. We have reserved the full amount of our
$2.5 million
self-insurance retention plus estimated litigation costs in connection with this incident. On October 24, 2014, the litigation was dismissed, without prejudice, with respect to one of the plaintiffs, a minor, who may reinstate the lawsuit at any time prior to
SIX FLAGS ENTERTAINMENT CORPORATION
Notes to Consolidated Financial Statements
two years following the date such plaintiff reaches the age of majority. In January 2015, an agreement was reached to settle the lawsuit with the remaining plaintiffs.
On September 12, 2014, a civil action against us was commenced in the Circuit Court of Cook County, Illinois. The plaintiff sought damages for personal injuries after riding a water slide at Six Flags Great America. In 2015, the venue for the action was transferred to Lake County. Pursuant to the trial that concluded on April 26, 2016, the jury returned a verdict in favor of the plaintiff for $1.5 million. We intend to vigorously challenge the verdict and in May 2016 we filed a post-trial motion to vacate the jury verdict.
On January 7, 2016, a potential class action complaint was filed against Six Flags Entertainment Corporation in the Circuit Court of Lake County, Illinois. On April 22, 2016, Great America, LLC was added as a defendant. The complaint asserts that we violated the Illinois Biometric Information Privacy Act in connection with the admission of season pass holders and members through the finger scan program at Six Flags Great America in Gurnee, Illinois, and seeks statutory damages, attorney's fees and an injunction. The program commenced at the park in the 2014 operating season. The complaint does not allege that any information was misused or disseminated. On June 17, 2016, the court denied our motion to dismiss, and allowed the case to proceed, however we intend to continue to vigorously defend ourselves against this litigation. Since this litigation is still in an early stage, the outcome is currently not determinable and a reasonable estimate of loss or range of loss in excess of the immaterial amount that we have recorded for this litigation cannot be made.
Tax and other contingencies
As of December 31,
2016
and
2015
, we had a nominal amount of accrued liabilities for tax and other indemnification contingencies related to certain parks sold in previous years that could be recognized as recovery losses from discontinued operations in the future if such liabilities are not requested to be paid.
We manage our operations on an individual park location basis, including operations from parks owned, managed and branded. Discrete financial information is maintained for each park and provided to our corporate management for review and as a basis for decision making. The primary performance measures used to allocate resources is Park EBITDA (defined as park-related operating earnings, excluding the impact of interest, taxes, depreciation, amortization and any other non-cash income or expenditures). Primarily all of our parks provide similar products and services through a similar process to the same class of customer through a consistent method. We also believe that the parks share common economic characteristics. Based on these factors, we have only
one
reportable segment—theme parks.
The following table presents segment financial information and a reconciliation of net income to Park EBITDA. Park level expenses exclude all non-cash operating expenses, principally depreciation and amortization and all non-operating expenses.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
(Amounts in thousands)
|
2016
|
|
2015
|
|
2014
|
Net income
|
$
|
156,727
|
|
|
$
|
192,855
|
|
|
$
|
113,489
|
|
Interest expense, net
|
81,872
|
|
|
75,903
|
|
|
72,589
|
|
Income tax expense
|
76,539
|
|
|
70,369
|
|
|
46,522
|
|
Depreciation and amortization
|
106,893
|
|
|
107,411
|
|
|
108,107
|
|
Corporate expenses
|
51,435
|
|
|
59,167
|
|
|
48,595
|
|
Stock-based compensation
|
116,339
|
|
|
56,233
|
|
|
140,038
|
|
Non-operating park level expense (income), net:
|
|
|
|
|
|
Loss on disposal of assets
|
1,968
|
|
|
9,882
|
|
|
5,860
|
|
Gain on sale of investee
|
—
|
|
|
—
|
|
|
(10,031
|
)
|
Loss on debt extinguishment, net
|
2,935
|
|
|
6,557
|
|
|
—
|
|
Other expense, net
|
1,684
|
|
|
223
|
|
|
356
|
|
Park EBITDA
|
$
|
596,392
|
|
|
$
|
578,600
|
|
|
$
|
525,525
|
|
All of our owned or managed parks are located in the United States with the exception of
one
park in Mexico City and
one
park in Montreal, Canada. We also have revenue and expenses related to the development of Six Flags-branded theme parks outside of North America. The following information reflects our long-lived assets (which consists of property and equipment and intangible assets), revenues and income from continuing operations by domestic and foreign categories as of or
SIX FLAGS ENTERTAINMENT CORPORATION
Notes to Consolidated Financial Statements
for the years ended December 31,
2016
,
2015
and
2014
:
|
|
|
|
|
|
|
|
|
|
|
|
|
(Amounts in thousands)
|
Domestic
|
|
Foreign
|
|
Total
|
As of or for the year ended December 31, 2016
|
|
|
|
|
|
Long-lived assets
|
$
|
2,111,839
|
|
|
$
|
83,636
|
|
|
$
|
2,195,475
|
|
Revenues
|
1,205,235
|
|
|
114,163
|
|
|
1,319,398
|
|
Income from continuing operations before income taxes and discontinued operations
|
216,205
|
|
|
17,061
|
|
|
233,266
|
|
As of or for the year ended December 31, 2015
|
|
|
|
|
|
Long-lived assets
|
$
|
2,105,547
|
|
|
$
|
79,283
|
|
|
$
|
2,184,830
|
|
Revenues
|
1,144,917
|
|
|
119,021
|
|
|
1,263,938
|
|
Income from continuing operations before income taxes and discontinued operations
|
238,416
|
|
|
24,808
|
|
|
263,224
|
|
As of or for the year ended December 31, 2014
|
|
|
|
|
|
Long-lived assets
|
$
|
2,114,897
|
|
|
$
|
92,815
|
|
|
$
|
2,207,712
|
|
Revenues
|
1,058,025
|
|
|
117,768
|
|
|
1,175,793
|
|
Income from continuing operations before income taxes and discontinued operations
|
145,622
|
|
|
14,389
|
|
|
160,011
|
|
|
|
17
.
|
Quarterly Financial Information (Unaudited)
|
Following is a summary of the unaudited interim results of operations for the years ended December 31,
2016
,
2015
and
2014
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, 2016
|
(Amounts in thousands)
|
First
Quarter
|
|
Second
Quarter
|
|
Third
Quarter
|
|
Fourth
Quarter
|
Total revenue
|
$
|
115,419
|
|
|
$
|
407,066
|
|
|
$
|
557,599
|
|
|
$
|
239,314
|
|
Net (loss) income attributable to Six Flags Entertainment Corporation common stockholders
|
(46,935
|
)
|
|
60,887
|
|
|
102,482
|
|
|
1,868
|
|
Net (loss) income per weighted average common share outstanding:
|
|
|
|
|
|
|
|
Basic
|
$
|
(0.51
|
)
|
|
$
|
0.65
|
|
|
$
|
1.11
|
|
|
$
|
0.02
|
|
Diluted
|
(0.51
|
)
|
|
0.64
|
|
|
1.09
|
|
|
0.02
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, 2015
|
(Amounts in thousands)
|
First
Quarter
|
|
Second
Quarter
|
|
Third
Quarter
|
|
Fourth
Quarter
|
Total revenue
|
$
|
85,155
|
|
|
$
|
386,065
|
|
|
$
|
575,261
|
|
|
$
|
217,457
|
|
Net (loss) income attributable to Six Flags Entertainment Corporation common stockholders
|
(70,326
|
)
|
|
65,532
|
|
|
157,300
|
|
|
2,184
|
|
Net (loss) income per weighted average common share outstanding:
|
|
|
|
|
|
|
|
Basic
|
$
|
(0.75
|
)
|
|
$
|
0.69
|
|
|
$
|
1.67
|
|
|
$
|
0.02
|
|
Diluted
|
(0.75
|
)
|
|
0.67
|
|
|
1.64
|
|
|
0.02
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, 2014
|
(Amounts in thousands)
|
First
Quarter
|
|
Second
Quarter
|
|
Third
Quarter
|
|
Fourth
Quarter
|
Total revenue
|
$
|
73,718
|
|
|
$
|
376,551
|
|
|
$
|
541,843
|
|
|
$
|
183,681
|
|
Net (loss) income attributable to Six Flags Entertainment Corporation common stockholders
|
(61,201
|
)
|
|
66,306
|
|
|
105,034
|
|
|
(34,117
|
)
|
Net (loss) income per weighted average common share outstanding:
|
|
|
|
|
|
|
|
Basic
|
$
|
(0.64
|
)
|
|
$
|
0.70
|
|
|
$
|
1.11
|
|
|
$
|
(0.37
|
)
|
Diluted
|
(0.64
|
)
|
|
0.67
|
|
|
1.08
|
|
|
(0.37
|
)
|
We operate a seasonal business. In particular, our theme park operations contribute most of their annual revenue during the period from Memorial Day to Labor Day each year.
During the third quarter of 2014, it was determined that achievement of the Modified EBITDA performance target related to the 2015 Performance Award was probable by 2015. Additionally, the results of operations for the year ended December 31, 2014 exceeded the threshold for a 2014 partial achievement award, and the results for the year ended December 31, 2015 exceeded the threshold for the remainder of the award, resulting in the issuance of a partial achievement award in February
SIX FLAGS ENTERTAINMENT CORPORATION
Notes to Consolidated Financial Statements
2015, with the remainder of the award issued in February 2016. As a result, we began accruing stock-based compensation expense related to this award in 2014, resulting in a cumulative catch-up of non-cash compensation costs that materially impacted net income for the third quarter of 2014 by
$72.6 million
.
During the third quarter of 2016, it was determined that achievement of the Modified EBITDA performance target related to the 2017 Performance Award was probable by 2017. As a result, we began accruing stock-based compensation expense related to this award in 2016, resulting in a cumulative catch-up of non-cash compensation costs that materially impacted net income for the third quarter of 2016 by
$85.8 million
.