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| This company has recently filed for protection under Chapter 11 of the U.S. Bankruptcy Code. |
Six Flags, Inc. (NYSE: SIX) is the largest regional theme park operator in the world[1] and owns or operates 21 theme parks throughout North America.[2] The company's only business segment involves the operation of its regional theme parks which generates theme park admission revenue and in-park sales income.[3] SIX holds exclusive long-term licenses for the use of Warner Brothers and DC Comics characters like Bugs Bunny, Daffy Duck, Batman, and Superman;[4] in addition to planting walk-around characters in its parks and using licensed characters for advertising, Six Flags builds character-inspired rides that are an important marketing tool.[4]
SIX has not been able to turn a profit since 1998.[5][6][7][8] The company's troubles began when expansion-related debt[9] drove the company to a net loss of $30.5 million in 1999.[7] By 2008, the debt had grown to be more than $2 billion - over 14 times its market capitalization in June 2008.[9] In the 2008 Quarter 3 earnings call, CEO Mark Shapiro made it clear that, since net income was growing even in poor economic conditions, knocking out SIX's debt had become the top priority for the company.[10]
In 2008, SIX violated two listing standards of the NYSE: its share price, after steadily falling for years while the company lost money and its debt mounted, finally fell below $1.00 for over thirty days[11] and its 30-day average market capitalization fell below $75 million.[12] This means that, in addition to regaining an annual net income and fighting off the serious debt on its balance sheet,[10] If SIX does not increase its stock price and market capitalization, it risks losing its listing on the NYSE.[11]
[edit] Business Overview
Six Flags is the largest regional theme park operator[1] and the second largest amusement park operator in the world.[13] Although approximately 25 million people visit its 20 operating theme parks each year,[4] the company has not posted a positive net income for any year since 1998.[5][6][7][8] Six Flags operates as a seasonal business - over 85% of park attendance and revenues are generated between the second and third quarters of the calendar year[14] - and primarily generates its income through ticket sales, in-park food and merchandise sales, and sponsorship revenue.[15]
[edit] Business and Financial Metrics
| Quarter 1 | Quarter 2 | Quarter 3 | |
| Park Attendance (1ks) | 1,448[16] | 8,638[17] | 12,153[18] |
| Per Capita Revenue | $47.11[16] | $40.02[17] | $40.27[18] |
| Theme Park Admissions Revenue ($1ks) | 31,131[19] | 184,495[20] | 260,576[21] |
| Food, Merchandise, and other Revenue ($1ks) | 25,667[19] | 146,714[20] | 209,430[21] |
| Net Income ($1ks) | (149,904)[19] | 94,591[20] | 143,469[21] |
| 2005 | 2006 | 2007 | |
| Park Attendance (1ks)[23] | 28,688 | 24,840 | 24,902 |
| Per Capita Revenue[23] | $33.35 | $38.07 | $39.06 |
| Theme Park Admissions Revenue ($1ks)[3] | 519,114 | 508,492 | 510,122 |
| Food, Merchandise, and other Revenue ($1ks)[24] | 437,643 | 437,173 | 462,658 |
| Net Loss ($1ks)[3] | 110,938 | 305,618 | 253,159 |
SIX generates most of its revenues through theme park admissions, which accounted for 52.4% of total revenue in 2007.[3] The rest of its income comes from food, merchandise, and other in-park sales: in 2007, a 3.2% rise in non-admission guest spending was the driving force between a 2.9% increase in SIX's total revenue in 2007.[23] In spite of the increased revenue for the year, SIX lost $244.0 million - 17.9% more than in 2006 - because of a 5.2% increase in expenses from $1.15 billion to $1.22 billion in FY 2007.[23]
[edit] Business Segments
Six Flags manages its operations on an individual park location basis; financial information is kept for each park and regularly submitted to management for review and decision-making.[25] The company has only one official segment - "operation of theme parks" - since SIX's parks all provide similar services to a similar group of customers.[25] SIX's parks are:
- Six Flags America: A 131-acre combination theme and water park in Largo, Maryland.[26] This park's primary market is in Maryland, northern Virginia, Washington D.C., and parts of Pennsylvania and Delaware; a permanent resident population of approximately 7.5 million people live within 50 miles and about 12.7 million within 100 miles.[26] Six Flags owns approximately 300 undeveloped acres at this site which can be used for further development.[26]
- Six Flags Discovery Kingdom: Formerly Six Flags Marine World, this Vallejo, California-based park features rides, marine mammals, and land animals.[27] Near San Francisco, Oakland, and Sacramento, Discovery Kingdom is surrounded by a permanent resident population of 5.7 million within 50 miles and 10.9 million within 100 miles.[27] SIX operated this park in a partnership with the City of Vallejo until July 2007, when the company bought the City's stake for approximately $52.8 million.[27]
- Six Flags Fiesta Texas: A 216-acre combination theme and water park in San Antonio, Texas.[27] A permanent resident population of approximately 2.1 million people live within 50 miles of the park and about 3.7 million live within 100 miles.[27]
- Six Flags Great Adventure, Six Flags Hurricane Harbor, and Six Flags Wild Safari: These three adjacent but separately-gated parks in Jackson, New Jersey serve the New York and Philadelphia markets, with a permanent resident population of about 13.9 million within 50 miles and 28.2 million within 100 miles.[27] The parks occupy approximately 635 acres of a 2,200-acre site and about 700 acres are available for future development.[27] Great Adventure acts as a traditional theme park, Hurricane Harbor as a water park, and Wild Safari as an animal park with over 1,200 animals representing more than 55 species.[27]
- Six Flags Great America: A 234-acre combination theme and water park in Gurnee, Illinois.[28] A permanent resident population of approximately 8.8 million people live within 50 miles of the park and about 13.7 million live within 100 miles.[28]
- Six Flags Kentucky Kingdom: A 58-acre combination theme and water park adjacent to the Kentucy Fair and Exposition Center in Louisville, Kentucky.[28] A permanent resident population of approximately 1.5 million people live within 50 miles of the park and about 4.8 million live within 100 miles.[28]
- Six Flags Magic Mountain and Six Flags Hurricane Harbor: These two adjacent but separately-gated parks in Valencia, California serve the Los Angeles, California market, with a permanent resident population of about 10.6 million within 50 miles and 17.7 million within 100 miles.[28] The parks occupy about 260 acres.[28]
- Six Flags Mexico: Six Flags acquired Reino Aventura, the largest paid admission theme park in Mexico, and rebranded it as "Six Flags Mexico" in 2000.[29] Located on approximately 107 acres in Mexico City, the park serves the Mexico City, Cuernavaca, Puebla, and Toluca markets, with about 25 million permanent residents within 50 miles and about 35 million within 100 miles.[29]
- Six Flags New England: A 126-acre combination theme and water park in Springfield, Massachusetts about 90 miles west of Boston.[29] A permanent resident population of approximately 3.2 million people live within 50 miles of the park and about 15.6 million live within 100 miles.[29]
- Six Flags New Orleans: Damaged by Hurricane Katrina, this 140-acre park has not been open for business since 2005.[29]
- Six Flags Over Georgia and Six Flags White Water Atlanta: Six Flags Over Georgia is a 238-acre park about 20 miles outside of Atlanta.[29] A permanent resident population of approximately 5.1 million people live within 50 miles of the park and about 8.2 million live within 100 miles.[29] White Water Atlanta is a water park is about 20 miles from Over Georgia.[29] SIX owns only a 26% stake in these parks as the managing general partner in a Georgia-based partnership.[30]
- Six Flags Over Texas and Six Flags Hurricane Harbor: These two adjacent but separately-gated parks in Arlington, Texas, serve the Dallas and Forth Worth markets, with a permanent resident population of about 6.0 million within 50 miles and 7.1 million within 100 miles.[30] The parks occupy about 187 and 45 acres respectively.[30] SIX owns only a 38% stake in these parks as the managing general partner in a Texas-based partnership.[30]
- Six Flags St. Louis: A 224-acre combination theme and water park in Eureka, Missouri, about 35 miles west of St. Louis.[30] A permanent resident population of approximately 2.7 million people live within 50 miles of the park and about 3.9 million live within 100 miles.[30]
- La Ronde: Located in Montreal, Quebec, on the 146-acre site of the 1967 Montreal Worlds Fair.[31] A permanent resident population of approximately 4.3 million people live within 50 miles of the park and about 5.8 million live within 100 miles.[31]
- The Great Escape and Six Flags Great Escape Lodge & Indoor Waterpark: A 132-acre combination theme and water park in Lake George, New York.[31] The Great Escape Lodge & Indoor Waterpark opened its 200 suite hotel and 38,000-square foot water park in 2006.[31] SIX owns a 41% interest in this facility.[31] These parks' primary markets are the Lake George tourist population and the residential populations of upstate New York and New England; a permanent resident population of approximately 1.1 million people live within 50 miles and about 3.1 million within 100 miles.[31] More than 7.9 million tourists visited Warren County, where Lake George is located, in 2006.[31]
[edit] Trends and Forces
[edit] Hurricane Katrina forced Six Flags to shut down its New Orleans park
In 2005, Hurricane Katrina destroyed $34.0 million worth of assets in the Six Flags New Orleans park, which has been closed since the storm hit.[32] Because of a $27.5 million sublimit on its insurance policy coverage, SIX was not even recompensed for the damaged assets in full by its insurance policy issuer and received nothing to compensate for lost operating income.[32] After a failed declaratory action in the Louisiana federal district court, SIX is appealing the court's ruling that, although the insurance policy includes a separate "Named Storm" provision, the sublimit is applicable to Katrina-related damage.[32] The insurance policy contractually binds SIX to rebuilding the New Orleans park with insurance-related gains,[26] but the company is in discussion with the City of New Orleans regarding cancellation of its 75-year[33] lease on the New Orleans park land.[32]
[edit] SIX has failed to meet NYSE listing standards
In October 2008, SIX was warned by the New York Stock Exchange that it had fallen out of compliance with NYSE listing standards when its stock fell below $1.00 for thirty days.[11] Later in the month, SIX's 30-day average market capitalization fell below $75 million, another threshold for listing on the NYSE.[12] SIX was required to submit a proposal for regaining compliance within 18 months which, if accepted, permits SIX to remain listed for the 18-month period.[12] The company has considered a reverse split as a means of increasing share price[11] but has made clear that failure to be listed on the NYSE would not lead to default under any of the company's debt agreements.[12]
[edit] Preferred stock to be redeemed in 2009
SIX has issued Preferred Income Equity Redeemable Shares (“PIERS”)[34] that are to be redeemed for 100% cash value on August 15, 2009.[35] The SIX Board of Directors has decided to discontinue dividend payments on PIERS but the value of the missed dividends are to be paid (interest-free) on the PIERS redemption date along with the principal.[36] As of November 10, 2008, the total value of the PIERS was $10.4 million.[36] Failure to to pay the PIERS owners by August 15 would constitute a default and the lenders would be able to accelerate the obligations thereunder.[37]
[edit] Competition
[edit] The Walt Disney Company
SIX is the second leading amusement park operator in the United States behind the Walt Disney Company.[13] While Disney's Parks and Resorts segment focuses on attracting visitors from across the globe to visit its parks, Six Flags targets its local demographic and does not seek to advertise internationally.[13] In 2008, Disney's Parks and Resorts segment generated $1.9 billion on $11.5 billion in revenues.[38]
[edit] Cedar Fair
Cedar Fair is a regional theme park operator that owns and operates many parks that directly compete with SIX's. In 2007, Cedar Fair incurred a net loss of $4.5 million on $987.0 million in total revenues.[39]
[edit] Busch Entertainment Corporation
A subsidiary of Anheuser-Busch, the Busch Entertainment Corporation ("BEC") operates nine theme parks across America, including the Sea World and Busch Gardens parks.[40] In 2007, Anheuser-Busch's theme parks and related operations earned the company $162.9 million on $1.3 billion in revenues.[41]
[edit] Competing Parks
Each of SIX's parks competes with different parks within its region.
| Park Name | Location | Competes With | Distance from SIX Park (miles) | Owner | Single-Day Adult Ticket Price in 2009 |
| King's Dominion[26] | Doswell, Virginia[26] | Six Flags America[26] | 120[27] | Cedar Fair[42] | $44.95[42] |
| Hershey Park[26] | Hershey, Pennsylvania[26] | Six Flags America[26] / Great Adventure[27] | 125 and 150[27] | Privately held by Hershey Entertainment & Resorts[43] | TBD[43] |
| Busch Gardens[26] | Williamsburg, Virginia[27] | Six Flags America[26] | 175[27] | Anheuser-Busch[44] | $59.95[45] |
| Aquarium of the Bay at Pier 39[27] | San Francisco, California[27] | Six Flags Discovery Kingdom[27] | 30[27] | Privately held by Aquarium of the Bay Foundation[46] | $15.95[47] |
| Great America[27] | Santa Clara, California[27] | Six Flags Discovery Kingdom[27] | 60[27] | Cedar Fair[48] | TBD[49] |
| Gilroy Gardens[27] | Gilroy, California[27] | Six Flags Discovery Kingdom[27] | 100[27] | Privately held by Gilroy Gardens, Inc.[50] | $80.00[51] |
| Outer Bay at Monterey Bay Aquarium[27] | Monterey, California[52] | Six Flags Discovery Kingdom[27] | 130[27] | Privately held by Monterey Bay Aquarium Foundation[53] | $29.95[54] |
| Sea World of Texas[27] | San Antonio, Texas[27] | Six Flags Fiesta Texas[27] / Six Flags Over Texas[29] | Same City[27] / 285[29] | Anheuser-Busch[55] | $54.99[56] |
| Dorney Park[27] | Allentown, Pennsylvania[28] | Six Flags Great Adventure[27] | 75[28] | Cedar Fair[57] | $36.99[58] |
| Kings Island[28] | Cincinatti, Ohio[28] | Six Flags Kentucky Kingdom[28] | 130[27] | Cedar Fair[59] | $32.99[60] |
| Holiday World[28] | Santa Claus, Indiana[28] | Six Flags Kentucky Kingdom[28] | 75[27] | Privately held[61] | $39.95[62] |
| Disneyland[28] | Anaheim, California[28] | Six Flags Magic Mountain[28] | 60[28] | The Walt Disney Company[28] | $69.00[63] |
| Universal Studios Hollywod[28] | Universal City, California[28] | Six Flags Magic Mountain[28] | 20[28] | Privately held by Universal Studios[64] | $67.00[65] |
| Soak City USA[28] | Buena Park, California[66] | Six Flags Magic Mountain[28] | 50[28] | Cedar Fair[66] | $51.99[67] |
| Raging Waters[28] | San Dimas, California[68] | Six Flags Magic Mountain[28] | 50[28] | Privately held by Palace Entertainment[69] | Unavailable |
| La Feria de Chapultepec[29] | Mexico City[29] | Six Flags Mexico[29] | Same City[29] | Privately held by CIE Parques[70] | Unavailable |
| Lake Compounce[29] | Bristol, Connecticut[29] | Six Flags New England[29] | 50[29] | Privately held by Kennywood Entertainment[71] | $34.99[72] |
| Carowinds[29] | Charlotte, North Carolina[29] | Six Flags Over Georgia[29] | 250[29] | Cedar Fair[73] | $37.99[74] |
| Alabama Adventure[29] | Birmingham, Alabama[29] | Six Flags Over Georgia[29] | 160[29] | Privately held[75] | $34.99[76] |
| Dollywood[29] | Pigeon Forge, Tennessee[29] | Six Flags Over Georgia[29] | 200[29] | Privately held by The Dollywood Company[77] | $53.50[78] |
| Wild Adventures[29] | Valdosta, Georgia[29] | Six Flags Over Georgia[29] | 240[29] | Privately held by Herschend Family Entertainment Corporation[79] | Unavailable |
| Sun Valley Beach[29] | Powder Springs, Georgia[29] | Six Flags White Water Atlanta[29] | 15[30] | Privately held by Wayne and Ann Powell[80] | $17.95[81] |
| Worlds of Fun[30] | Kansas City, Missouri[30] | Six Flags St. Louis[30] | 250[30] | Cedar Fair[82] | $39.99[83] |
[edit] References
- ↑ 1.0 1.1 SIX 2007 10-K pg. 1
- ↑ SIX 08Q3 10-Q pg. 9
- ↑ 3.0 3.1 3.2 3.3 SIX 2007 10-K pg. 29
- ↑ 4.0 4.1 4.2 SIX 2007 10-K pg. 2
- ↑ 5.0 5.1 5.2 Yahoo! Finance Income Statement: Six Flags
- ↑ 6.0 6.1 6.2 SIX 1998 10-K pg. 21
- ↑ 7.0 7.1 7.2 7.3 SIX 2001 10-K pg. F-4
- ↑ 8.0 8.1 8.2 SIX 2004 10-K pg. F-7
- ↑ 9.0 9.1 Todd Sullivan (June 27, 2008). Will this be Six Flags (SIX) last summer?.
- ↑ 10.0 10.1 10.2 10.3 10.4 SIX 2008 Q3 Earnings Call
- ↑ 11.0 11.1 11.2 11.3 Rick Aristotle Munarriz. Bring on the Reverse Stock Splits.
- ↑ 12.0 12.1 12.2 12.3 Associated Press. Six Flags' market cap falls below NYSE standards.
- ↑ 13.0 13.1 13.2 Thomson Gale. Business and Company Resource Center Curriculum Support Demonstration.
- ↑ SIX 2007 10-K pg. 14
- ↑ SIX 2007 10-K pg. 32
- ↑ 16.0 16.1 SIX 08Q1 10-Q pg. 27
- ↑ 17.0 17.1 SIX 08Q2 10-Q pg. 27
- ↑ 18.0 18.1 SIX 08Q3 10-Q pg. 30
- ↑ 19.0 19.1 19.2 SIX 08Q1 10-Q pg. 4
- ↑ 20.0 20.1 20.2 SIX 08Q2 10-Q pg. 4
- ↑ 21.0 21.1 21.2 SIX 08Q3 10-Q pg. 4
- ↑ SIX 2007 10-K pg. 22
- ↑ 23.0 23.1 23.2 23.3 SIX 2007 10-K pg. 33
- ↑ SIX 2007 10-K pg. F-6
- ↑ 25.0 25.1 SIX 08Q3 10-Q pg. 26
- ↑ 26.00 26.01 26.02 26.03 26.04 26.05 26.06 26.07 26.08 26.09 26.10 26.11 SIX 2007 10-K pg. 5
- ↑ 27.00 27.01 27.02 27.03 27.04 27.05 27.06 27.07 27.08 27.09 27.10 27.11 27.12 27.13 27.14 27.15 27.16 27.17 27.18 27.19 27.20 27.21 27.22 27.23 27.24 27.25 27.26 27.27 27.28 27.29 27.30 27.31 27.32 27.33 27.34 27.35 SIX 2007 10-K pg. 6
- ↑ 28.00 28.01 28.02 28.03 28.04 28.05 28.06 28.07 28.08 28.09 28.10 28.11 28.12 28.13 28.14 28.15 28.16 28.17 28.18 28.19 28.20 28.21 28.22 28.23 28.24 28.25 28.26 28.27 28.28 SIX 2007 10-K pg. 7
- ↑ 29.00 29.01 29.02 29.03 29.04 29.05 29.06 29.07 29.08 29.09 29.10 29.11 29.12 29.13 29.14 29.15 29.16 29.17 29.18 29.19 29.20 29.21 29.22 29.23 29.24 29.25 29.26 29.27 29.28 29.29 29.30 29.31 29.32 29.33 29.34 29.35 29.36 SIX 2007 10-K pg. 8
- ↑ 30.00 30.01 30.02 30.03 30.04 30.05 30.06 30.07 30.08 30.09 30.10 SIX 2007 10-K pg. 9
- ↑ 31.0 31.1 31.2 31.3 31.4 31.5 31.6 SIX 2007 10-K pg. 10
- ↑ 32.0 32.1 32.2 32.3 SIX 08Q3 10-Q pg. 22
- ↑ Rebecca Mowbray. Six Flags wants out, offers the city a deal.
- ↑ SIX 08Q3 10-Q pg. 10
- ↑ SIX 08Q3 10-Q pg. 34
- ↑ 36.0 36.1 SIX 08Q3 10-Q pg. 36
- ↑ SIX 08Q3 10-Q pg. 33
- ↑ DIS 2008 10-K pg. 30
- ↑ FUN 2007 10-K pg. 13
- ↑ BUD 2007 10-K pg. 8
- ↑ BUD 2007 Annual Report pg. 63
- ↑ 42.0 42.1 Kings Dominion
- ↑ 43.0 43.1 Hersheypark
- ↑ Busch Gardens
- ↑ Busch Gardens: Single Day Tickets
- ↑ About Aquarium of the Bay
- ↑ Aquarium of the Bay: Tickets
- ↑ California's Great America
- ↑ California's Great Adventure: General Admission
- ↑ Gilroy Gardens
- ↑ Gilroy Gardens: Tickets
- ↑ Monterey Bay Aquarium: Directions and Parking
- ↑ Monterey Bay Aquarium: Outer Bay
- ↑ Monterey Bay Aquarium: Ticket Prices & Ordering Info
- ↑ Sea World San Antonio
- ↑ Sea World San Antonio: Single Day Tickets
- ↑ Dorney Park & Wildwater Kingdom
- ↑ Dorney Park: General Admission
- ↑ Kings Island
- ↑ Kings Island: General Admission
- ↑ Holiday World
- ↑ Holiday World: Prices
- ↑ Disneyland: Tickets
- ↑ Universal Studios Hollywood
- ↑ Universal Studios Hollywood: Ticket Choices
- ↑ 66.0 66.1 Knott's Berry Farm
- ↑ Knott's Berry Farm: Ticket Information
- ↑ Raging Waters
- ↑ Raging Waters: San Dimas
- ↑ La Feria de Chapultepec
- ↑ Lake Compounce: About Us
- ↑ Lake Compounce: Purchase Tickets
- ↑ Carowinds
- ↑ Carowinds: General Admission
- ↑ Alabama Adventure
- ↑ Alabama Adventure: General Information
- ↑ Dollywood
- ↑ 2009 Dollywood Admission & Season Pass Prices
- ↑ Wild Adventures: Company Info
- ↑ Sun Valley Beach: About Us
- ↑ Sun Valley Beach: 2008 Ticket Information
- ↑ Worlds of Fun
- ↑ Worlds of Fun: Tickets
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