☐Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Six Flags Entertainment Corporation
Delaware 1000 Ballpark Way Suite 400, Title of each class Trading Symbol(s) Name of each exchange on which registered Common stock, $0.025 par value per share SIX New York Stock Exchange This Quarterly Report on Form 10-Q (this "Quarterly Report") and the documents incorporated herein by reference contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements include all statements that are not historical facts and can be identified by words such as "anticipates," "intends," "plans," "seeks," "believes," "estimates," "expects," "may," "should," "could" and variations of such words or similar expressions. These forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties, assumptions and other factors, some of which are beyond our control, which could cause actual results to differ materially from those expressed or implied by such forward-looking statements. These factors include (i) global coronavirus (“COVID-19”) pandemic-related business disruptions and economic uncertainty (ii) the adequacy of our cash flows from operations, available cash and available amounts under our credit facilities to meet our liquidity needs, (iii) our expectations regarding the timing, costs, benefits and results of our strategic plan, (iv) impact of macro-economic conditions, including inflation on consumer spending, (iv) our ability to implement our capital plans in a timely and cost effective manner, and our expectations regarding the anticipated costs, benefits and results of such capital plans, (vi) the extent to which having parks in diverse geographical locations protects our consolidated results against the effects of adverse weather and other events, (vii) our ongoing compliance with laws and regulations, and the effect of, and cost and timing of compliance with, newly enacted laws and regulations, (viii) our ability to obtain additional financing and the increased cost of capital due to rising interest rates, (x) our expectations regarding the effect of certain accounting pronouncements, (xi) our expectations regarding the cost or outcome of any litigation or other disputes, (xii) our annual income tax liability and the availability and effect of net operating loss carryforwards and other tax benefits, and (xii) our expectations regarding uncertain tax positions. •other factors or uncertainties described in "Item 1A. Risk Factors" set forth in our Annual Report on Form 10-K for the year ended January 1, 2023 (the "2022 Annual Report"), and in this Quarterly Report. As of July 2, 2023 January 1, 2023 July 3, 2022 (Amounts in thousands, except share data) (unaudited) (unaudited) ASSETS Current assets: Cash and cash equivalents $ 51,580 $ 80,122 $ 74,802 Accounts receivable, net 93,077 49,405 70,473 Inventories 43,172 44,811 47,531 Prepaid expenses and other current assets 84,808 66,452 69,990 Total current assets 272,637 240,790 262,796 Property and equipment, net: Property and equipment, at cost 2,666,636 2,592,485 2,552,144 Accumulated depreciation (1,410,480) (1,350,739) (1,297,710) Total property and equipment, net 1,256,156 1,241,746 1,254,434 Goodwill 659,618 659,618 659,618 Intangible assets, net of accumulated amortization of $295, $284 and $272 as of July 2, 2023, January 1, 2023 and July 3, 2022, respectively 344,153 344,164 344,176 Right-of-use operating leases, net 154,182 158,838 180,836 Debt issuance costs 6,110 2,764 3,832 Deposits and other assets 20,737 17,905 8,101 Total assets $ 2,713,593 $ 2,665,825 $ 2,713,793 LIABILITIES AND STOCKHOLDERS' DEFICIT Current liabilities: Accounts payable $ 54,174 $ 38,887 $ 67,925 Accrued compensation, payroll taxes and benefits 21,571 15,224 24,968 Self-insurance reserves 68,633 34,053 37,017 Accrued interest payable 33,216 38,484 24,713 Other accrued liabilities 79,959 67,346 102,626 Deferred revenue 176,811 128,627 171,238 Short-term borrowings 169,000 100,000 200,000 Short-term lease liabilities 11,730 11,688 11,394 Total current liabilities 615,094 434,309 639,881 Noncurrent liabilities: Long-term debt 2,183,325 2,280,531 2,277,910 Long-term lease liabilities 163,950 164,804 175,786 Other long-term liabilities 29,077 30,714 5,476 Deferred income taxes 172,849 184,637 152,041 Total liabilities 3,164,295 3,094,995 3,251,094 Redeemable noncontrolling interests 544,764 521,395 543,719 Stockholders' deficit: Preferred stock, $1.00 par value — — — Common stock, $0.025 par value, 280,000,000 shares authorized; 83,464,774, 83,178,294 and 83,026,556 shares issued and outstanding at July 2, 2023, January 1, 2023 and July 3, 2022, respectively 2,086 2,079 2,075 Capital in excess of par value 1,109,779 1,104,051 1,103,534 Accumulated deficit (2,034,736) (1,985,500) (2,114,697) Accumulated other comprehensive loss, net of tax (72,595) (71,195) (71,932) Total stockholders' deficit (995,466) (950,565) (1,081,020) Total liabilities and stockholders' deficit $ 2,713,593 $ 2,665,825 $ 2,713,793 Three Months Ended (Amounts in thousands, except per share data) July 2, 2023 July 3, 2022 Park admissions $ 238,963 $ 241,777 Park food, merchandise and other 190,792 183,081 Sponsorship, international agreements and accommodations 13,952 10,564 Total revenues 443,707 435,422 Operating expenses (excluding depreciation and amortization shown separately below) 173,669 173,357 Selling, general and administrative expenses (including stock-based compensation of $2,179 and $3,223 in 2023 and 2022, respectively, and excluding depreciation and amortization shown separately below) 90,448 53,498 Costs of products sold 34,787 35,710 Depreciation and amortization 28,910 27,537 Loss on disposal of assets 2,550 98 Operating income 113,343 145,222 Interest expense, net 43,495 35,978 Loss on debt extinguishment 13,982 17,533 Other income, net (2,261) (722) Income before income taxes 58,127 92,433 Income tax expense 13,807 24,716 Net income 44,320 67,717 Less: Net income attributable to noncontrolling interests (23,766) (22,325) Net income attributable to Six Flags Entertainment Corporation $ 20,554 $ 45,392 Weighted-average common shares outstanding: Basic: 83,379 84,992 Diluted: 83,796 85,242 Earnings per average common share outstanding: Basic: $ 0.25 $ 0.53 Diluted: $ 0.25 $ 0.53 Six Months Ended (Amounts in thousands, except per share data) July 2, 2023 July 3, 2022 Park admissions $ 315,266 $ 314,764 Park food, merchandise and other 243,578 237,350 Sponsorship, international agreements and accommodations 27,053 21,415 Total revenues 585,897 573,529 Operating expenses (excluding depreciation and amortization shown separately below) 282,539 283,076 Selling, general and administrative expenses (including stock-based compensation of $5,493 and $7,448 in 2023 and 2022, respectively, and excluding depreciation and amortization shown separately below) 134,695 92,755 Costs of products sold 44,552 45,825 Depreciation and amortization 58,024 56,586 Loss (gain) on disposal of assets 4,985 (2,002) Operating income 61,102 97,289 Interest expense, net 79,797 73,508 Loss on debt extinguishment 13,982 17,533 Other income, net (3,093) (1,410) (Loss) income before income taxes (29,584) 7,658 Income tax (benefit) expense (4,045) 5,603 Net (loss) income $ (25,539) $ 2,055 Less: Net income attributable to noncontrolling interests (23,766) (22,325) Net loss attributable to Six Flags Entertainment Corporation $ (49,305) $ (20,270) Weighted-average common shares outstanding: Basic: 83,293 85,594 Diluted: 83,293 85,594 Earnings per average common share outstanding: Basic: $ (0.59) $ (0.24) Diluted: $ (0.59) $ (0.24) Three Months Ended (Amounts in thousands) July 2, 2023 July 3, 2022 Net income $ 44,320 $ 67,717 Other comprehensive income, net of tax: Foreign currency translation adjustment (1) (1,481) 3,920 Defined benefit retirement plan (2) 175 172 Change in cash flow hedging (3) (595) (402) Other comprehensive income (loss), net of tax (1,901) 3,690 Comprehensive income $ 42,419 $ 71,407 Less: Comprehensive income attributable to noncontrolling interests (23,766) (22,325) Comprehensive income attributable to Six Flags Entertainment Corporation $ 18,653 $ 49,082 Cash Flows Six Months Ended (Amounts in thousands) July 2, 2023 July 3, 2022 Net (loss) income $ (25,539) $ 2,055 Other comprehensive income, net of tax: Foreign currency translation adjustment (1) (565) (165) Defined benefit retirement plan (2) 351 343 Change in cash flow hedging (3) (1,186) 9,077 Other comprehensive (loss) income, net of tax (1,400) 9,255 Comprehensive (loss) income $ (26,939) $ 11,310 Less: Comprehensive income attributable to noncontrolling interests (23,766) (22,325) Comprehensive loss attributable to Six Flags Entertainment Corporation $ (50,705) $ (11,015) See accompanying notes to unaudited condensed consolidated financial statements. Accumulated Capital in other Total Common stock excess of Accumulated comprehensive stockholders' (Amounts in thousands, except share data) Shares issued Amount par value deficit loss deficit Balances at April 3, 2022 86,248,545 $ 2,156 $ 1,124,603 $ (2,088,913) $ (75,622) $ (1,037,776) Issuance of common stock 215,707 5 735 — — 740 Stock-based compensation — — 3,223 — — 3,223 Repurchase of common stock (3,464,385) (87) (25,394) (71,293) — (96,774) Payment of tax withholdings on equity-based compensation through shares withheld (5,304) — (257) — — (257) Employee stock purchase plan 31,993 1 624 — — 625 Fresh start valuation adjustment for partnership park units purchased — — — 117 — 117 Net loss attributable to Six Flags Entertainment Corporation — — — 45,392 — 45,392 Net other comprehensive income, net of tax — — — — 3,690 3,690 Balances at July 3, 2022 83,026,556 $ 2,075 $ 1,103,534 $ (2,114,697) $ (71,932) $ (1,081,020) Accumulated Capital in other Total Common stock excess of Accumulated comprehensive stockholders' (Amounts in thousands, except share data) Shares issued Amount par value deficit loss deficit Balances at April 2, 2023 83,279,300 $ 2,082 $ 1,107,258 $ (2,055,359) $ (70,694) $ (1,016,713) Issuance of common stock 168,809 3 (4) — — (1) Stock-based compensation — — 2,179 — — 2,179 Payment of tax withholdings on equity-based compensation through shares withheld (5,507) — (137) — — (137) Employee stock purchase plan 22,172 1 483 — — 484 Fresh start valuation adjustment for partnership park units purchased — — — 69 — 69 Net income attributable to Six Flags Entertainment Corporation — — — 20,554 — 20,554 Net other comprehensive loss, net of tax — — — — (1,901) (1,901) Balances at July 2, 2023 83,464,774 $ 2,086 $ 1,109,779 $ (2,034,736) $ (72,595) $ (995,466) Accumulated Capital in other Total Common stock excess of Accumulated comprehensive stockholders' (Amounts in thousands, except share data) Shares issued Amount par value deficit loss deficit Balances at January 2, 2022 86,162,879 $ 2,154 $ 1,120,084 $ (2,023,251) $ (81,187) $ (982,200) Issuance of common stock 303,409 7 1,032 — — 1,039 Stock-based compensation — — 7,448 — — 7,448 Repurchase of common stock (3,464,385) (87) (25,394) (71,293) — (96,774) Payment of tax withholdings on equity-based compensation through shares withheld (7,340) — (260) — — (260) Employee stock purchase plan 31,993 1 624 — — 625 Fresh start valuation adjustment for partnership park units purchased — — — 117 — 117 Net loss attributable to Six Flags Entertainment Corporation — — — (20,270) — (20,270) Net other comprehensive income, net of tax — — — — 9,255 9,255 Balances at July 3, 2022 83,026,556 $ 2,075 $ 1,103,534 $ (2,114,697) $ (71,932) $ (1,081,020) Accumulated Capital in other Total Common stock excess of Accumulated comprehensive stockholders' (Amounts in thousands, except share data) Shares issued Amount par value deficit loss deficit Balances at January 1, 2023 83,178,294 $ 2,079 $ 1,104,051 $ (1,985,500) $ (71,195) $ (950,565) Issuance of common stock 273,469 6 (7) — — (1) Stock-based compensation — — 5,493 — — 5,493 Payment of tax withholdings on equity-based compensation through shares withheld (9,161) — (241) — — (241) Employee stock purchase plan 22,172 1 483 — — 484 Fresh start valuation adjustment for partnership park units purchased — — — 69 — 69 Net loss attributable to Six Flags Entertainment Corporation — — — (49,305) — (49,305) Net other comprehensive loss, net of tax — — — — (1,400) (1,400) Balances at July 2, 2023 83,464,774 $ 2,086 $ 1,109,779 $ (2,034,736) $ (72,595) $ (995,466) Six Months Ended (Amounts in thousands) July 2, 2023 July 3, 2022 Cash flows from operating activities: Net (loss) income $ (25,539) $ 2,055 Adjustments to reconcile net (loss) income to net cash provided by operating activities: Depreciation and amortization 58,024 56,586 Stock-based compensation 5,493 7,448 Interest accretion on notes payable 511 555 Loss on debt extinguishment 13,982 17,533 Amortization of debt issuance costs 2,889 3,965 Loss (gain) on disposal of assets 4,985 (2,002) Deferred income tax (benefit) expense (7,467) 726 Other (5,573) (3,403) Changes in operating assets and liabilities: (Increase) decrease in accounts receivable (42,233) 27,327 Increase in inventories, prepaid expenses and other current assets (25,480) (34,698) (Increase) decrease in deposits and other assets 1,315 (1,928) Decrease in ROU operating leases 5,614 5,517 Increase in accounts payable, deferred revenue, accrued liabilities and other long-term liabilities 104,717 11,012 Decrease in operating lease liabilities (1,340) (1,615) Decrease in accrued interest payable (5,269) (25,841) Net cash provided by operating activities 84,629 63,237 Cash flows from investing activities: Additions to property and equipment (68,130) (59,006) Property insurance recoveries 1,089 3,664 Net cash used in investing activities (67,041) (55,342) Cash flows from financing activities: Repayment of borrowings (1,028,623) (360,000) Proceeds from borrowings 998,984 200,000 Payment of debt issuance costs (19,294) (12,600) Stock repurchases — (96,774) Payment of cash dividends — (3) Proceeds from issuance of common stock — 1,665 Payment of tax withholdings on equity-based compensation through shares withheld (241) (260) Reduction in finance lease liability (498) (490) Purchase of redeemable noncontrolling interest (328) (556) Net cash used in financing activities (50,000) (269,018) Effect of exchange rate on cash 3,870 340 Net change in cash and cash equivalents (28,542) (260,783) Cash and cash equivalents at beginning of period 80,122 335,585 Cash and cash equivalents at end of period $ 51,580 $ 74,802 Supplemental cash flow information Cash paid for interest $ 83,031 $ 95,141 Cash paid for income taxes $ 6,892 $ 1,661 Note 10 -Revision to Previously Reported Financial Informationfor additional information. Three Months Ended Six Months Ended (Amounts in thousands, except per share data) July 2, 2023 July 3, 2022 July 2, 2023 July 3, 2022 Net income (loss) attributable to Six Flags Entertainment Corporation $ 20,554 $ 45,392 $ (49,305) $ (20,270) Weighted-average common shares outstanding - basic: 83,379 84,992 83,293 85,594 Effect of dilutive stock options and restricted stock units 417 250 — — Weighted-average common shares outstanding - diluted: 83,796 85,242 83,293 85,594 Earnings (loss) per share - basic: $ 0.25 $ 0.53 $ (0.59) $ (0.24) Earnings (loss) per share - diluted: $ 0.25 $ 0.53 $ (0.59) $ (0.24) During the three and Three Months Ended Six Months Ended (Amounts in thousands) July 2, 2023 July 3, 2022 July 2, 2023 July 3, 2022 Long-term incentive plan $ 2,123 $ 3,229 $ 5,407 $ 7,379 Employee stock purchase plan 56 (6) 86 69 Total stock-based compensation $ 2,179 $ 3,223 $ 5,493 $ 7,448 The following tables present our revenues disaggregated by contract duration for the three and Three Months Ended July 2, 2023 Sponsorship, Park Food, International Merchandise Agreements and (Amounts in thousands) Park Admissions and Other Accommodations Total Long-term contracts $ 12,066 $ 1,423 $ 6,807 $ 20,296 Short-term contracts and other (1) 226,897 189,369 7,145 423,411 Total revenues $ 238,963 $ 190,792 $ 13,952 $ 443,707 Three Months Ended July 3, 2022 Sponsorship, Park Food, International Merchandise Agreements and (Amounts in thousands) Park Admissions and Other Accommodations Total Long-term contracts $ 16,001 $ 2,226 $ 3,500 $ 21,727 Short-term contracts and other (1) 225,776 180,855 7,064 413,695 Total revenues $ 241,777 $ 183,081 $ 10,564 $ 435,422 Six Months Ended July 2, 2023 Sponsorship, Park Food, International Merchandise Agreements and (Amounts in thousands) Park Admissions and Other Accommodations Total Long-term contracts $ 16,927 $ 1,963 $ 13,570 $ 32,460 Short-term contracts and other (1) 298,339 241,615 13,483 553,437 Total revenues $ 315,266 $ 243,578 $ 27,053 $ 585,897 Six Months Ended July 3, 2022 Sponsorship, Park Food, International Merchandise Agreements and (Amounts in thousands) Park Admissions and Other Accommodations Total Long-term contracts $ 19,952 $ 3,008 $ 10,028 $ 32,988 Short-term contracts and other (1) 294,812 234,342 11,387 540,541 Total revenues $ 314,764 $ 237,350 $ 21,415 $ 573,529 Other revenues primarily include sales of single-use tickets and short-term transactional sales for which we have the right to invoice. On May 3, 2023, the Company completed the private sale of the 2031 Notes at an offering price of 99.248% of the principal amount thereof. Net of the original issuance discount and debt issuance costs, the Company received net proceeds of $784.0 million. As of (Amounts in thousands) July 2, 2023 January 1, 2023 July 3, 2022 Term Loan B $ 479,000 $ 479,000 $ 479,000 Revolving Credit Facility 169,000 100,000 200,000 2024 Notes 56,867 949,490 949,490 2025 Notes 365,000 365,000 365,000 2027 Notes 500,000 500,000 500,000 2031 Notes 800,000 — — Net discount (6,580) (2,138) (2,694) Deferred financing costs (10,961) (10,821) (12,886) Total debt $ 2,352,325 $ 2,380,531 $ 2,477,910 Less short-term borrowings (169,000) (100,000) (200,000) Total long-term debt $ 2,183,325 $ 2,280,531 $ 2,277,910 Accumulated Cumulative Other Translation Cash Flow Defined Benefit Income Comprehensive (Amounts in thousands) Adjustment Hedges Plans Taxes Loss Balances at January 1, 2023 $ (33,145) $ 5,337 $ (39,385) $ (4,002) $ (71,195) Net current period change (663) — — 97 (566) Amounts reclassified from AOCI — (1,579) 468 277 (834) Balances at July 2, 2023 $ (33,808) $ 3,758 $ (38,917) $ (3,628) $ (72,595) Reclassification of (Gain) Loss from AOCL into Earnings Three Months Ended Six Months Ended Component of AOCI Location of Reclassification into Income (Loss) July 2, 2023 July 3, 2022 July 2, 2023 July 3, 2022 Amortization of gain on interest rate hedge Interest expense, net $ (792) $ (774) $ (1,579) $ 343 Income tax expense 197 193 393 (88) Net of tax $ (595) $ (581) $ (1,186) $ 255 Amortization of deferred actuarial loss and prior service cost Operating expenses $ 234 $ 229 $ 468 $ 458 Income tax benefit (58) (58) (116) (115) Net of tax $ 176 $ 171 $ 352 $ 343 Total reclassifications $ (419) $ (410) $ (834) $ 598 Derivative Assets (Amounts in thousands) July 2, 2023 January 1, 2023 July 3, 2022 Derivatives Not Designated as Hedging Instruments Interest rate swap agreements — other current assets $ 3,631 $ 6,135 $ 3,688 Interest rate swap agreements — other non-current assets 3,984 4,446 2,829 $ 7,615 $ 10,581 $ 6,517 Derivative Liabilities (Amounts in thousands) July 2, 2023 January 1, 2023 July 3, 2022 Derivatives Not Designated as Hedging Instruments Interest rate swap agreements — other accrued liabilities $ 4,535 $ 8,476 $ 7,589 Interest rate swap agreements — other long-term liabilities 5,382 6,224 5,196 $ 9,917 $ 14,700 $ 12,785 Gain (Loss) Gain (Loss) Reclassified from Recognized in AOCL AOCL into Interest Expense, Net (Amounts in thousands) 2023 2022 2023 2022 Interest rate swap agreements $ — $ — $ 792 $ 774 Total $ — $ — $ 792 $ 774 Gain (Loss) Gain (Loss) Reclassified from Recognized in AOCL AOCL into Interest Expense, Net (Amounts in thousands) 2023 2022 2023 2022 Interest rate swap agreements $ — $ 11,778 $ 1,579 $ (343) Total $ — $ 11,778 $ 1,579 $ (343) 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 offered for the units of the Partnership Parks by certain entities. In light of the temporary suspension of operations of the parks due to the COVID-19 pandemic in March 2020, which would have caused the value of the Partnership Park units to decrease in 2021 and thereafter, we adjusted our (Amounts in thousands) SFOT SFOG Total Balance at January 1, 2023 $ 241,194 $ 280,201 $ 521,395 Purchase of redeemable units (328) — (328) Fresh start accounting fair market value adjustment for purchased units (69) — (69) Net income attributable to noncontrolling interests 11,860 11,906 23,766 Balance at July 2, 2023 $ 252,657 $ 292,107 $ 544,764 identified claims during the quarter as well as an observed pattern of increasing litigation and settlement costs. As a result of this actuarial analysis, we revised certain key actuarial assumptions utilized in determining estimated ultimate losses, including loss development On September 29, 2023, plaintiffs filed the Appellant's brief. On October 4, 2023, the Fifth Circuit informed the parties that defendants' brief is due on November 13, 2023. Stockholder Derivative Lawsuits captioned Hancock v. Roedel, et al., Case No. 348-340304-23 (348th Dist. Ct., Tarrant Cty., Tex.). Plaintiff refers to and makes many of the same allegations as are set forth in the Electrical Workers litigation, claiming that, among other things, the individual defendants caused Six Flags to make false and misleading statements and omissions about the status of construction of Six Flags branded parks in China and the financial health of its former partner, Riverside Investment Group Co. Ltd. Plaintiff asserts breach of fiduciary duty and unjust enrichment claims. Plaintiff seeks an unspecified amount of monetary damages and equitable relief including, but not limited to, disgorgement. On May 5, 2023, the individual defendants and the Company agreed to accept service of the petition, and plaintiff agreed that the individual defendants and the Company had no obligation to respond to the petition and that defendant’s answer dates are tolled until plaintiff files an amended petition. Plaintiff stated Plaintiff would file an amended petition by June 30, 2023. On August 25, 2023, Plaintiff uncertain, and we cannot reasonably estimate any loss or range of loss that may arise from the remaining matters in excess of the amount that we have recorded for this litigation, which amount is not material to our consolidated financial statements. As of (Amounts in thousands) July 2, 2023 January 1, 2023 July 3, 2022 Domestic $ 2,292,265 $ 2,290,318 $ 2,322,514 Foreign 121,844 114,048 116,550 Total $ 2,414,109 $ 2,404,366 $ 2,439,064 Domestic Foreign Total 2023 (Amounts in thousands) Revenues $ 529,735 $ 56,162 $ 585,897 (Loss) income before income taxes (55,878) 26,294 (29,584) 2022 Revenues $ 531,041 $ 42,488 $ 573,529 (Loss) income before income taxes (1,063) 8,721 7,658 Three Months Ended Six Months Ended (Amounts in thousands) July 2, 2023 July 3, 2022 July 2, 2023 July 3, 2022 Service cost $ — $ — $ — $ — Interest cost 1,954 1,384 3,908 2,768 Expected return on plan assets (2,402) (3,060) (4,804) (6,119) Amortization of net actuarial loss 234 229 468 458 Administrative fees 650 300 1,300 600 Total net periodic expense (benefit) $ 436 $ (1,147) $ 872 $ (2,293) Three Months Ended Six Months Ended July 2, 2023 July 3, 2022 July 2, 2023 July 3, 2022 Discount rate 4.95 % 2.60 % 4.95 % 2.60 % Rate of compensation increase N/A N/A N/A N/A Expected return on plan assets 5.75 % 5.75 % 5.75 % 5.75 % During the third quarter of 2023, we identified an accounting error for our stock-based compensation expense related to the recognition of expense for dividend equivalent rights ("DERs"). The error primarily relates to the inadvertent reversal of stock-based compensation expense for vested DERs for periods beginning in the first quarter of 2020 through the fourth quarter of 2022. We have assessed the error and concluded that it was not material to any prior periods. However, the aggregate amount of the error would have been material to our condensed consolidated financial statements in the current period. Therefore, we have revised our previously issued financial information. Prior periods not presented herein will be revised, as applicable, in future filings. agreements and accommodations can be impacted by the term, timing and extent of services and fees under these arrangements, which can result in fluctuations from quarter to quarter and year to year. Results of Operations Three Months Ended Percentage Change (%) (Amounts in thousands, except percentage and per capita data) July 2, 2023 July 3, 2022 2023 to 2022 Total revenue $ 443,707 $ 435,422 2 % Operating expenses 173,669 173,357 N/M Selling, general and administrative expenses 90,448 53,498 69 % Cost of products sold 34,787 35,710 (3) % Depreciation and amortization 28,910 27,537 5 % Loss on disposal of assets 2,550 98 N/M Operating income 113,343 145,222 (22) % Interest expense, net 43,495 35,978 21 % Loss on extinguishment of debt 13,982 17,533 (20) % Other income, net (2,261) (722) N/M Income before income taxes 58,127 92,433 (37) % Income tax expense 13,807 24,716 (44) % Net income 44,320 67,717 (35) % Less: Net income attributable to noncontrolling interests (23,766) (22,325) 6 % Net income attributable to Six Flags Entertainment Corporation $ 20,554 $ 45,392 (55) % Other Data: Attendance 7,073 6,652 6 % Admissions revenue per capita $ 33.79 $ 36.35 (7) % In-park spending per capita $ 26.97 $ 27.52 (2) % Total guest spending per capita $ 60.76 $ 63.87 (5) % products than guests visiting on a single-day ticket. The season pass mix-driven decline in in-park spending per capita was partially offset by higher food and beverage sales in third quarter 2023 versus the prior year. Cost of products sold Six Months Ended Percentage Change (%) (Amounts in thousands, except per capita data) July 2, 2023 July 3, 2022 2023 to 2022 Total revenue $ 585,897 $ 573,529 2 % Operating expenses 282,539 283,076 N/M Selling, general and administrative expenses 134,695 92,755 45 % Costs of products sold 44,552 45,825 (3) % Depreciation and amortization 58,024 56,586 3 % Loss (gain) on disposal of assets 4,985 (2,002) N/M Operating income 61,102 97,289 (37) % Interest expense, net 79,797 73,508 9 % Loss on debt extinguishment 13,982 17,533 (20) % Other income, net (3,093) (1,410) N/M (Loss) income before income taxes (29,584) 7,658 N/M Income tax (benefit) expense (4,045) 5,603 N/M Net (loss) income attributable to Six Flags Entertainment Corporation (25,539) 2,055 N/M Less: Net income attributable to noncontrolling interests (23,766) (22,325) 6 % Net loss attributable to Six Flags Entertainment Corporation $ (49,305) $ (20,270) N/M Other Data: Attendance 8,669 8,339 4 % Admissions revenue per capita $ 36.37 $ 37.75 (4) % In-park spending per capita $ 28.09 $ 28.46 (1) % Total guest spending per capita $ 64.46 $ 66.21 (3) % Calculation of EBITDA for the three and Three Months Ended Six Months Ended (Amounts in thousands, except per share data) July 2, 2023 July 3, 2022 July 2, 2023 July 3, 2022 Net income (loss) $ 44,320 $ 67,717 $ (25,539) $ 2,055 Income tax expense (benefit) 13,807 24,716 (4,045) 5,603 Other income, net (2,261) (722) (3,093) (1,410) Loss on debt extinguishment 13,982 17,533 13,982 17,533 Interest expense, net 43,495 35,978 79,797 73,508 Loss (gain) on disposal of assets 2,550 98 4,985 (2,002) Depreciation and amortization 28,910 27,537 58,024 56,586 Stock-based compensation 2,179 3,223 5,493 7,448 Self-insurance reserve adjustment (1) 37,558 — 37,558 — Modified EBITDA $ 184,540 $ 176,080 $ 167,162 $ 159,321 Third party interest in EBITDA of certain operations (23,766) (22,325) (23,766) (22,325) Adjusted EBITDA $ 160,774 $ 153,755 $ 143,396 $ 136,996 Capital expenditures, net of property insurance recovery (42,034) (26,352) (67,041) (55,342) Adjusted EBITDA minus CAPEX $ 118,740 $ 127,403 $ 76,355 $ 81,654 As of Six Months Ended (Amounts in thousands) July 2, 2023 July 3, 2022 Net cash provided by operating activities $ 84,629 $ 63,237 Net cash used in investing activities (67,041) (55,342) Net cash used in financing activities (50,000) (269,018) Effect of exchange rate on cash 3,870 340 Net change in cash and cash equivalents $ (28,542) $ (260,783) used in financing activities was Payment Due by Period (Amounts in thousands) 2023 2024 - 2025 2026 - 2027 2028 and beyond Total Long-term debt including current portion (2024 Notes, 2031 Notes and Revolving Credit Facility) $ — $ 56,867 $ — $ 969,000 $ 1,025,867 Interest on 2024 Notes 1,386 1,386 — — 2,772 Interest on 2031 Notes 31,145 116,000 116,000 203,000 466,145 For information regarding legal proceedings, see Note 15, Commitments and Contingencies, to the consolidated financial statements in the 2022 Annual Report, and Note 6, Commitments and Contingencies, to the unaudited condensed consolidated financial statements in this Quarterly Report. Exhibit 101* Exhibit 104* The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended SIX FLAGS ENTERTAINMENT CORPORATION (Registrant) Date: /s/ SELIM BASSOUL Selim Bassoul President and Chief Executive Officer Date: /s/ GARY MICK Gary Mick Chief Financial Officer13-3995059 (State or Other Jurisdiction of Incorporation or Organization) 13-3995059, Arlington,, TX76011(972) 595-5000 (Address of Principal Executive Offices, Including Zip Code) (972) 595-5000⌧x No ◻o⌧x No ◻o⌧x◻o◻o☐o☐o◻o☐o No ☒xAugust 7,November 6, 2023, Six Flags Entertainment Corporation had 83,519,69283,537,017 outstanding shares of common stock, par value $0.025 per share.344556677889910101111122528343734373437353735393537403841••factors impacting our ability to consummate the transactions (collectively the “Merger”) contemplated by that certain Agreement and Plan of Merger, dated November 2, 2023, by and among Six Flags Entertainment Corporation, (“Holdings”), Cedar Fair, L.P., (“Cedar Fair”), CopperSteel HoldCo, Inc., and CopperSteel Merger Sub, LLC; •regulations and guidance of federal, state and local governments and health officials regarding the response to COVID-19 and Monkey Pox, including, with respect to business operations, safety protocols and public gatherings (such as voluntary and, in some cases, mandatory, quarantines, as well as shut downs and other restrictions on travel and commercial, social and other activities);•economic impact of political instability and conflicts globally, such as the war in Ukraine;•recall of food, toys and other retail products sold at our parks;•accidents or incidents involving the safety of guests and employees, or contagious disease outbreaks at our parks or other parks in our industry, and negative publicity about us or our industry;•availability of commercially reasonable insurance policies at reasonable rates;•inability to achieve desired improvements and financial performance targets;•adverse weather conditions, such as excess heat or cold, rain and storms;•general financial and credit market conditions, including our ability to access credit or raise capital;•macro-economic conditions (including supply chain issues and the impact of inflation on customer spending patterns);•our ability to successfully implement our strategy;•changes in public and consumer tastes;•construction delays in capital improvements or ride downtime;•competition with other theme parks, water parks and entertainment alternatives;•dependence on a seasonal workforce;•unionization activities and labor disputes;•laws and regulations affecting labor and employee benefit costs, including increases in state and federally mandated minimum wages, healthcare reform and potential wage and hour claims;•availability of labor;•environmental laws and regulations;•laws and regulations affecting corporate taxation;•pending, threatened or future legal proceedings and the significant expenses associated with litigation;•cyber security risks; and •other factors or uncertainties described in "Item 1A. Risk Factors" set forth in our Annual Report on Form 10-K for the year ended January 1, 2023 (the "2022 Annual Report"), and in this Quarterly Report.1 Additionally, the continued impact of COVID-19, virus variants and the rate of vaccinations could heighten many of the risk factors described herein.As of October 1, 2023 January 1, 2023 October 2, 2022 (Amounts in thousands, except share data) (unaudited) (unaudited) ASSETS Current assets: Cash and cash equivalents $ 66,763 $ 80,122 $ 73,314 Accounts receivable, net 90,877 49,405 72,299 Inventories 38,298 44,811 48,493 Prepaid expenses and other current assets 74,234 66,452 77,329 Total current assets 270,172 240,790 271,435 Property and equipment, net: Property and equipment, at cost 2,699,159 2,592,485 2,559,635 Accumulated depreciation (1,431,176) (1,350,739) (1,320,141) Total property and equipment, net 1,267,983 1,241,746 1,239,494 Goodwill 659,618 659,618 659,618 Intangible assets, net of accumulated amortization of $301, $284 and $278 as of October 1, 2023, January 1, 2023 and October 2, 2022, respectively 344,147 344,164 344,170 Right-of-use operating leases, net 150,528 158,838 176,178 Other assets, net 24,685 20,669 13,171 Total assets $ 2,717,133 $ 2,665,825 $ 2,704,066 LIABILITIES AND STOCKHOLDERS' DEFICIT Current liabilities: Accounts payable $ 46,121 $ 38,887 $ 47,808 Accrued compensation, payroll taxes and benefits 20,547 15,224 14,838 Self-insurance reserves 65,505 34,053 44,563 Accrued interest payable 44,062 38,484 26,616 Other accrued liabilities 69,323 67,346 102,382 Deferred revenue 147,650 128,627 126,578 Short-term borrowings 89,000 100,000 110,000 Current portion of long-term debt 56,867 — — Short-term lease liabilities 11,217 11,688 11,451 Total current liabilities 550,292 434,309 484,236 Noncurrent liabilities: Long-term debt 2,127,495 2,280,531 2,279,220 Long-term lease liabilities 152,575 164,804 162,569 Other long-term liabilities 28,893 30,714 5,519 Deferred income taxes 193,175 184,637 194,358 Total liabilities 3,052,430 3,094,995 3,125,902 Redeemable noncontrolling interests 544,764 521,395 543,719 Stockholders' deficit: Preferred stock, $1.00 par value — — — Common stock, $0.025 par value, 280,000,000 shares authorized; 83,540,861, 83,178,294 and 83,152,582 shares issued and outstanding at October 1, 2023, January 1, 2023 and October 2, 2022, respectively 2,088 2,079 2,079 Capital in excess of par value 1,128,376 1,119,222 1,116,959 Accumulated deficit (1,939,207) (2,000,671) (2,010,774) Accumulated other comprehensive loss, net of tax (71,318) (71,195) (73,819) Total stockholders' deficit (880,061) (950,565) (965,555) Total liabilities and stockholders' deficit 2,717,133 2,665,825 2,704,066 3Three Months Ended (Amounts in thousands, except per share data) October 1, 2023 October 2, 2022 Park admissions $ 286,319 $ 280,502 Park food, merchandise and other 236,703 209,099 Sponsorship, international agreements and accommodations 24,433 15,230 Total revenues 547,455 504,831 Operating expenses (excluding depreciation and amortization shown separately below) 206,461 180,937 Selling, general and administrative expenses (including stock-based compensation of $3,525 and $3,998 in 2023 and 2022, respectively, and excluding depreciation and amortization shown separately below) 57,952 40,481 Costs of products sold 42,885 40,164 Depreciation and amortization 27,942 30,186 Loss on disposal of assets 1,760 5,038 Operating income 210,455 208,025 Interest expense, net 38,263 34,197 Other (income) expense, net 1,155 (659) Income before income taxes 171,037 174,487 Income tax expense 36,570 38,654 Net income $ 134,467 $ 135,833 Less: Net income attributable to noncontrolling interests (23,767) (22,326) Net income attributable to Six Flags Entertainment Corporation $ 110,700 $ 113,507 Weighted-average common shares outstanding: Basic: 83,510 83,094 Diluted: 83,780 83,107 Earnings per average common share outstanding: Basic: $ 1.33 $ 1.37 Diluted: $ 1.32 $ 1.37 statements4Nine Months Ended (Amounts in thousands, except per share data) October 1, 2023 October 2, 2022 Park admissions $ 601,585 $ 595,266 Park food, merchandise and other 480,281 446,449 Sponsorship, international agreements and accommodations 51,486 36,645 Total revenues 1,133,352 1,078,360 Operating expenses (excluding depreciation and amortization shown separately below) 489,000 464,013 Selling, general and administrative expenses (including stock-based compensation of $9,018 and $13,404 in 2023 and 2022, respectively, and excluding depreciation and amortization shown separately below) 192,647 135,194 Costs of products sold 87,437 85,989 Depreciation and amortization 85,966 86,772 Loss on disposal of assets 6,745 3,036 Operating income 271,557 303,356 Interest expense, net 118,060 107,705 Loss on debt extinguishment 13,982 17,533 Other income, net (1,938) (2,069) Income before income taxes 141,453 180,187 Income tax expense 32,525 44,257 Net income $ 108,928 $ 135,930 Less: Net income attributable to noncontrolling interests (47,533) (44,651) Net income attributable to Six Flags Entertainment Corporation $ 61,395 $ 91,279 Weighted-average common shares outstanding: Basic: 83,365 84,760 Diluted: 83,736 84,919 Earnings per average common share outstanding: Basic: $ 0.74 $ 1.08 Diluted: $ 0.73 $ 1.07 5 (Loss)Three Months Ended (Amounts in thousands) October 1, 2023 October 2, 2022 Net income $ 134,467 $ 135,833 Other comprehensive loss, net of tax 1,698 (1,287) 178 161 (599) (761) Other comprehensive income (loss), net of tax 1,277 (1,887) Comprehensive income $ 135,744 $ 133,946 Less: Comprehensive income attributable to noncontrolling interests (23,767) (22,326) Comprehensive income attributable to Six Flags Entertainment Corporation $ 111,977 $ 111,620 JulyOctober 2, 2023 and2022.expensebenefit of $1.0$0.1 million for the three months ended July 3, 2022.(2) Defined benefit retirement plan is presentedOctober 1, 2023 and net of tax expense of $0.1 million for the three months ended JulyOctober 2, 2022.July 3,net of tax benefit of $0.3 million for the three months ended October 2, 2022.Nine Months Ended (Amounts in thousands) October 1, 2023 October 2, 2022 Net income $ 108,928 $ 135,930 Other comprehensive income (loss), net of tax 1,133 (1,452) 529 504 (1,785) 8,316 Other comprehensive income (loss), net of tax (123) 7,368 Comprehensive income $ 108,805 $ 143,298 Less: Comprehensive income attributable to noncontrolling interests (47,533) (44,651) Comprehensive income attributable to Six Flags Entertainment Corporation $ 61,272 $ 98,647 $0.2 million and $0.1$0.6 million for the threenine months ended July 2,October 1, 2023 and July 3, 2022, respectively.net of tax expense of $2.8 million for the nine months ended October 2, 2022.statements6(Amounts in thousands, except share data) Common stock Capital in
excess of
par valueAccumulated
deficitAccumulated
other
comprehensive
lossTotal
stockholders'
deficitShares issued Amount Balances at July 3, 2022 83,026,556 $ 2,075 $ 1,113,118 $ (2,124,281) $ (71,932) $ (1,081,020) Issuance of common stock 128,590 4 (4) — — — Stock-based compensation — — 3,998 — — 3,998 Repurchase of common stock — — — — — — Payment of tax withholdings on equity-based compensation through shares withheld (2,564) — (154) — — (154) Employee stock purchase plan — — 1 — — 1 Fresh start valuation adjustment for partnership park units purchased — — — — — — Net income attributable to Six Flags Entertainment Corporation — — — 113,507 — 113,507 Net other comprehensive loss, net of tax — — — — (1,887) (1,887) Balances at October 2, 2022 83,152,582 $ 2,079 $ 1,116,959 $ (2,010,774) $ (73,819) $ (965,555) (Amounts in thousands, except share data) Common stock Capital in
excess of
par valueAccumulated
deficitAccumulated
other
comprehensive
lossTotal
stockholders'
deficitShares issued Amount Balances at July 2, 2023 83,464,774 $ 2,086 $ 1,124,950 $ (2,049,907) $ (72,595) $ (995,466) Issuance of common stock 79,492 2 (2) — — — Stock-based compensation — — 3,525 — — 3,525 Payment of tax withholdings on equity-based compensation through shares withheld (3,405) — (97) — — (97) Employee stock purchase plan — — — — — — Fresh start valuation adjustment for partnership park units purchased — — — — — — Net income attributable to Six Flags Entertainment Corporation — — — 110,700 — 110,700 Net other comprehensive loss, net of tax — — — — 1,277 1,277 Balances at October 1, 2023 83,540,861 $ 2,088 $ 1,128,376 $ (1,939,207) $ (71,318) $ (880,061) (Amounts in thousands, except share data) Common stock Capital in
excess of
par valueAccumulated
deficitAccumulated
other
comprehensive
lossTotal
stockholders'
deficitShares issued Amount Balances at January 1, 2022 86,162,879 $ 2,154 $ 1,127,710 $ (2,030,877) $ (81,187) $ (982,200) Issuance of common stock 431,999 11 1,028 — — 1,039 Stock-based compensation — — 13,404 — — 13,404 Repurchase of common stock (3,464,385) (87) (25,394) (71,293) — (96,774) Payment of tax withholdings on equity-based compensation through shares withheld (9,904) — (414) — — (414) Employee stock purchase plan 31,993 1 625 — — 626 Fresh start valuation adjustment for partnership park units purchased — — — 117 — 117 Net income attributable to Six Flags Entertainment Corporation — — — 91,279 — 91,279 Net other comprehensive loss, net of tax — — — — 7,368 7,368 Balances at October 2, 2022 83,152,582 $ 2,079 $ 1,116,959 $ (2,010,774) $ (73,819) $ (965,555) (Amounts in thousands, except share data) Common stock Capital in
excess of
par valueAccumulated
deficitAccumulated
other
comprehensive
lossTotal
stockholders'
deficitShares issued Amount Balances at January 1, 2023 83,178,294 $ 2,079 $ 1,119,222 $ (2,000,671) $ (71,195) $ (950,565) Issuance of common stock 352,961 8 (9) — — (1) Stock-based compensation — 9,018 — — 9,018 Payment of tax withholdings on equity-based compensation through shares withheld (12,566) — (338) — — (338) Employee stock purchase plan 22,172 1 483 — — 484 Fresh start valuation adjustment for partnership park units purchased — — — 69 — 69 Net income attributable to Six Flags Entertainment Corporation — — — 61,395 — 61,395 Net other comprehensive loss, net of tax — — — — (123) (123) Balances at October 1, 2023 83,540,861 $ 2,088 $ 1,128,376 $ (1,939,207) $ (71,318) $ (880,061) Comprehensive Income
(Unaudited)Nine Months Ended (Amounts in thousands) October 1, 2023 October 2, 2022 Cash flows from operating activities: Net income $ 108,928 $ 135,930 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 85,966 86,772 Stock-based compensation 9,018 13,404 Interest accretion on notes payable 716 833 Loss on debt extinguishment 13,982 17,533 Amortization of debt issuance costs 4,139 5,531 Loss on disposal of assets 6,745 3,036 Deferred income tax expense 13,731 43,434 Other (3,741) (276) Changes in operating assets and liabilities: (Increase) decrease in accounts receivable - trade (40,177) 25,519 Increase in inventories, prepaid expenses and other current assets (11,139) (43,543) (Increase) decrease in deposits and other assets 3,376 (3,697) Decrease in ROU operating leases 8,708 10,176 (Decrease) increase in accounts payable, deferred revenue and accrued liabilities and other long-term liabilities 53,738 (62,274) Decrease in operating lease liabilities (12,310) (14,628) (Decrease) increase in accrued interest payable 5,578 (23,938) Net cash provided by operating activities 247,258 193,812 Cash flows from investing activities: Additions to property and equipment (110,371) (78,038) Property insurance recoveries 1,089 4,655 Net cash used in investing activities (109,282) (73,383) Cash flows from financing activities: Repayment of borrowings (1,133,623) (450,000) Proceeds from borrowings 1,023,984 200,000 Payment of debt issuance costs (19,821) — Stock repurchases — (96,774) Redemption premium payments on debt extinguishment — (12,600) Payment of cash dividends — (199) Proceeds from issuance of common stock — 1,665 Payment of tax withholdings on equity-based compensation through shares withheld (339) (414) Reduction in finance lease liability (750) (2,025) Purchase of redeemable noncontrolling interest (328) (556) Distributions to noncontrolling interests (23,766) (22,326) Net cash used in financing activities (154,643) (383,229) Effect of exchange rate on cash 3,308 529 Net decrease in cash and cash equivalents (13,359) (262,271) Cash and cash equivalents at beginning of period 80,122 335,585 Cash and cash equivalents at end of period $ 66,763 $ 73,314 Supplemental cash flow information Cash paid for interest $ 109,518 $ 125,919 Cash paid for income taxes $ 14,173 $ 3,582 (1) Foreign currency translation adjustment is presented net of tax benefit of $0.1 million and net of tax benefit of a nominal amount for the six months ended July 2, 2023 and July 3, 2022, respectively.(2) Defined benefit retirement plan is presented net of tax expense of $0.1 million for the six months ended July 2, 2023 and July 3, 2022, respectively.(3) Change in fair value of cash flow hedging is presented net of tax benefit of $0.4 million for the six months ended July 2, 2023 and net of tax expense of $3.0 million for the six months ended July 3, 2023.7SIX FLAGS ENTERTAINMENT CORPORATIONConsolidated Statements of Stockholders’ Deficit(Unaudited)See accompanying notes to unaudited condensed consolidated financial statements.8SIX FLAGS ENTERTAINMENT CORPORATIONConsolidated Statements of Stockholders’ Deficit(Unaudited)See accompanying notes to unaudited condensed consolidated financial statements.9SIX FLAGS ENTERTAINMENT CORPORATIONCondensed Consolidated Statements of Cash Flows(Unaudited)See accompanying notes to unaudited condensed consolidated financial statements.10July 2,October 1, 2023 (“the sixnine months ended July 2,October 1, 2023”) and the period AprilJuly 3, 2023 – July 2,October 1, 2023 (“the three months ended July 2,October 1, 2023”). The comparison period in the prior year covers the dates January 3, 2022 – July 3,October 2, 2022 (“the sixnine months ended July 3,October 2, 2022”) and the period AprilJuly 4, 2022 – July 3,October 2, 2022 (“the three months ended July 3,October 2, 2022”).sixnine months ended July 2,October 1, 2023, are not indicative of the results expected for the full year. Our operations are highly seasonal, with approximately 70% - 75% of park attendance and revenues in a typical year occurring in the second and third calendar quarters of each year, with the most significant period falling between Memorial Day and Labor Day.$98.1$99.4 million, $96.0 million and $108.4$109.0 million as of July 2,October 1, 2023, January 1, 2023, and July 3,October 2, 2022, respectively, due to uncertainties related to our ability to use some of our deferred tax assets, primarily consisting of certain state net operating loss and other tax carryforwards, before they expire. The valuation allowance wasis based on our estimates ofwereare recoverable. Our projected taxable income over the foreseeable future indicates we will be able to use all of our federal net operating loss carryforwards before they expire.July 2,October 1, 2023, January 1, 2023, and July 3,October 2, 2022, we had no recorded amounts for accrued interest or penalties.11July 2,October 1, 2023, the fair value of our single reporting unit exceeded our carrying amount. We have one reporting unit at the same level for which Holdings common stock is traded and we believe our market capitalization is the best indicator of our reporting unit’s fair value. As of July 2,October 1, 2023, we did not identify any triggering events that would require a full quantitative analysis to be performed.July 2,October 1, 2023, we did not identify any triggering events that would require a quantitative analysis. (Loss) Per Common Share (loss) per common share for the three and sixnine months ended July 2,October 1, 2023 and July 3,October 2, 2022, was calculated as follows:Three Months Ended Nine Months Ended (Amounts in thousands, except per share data) October 1, 2023 October 2, 2022 October 1, 2023 October 2, 2022 Net income attributable to Six Flags Entertainment Corporation $ 110,700 $ 113,507 $ 61,395 $ 91,279 Weighted-average common shares outstanding - basic: 83,510 83,094 83,365 84,760 Effect of dilutive stock options and restricted stock units 270 13 371 159 Weighted-average common shares outstanding - diluted: 83,780 83,107 83,736 84,919 Earnings per share - basic: $ 1.33 $ 1.37 $ 0.74 $ 1.08 Earnings per share - diluted: $ 1.32 $ 1.37 $ 0.73 $ 1.07 1,578,0001,406,000 and 2,462,0002,509,000 antidilutive stock options and restricted stock units for the three months ended July 2,October 1, 2023, and July 3,October 2, 2022, respectively, and excluded the effect of 1,550,0001,474,000 and 2,415,0002,979,000 antidilutive stock options and restricted stock units for the sixnine months ended July 2,October 1, 2023, and July 3,October 2, 2022, respectively.July 2,October 1, 2023, we have not determined that it is probable that we will achieve any of the performance targets associated with our outstanding performance units, and we have therefore not recognized any expense for these awards.12sixnine months ended July 2,October 1, 2023 and July 3,October 2, 2022, stock-based compensation expense consisted of the following:Three Months Ended Nine Months Ended (Amounts in thousands) October 1, 2023 October 2, 2022 October 1, 2023 October 2, 2022 Long-term incentive plan $ 3,495 $ 4,004 $ 8,902 $ 13,341 Employee stock purchase plan 30 (6) 116 63 Total stock-based compensation $ 3,525 $ 3,998 $ 9,018 $ 13,404 pass, a new twelve-month, subscription style pass. We are not exposed to a significant concentration of credit risk; however, based on the age of receivables, our historical experience and other factors and assumptions we believe to be customary and reasonable, we record an allowance for doubtful accounts. As of July 2,October 1, 2023, January 1, 2023, and July 3,October 2, 2022, we have recorded an allowance for doubtful accounts of $9.3$10.1 million, $4.1 million, and $6.7$7.6 million, respectively, which is primarily comprised of estimated payment defaults under our Six Flags Plus pass and other multi-use admission products that allow for payment plans. To the extent that payments for products for which an allowance for doubtful accounts is established have not been recognized in revenue, the allowance recorded is offset with a corresponding reduction in deferred revenue.July 2,October 1, 2023, we no longer have any debt instruments that contain LIBOR as a reference rate. Our adoption of Update 2020-04 did not have any effect on our condensed consolidated financial statements.13sixnine month periods ended July 2,October 1, 2023 and July 3,October 2, 2022, respectively. Long-term and short-term contracts consist of our contracts with customers with terms greater than one year and less than or equal to one year, respectively.Three Months Ended October 1, 2023 (Amounts in thousands) Park Admissions Park Food, Merchandise and Other Sponsorship, International Agreements and Accommodations Total Long-term contracts $ 21,075 $ 2,538 $ 7,163 $ 30,776 265,244 234,165 17,270 516,679 Total revenues $ 286,319 $ 236,703 $ 24,433 $ 547,455 (1)Other revenues primarily include sales of single-use tickets and short-term transactional sales for which we have the right to invoice.Three Months Ended October 2, 2022 (Amounts in thousands) Park Admissions Park Food, Merchandise and Other Sponsorship, International Agreements and Accommodations Total Long-term contracts $ 20,481 $ 1,915 $ 6,301 $ 28,697 260,021 207,184 8,929 476,134 Total revenues $ 280,502 $ 209,099 $ 15,230 $ 504,831 Nine Months Ended October 1, 2023 (Amounts in thousands) Park Admissions Park Food, Merchandise and Other Sponsorship, International Agreements and Accommodations Total Long-term contracts $ 38,002 $ 4,501 $ 20,733 $ 63,236 563,583 475,780 30,753 1,070,116 Total revenues $ 601,585 $ 480,281 $ 51,486 $ 1,133,352 Nine Months Ended October 2, 2022 (Amounts in thousands) Park Admissions Park Food, Merchandise and Other Sponsorship, International Agreements and Accommodations Total Long-term contracts $ 40,433 $ 4,923 $ 16,329 $ 61,685 554,833 441,526 20,316 1,016,675 Total revenues $ 595,266 $ 446,449 $ 36,645 $ 1,078,360 (1)$8.6$30.8 million and $20.8$51.6 million was recognized as revenue for long-term contracts during the three and sixnine months ended July 2,October 1, 2023, respectively. As of July 2,October 1, 2023, the total unearned amount of revenue for remaining long-term contract performance obligations was $27.5$71.6 million. As of January 2,1, 2022, $58.7 million of unearned revenue associated with outstanding long-term contracts was reported in "Deferred revenue," of which $20.8$24.6 million and $33.0$49.4 million was recognized as revenue for long-term contracts during the three and sixnine months ended July 3,October 2, 2022, respectively. As of July 3,October 2, 2022, the total unearned amount of revenue for remaining long-term contract performance obligations was $37.6$21.4 million.July 2,October 1, 2023, we expect to recognize estimated revenue for partially or wholly unsatisfied performance obligations on long-term contracts of approximately $35.0$13.9 million in the remainder of 2023,, $17.6 $73.6 million in 2024,, $9.2 million in 2025,, $7.1 million in 2026,, and $12.8 million in 2027 and thereafter.14July 2,October 1, 2023, our credit facility consisted of a $500.0 million revolving credit facility (the “Revolving Credit Facility”) and a $479.0 million Tranche B Term Loan facility (the “Term Loan B”) pursuant to the amended and restated credit facility that we entered into in May 2023 (the “Credit Facility”).$800$800.0 million in aggregate principal amount of 7.25% senior unsecured notes due 2031 (“2031 Notes”), the Company amended its existing senior secured credit facility to, among other things, (i) establish a $500$500.0 million replacement revolving credit facility maturing in May 2028, subject to springing maturity conditions, which was previously scheduled to expire in April 2024 (ii) maintain the same interest rate margins on borrowings under the replacement revolving credit facility as were previously in effect, while reducing the fee on unused revolving commitments to 0.5%, stepping down to 0.375% upon achieving a seniortransaction which was recognized during the three months ended July 2, 2023.transaction.July 2,October 1, 2023, our available borrowing capacity under our Revolving Credit Facility was $310.0$390.0 million after reducing the facility by $169.0$89.0 million borrowings outstanding and $21.0 million of outstanding letters of credit. As of January 1, 2023 and July 3,October 2, 2022, $100.0 million and $200.0$110.0 million, respectively, under the Revolving Credit Facility were outstanding (excluding amounts reserved for letters of credit in the amount of $21.0 million). Interest on the Revolving Credit Facility accrues at an annual rate of SOFR, plus a Term SOFR Adjustment of 0.10%, plus an applicable margin with an unused commitment fee based on our senior secured leverage ratio. As of July 2,October 1, 2023, the Revolving Credit Facility had an interest rate of 8.45%8.66%. As of July 2,October 1, 2023, the Revolving Credit Facility unused commitment fee was 0.500%. The Revolving Credit Facility matures in May 2028.July 2,October 1, 2023, January 1, 2023 and July 3,October 2, 2022, $479.0 million was outstanding under the Term Loan B. Interest on the Term Loan B accrues at an annual rate of SOFR, plus a Term SOFR Adjustment of 0.10%, plus 1.75%. The Term Loan B consists of only floating rate debt. As of July 2,October 1, 2023, the applicable interest rate on the Term Loan B was 6.95%7.17%. The Term Loan B matures on April 17, 2026.threenine months ended July 3,October 2, 2022.15containingcomprised of $1.0 million for the premium paid above par and $12.9 million of costs charged to expense on debt modification which were recognized during the threenine months ended July 2,October 1, 2023.Also, on May 3, 2023, the Company announced that $892.6 million, or 94.0% of the aggregate principal amount of the 2024 notes were validly tendered pursuant to the Tender Offer. Net cash proceeds from the 2031 Notes, together with other available cash, including borrowings under our revolving credit facility, were used to pay the Purchase Price, plus accrued and unpaid interest.July 2,October 1, 2023, $56.9 million of the 2024 Notes, $365.0 million of the 2025 Notes, $500.0 million of the 2027 Notes and $800.0 million of the 2031 Notes, were issued and outstanding. Interest payments of $1.4 million for the 2024 Notes are due semi-annually on January 31 and July 31 of each year. Following the repayment of $360 million of the 2025 Notes, interest payments of $12.7 million for the 2025 Notes are due semi-annually on January 1 and July 1 each year. Interest payments of $13.8 million for the 2027 Notes are due semi-annually on April 15 and October 15 of each year. For the 2031 Notes, an interest payment of $30.9 million is due November 15, 2023, and then $29.0 million is due semi-annually on May 15 and November 15 of each year, thereafter.July 2,October 1, 2023, January 1, 2023, and July 3,October 2, 2022, the principal balance of our long-term debt consisted of the following:As of (Amounts in thousands) October 1, 2023 January 1, 2023 October 2, 2022 Term Loan B $ 479,000 $ 479,000 $ 479,000 Revolving Credit Facility 89,000 100,000 110,000 2024 Notes 56,867 949,490 949,490 2025 Notes 365,000 365,000 365,000 2027 Notes 500,000 500,000 500,000 2031 Notes 800,000 — — Net discount (6,375) (2,138) (2,416) Deferred financing costs (10,130) (10,821) (11,854) Total debt $ 2,273,362 $ 2,380,531 $ 2,389,220 Less current portion of long-term debt (56,867) — — Less short-term borrowings (89,000) (100,000) (110,000) Total long-term debt $ 2,127,495 $ 2,280,531 $ 2,279,220 July 2,October 1, 2023, January 1, 2023, and July 3,October 2, 2022, the fair value of our long-term debt was $2,298.7$2,203.3 million, $2,284.3 million and $2,368.2$2,259.2 million, respectively.16sixnine months ended July 2,October 1, 2023, were as follows:(Amounts in thousands) Cumulative Translation Adjustment Cash Flow Hedges Defined Benefit Plans Income Taxes Accumulated Other Comprehensive Loss Balances at January 1, 2023 $ (33,145) $ 5,337 $ (39,385) $ (4,002) $ (71,195) Net current period change 1,593 — — (460) 1,133 Amounts reclassified from AOCI — (2,376) 704 416 (1,256) Balances at October 1, 2023 $ (31,552) $ 2,961 $ (38,681) $ (4,046) $ (71,318) sixnine months ended July 2,October 1, 2023 and July 3,October 2, 2022:Reclassification of (Gain) Loss from AOCL into Earnings Three Months Ended Nine Months Ended Component of AOCI Location of Reclassification into Income (Loss) October 1, 2023 October 2, 2022 October 1, 2023 October 2, 2022 Amortization of gain on interest rate hedge Interest expense, net $ (797) $ (778) $ (2,376) $ (435) Income tax expense 198 17 591 (109) Net of tax $ (599) $ (761) $ (1,785) $ (544) Amortization of deferred actuarial loss and prior service cost Operating expenses $ 236 $ 216 $ 704 $ 674 Income tax benefit (58) (55) (175) (170) Net of tax $ 178 $ 161 $ 529 $ 504 Total reclassifications $ (421) $ (600) $ (1,256) $ (40) July 2,October 1, 2023, January 1, 2023, and July 3,October 2, 2022:17Derivative Assets (Amounts in thousands) October 1, 2023 January 1, 2023 October 2, 2022 Derivatives Not Designated as Hedging Instruments Interest rate swap agreements — prepaid expenses and other current assets $ 3,743 $ 6,135 $ 6,082 Interest rate swap agreements — other assets, net 3,955 4,446 5,442 $ 7,698 $ 10,581 $ 11,524 July 2,October 1, 2023, January 1, 2023, and July 3,October 2, 2022:Derivative Liabilities (Amounts in thousands) October 1, 2023 January 1, 2023 October 2, 2022 Derivatives Not Designated as Hedging Instruments Interest rate swap agreements — other accrued liabilities $ 4,660 $ 8,476 $ 9,235 Interest rate swap agreements — other long-term liabilities 5,181 6,224 7,542 $ 9,841 $ 14,700 $ 16,777 July 2,October 1, 2023 and July 3,October 2, 2022 or for the sixnine months ended July 2,October 1, 2023 and July 3,October 2, 2022.expense”expense, net” in the condensed consolidated statements of operations for the three and sixnine months ended July 2,October 1, 2023, and July 3,October 2, 2022, were as follows:July 2,October 1, 2023 and July 3,October 2, 2022SixGain (Loss)
Recognized in AOCLGain (Loss) Reclassified from
AOCL into Interest Expense, Net(Amounts in thousands) 2023 2022 2023 2022 Interest rate swap agreements $ — $ — $ 796 $ 778 Total $ — $ — $ 796 $ 778 July 2,October 1, 2023 and July 3,October 2, 2022Gain (Loss)
Recognized in AOCLGain (Loss) Reclassified from
AOCL into Interest Expense, Net(Amounts in thousands) 2023 2022 2023 2022 Interest rate swap agreements $ — $ 11,778 $ 2,376 $ 435 Total $ — $ 11,778 $ 2,376 $ 435 July 2,October 1, 2023, we expect to reclassify net gains of $3.2$3.0 million, currently recorded in AOCL, into “Interest expense, net” within the next twelve months.July 2,October 1, 2023, our share of the distribution will be approximately $38.1 million) and (ii) make minimum capital expenditures at each of the Partnership Parks during rolling five-year periods, based generally on 6.0% of the Partnership Parks’ revenues. Pursuant to the 2023 annual offer to purchase limited partnership units tendered by the unit holders (the "Partnership Park Put") in May 2023, we purchased 0.149 limited partnership units from the Texas partnership for $0.3 million. As we purchase additional units, we are entitled to a proportionate increase in our share of the minimum annual distributions.18July 2,October 1, 2023, is $409.8$409.7 million in the case of SFOG and $527.4 million in the case of SFOT. As of July 2,October 1, 2023, we owned approximately 31.5% and 54.1% 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.$26.0$28.0 million to $30.0$32.0 million of capital expenditures at these parks for the 2023 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 $73.0 million of cash in 2022, after deduction of capital expenditures and excluding the impact of short-term intercompany advances from or payments to Holdings. As of July 2,October 1, 2023, January 1, 2023 and July 3,October 2, 2022, we had total loans receivable outstanding of $288.3 million from the partnerships that own the Partnership Parks. The loans were primarily used to fund the acquisition of Six Flags White Water Atlanta and to make capital improvements to the Partnership Parks and distributions to the limited partners in prior years.July 2,October 1, 2023, redeemable noncontrolling interests of the SFOTSFOG and SFOGSFOT partnerships were $292.1 million and $252.7 million, and $292.1 million, respectively.(Amounts in thousands) SFOT SFOG Total Balance at January 1, 2023 $ 241,194 $ 280,201 $ 521,395 Purchase of redeemable units (328) — (328) Fresh start accounting fair market value adjustment for purchased units (69) — (69) Net income attributable to noncontrolling interests 23,721 23,812 47,533 Distributions to noncontrolling interests (11,860) (11,907) (23,767) Balance at October 1, 2023 $ 252,658 $ 292,106 $ 544,764 SFOTSFOG and SFOGSFOT as of July 2,October 1, 2023, was approximately $280.2 million and $240.8 million, and $280.2 million, respectively.19$37.6$37.6 million during the three and sixnine months ended July 2,October 1, 2023.$68.6$65.5 million, $34.1 million and $37.0$44.6 million as of July 2,October 1, 2023, January 1, 2023 and July 3,October 2, 2022, respectively.parties’parties that, among other things, the appeal has been docketed, the appellate record is complete, and the Appellant’s brief is due within 40 days.2021 has not yet filed an amended petition. On September 7, 2023, the individual defendants and the Company filed a motion to stay pendingiswas due on or before September 12, 2023; plaintiff’s opposition to defendants’ motion to dismiss iswas due on or before October 17, 2023; and defendants’ reply to plaintiff’s opposition is due on or beforewas filed prior to November 1, 2023. On July 20, 2023, the court scheduled completion of discovery to occur by April 4, 2025, and a four-day trial to begin on September 1, 2025. On August 22, 2023, plaintiff filed an amended complaint. On September 12, 2023, Six Flags and the individual defendants filed motions to dismiss the amended complaint. On October 17, 2023, plaintiff filed oppositions to the defendants' motions to dismiss. Six Flags' and the individual defendants' replies in support of their motions to dismiss were filed by November 1, 2023.This settlementOn September 22, 2023, the Park settled with 55 additional plaintiffs, including the bellwether plaintiffs set for trial on January 15, 2024, for an immaterial amount. These settlements resolved all claims brought by these plaintiffs only. The parties are working to document this settlementonly and will seek to have the Court appoint a special master to determine the amounts each settling plaintiff will receive. This settlement doesdo not resolve all claims arising from the alleged chemical vapor release. There are 12219 remaining plaintiffs; 71 plaintiffs represented by 5 different firms and 51firms. All pro se plaintiffs. The Court set a status conference for August 10, 2023, and ordered all remaining plaintiffs to appear. Any who fail to appear at the status conference will immediately behave been dismissed. The court also setparties are working to document these settlements and have asked the next bellweather trial for January 15, 2024. We have defended this litigation vigorously andCourt to appoint special masters to determine the amounts each settling plaintiff will continue to do so.receive. Regardless of the merit of particular claims, litigation may be expensive, time-consuming, disruptive to the Company’s operations and distracting to management. In recognition of these considerations, the Company may enter into further settlement agreements or other arrangements to settle litigation and resolve such disputes. No assurance can be given that such agreements can be obtained on acceptable terms or that litigation will not occur. These agreements may also significantly increase the Company’s operating expenses. The outcome of this litigation is inherently22strategystrategic decisions. Each individual park location has a Park President or General Manager responsible for the operational results and executing the strategy set forth by the CODM. Substantially 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 - parks.July 2,October 1, 2023, January 1, 2023, and July 3,October 2, 2022:As of (Amounts in thousands) October 1, 2023 January 1, 2023 October 2, 2022 Domestic $ 2,303,345 $ 2,290,318 $ 2,308,557 Foreign 118,931 114,048 110,903 Total $ 2,422,276 $ 2,404,366 $ 2,419,460 sixnine months ended July 2,October 1, 2023, and July 3,October 2, 2022:23Domestic Foreign Total 2023 (Amounts in thousands) Revenues $ 1,022,513 $ 110,839 $ 1,133,352 Income before income taxes 96,609 44,844 141,453 2022 Revenues $ 994,463 $ 83,897 $ 1,078,360 Income before income taxes 154,209 25,978 180,187 sixnine months ended July 2,October 1, 2023, and July 3,October 2, 2022, respectively:Three Months Ended Nine Months Ended (Amounts in thousands) October 1, 2023 October 2, 2022 October 1, 2023 October 2, 2022 Service cost $ — $ — $ — $ — Interest cost 1,955 1,375 5,863 4,143 Expected return on plan assets (2,401) (3,060) (7,205) (9,179) Amortization of net actuarial loss 236 217 704 675 Administrative fees 650 300 1,950 900 Total net periodic expense (benefit) $ 440 $ (1,168) $ 1,312 $ (3,461) expense"expense, net" in the condensed consolidated statements of operations.Three Months Ended Nine Months Ended October 1, 2023 October 2, 2022 October 1, 2023 October 2, 2022 Discount rate 4.95 % 2.60 % 4.95 % 2.60 % Rate of compensation increase N/A N/A N/A N/A Expected return on plan assets 5.75 % 5.75 % 5.75 % 5.75 % sixnine month periods ended July 2,October 1, 2023 and July 3,October 2, 2022.July 2,October 1, 2023, Holdings had repurchased 8,071,000 shares at a cumulative cost of approximately $365.1 million and an average price per share of $45.24 under the March 2017 Stock Repurchase Plan, leaving approximately $134.9 million available for permitted repurchases. We have notnot made any repurchases during the sixnine months ended July 2,October 1, 2023.24As of October 2, 2022 (Amounts in thousands) As Reported Adjustments As Revised Capital in excess of par value $ 1,105,053 $ 11,906 $ 1,116,959 Accumulated deficit (1,998,868) (11,906) (2,010,774) Total stockholders' deficit (965,555) — (965,555) Total liabilities and stockholders' deficit $ 2,704,066 $ — $ 2,704,066 As of January 1, 2023 (Amounts in thousands) As Reported Adjustments As Revised Capital in excess of par value $ 1,104,051 $ 15,171 $ 1,119,222 Accumulated deficit (1,985,500) (15,171) (2,000,671) Total stockholders' deficit (950,565) — (950,565) Total liabilities and stockholders' deficit $ 2,665,825 $ — $ 2,665,825 Three Months Ended October 2, 2022 (Amounts in thousands) As Reported Adjustments As Revised Selling, general and administrative expenses $ 38,159 $ 2,322 $ 40,481 Income before income taxes 176,809 (2,322) 174,487 Net income 138,155 (2,322) 135,833 Net income attributable to Six Flags Entertainment Corporation 115,829 (2,322) 113,507 Earnings per average common share outstanding: Basic $ 1.39 $ (0.02) $ 1.37 Diluted $ 1.39 $ (0.02) $ 1.37 (1) Including stock-based compensation of $1,676 and $3,998 in the "As Reported" and "As Revised" figures, respectively. "As Reported" figure adjusted to reflect the reclassification of pension-related expense to other (income) expense, net in our condensed consolidated statements of operations as discussed in Note 1 - General - Basis of Presentation.Nine Months Ended October 2, 2022 (Amounts in thousands) As Reported Adjustments As Revised Selling, general and administrative expenses $ 130,914 $ 4,280 $ 135,194 Income before income taxes 184,467 (4,280) 180,187 Net income 140,210 (4,280) 135,930 Net income attributable to Six Flags Entertainment Corporation 95,559 (4,280) 91,279 Earnings per average common share outstanding: Basic $ 1.13 $ (0.05) $ 1.08 Diluted $ 1.13 $ (0.06) $ 1.07 "Cautionary"Cautionary Note Regarding Forward-Looking Statements"Statements" included elsewhere in this Quarterly Report and "Item 1A. Risk Factors" in the 2022 Annual Report and in this Quarterly Report for further discussion of the uncertainties, risks and assumptions associated with these statements.●Total guest spending per capita is the total revenue generated from our guests, on a per guest basis, through admissions and in-park spending. Total guest spending per capita is calculated by dividing the sum of park admissions revenue and park food merchandise and other revenue by total attendance.●Admissions revenue per capita is the total revenue generated from our guests, on a per guest basis, to enter our parks. Admissions revenue per capita is calculated by dividing park admission revenue by total attendance.
Total guest spending per capita is the total revenue generated from our guests, on a per guest basis, through admissions and in-park spending. Total guest spending per capita is calculated by dividing the sum of park admissions revenue and park food merchandise and other revenue by total attendance.●In-park spending per capita is the total revenue generated from our guests, on a per guest basis, on items sold within our parks, such as food and beverages, games and merchandise. In-park spending per capita is calculated by dividing park food, merchandise and other revenue by total attendance.sixnine months ended July 2,October 1, 2023 and July 3,October 2, 2022, are not indicative of the results expected for the full year. Typically, our park operations generate approximately 70% - 75% of their annual revenue during the second and third quarter each year while certain expenses are incurred year-round.2526July 2,October 1, 2023 Compared to Three Months Ended July 3,October 2, 2022July 2,October 1, 2023 and July 3,October 2, 2022:Three Months Ended Change (Amounts in thousands, except percentage and per capita data) October 1, 2023 October 2, 2022 $ % Total revenue 547,455 504,831 42,624 8 % Operating expenses 206,461 180,937 25,524 14 % Selling, general and administrative expenses 57,952 40,481 17,471 43 % Cost of products sold 42,885 40,164 2,721 7 % Depreciation and amortization 27,942 30,186 (2,244) (7) % Loss on disposal of assets 1,760 5,038 (3,278) N/M Operating income 210,455 208,025 2,430 1 % Interest expense, net 38,263 34,197 4,066 12 % Other (income) expense, net 1,155 (659) 1,814 N/M Income before income taxes 171,037 174,487 (3,450) (2) % Income tax expense 36,570 38,654 (2,084) (5) % Net income 134,467 135,833 (1,366) (1) % Less: Net income attributable to noncontrolling interests (23,767) (22,326) (1,441) 6 % Net income attributable to Six Flags Entertainment Corporation $ 110,700 $ 113,507 $ (2,807) (2) % Other Data: Attendance 9,279 8,032 1,247 16 % Admissions revenue per capita $ 30.86 $ 34.93 $ (4.07) (12) % In-park spending per capita $ 25.51 $ 26.03 $ (0.52) (2) % Total guest spending per capita $ 56.37 $ 60.96 $ (4.59) (8) % July 2,October 1, 2023, totaled $443.7$547.5 million, an increase of $8.3$42.6 million, or 2%8%, compared to $435.4$504.8 million for the three months ended July 3,October 2, 2022. The increase was attributable to an attendance increase of 6%16% and an increase in sponsorship, international agreements and accommodations revenue of $3.4$9.2 million. The increase was partially offset by a decrease in per capita spending.July 2,October 1, 2023, decreased by $3.11,$4.59, to $60.76,$56.37, compared to the three months ended July 3,October 2, 2022, driven by a $2.56,$4.07, or 7%12%, decrease in admissions revenue per capita and a $0.55,$0.52, or 2%, decrease in in-park spending per capita. The lowerdecrease in admissions spending per capita reflects our increased focus on sellingwas driven primarily by the planned effort to optimize season pass and other multi-use productssingle-day ticket pricing, which generateresulted in lower per capita revenue compared to our single-day tickets.average admissions pricing in third quarter 2023 versus third quarter 2022. The decrease in in-park spending per capita reflectswas driven primarily by lower spend on parking, retail, and flash passes, resulting from a higher mix of attendance from season passes in third quarter 2023 versus the Company’sprior year. Due to certain benefits available to season pass holders, guests visiting on a season pass spend less per visit on certain in-park pricing initiatives.July 2,October 1, 2023, increased $0.3$25.5 million, or 14%, compared to the three months ended July 3,October 2, 2022, which was primarily attributable to wage increases for our seasonal labor, partially offset by a declinehigher costs associated with an earlier start to our fall events and investments in full-time headcount.new entertainment shows and events and an increase in repairs and maintenance expense.July 2,October 1, 2023, increased $37.0$17.5 million, or 69%43%, compared to the three months ended July 3,October 2, 2022. The increase was primarily attributable to an increase in self-insurance reserves of $37.6 million. See Note 6, Commitments and Contingencies, for additional information on the change in accounting estimate that resulted in this adjustment. The remaining decrease was attributable to a decrease in full-time head count, partially offset by an$12.9 million increase in advertising expenses.27July 2,October 1, 2023, decreased $0.9increased $2.7 million, or 3%7%, compared to the three months ended July 3,October 2, 2022, primarily as a result of procurement initiatives to reduce costs, partially offset by higher unit sales volume of our other in-park offerings due toresulting from higher attendance.July 2,October 1, 2023, increased $1.4decreased $2.2 million, or 5%7%, compared to the period ended JulyOctober 2, 2022. The increase wasdecrease in depreciation and amortization expense is primarily attributable tothe result of a higher proportion of our capital expenditures over the past several years that have been allocated to assets with shorter useful lives.$2.5$1.8 million during the three months ended July 2,October 1, 2023, and a loss on disposal of assets of $0.1$5.0 million during the three months ended July 3,October 2, 2022. These losses were related to the disposition of older rides and other assets in the normal course of operations.$7.5$4.1 million, or 21%12%, compared to the three months ended July 3,October 2, 2022. The increase is attributable to higher interest rates on the 2031 Notes as compared to the 2024 Notes which were outstanding in the prior year and increases in interest rates on our floating-rate debt related to our Term Loan B and Revolving Credit Facility.Nine Months Ended Change (Amounts in thousands, except per capita data) October 1, 2023 October 2, 2022 $ % Total revenue $ 1,133,352 $ 1,078,360 $ 54,992 5 % Operating expenses 489,000 464,013 24,987 5 % Selling, general and administrative expenses 192,647 135,194 57,453 42 % Costs of products sold 87,437 85,989 1,448 2 % Depreciation and amortization 85,966 86,772 (806) (1) % Loss on disposal of assets 6,745 3,036 3,709 N/M Operating income 271,557 303,356 (31,799) (10) % Interest expense, net 118,060 107,705 10,355 10 % Loss on debt extinguishment 13,982 17,533 (3,551) (20) % Other income, net (1,938) (2,069) 131 (6) % Income before income taxes 141,453 180,187 (38,734) (21) % Income tax expense 32,525 44,257 (11,732) (27) % Net income 108,928 135,930 (27,002) (20) % Less: Net income attributable to noncontrolling interests (47,533) (44,651) (2,882) 6 % Net income attributable to Six Flags Entertainment Corporation $ 61,395 $ 91,279 $ (29,884) (33) % Other Data: Attendance 17,948 16,371 1,577 10 % Admissions revenue per capita $ 33.52 $ 36.36 $ (2.84) (8) % In-park spending per capita $ 26.76 $ 27.27 $ (0.51) (2) % Total guest spending per capita $ 60.28 $ 63.63 $ (3.35) (5) % threenine months ended July 2,October 1, 2023 as compared to compared to a loss of debt extinguishment of $17.5 for threenine months ended July 3,October 2, 2022. During the threenine months ended July 2,October 1, 2023, we recognized a loss on debt extinguishment of $14.0 million due to the write-off of unamortized deferred financing costs on the 2024 Notes, the premium paid above par on the early redemption of the 2024 Notes and the transaction costs charged to expense. During the threenine months ended July 3,October 2, 2022, we incurred a $17.5 million loss on debt extinguishment upon the early redemption of $360.0 million of the 2025 Notes comprised of $12.6 million for the premium paid above par and $5.0 million for the write-off of the pro rata amount of unamortized deferred financing costs associated with the 2025 Notes that were redeemed early.threenine months ended July 2,October 1, 2023 was $13.8$32.5 million, reflecting an effective tax rate of 23.7%23.0%. The difference between our effective tax rate and the federal statutory rate primarily results from state and foreign income taxes and certain nondeductible expenses, including nondeductible executive compensation. Income tax expense for the threenine months ended July 3,October 2, 2022, was $24.7 million reflecting an effective tax rate of 27%. The difference between our effective tax rate and the federal statutory rate primarily results from state and foreign income taxes and certain nondeductible expenses, including nondeductible executive compensation and a $4.0 million discrete tax assessment in Mexico.28Results of OperationsSix Months Ended July 2, 2023 Compared to Six Months Ended July 3, 2022The following table sets forth summary financial information for the six months ended July 2, 2023 and July 3, 2022:RevenueRevenue for the six months ended July 2, 2023, totaled $585.9 million, an increase of $12.4 million, or 2%, compared to the $573.5 million for the six months ended July 3, 2022. The increase was primarily attributable to an increase in attendance of 4% and a $5.6 million increase in sponsorship, international agreement and accommodations revenue. The increase was partially offset by reduced spending on a per capita basis.Total guest spending per capita, which excludes sponsorship, international agreements and accommodations revenue, for the six months ended July 2, 2023, decreased $1.75, to $64.46, compared to the six months ended July 3, 2022, driven by a decrease in admissions revenue per capita of $1.38, or 4%, and a decrease in in-park spending per capita of $0.37, or 1%. The lower admissions per capita reflects our increased focus on selling season pass and other multi-use products, which generate lower per capita revenue compared to single day tickets.Operating expensesOperating expenses for the six months ended July 2, 2023, decreased $0.5 million, compared to the six months ended July 3, 2022, primarily as a result of a decline in full-time headcount. This decrease was partially offset by an increase in wages per hour paid to our seasonal workers and the addition of multiple events during the first half of the year including Viva la Fiesta, Flavors of the World and Scream Break.Selling, general and administrative expensesSelling, general and administrative expenses for the six months ended July 2, 2023, increased $41.9 million, or 45%, compared to the six months ended July 3, 2022. The increase was primarily attributable to an increase in our self-insurance reserves of $37.6 million. See Note 6, Commitments and Contingencies, for additional information on the change in accounting estimate that resulted in this adjustment. The remaining increase is attributable to an increase in advertising expenses during the first half of the year. The increase was partially offset by a decline in full-time headcount.29Cost of products soldCost of products sold for the six months ended July 2, 2023 decreased $1.3 million, or 3%, compared to the six month period ended July 3, 2022 primarily as a result of procurement initiatives to reduce costs, partially offset by higher sales volume of our other in-park offerings due to higher attendance.Depreciation and amortizationDepreciation and amortization expense for the six months ended July 2, 2023, increased $1.4 million, or 3%, compared to the six months ended July 3, 2022. The increase in depreciation and amortization expense is primarily the result of a higher proportion of our capital expenditures over the past several years that have been allocated to assets with shorter useful lives.Loss on disposal of assetsWe recognized a $5.0 million loss on disposal of assets for the six months ended July 2, 2023, compared to a gain on disposal of assets of $2.0 million for the six months ended July 3, 2022. The loss on disposal of assets during the six months ended July 2, 2023, was driven by the disposition of older rides and other assets in the normal course of operations. The gain of $2.0 million during the six months ended July 3, 2022 was primarily attributable to insurance proceeds received under our property insurance policy for losses incurred.Interest expense, netInterest expense, net increased $6.3 million, or 9%, compared to the six months ended July 3, 2022. The increase is primarily attributable to an increase in the cost of our floating rate debt and increased borrowings on our Revolving Credit Facility. The higher borrowings under our Revolving Credit Facility are primarily attributable to additional borrowings used to fund the portion of the tender of our 2024 Notes not covered by the net proceeds of the 2031 Notes.Loss on debt extinguishmentLoss on debt extinguishment was $14.0 million for the six months ended July 2, 2023 as compared to compared to a loss of debt extinguishment of $17.5 for six months ended July 3, 2022. During the six months ended July 2, 2023, we recognized a loss on debt extinguishment of $14.0 million due to the write-off of unamortized deferred financing costs on the 2024 Notes, the premium paid above par on the early redemption of the 2024 Notes and the transaction costs charged to expense. During the six months ended July 3, 2022, we incurred a $17.5 million loss on debt extinguishment upon the early redemption of $360.0 million of the 2025 Notes comprised of $12.6 million for the premium paid above par and $5.0 million for the write-off of the pro rata amount of unamortized deferred financing costs associated with the 2025 Notes that were redeemed early.Income tax (benefit) expenseIncome tax benefit for the six months ended July 2, 2023 was $4.0$44.3 million, an effective tax rate of 13.7%24.6%. The difference between our effective tax rate and the federal statutory rate primarily results from state and foreign income taxes and certain nondeductible expenses, including nondeductible executive compensation. Income tax expense for the six months ended July 3, 2022, was $5.6 million. The difference between the federal statutory rate and our effective tax rate was driven bydue to a $4.0 million discrete tax adjustmentitem associated with our operations in Mexico. Our income tax expense was also driven byMexico, as well as state and foreign income taxes and nondeductible expenses, including certain nondeductible executive compensation.30sixnine months ended July 2,October 1, 2023 and July 3,October 2, 2022capex.CAPEX.sell-side analysts and most investors as their primary measure of our performance in the evaluation of companies in our industry. In addition, the instruments governing our indebtedness use Adjusted EBITDA to measure our compliance with certain covenants and, in certain circumstances, our ability to make certain borrowings. During 2023, we reclassified the net pension-related expense (benefit) to other (income) expense, net, in our condensed consolidated statements of operations. This reclassification has been reflected in all periods presented. As a result of this reclassification, Adjusted EBITDA for the three-month and six-monthnine month periods ended July 3,October 2, 2022, declined by $1.6 million and $2.8$4.0 million, respectively, as compared to the amounts previously reported.Our board of directors and management use Adjusted EBITDA to measure our performance and our current management incentive compensation plans are based largely on Adjusted EBITDA minus capex. Adjusted EBITDA minus capex as defined herein may differ from similarly titled measures presented by other companies. (loss) to Modified EBITDA, Adjusted EBITDA and Adjusted EBITDA minus capex for the three and sixnine month periods ended July 2,October 1, 2023 and July 3,October 2, 2022:31Three Months Ended Nine Months Ended (Amounts in thousands, except per share data) October 1, 2023 October 2, 2022 October 1, 2023 October 2, 2022 Net income $ 134,467 $ 135,833 $ 108,928 $ 135,930 Income tax expense 36,570 38,654 32,525 44,257 Other (income) expense, net 1,155 (659) (1,938) (2,069) Loss on debt extinguishment — — 13,982 17,533 Interest expense, net 38,263 34,197 118,060 107,705 Loss on disposal of assets 1,760 5,038 6,745 3,036 Depreciation and amortization 27,942 30,186 85,966 86,772 Stock-based compensation 3,525 3,998 9,018 13,404 — — 37,558 — Modified EBITDA $ 243,682 $ 247,247 $ 410,844 $ 406,568 Third party interest in EBITDA of certain operations (23,767) (22,326) (47,533) (44,651) Adjusted EBITDA $ 219,915 $ 224,921 $ 363,311 $ 361,917 Capital expenditures, net of property insurance recovery (42,241) (18,041) (109,282) (73,383) Adjusted EBITDA minus CAPEX $ 177,674 $ 206,880 $ 254,029 $ 288,534 ______________________________________
(1)Amount relates to an adjustment to our self-insurance reserves resulting from a change in accounting estimate that increased our ultimate loss indications on both identified claims and incurred but not reported claims. See Note 6 – Commitment and Contingencies for additional information regarding this change in accounting estimate. We have excluded this adjustment from our reported Adjusted EBITDA because we believe (i) the change in actuarial assumptions and related change in accounting estimate that rise to adjustment is unusual and not expected to be recurring; (ii) excluding it provides more meaningful comparisons to our historical results; and (iii) excluding it provides more meaningful comparisons to other companies in our industry.(1)Amount relates to an adjustment to our self-insurance reserves resulting from a change in accounting estimate that increased our ultimate loss indications on both identified claims and incurred but not reported claims. See Note 6 – Commitment and Contingencies for additional information regarding this change in accounting estimate. We have excluded this adjustment from our reported Adjusted EBITDA because we believe (i) the change in actuarial assumptions and related change in accounting estimate that rise to adjustment is unusual and not expected to be recurring; (ii) excluding it provides more meaningful comparisons to our historical results; and (iii) excluding it provides more meaningful comparisons to other companies in our industry.sixnine months ended July 2,October 1, 2023, and we paid a nominal amount in the sixnine months ended July 3,October 2, 2022 to employees with dividend equivalent rights for previously declared dividends due upon the vesting of the related shares.July 2,October 1, 2023, we have repurchased 8,071,000 shares of common stock at a cumulative cost of approximately $365.1 million and an average cost per share of $45.24 under our approved stock repurchase program, leaving approximately $134.9 million available for permitted repurchases."Cautionary"Cautionary Note Regarding Forward-Looking Statements"Statements" and "Item 1A. Risk Factors" in the 2022 Annual Report and in this Quarterly Report.32July 2,October 1, 2023, the principal amount of our total indebtedness, was $2,369.9$2,289.9 million. As of August 7,October 1, 2023, based on (i) non-revolving credit debt outstanding, (ii) anticipated levels of working capital revolving borrowings during 2023 and 2024, and (iii) required interest payments due to holders of the 2024 Notes, the 2025 Notes, the 2027 Notes and the 2031 Notes, we anticipate annual cash interest payments of approximately $165 million and $155 million during 2023 and 2024, respectively.July 2,October 1, 2023, we had approximately $51.6$66.8 million of unrestricted cash and $310.0$390.0 million available for borrowing under the Revolving Credit Facility. Our ability to borrow under the Revolving Credit Facility is contingent on our compliance with certain conditions, including a maximum senior secured net leverage maintenance covenant, a minimum liquidity covenant and the absence of any material adverse change in our business or financial condition. If we were to become unable to borrow under the Revolving Credit Facility, and our operating results significantly underperform our expectations, we may be unable to pay in full our obligations. A default under the Revolving Credit Facility could permit the lenders under the Credit Facility to accelerate the obligations thereunder. The Revolving Credit Facility expires in May 2028. The terms and availability of the Credit Facility and other indebtedness are not affected by changes in the ratings issued by rating agencies in respect of our indebtedness. As of July 2,October 1, 2023, we are in compliance with all covenants. For a more detailed description of our indebtedness, seeNote 3- Long-term indebtedness to the unaudited condensed consolidated financial statements included in this Quarterly Report.containingcomprised of $1.0 million for the premium paid above par and $12.9 million of costs charged to expense on debt modification which were recognized during the three months ended July 2, 2023.Nine Months Ended (Amounts in thousands) October 1, 2023 October 2, 2022 Net cash provided by operating activities $ 247,258 $ 193,812 Net cash used in investing activities (109,282) (73,383) Net cash used in financing activities (154,643) (383,229) Effect of exchange rate on cash 3,308 529 Net decrease in cash and cash equivalents $ (13,359) $ (262,271) sixnine months ended July 2,October 1, 2023, net cash provided by operating activities was $84.6$247.3 million, compared to net cash provided by operating activities of $63.2$193.8 million during the sixnine months ended July 3,October 2, 2022. The increase was primarily driven by an increase in deferred revenue from the sale of season passmulti-use admissions products which require up-front payment for visitation.as compared to the prior year period. Net cash used in investing activities was $67.0$109.3 million for the sixnine months ended July 2,October 1, 2023, compared to net cash used in investing activities of $55.3$73.4 million in the sixnine months ended July 3,October 2, 2022. The increase was primarily attributable to a planned increase in capital spending. Net cash33$50.0$154.6 million for the sixnine months ended July 3, 2022,October 1, 2023, compared to $269.0$383.2 million for the sixnine months ended July 3,October 2, 2022. During 2023, the amount is driven by the repayment of $892.0 million of the 2024 Notes offset by the $784.0 million in proceeds received from the issuance of the 2031 Notes, and additional borrowings under the Revolving Credit Facility. The $269.0$383.2 million in 2022 was driven by the repayment of $360.0 million of the 2025 Notes and share repurchases of $96.8 million, partially offset by increased borrowings under our Revolving Credit Facility.Payment Due by Period (Amounts in thousands) 2023 2024 - 2025 2026 - 2027 2028 and beyond Total Long-term debt including current portion (2024 Notes, 2031 Notes and Revolving Credit Facility) $ — $ 56,867 $ — $ 969,000 $ 1,025,867 Interest on 2024 Notes 1,386 1,386 — — 2,772 Interest on 2031 Notes 31,145 116,000 116,000 203,000 466,145 July 2,October 1, 2023, there were no material changes in our market risk exposure from that disclosed in the 2022 Annual Report.July 2,October 1, 2023, of the effectiveness of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) or 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Based on this evaluation, our Chief Executive Officer and our Chief Financial Officer concluded that, as of the end of such period, our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (ii) accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure.34Thereno materialidentified as a result of Six Flags Entertainment Corporation entering into a merger agreement with Cedar Fair, L.P. ("Cedar Fair").principal risksterms of the transactions contemplated by the Merger agreement, which could affect the anticipated benefits of the Merger.we believe are materialcould prevent or delay the closing and/or result in the payment of damages.financial condition, fromcash flows or those of the risk factors disclosed in the 2022 Annual Report. For a discussion of these risk factors, please see “Item 1A. Risk Factors” contained in the 2022 Annual Report.combined entity.August 7,October 1, 2023, we have repurchased 8,071,000 shares of common stock at a cumulative cost of approximately $365.1 million and an average cost per share of $45.24 under our approved stock repurchase program, leaving approximately $134.9 million available for permitted repurchases.ITEM 5.OTHER ITEMSOn June 7, 2023, Aimee Williams-Ramey, Chief Legal Officer and Corporate Secretary of the Company, entered into a 10b5-1 trading arrangement intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) promulgated under the Securities Exchange Act of 1934, as amended. The trading arrangements will expire on June 28, 2024, and may be terminated earlier in the limited circumstances defined in the trading arrangement. An aggregate of 2,307 shares may be sold pursuant to the trading arrangement.Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain OfficersThe Company announced on August 11, 2023 (“Effective Date”) that Aimee Williams-Ramey, the Company’s Chief Legal Officer and Corporate Secretary, has departed from the Company. Concurrently with her departure, Ms. Williams-Ramey entered into a consulting agreement, dated as of August 11, 2023 (the “Consulting Agreement”), pursuant to which she will provide consulting services to the Company for up to 10 months following the Effective Date in exchange for a monthly consulting fee of $38,333. Ms. Williams-Ramey’s employment was terminated without cause under the employment agreement between Ms. Williams-Ramey and the Company, dated as of June 13, 2022 (the “Employment Agreement”), with such termination effective as of the Effective Date. In connection with such termination, Ms. Williams-Ramey entered into a Separation Agreement and General Release with the Company on August 11, 2023 (the “Separation Agreement”), which provides, in addition to the terms below, that Ms. Williams-Ramey will receive the payments and benefits provided upon a termination without cause pursuant to the Employment Agreement. These payments and benefits consist of (i) an amount equal to the sum of Ms. Williams-Ramey’s base salary and target annual bonus, to be paid in a lump sum within 60 days following the Effective Date, (ii) payment of the annual bonus, if any, that would otherwise have been paid to Ms. Williams-Ramey if she had remained employed by the Company through December 31, 2023, calculated based on actual performance and paid at the time annual bonuses are normally paid to the Company’s executives (but no later than March 15, 2024), (iii) subject to Ms. Williams-Ramey’s timely election, continued health care coverage for a period of 12 months commencing on the Effective Date or until Ms. Williams-Ramey receives comparable coverage from a subsequent employer, (iv) immediate vesting of 10,030 unvested restricted stock units held by Ms. Williams-Ramey that are scheduled to vest in the 12-month period following the Effective Date, and (v) a cash payment equal to $10,000 for executive outplacement services.Ms. Williams-Ramey has agreed to extend the duration of the non-competition and noninterference covenants under her Employment Agreement from 12 months to 18 months following the Effective Date. In consideration of this extension and her entry into the Consulting Agreement, the Separation Agreement provides for a lump sum cash payment equal to $355,000, to be paid within 60 days following the Effective Date.35The foregoing descriptions of the Separation Agreement and the Consulting Agreement are not complete and are qualified by reference to the full text and terms of the Separation Agreement and Consulting Agreement, which are filed as Exhibit 10.3 and Exhibit 10.4, respectively, to this report and incorporated herein by reference.36July 2,October 1, 2023 formatted in Inline XBRL: (i) the Unaudited Condensed Consolidated Balance Sheets, (ii) the Unaudited Condensed Consolidated Statements of Operations, (iii) the Unaudited Condensed Consolidated Statements of Comprehensive Income, (Loss), (iv) the Unaudited Condensed Consolidated Statements of Stockholders’ Deficit, (v) the Unaudited Condensed Statements of Cash Flow,Flows, and (vi) related Notes to the Condensed Consolidated Financial StatementsJuly 2,October 1, 2023, formatted in Inline XBRL* Filed herewith37August 11, 2023August 11, 202338