PKS Six Flags

Six Flags, Inc. (the "Company") (NYSE: PKS) announced today its results of operations for the six months and quarter ended June 30, 2005. Revenues for the second quarter of 2005 were 8.4% higher than the prior year, and attendance increased 753,000, or 6.6%, reflecting the positive market reaction in virtually all of the Company's parks to the Company's new capital additions and marketing programs. Six Month Results For the first six months of 2005, revenues were $440.9 million, compared to $401.2 million for the comparable period of 2004, an increase of $39.7 million, or 9.9%. Attendance for the period rose 1.08 million, or 8.5%, while total revenue per capita increased by 1.3%, to $31.82. Operating costs and expenses, including depreciation, amortization and non-cash compensation, were $465.8 million in the 2005 six-month period, as compared to $444.7 million in the prior-year period. Excluding depreciation, amortization and non-cash compensation, cash operating costs and expenses were $390.0 million in 2005 and $370.6 million in 2004, an increase of 5.2%, reflecting planned increases in labor and other expenses to continue the Company's guest service initiatives and to operate the attractions added for the 2005 season, as well as expected increases in costs of goods sold as a result of higher sales volume. EBITDA (Modified) was $50.9 million in the 2005 period as compared to $30.7 million in the 2004 period(1). Adjusted EBITDA for the 2005 period was $29.5 million compared to $12.0 million in 2004.(1) Loss from continuing operations applicable to common stock was $178.6 million in the first six months of 2005 as compared to $135.1 million in the 2004 period. The 2005 period reflects the impact of a $63.8 million tax valuation allowance. In addition, both periods included a loss on early repurchase of debt. Absent the tax valuation allowance and the loss on early repurchase of debt (net of the associated tax benefits in 2005 and 2004), the loss from continuing operations in 2005 would have been $102.8 million and in 2004 would have been $115.6 million.(2) Three Month Results Revenues for the second quarter of 2005 were $386.5 million, compared to $356.4 million for the comparable quarter of 2004. The 2005 performance reflects an increase in attendance of 753,000, or 6.6%, and a 1.8% increase in total revenue per capita, to $31.65. Operating costs and expenses, including depreciation, amortization and non-cash compensation, were $294.3 million in the 2005 quarter and $282.6 million in the year ago period. Excluding depreciation, amortization and non-cash compensation, cash operating costs and expenses were $256.3 million in the second quarter of 2005, as compared to $245.6 million in the prior-year quarter, an increase of 4.3%. EBITDA (Modified) was $130.2 million in the second quarter of 2005 compared to $110.8 million in the 2004 quarter. Adjusted EBITDA for the second quarter of 2005 was $103.5 million compared to $86.2 million in the second quarter of 2004, an increase of 20.1%. Income from continuing operations applicable to common stock was $5.6 million in the second quarter of 2005 as compared to a loss of $9.7 million in the 2004 period. The 2005 results benefited from a partial reversal of the tax valuation allowance established in the first quarter. Without that effect, the income from continuing operations in the 2005 quarter would have been $2.2 million. The 2004 period included a loss on early repurchase of debt. Absent that loss, net of the associated tax benefits, the loss from continuing operations applicable to common stock would have been $5.8 million in the 2004 period. Discussion and Outlook Kieran E. Burke, Chairman and Chief Executive Officer of Six Flags, said, "We are pleased with the broad-based strong performance of our parks during the first half of 2005. Although there is a great deal of time left in our season, the year-to-date results from our parks have been very encouraging. They reflect the successful implementation of our investment program, which added new attractions in 13 of our 18 domestic theme parks, and three of our water parks and both of our international parks, as well as our ongoing guest service initiatives, and year two of our advertising campaign. We also enjoyed favorable weather conditions during the early part of the summer, and this had a positive impact on attendance. Our performance in July continued to reflect solid growth. While attendance growth in the month slowed somewhat from its robust early season pace, per capita revenues rose sharply. For the month, total revenues rose 9.6% from the year ago period. As a result, year-to-date through August 1 total attendance is 6.3% ahead of the prior year, per capita revenues are up 3.3%, and revenues are up by 9.8% year over year. There is a significant amount of our season remaining and we did enjoy a strong October performance last year. Nonetheless, given our performance to date, we are clearly poised to deliver strong financial results for the year, and see the stage set for further growth. "We continue to anticipate generating Adjusted EBITDA of $300 million in 2005. This is based on expected full year revenue growth of approximately 8.5%. We continue to enjoy substantial liquidity and have no near-term debt maturities." Six Flags, Inc. is the world's largest regional theme park company. The information contained in this news release, other than historical information, consists of forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act. These statements may involve risks and uncertainties that could cause actual results to differ materially from those described in such statements. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to have been correct. Important factors, including factors impacting attendance, such as local conditions, events, disturbances and terrorist activities, risks of accidents occurring at the Company's parks, adverse weather conditions, general economic conditions (including consumer spending patterns), competition, pending, threatened or future legal proceedings and other factors could cause actual results to differ materially from the Company's expectations. Reference is made to a more complete discussion of forward-looking statements and applicable risks contained under the captions "Cautionary Note Regarding Forward-Looking Statements" and "Business - Risk Factors" in the Company's Annual Report on Form 10-K for the year ended December 31, 2004, which is available free of charge on the Company's website (www.sixflags.com). This release and prior releases are available on the Company's Worldwide Web site at www.sixflags.com. (1) See note 3 to the following table for a discussion of EBITDA (Modified) and Adjusted EBITDA, and for a reconciliation of these amounts to net loss. (2) See note 2 to the following table. -0- *T Six Flags, Inc. Statement of Operations Data (1) Three and Six Months Ended June 30, 2005 (In Thousands, Except Per Share Amounts) (Unaudited) Statement of Operations Data Three Months Six Months ended June 30, ended June 30, ------------------ --------------------- 2005 2004 2005 2004 -------- --------- ---------- ---------- Revenue $386,492 $356,411 $ 440,872 $ 401,224 Costs and expenses (excluding depreciation, amortization and non-cash compensation) 256,282 245,647 389,988 370,551 Depreciation 37,674 36,496 74,920 73,152 Amortization 223 327 445 653 Non-cash compensation 166 161 454 322 -------- --------- ---------- ---------- Income (loss) from operations 92,147 73,780 (24,935) (43,454) Interest expense (net) (45,775) (49,116) (90,520) (101,023) Minority interest in earnings (25,531) (23,236) (18,968) (15,882) Early repurchase of debt - (6,195) (19,303) (31,372) Other expense (8,174) (1,626) (11,371) (4,571) -------- --------- ---------- ---------- Income (loss) from continuing operations before income taxes 12,667 (6,393) (165,097) (196,302) Income tax expense (benefit) 1,566 (2,224) 2,521 (72,218) -------- --------- ---------- ---------- Income (loss) from continuing operations 11,101 (4,169) (167,618) (124,084) Discontinued operations, net of tax benefit of $1,628 (three months) and $57,387 (six months) in 2004 - (2,657) - (287,561) -------- --------- ---------- ---------- Net income (loss) $ 11,101 $ (6,826) $(167,618) $(411,645) ======== ========= ========== ========== Net income (loss) applicable to common stock $ 5,609 $(12,318) $(178,603) $(422,630) ======== ========= ========== ========== Per share - basic and diluted: Income (loss) from continuing operations $ 0.06 $ (0.10) $ (1.92) $ (1.45) Discontinued operations, inclusive of tax benefit - (0.03) - (3.09) -------- --------- ---------- ---------- Net income (loss) $ 0.06 $ (0.13) $ (1.92) $ (4.54) ======== ========= ========== ========== Other Data: Income (loss) applicable to common stock from continuing operations before effect of valuation allowance and loss on early repurchase of debt(2) $ 2,180 $ (5,820) $(102,818) $(115,618) Income (loss) applicable to common stock from continuing operations per common share (basic and diluted) before valuation allowance and loss on early repurchase of debt(2) $ 0.02 $ (0.06) $ (1.10) $ (1.24) EBITDA (Modified)(3) $130,210 $110,764 $ 50,884 $ 30,673 Adjusted EBITDA(3) $103,459 $ 86,157 $ 29,476 $ 12,049 Average weighted shares outstanding - basic 93,107 93,042 93,105 93,030 Average weighted shares outstanding - diluted 93,108 93,042 93,105 93,030 Net cash provided by (used in) operating activities $122,444 $ 89,368 $ 25,146 $ (14,750) Balance Sheet Data (In Thousands) June December Balance Sheet Data 30, 2005 31, 2004 ----------- ---------- (Unaudited) Cash and cash equivalents $ 116,643 $ 68,807 Total assets 3,646,845 3,642,227 Current portion of long-term debt (excluding debt called for repayment) 173,979 24,394 Long-term debt (excluding current portion) 2,134,963 2,125,121 Mandatorily redeemable preferred stock 282,808 282,245 Total stockholders' equity 649,852 826,065 (1) Revenues and expenses of international operations are converted into dollars on a current basis as provided by accounting principles generally accepted in the United States ("GAAP"). (2) The Company's reported results include items of income and expense that the Company believes are typically excluded by securities analysts in their published estimates for the Company's financial results. These excluded items include gains and losses on early repurchases of debt and effects of deferred tax asset valuation allowances. The following tables set forth the calculation of net income (loss) applicable to common stock and net income (loss) applicable to common stock per common share before giving effect to those excluded items and before discontinued operations, in the case of the 2004 periods. This measure is not defined by GAAP and should not be considered in isolation or as an alternative to net income (loss), income (loss) from continuing operations, net cash provided by (used in) operating, investing and financing activities or other financial data prepared in accordance with GAAP or as an indicator of the Company's operating performance. (In thousands) -------------------------------------- Three Months ended Six Months June 30, ended June 30, ----------------- -------------------- 2005 2004 2005 2004 -------- -------- ---------- --------- (Unaudited) Net income (loss) applicable to common stock $ 5,609 (12,318) $(178,603) (422,630) Discontinued operations, net of tax -- 2,657 -- 287,561 Effect of valuation allowance (3,429) -- 63,817 -- Early repurchase of debt -- 6,195 19,303 31,372 Income tax benefit from early repurchase of debt -- (2,354) (7,335) (11,921) -------- -------- ---------- --------- Income (loss) applicable to common stock from continuing operations before valuation allowance and loss on early repurchase of debt $ 2,180 (5,820) $(102,818) (115,618) ======== ======== ========== ========= Income (loss) Per Share (Basic) ------------------------------- (In thousands) ------------------------------ Three Months Six Months ended ended June 30, June 30, --------------- -------------- 2005 2004 2005 2004 ------- ------- ------- ------ (Unaudited) Net income (loss) applicable to common stock $ 0.06 (0.13) $(1.92) (4.54) Discontinued operations, net of tax -- 0.03 -- 3.09 Effect of valuation allowance (0.04) -- 0.68 -- Early repurchase of debt -- 0.07 0.21 0.34 Income tax benefit from early repurchase of debt -- (0.03) (0.07) (0.13) -------- ------- ------- ------ Income (loss) applicable to common stock from continuing operations before valuation allowance and loss on early repurchase of debt $ 0.02 (0.06) $(1.10) (1.24) ======== ======= ======= ====== (3) EBITDA (Modified) is defined as net income (loss) from continuing operations, before income tax expense (benefit), other expense, early repurchase of debt (formerly extraordinary loss), minority interest in earnings, interest expense (net), amortization, depreciation and non-cash compensation. Adjusted EBITDA is defined as EBITDA (Modified) minus the interest of third parties in EBITDA of the four parks that are less than wholly owned. The Company believes that EBITDA (Modified) and Adjusted EBITDA (collectively, the "EBITDA-Based Measures") provide useful information to investors regarding the Company's operating performance and its capacity to incur and service debt and fund capital expenditures. The Company believes that the EBITDA-Based Measures are used by many investors, equity analysts and rating agencies as a measure of performance. In addition, Adjusted EBITDA is approximately equal to "Consolidated Cash Flow" as defined in the indentures relating to the Company's senior notes. Neither of the EBITDA-Based Measures is defined by GAAP and neither should be considered in isolation or as an alternative to net income (loss), income (loss) from continuing operations, net cash provided by (used in) operating, investing and financing activities or other financial data prepared in accordance with GAAP or as an indicator of the Company's operating performance. The following table sets forth a reconciliation of net income (loss) to EBITDA (Modified) and Adjusted EBITDA for the periods shown (in thousands). (In thousands) -------------------------------------- Three Months ended Six Months ended June 30, June 30, ----------------- ------------------- 2005 2004 2005 2004 -------- -------- --------- --------- (Unaudited) Net income (loss) $ 11,101 (6,826) $(167,618) (411,645) Discontinued operations, inclusive of tax benefit -- 2,657 -- 287,561 Income tax expense (benefit) 1,566 (2,224) 2,521 (72,218) Other expense 8,174 1,626 11,371 4,571 Early repurchase of debt -- 6,195 19,303 31,372 Minority interest in earnings 25,531 23,236 18,968 15,882 Interest expense (net) 45,775 49,116 90,520 101,023 Amortization 223 327 445 653 Depreciation 37,674 36,496 74,920 73,152 Non-cash compensation 166 161 454 322 -------- -------- --------- --------- EBITDA (Modified) 130,210 110,764 50,884 30,673 Third party interest in EBITDA of certain parks(a) (26,751) (24,607) (21,408) (18,624) -------- -------- --------- --------- Adjusted EBITDA $103,459 86,157 $ 29,476 12,049 ======== ======== ========= ========= *T The Company is not able as of this date to provide a reliable estimate of its income tax expense (benefit) and other income (expense) for the year ending December 31, 2005. Therefore, a reliable estimate of its net loss for that year is not available. Accordingly, the following table sets forth a reconciliation of expected income from operations for 2005 to expected EBITDA (Modified) and expected Adjusted EBITDA for such year. Since the EBITDA-Based Measures are calculated before income taxes and other expense, the absence of estimates with respect to these items would not affect the expected EBITDA-Based Measures presented. For 2005, expected interest expense (net) is approximately $180,000,000 and expected minority interest in earnings is approximately $40,000,000. -0- *T (In thousands) Year Ending December 31, 2005 -------------------- Income from operations $ 186,300 Non-cash compensation 800 Amortization 900 Depreciation 156,000 -------------------- EBITDA (Modified) 344,000 Third-party interest in EBITDA of certain parks(a) (44,000) -------------------- Adjusted EBITDA $ 300,000 ==================== (a) Represents interest of third parties in EBITDA of Six Flags Over Georgia, Six Flags Over Texas, Six Flags White Water Atlanta and Six Flags Marine World. *T