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TABLE OF CONTENTS
PART IV
SIX FLAGS ENTERTAINMENT CORPORATION

Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

(Mark One)    

ý

 

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2012

OR

o

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                        to                       

Commission File Number: 1-13703

SIX FLAGS ENTERTAINMENT CORPORATION
(Exact name of registrant as specified in its charter)

Delaware
(State or other jurisdiction of
incorporation or organization)
  13-3995059
(I.R.S. Employer
Identification No.)

924 Avenue J East, Grand Prairie, TX 75050
(Address of principal executive offices)

Registrant's telephone number, including area code: (972) 595-5000

         Securities registered pursuant to Section 12(b) of the Act:

Title of each class   Name of each exchange on which registered
Common Stock, par value $0.025 per share   The New York Stock Exchange, LLC

         Securities registered pursuant to Section 12(g) of the Act: None



         Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act of 1993. Yes ý    No o

         Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934. Yes o    No ý

         Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý    No o

         Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ý    No o

         Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of the registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o

         Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definition of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer ý   Accelerated filer o   Non-accelerated filer o
(Do not check if a
smaller reporting company)
  Smaller reporting company o

         Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o    No ý

         On the last business day of the registrant's most recently completed second fiscal quarter, the aggregate market value of the common stock of the registrant held by non-affiliates was approximately $2,097.7 million based on the closing price ($54.18) of the common stock on The New York Stock Exchange on such date. Shares of common stock beneficially held by each executive officer and director and one major stockholder have been excluded from this computation because these persons may be deemed to be affiliates. This determination of affiliate status is not necessarily a conclusive determination for any other purposes.

         Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. ý Yes    o No

         On February 26, 2013, there were 50,234,485 shares of common stock, par value $0.025, of the registrant issued and outstanding.

         DOCUMENTS INCORPORATED BY REFERENCE

         Portions of the information required in Part III by Items 10, 11, 12, 13 and 14 are incorporated by reference to the registrant's proxy statement for the 2013 annual meeting of stockholders, which will be filed by the registrant within 120 days after the close of its 2012 fiscal year.

   


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TABLE OF CONTENTS

 
   
  Page No.  

 

Part I

       

Item 1

 

Business

    3  

Item 1A

 

Risk Factors

    17  

Item 1B

 

Unresolved Staff Comments

    27  

Item 2

 

Properties

    27  

Item 3

 

Legal Proceedings

    28  

Item 4

 

Mine Safety Disclosures

    28  

 

Part II

       

Item 5

 

Market for the Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

    29  

Item 6

 

Selected Financial Data

    32  

Item 7

 

Management's Discussion and Analysis of Financial Condition and Results of Operations

    34  

Item 7A

 

Quantitative and Qualitative Disclosures about Market Risk

    49  

Item 8

 

Financial Statements and Supplementary Data

    49  

Item 9

 

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

    49  

Item 9A

 

Controls and Procedures

    49  

Item 9B

 

Other Information

    49  

 

Part III

       

Item 10

 

Directors, Executive Officers and Corporate Governance

    50  

Item 11

 

Executive Compensation

    50  

Item 12

 

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

    50  

Item 13

 

Certain Relationships and Related Transactions and Director Independence

    51  

Item 14

 

Principal Accounting Fees and Services

    51  

 

Part IV

       

Item 15

 

Exhibits and Financial Statement Schedules

    52  

Signatures

           

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

        This document and the documents incorporated herein by reference contain "forward-looking statements" within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act. Forward-looking statements can be identified by words such as "anticipates," "intends," "plans," "seeks," "believes," "estimates," "expects" and similar references to future periods.

        Forward-looking statements are based on our current expectations and assumptions regarding our business, the economy and other future conditions. Because forward-looking statements relate to the future, by their nature, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. Our actual results may differ materially from those contemplated by the forward-looking statements. We caution you therefore that you should not rely on any of these forward-looking statements as statements of historical fact or as guarantees or assurances of future performance. These statements may involve risks and uncertainties that could cause actual results to differ materially from those described in such statements. These risks and uncertainties include, but are not limited to, statements we make regarding: (i) the adequacy of cash flows from operations, available cash and available amounts under our credit facilities to meet our future liquidity needs, (ii) our ability to roll out our capital enhancements in a timely and cost effective manner, (iii) our ability to improve operating results by implementing strategic cost reductions, and organizational and personnel changes without adversely affecting our business, and (iv) our operations and results of operations. Additional important factors that could cause actual results to differ materially from those in the forward-looking statements include regional, national or global political, economic, business, competitive, market and regulatory conditions and include the following:

    factors impacting attendance, such as local conditions, contagious diseases, events, disturbances and terrorist activities;

    recall of food, toys and other retail products which we sell;

    accidents occurring at our parks or other parks in the industry;

    inability to achieve desired improvements and financial performance targets set forth in our aspirational goals;

    adverse weather conditions such as excess heat or cold, rain, and storms;

    general financial and credit market conditions;

    economic conditions (including customer spending patterns);

    changes in public and consumer tastes;

    construction delays in capital improvements or ride downtime;

    competition with other theme parks and other entertainment alternatives;

    dependence on a seasonal workforce;

    pending, threatened or future legal proceedings and the significant expenses associated with litigation; and

    other factors described in "Risk Factors" in Part I. Item 1A of this Annual Report on Form 10-K.

        A more complete discussion of these factors and other risks applicable to our business is contained in Part I, Item 1A of this Annual Report on Form 10-K. Any forward-looking statement made by us in this document, or on our behalf by our directors, officers or employees related to the information contained herein, speaks only as of the date of this document. Although we believe that the expectations reflected in such forward-looking statements are reasonable, we can give no assurance that

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such expectations will be realized and actual results could vary materially. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We do not intend to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise.

*        *        *        *        *

        As used in this Annual Report on Form 10-K, unless the context requires otherwise, the terms "we," "our," "Six Flags" and "SFEC" refer collectively to Six Flags Entertainment Corporation and its consolidated subsidiaries, and "Holdings" refers only to Six Flags Entertainment Corporation, without regard to its consolidated subsidiaries. As used herein, "SFI" means Six Flags, Inc. as a Debtor or prior to its name change to Six Flags Entertainment Corporation. As used herein, the "Company" refers collectively to SFI or Holdings, as the case may be, and its consolidated subsidiaries.

        Looney Tunes characters, names and all related indicia are trademarks of Warner Bros., a division of Time Warner Entertainment Company, L.P. Batman and Superman and all related characters, names and indicia are copyrights and trademarks of DC Comics. Cartoon Network is a trademark of Cartoon Network. Six Flags and all related indicia are registered trademarks of Six Flags Theme Parks Inc. Fiesta Texas and all related indicia are trademarks of Fiesta Texas, Inc.

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PART I

ITEM 1.    BUSINESS

Introduction

        We are the largest regional theme park operator in the world based on the number of parks we operate. Of our 18 regional theme and water parks, 16 are located in the United States, one is located in Mexico City, Mexico and one is located in Montreal, Canada. Our U.S. theme parks serve the top 10 designated market areas. Our diversified portfolio of North American theme parks serves an aggregate population of approximately 100 million people and 160 million people within a radius of 50 miles and 100 miles, respectively, with some of the highest per capita gross domestic product in the United States.

        Our parks occupy approximately 4,500 acres of land, and we own approximately 1,100 acres of other potentially developable land. Our parks are located in geographically diverse markets across North America. Our parks generally offer a broad selection of state-of-the-art and traditional thrill rides, water attractions, themed areas, concerts and shows, restaurants, game venues and retail outlets, and thereby provide a complete family-oriented entertainment experience. In the aggregate, during 2012, our parks offered approximately 800 rides, including over 120 roller coasters, making us the leading provider of "thrill rides" in the industry.

        In 1998, we acquired the former Six Flags Entertainment Corporation ("Former SFEC", a corporation that has been merged out of existence and that has always been a separate corporation from Holdings), which had operated regional theme parks under the Six Flags name for nearly forty years and established an internationally recognized brand name. We own the "Six Flags" brand name in the United States and foreign countries throughout the world. To capitalize on this name recognition, 16 of our parks are branded as "Six Flags" parks.

        We hold exclusive long-term licenses for theme park usage throughout the United States (except the Las Vegas metropolitan area), Canada, Mexico and other countries of certain Warner Bros. and DC Comics characters. These characters include Bugs Bunny, Daffy Duck, Tweety Bird, Yosemite Sam, Batman, Superman and others. In addition, we have certain rights to use the Hanna-Barbera and Cartoon Network characters, including Yogi Bear, Scooby-Doo, The Flintstones and others. We use these characters to market our parks and to provide an enhanced family entertainment experience. Our licenses include the right to sell merchandise featuring the characters at the parks, and to use the characters in our advertising, as walk-around characters and in theming for rides, attractions and retail outlets. We believe using these characters promotes increased attendance, supports higher ticket prices, increases lengths-of-stay and enhances in-park sales.

        We believe that our parks benefit from limited direct theme park competition. A limited supply of real estate appropriate for theme park development, substantial initial capital investment requirements, and long development lead-time and zoning restrictions provides each of our parks with a significant degree of protection from competitive new theme park openings. Based on our knowledge of the development of our own and other regional theme parks, we estimate it would cost $300 million to $500 million and would take a minimum of two years to construct a new regional theme park comparable to one of our major Six Flags-branded theme parks.

Chapter 11 Reorganization and Related Subsequent Events

        On June 13, 2009, Six Flags, Inc. ("SFI"), Six Flags Operations Inc. ("SFO") and Six Flags Theme Parks Inc. ("SFTP") and certain of SFTP's domestic subsidiaries (the "SFTP Subsidiaries" and, collectively with SFI, SFO and SFTP, the "Debtors") filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware (the "Bankruptcy Court") (Case No. 09-12019) (the "Chapter 11 Filing"). SFI's subsidiaries that own interests in Six Flags Over Texas ("SFOT") and Six Flags Over Georgia (including

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Six Flags White Water Atlanta) ("SFOG" and together with SFOT, the "Partnership Parks") and the parks in Canada and Mexico were not debtors in the Chapter 11 Filing.

        On April 30, 2010 (the "Effective Date"), the Bankruptcy Court entered an order confirming the Debtors' Modified Fourth Amended Joint Plan of Reorganization (the "Plan") and the Debtors emerged from Chapter 11 by consummating their restructuring through a series of transactions contemplated by the Plan including the following:

    Name Change.  On the Effective Date, but after the Plan became effective and prior to the distribution of securities under the Plan, SFI changed its corporate name to Six Flags Entertainment Corporation.

    Common Stock.  Pursuant to the Plan, all of SFI's common stock, preferred stock purchase rights, preferred income equity redeemable shares ("PIERS") and any other ownership interest in SFI including all options, warrants or rights, contractual or otherwise (including, but not limited to, stockholders agreements, registration rights agreements and rights agreements) were cancelled as of the Effective Date.

      On the Effective Date, Holdings issued an aggregate of 54,777,778 shares of common stock at $0.025 par value as follows: (i) 5,203,888 shares of common stock to the holders of unsecured claims against SFI, (ii) 4,724,618 shares of common stock to certain holders of the 121/4 Notes due 2016 (the "2016 Notes") in exchange for such 2016 Notes in the aggregate amount of $69.5 million, (iii) 34,363,950 shares of common stock to certain "accredited investors" that held unsecured claims who participated in a $505.5 million rights offering, (iv) 6,798,012 shares of common stock in an offering to certain purchasers for an aggregate purchase price of $75.0 million, (v) 3,399,006 shares of common stock in an offering to certain purchasers for an aggregate purchase price of $50.0 million and (vi) 288,304 shares of common stock were issued to certain other equity purchasers as consideration for their commitment to purchase an additional $25.0 million of common stock on or before June 1, 2011, following approval by a majority of the members of Holdings' Board of Directors (the "Delayed Draw Equity Purchase"). On June 1, 2011, the Delayed Draw Equity Purchase option expired. These share amounts have been retroactively adjusted to reflect the June 2011 two-for-one stock split as described in Note 12 to the Consolidated Financial Statements.

      On June 21, 2010, the common stock commenced trading on the New York Stock Exchange under the symbol "SIX."

    Financing at Emergence.  On the Effective Date, we entered into two exit financing facilities: (i) an $890.0 million senior secured first lien credit facility comprised of a $120.0 million revolving loan facility, which could have been increased up to $150.0 million in certain circumstances, and a $770.0 million term loan facility (the "Exit First Lien Term Loan") and (ii) a $250.0 million senior secured second lien term loan facility (the "Exit Second Lien Facility" and, together with the Exit First Lien Facility, the "Exit Facilities").

      On August 5, 2010, we made a discretionary $25.0 million prepayment on the Exit First Lien Term Loan and recorded a $1.0 million net loss on the debt extinguishment. On December 3, 2010, we entered into an amendment (the "First Lien Amendment") that increased the senior secured first lien credit facility (the "Senior Credit Facility") to $1,070.0 million comprised of a $120.0 million revolving loan facility, which could be increased up to $200.0 million in certain circumstances, and a $950.0 million term loan facility (the "Senior Term Loan"). In connection with the First Lien Amendment, we repaid in full and terminated the $250.0 million senior secured second lien term loan facility and recorded an approximate $17.5 million loss on debt extinguishment for the year ended December 31, 2010.

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      On December 20, 2011, we entered into a new $1,135.0 million credit agreement (the "2011 Credit Facility"), which replaced the First Lien Amendment and related facilities. The 2011 Credit Facility was comprised of a $200.0 million revolving credit loan facility (the "2011 Revolving Loan"), a $75.0 million Tranche A Term Loan facility (the "Term Loan A") and an $860.0 million Tranche B Term Loan facility (the "Term Loan B" and together with the Term Loan A, the "2011 Term Loans"). In certain circumstances, the Term Loan B can be increased by $300.0 million. In connection with the 2011 Credit Facility, we terminated the Senior Credit Facility, repaid in full the $950.0 million Senior Term Loan, and recorded a $42.2 million loss on debt extinguishment for the year ended December 31, 2011.

      On December 21, 2012, we entered into an amendment to the 2011 Credit Facility (the "2012 Credit Facility Amendment") that among other things, permitted us to (i) issue $800 million of senior unsecured notes, (ii) use $350.0 million of the proceeds of the senior unsecured notes to repay the $72.2 million that was outstanding under the Term Loan A and $277.8 million of the outstanding balance of the Term Loan B, (iii) use the remaining $450.0 million of proceeds for share repurchases and other corporate matters, and (iv) reduce the interest rate payable on the Term Loan B by 25 basis points. In connection with the 2012 Credit Facility Amendment, the issuance of the $800.0 million of senior unsecured notes and the repayment of the Term Loan A and a portion of the Term Loan B, we recorded a $0.6 million loss on debt extinguishment for the year ended December 31, 2012.

      Also on the Effective Date, SFOG Acquisition A, Inc., SFOG Acquisition B, L.L.C., SFOT Acquisition I, Inc. and SFOT Acquisition II, Inc. (collectively, the "TW Borrowers") entered into a credit agreement with TW-SF, LLC comprised of a $150.0 million multi-draw term loan facility (the "TW Loan") for use with respect to the Partnership Parks "put" obligations. On December 3, 2010, the TW Borrowers entered into an amendment to the TW Loan primarily to conform to the new terms under the First Lien Amendment in certain respects. No borrowings occurred during 2011 or 2010 under the TW Loan. On December 20, 2011, in connection with the 2011 Credit Facility, we terminated the TW Loan and recorded a $4.3 million loss on debt extinguishment for the year ended December 31, 2011.

      See Note 8 to the Consolidated Financial Statements for a discussion of the terms and conditions of our facilities and the availability of additional borrowing.

    Fresh Start Accounting.  As required by accounting principles generally accepted in the United States ("GAAP"), we adopted fresh start accounting effective May 1, 2010 following the guidance of Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 852, Reorganizations ("FASB ASC 852"). The financial statements for the periods ended prior to April 30, 2010 do not include the effect of any changes in our capital structure or changes in the fair value of assets and liabilities as a result of fresh start accounting. The implementation of the Plan and the application of fresh start accounting results in financial statements that are not comparable to financial statements in periods prior to emergence. See Note 1(b) to the Consolidated Financial Statements for a detailed explanation of the impact of emerging from Chapter 11 and applying fresh start accounting on our financial position.

      As used herein, "Successor" refers to the Company as of the Effective Date and "Predecessor" refers to SFI together with its consolidated subsidiaries prior to the Effective Date.

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Description of Parks

        The following chart summarizes key business information about our parks.

Name of Park and Location
  Description   Designated
Market Area and Rank*
  Population Within
Radius from
Park Location
  External Park Competition/ Location/
Approximate Distance
Six Flags America 
    Largo, MD
  515 acres—combination theme and water park and approximately 300 acres of potentially developable land   Washington, D.C. (8) and Baltimore (27)   7.6 million—50 miles
12.9 million—100 miles
  Kings Dominion/Doswell, VA (near Richmond)/120 miles; Hershey Park/Hershey, PA/125 miles; Busch Gardens/Williamsburg, VA/175 miles

Six Flags Discovery Kingdom
    Vallejo, CA

 

135 acres—theme park plus marine and land animal exhibits

 

San Francisco/ Oakland (6) and Sacramento (20)

 

5.9 million—50 miles
11.1 million—100 miles

 

Aquarium of the Bay at Pier 39/San Francisco, CA/30 miles; Academy of Science Center/San Francisco, CA/30 miles; California Great America/Santa Clara, CA/60 miles; Gilroy Gardens/Gilroy, CA/100 miles; Outer Bay at Monterey Bay Aquarium/Monterey, CA/130 miles

Six Flags Fiesta Texas
    San Antonio, TX

 

216 acres—combination theme and water park

 

San Antonio (36) and Houston (10)

 

2.2 million—50 miles
4.1 million—100 miles

 

Sea World of Texas/San Antonio, TX/15 miles; Schlitterbahn/New Braunfels, TX/33 miles

Six Flags Great Adventure &
Wild Safari/
Six Flags Hurricane Harbor

    Jackson, NJ

 

2,200 acres—separately gated theme park/safari and water park and approximately 556 acres of potentially developable land

 

New York City (1) and Philadelphia (4)

 

13.3 million—50 miles
28.0 million—100 miles

 

Hershey Park/Hershey, PA/150 miles; Dorney Park/Allentown, PA/75 miles; Morey's Piers Wildwood/Wildwood, NJ/97 miles; Coney Island/Brooklyn, NY/77 miles

Six Flags Great America
    Gurnee, IL

 

304 acres—combination theme and water park and approximately 30 acres of potentially developable land

 

Chicago (3) and Milwaukee (34)

 

8.5 million—50 miles
13.4 million—100 miles

 

Kings Island/Cincinnati, OH/350 miles; Cedar Point/Sandusky, OH/340 miles; Wisconsin Dells Area (several water parks) /170 miles

Six Flags Magic Mountain/
Six Flags Hurricane Harbor

    Valencia, CA

 

262 acres—separately gated theme park and water park on 250 acres and 12 acres, respectively

 

Los Angeles (2)

 

10.0 million—50 miles
17.7 million—100 miles

 

Disneyland Resort/Anaheim, CA/60 miles; Universal Studios Hollywood/Universal City, CA/20 miles; Knott's Berry Farm/Buena Park, CA/50 miles; Sea World of California/San Diego, CA/150 miles; Legoland/ Carlsbad, CA/130 miles; Soak City USA/Buena Park, CA/50 miles; Raging Waters/San Dimas, CA/50 miles

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Name of Park and Location
  Description   Designated
Market Area and Rank*
  Population Within
Radius from
Park Location
  External Park Competition/ Location/
Approximate Distance
Six Flags Mexico
    Mexico City, Mexico
  110 acres—theme park   N/A   32.0 million—50 miles
33.5 million—100 miles
  Mexico City Zoo, Mexico City, Mexico/14 miles; Chapultepec/Mexico City, Mexico/11 miles

Six Flags New England
    Agawam, MA

 

262 acres—combination theme and water park

 

Boston (7)
Hartford/New Haven (30)
Providence (53)
Springfield (114)

 

3.2 million—50 miles
15.5 million—100 miles

 

Lake Compounce/Bristol, CT/50 miles; Canobie Lake Park/Salem, New Hampshire /140 miles

Six Flags Over Georgia
    Austell, GA/
Six Flags Whitewater
    Marietta, GA

 

352 acres—separately gated theme park and water park on 283 acres and 69 acres, respectively

 

Atlanta (9)

 

5.2 million—50 miles
8.2 million—100 miles

 

Georgia Aquarium/Atlanta, GA/20 miles; Carowinds/Charlotte, NC/250 miles; Alabama Adventure/Birmingham, AL/160 miles; Dollywood and Splash Country/Pigeon Forge, TN/200 miles; Wild Adventures/Valdosta, GA/240 miles

Six Flags Over Texas/
Six Flags Hurricane Harbor

    Arlington, TX

 

264 acres—separately gated theme park and water park on 217 and 47 acres, respectively

 

Dallas/Fort Worth (5)

 

6.2 million—50 miles
7.4 million—100 miles

 

Sea World of Texas/San Antonio, TX/285 miles; NRH2O Waterpark/Richland Hills, TX/13 miles; The Great Wolf Lodge/Grapevine, TX/17 miles; Hawaiian Falls Waterpark/Mansfield, TX/16 miles

Six Flags St. Louis
    Eureka, MO

 

503 acres—combination theme and water park and approximately 220 acres of potentially developable land

 

St. Louis (21)

 

2.7 million—50 miles
3.8 million—100 miles

 

Worlds of Fun/Kansas City, MO/250 miles; Silver Dollar City/Branson, MO/250 miles; Holiday World/Santa Claus, IN/150 miles

La Ronde
    Montreal, Canada

 

146 acres—theme park

 

N/A

 

1.6 million—50 miles
3.8 million—100 miles

 

Quebec City Waterpark/Quebec City, Canada/130 miles; Canada's Wonderland/370 miles

The Great Escape and
Splashwater Kingdom/
Six Flags Great Escape Lodge &
Indoor Waterpark

    Queensbury, NY

 

345 acres—combination theme and water park, plus 200 room hotel and 38,000 square foot indoor waterpark

 

Albany (58)

 

1.0 million—50 miles
3.0 million—100 miles

 

Darien Lake/Darien Center, NY/311 miles

*
Based on a September 22, 2012 survey of television households within designated market areas published by A.C. Nielsen Media Research.

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Partnership Park Arrangements

        In 1998, we acquired the former Six Flags Entertainment Corporation ("Former SFEC", a corporation that has been merged out of existence and that has always been a separate corporation from Holdings). In connection with our 1998 acquisition of Former SFEC, we guaranteed certain obligations relating to the Partnership Parks. These obligations continue until 2027, in the case of SFOG, and 2028, in the case of SFOT. Such obligations include (i) minimum annual distributions (including rent) of approximately $66.3 million in 2013 (subject to cost of living adjustments in subsequent years) to the limited partners in the Partnerships Parks (based on our ownership of units as of December 31, 2012, our share of the distribution will be approximately $28.8 million), (ii) minimum capital expenditures at each park during rolling five-year periods based generally on 6% of park revenues, and (iii) an annual offer to purchase all outstanding limited partnership units at the Specified Prices described below.

        After payment of the minimum distribution, we are entitled to a management fee equal to 3% of prior year gross revenues and, thereafter, any additional cash will be distributed first to management fee in arrears, repayment of any interest and principal on intercompany loans with any additional cash being distributed 95% to us, in the case of SFOG, and 92.5% to us, in the case of SFOT.

        The purchase price for the annual offer to purchase limited partnership units in the Partnership Parks is based on the greater of (i) a total equity value of $250.0 million (in the case of SFOG) and $374.8 million (in the case of SFOT) or (ii) a value derived by multiplying the weighted-average four-year EBITDA of the park by 8.0 (in the case of SFOG) and 8.5 (in the case of SFOT) (the "Specified Prices"). As of December 31, 2012, we owned approximately 30.5% and 53.0% of the Georgia limited partner units and Texas Limited Partner units, respectively. In 2027 and 2028, we will have the option to purchase all remaining units in the Georgia limited partner and the Texas limited partner, respectively, at a price based on the Specified Prices set forth above, increased by a cost of living adjustment. The maximum number of units that we could be required to purchase for both parks in 2013 would result in an aggregate payment by us of approximately $348.2 million, representing 69.5% and 47.0% of the units of the Georgia limited partner and the Texas limited partner, respectively.

        In connection with our acquisition of Former SFEC, we entered into the Subordinated Indemnity Agreement with certain of the Company's entities, Time Warner and an affiliate of Time Warner, pursuant to which, among other things, we transferred to Time Warner (which has guaranteed all of our obligations under the Partnership Park arrangements) record title to the corporations which own the entities that have purchased and will purchase limited partnership units of the Partnership Parks, and we received an assignment from Time Warner of all cash flow received on such limited partnership units, and we otherwise control such entities. In addition, we issued preferred stock of the managing partner of the partnerships to Time Warner. In the event of a default by us under the Subordinated Indemnity Agreement or of our obligations to our partners in the Partnership Parks, these arrangements would permit Time Warner to take full control of both the entities that own limited partnership units and the managing partner. If we satisfy all such obligations, Time Warner is required to transfer to us the entire equity interests of these entities. We incurred approximately $6.2 million of capital expenditures at the Partnership Parks for the 2012 season and intend to incur approximately $16.0 million of capital expenditures at these parks for the 2013 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 two partnerships generated approximately $52.8 million of cash in 2012 from operating activities after deduction of capital expenditures and excluding the impact of short-term intercompany advances from or payments to Holdings. At December 31, 2012 and 2011, we had total loans receivable outstanding of $239.3 million from the partnerships that own the Partnership Parks, primarily to fund

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the acquisition of Six Flags White Water Atlanta, and to make capital improvements and distributions to the limited partners.

        Pursuant to the 2012 annual offer, we purchased 0.79 units from the Georgia partnership and 0.05 units from the Texas partnership for approximately $2.0 million in May 2012. With respect to the 2012 "put" obligations, no borrowing occurred. The $300 million accordion feature on the Term Loan B under the 2011 Credit Facility is available for borrowing for future "put" obligations if necessary.

Marketing and Promotion

        We attract visitors through multi-media marketing and promotional programs for each of our parks. The programs are designed to enhance the Six Flags brand name and are tailored to address the different characteristics of our various markets and to maximize the impact of specific park attractions and product introductions. All marketing and promotional programs are updated or completely changed each year to address new developments. These initiatives are supervised by our Senior Vice President, Marketing, with the assistance of our senior management and advertising and promotion agencies.

        We also develop alliance, sponsorship and co-marketing relationships with well-known national, regional and local consumer goods companies and retailers to supplement our advertising efforts and to provide attendance incentives in the form of discounts. We also arrange for popular local radio and television programs to be filmed or broadcast live from our parks.

        Group sales represented approximately 25%, and 28%, respectively, of the aggregate attendance in the 2012 and 2011 seasons at our parks. Each park has a group sales manager and a sales staff dedicated to selling multiple group sales and pre-sold ticket programs through a variety of methods, including online promotions, direct mail, telemarketing and personal sales calls.

        Season pass sales establish an attendance base in advance of the season, thus reducing exposure to inclement weather. In general, a season pass attendee contributes higher aggregate profitability to the Company over the course of a year compared to a single day ticket visitor because a season pass holder pays a higher ticket price and contributes to in-park guest spending over multiple visits. Additionally, season pass holders often bring paying guests and generate "word-of-mouth" advertising for the parks. During the 2012 and 2011 seasons, season pass attendance constituted approximately 44% and 35%, respectively, of the total attendance at our parks.

        We offer discounts on season pass and multi-visit tickets, tickets for specific dates and tickets to affiliated groups such as businesses, schools and religious, fraternal and similar organizations.

        We also implement promotional programs as a means of targeting specific market segments and geographic locations not generally reached through group or retail sales efforts. The promotional programs utilize coupons, sweepstakes, reward incentives and rebates to attract additional visitors. These programs are implemented through online promotions, direct mail, telemarketing, direct response media, sponsorship marketing and targeted multi-media programs. The special promotional offers are usually for a limited time and offer a reduced admission price or provide some additional incentive to purchase a ticket.

Licenses

        We have the exclusive right on a long-term basis to theme park usage of the Warner Bros. and DC Comics animated characters throughout the United States (except for the Las Vegas metropolitan area), Canada, Mexico and certain other countries. In particular, our license agreements entitle us to use, subject to customary approval rights of Warner Bros. and, in limited circumstances, approval rights of certain third parties, all animated, cartoon and comic book characters that Warner Bros. and DC Comics have the right to license, including Batman, Superman, Bugs Bunny, Daffy Duck, Tweety Bird and Yosemite Sam, and include the right to sell merchandise using the characters. In addition, certain

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Hanna-Barbera characters including Yogi Bear, Scooby-Doo and The Flintstones are available for our use at certain of our theme parks. In addition to annual license fees, we are required to pay a royalty fee on merchandise manufactured by or for us and sold that uses the licensed characters. Warner Bros. and Hanna-Barbera have the right to terminate their license agreements under certain circumstances, including if any persons involved in the movie or television industries obtain control of us or, in the case of Warner Bros., upon a default under the Subordinated Indemnity Agreement.

        In connection with our investment in dick clark productions, inc. ("DCP"), we obtained a license to use stills and clips from the DCP library, which included the Golden Globes, the American Music Awards, the Academy of Country Music Awards, So You Think You Can Dance, American Bandstand and Dick Clark's New Year's Rockin' Eve, in our parks as well as for the promotion and advertising of our parks. In certain cases, our right to use these properties was subject to the consent of third parties with interests in such properties. The term of the license was for the longer of seven years or the date that we ceased to hold 50% of our original investment in DCP. We discontinued using these stills and clips in our parks at the end of the 2011 season. During the third quarter of 2012, the venture that we invested in to obtain our interest in DCP, sold DCP to a third party. We received approximately $70.0 million for our portion of the proceeds from the sale on October 1, 2012, and an additional $0.3 million on January 28, 2013. We recorded a gain of approximately $67.3 million after recovering our $2.5 million investment and the $0.5 million license that allowed us to air DCP shows at our parks. There are several items that are being resolved related to the sale. As a result, some of the sale proceeds are being held in escrow to be released at later dates. If all of these items result in favorable outcomes, we would receive up to $10 million of additional proceeds from the sale. We had accounted for our investment in the venture under the equity method and included our investment of $4.7 million as of December 31, 2011 in deposits and other assets in the condensed consolidated balance sheet.

Park Operations

        We currently operate in geographically diverse markets in North America. Each park is managed by a park president who reports to a senior vice president of the Company. The park presidents are responsible for all operations and management of the individual parks. Local advertising, ticket sales, community relations and hiring and training of personnel are the responsibility of individual park management in coordination with corporate support teams.

        Each park president directs a full-time, on-site management team. Each management team includes senior personnel responsible for operations and maintenance, in-park food, beverage, merchandising and games, marketing and promotion, sponsorships, human resources and finance. Finance directors at our parks report to a corporate vice president of the Company, and with their support staff provide financial services to their respective parks and park management teams. Park management compensation structures are designed to provide financial incentives for individual park managers to execute our strategy and to maximize revenues and free cash flow.

        Our parks are generally open daily from Memorial Day through Labor Day. In addition, most of our parks are open weekends prior to and following their daily seasons, often in conjunction with themed events, such as Fright Fest® and Holiday in the Park®. Due to their location, certain parks have longer operating seasons. Typically, the parks charge a basic daily admission price, which allows unlimited use of all rides and attractions, although in certain cases special rides and attractions require the payment of an additional fee.

        See Note 17 to the Consolidated Financial Statements for information concerning revenues and long-lived assets by domestic and international categories.

Capital Improvements

        We regularly make capital investments for new rides and attractions in our parks that, in total, approximate 9% of revenue annually. We purchase both new and used rides and attractions. In

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addition, we rotate rides among parks to provide fresh attractions. We believe that the selective introduction of new rides and attractions, including family entertainment attractions, is an important factor in promoting each of the parks in order to draw higher attendance and encourage longer visits, which can lead to higher in-park sales.

        During 2012, we (i) added the world's tallest vertical drop ride at Six Flags Magic Mountain (Valencia, CA) and a new launch coaster at Six Flags Discovery Kingdom (Vallejo, CA); (ii) added a new wing coaster at Six Flags Great America (Gurnee, IL) and a colossal boomerang coaster at Six Flags New England (Agawam, MA); (iii) introduced a stand-up coaster to Six Flags America (outside Washington D.C.); (iv) added a giant swing ride at Six Flags Great Adventure (Jackson, NJ), Six Flags Fiesta Texas (San Antonio, TX), and La Ronde (Montreal, Canada); (v) added a looping body slide at Six Flags Hurricane Harbor (Eureka, MO) and added a King Cobra waterslide at Six Flags Hurricane Harbor (Jackson, NJ) as well as a Nordic-themed waterslide complex at The Great Escape and Splashwater Kingdom (Queensbury, NY); (vi) added a variety of family rides, shows and attractions at several parks, including Six Flags Mexico (Mexico City, Mexico), La Ronde (Montreal, Canada), Six Flags Over Texas (Arlington, TX), Six Flags Fiesta Texas (San Antonio, TX), and a 45th anniversary tribute at Six Flags Over Georgia (Austell, GA); (vii) continued our targeted marketing strategies including focusing on our breadth of product and value proposition; (viii) maintained focus on containing our operating expenses; (ix) continued our more targeted approach to ticket discounting; (x) improved and expanded upon our branded product offerings and guest-focused initiatives to continue driving guest spending growth; and (xi) continued our efforts to grow profitable sponsorship and international revenue opportunities. Additionally in 2012, for the second year in a row, we attained record guest satisfaction scores in several categories including overall guest satisfaction, cleanliness, safety, and value perception, based on guest surveys.

        Planned initiatives for 2013 include: (i) adding the world's tallest and fastest looping coaster at Six Flags Magic Mountain (Valencia, CA) and the world's tallest swing ride at Six Flags Over Texas (Arlington, TX); (ii) adding a boomerang coaster at Six Flags St. Louis (Eureka, MO) and re-introducing the New Iron Rattler at Six Flags Fiesta Texas (San Antonio, TX); (iii) introducing the new Safari Off Road Adventure at Six Flags Great Adventure (Jackson, NJ); (iv) adding a giant swing ride at Six Flags Over Georgia (Austell, GA); (v) adding water slide complexes with drop capsules at Six Flags New England (Springfield, MA) and Six Flags America (outside Washington, D.C.), a mat racer waterslide at Six Flags Hurricane Harbor (Jackson, NJ) as well as a twisting waterslide at Six Flags White Water Atlanta (Marietta, GA); (vi) adding a spinning coaster at Six Flags Mexico (Mexico City, Mexico); (vii) adding a variety of family rides, shows and attractions at several parks, including La Ronde (Montreal, Canada), Six Flags Great America (Gurnee, IL), Six Flags Discovery Kingdom (Vallejo, CA), and The Great Escape (Queensbury, NY); (viii) continuing our targeted marketing strategies including focusing on our breadth of product and value proposition; (ix) maintaining focus on containing our operating expenses; (x) continuing our more targeted approach to ticket discounting; (xi) improving and expanding upon our branded product offerings and guest-focused initiatives to continue driving guest spending growth and (xii) continuing our efforts to grow profitable sponsorship and international revenue opportunities.

        In addition, as part of our overall capital improvements, we generally make capital investments in the food, retail, games and other in-park areas to increase per capita guest spending. We also make annual enhancements in the theming and landscaping of our parks in order to provide a more complete family-oriented entertainment experience. Each year we invest in our information technology infrastructure, which helps enhance our operational efficiencies. Capital expenditures are planned on an annual basis with most expenditures made during the off-season. Expenditures for materials and services associated with maintaining assets, such as painting and inspecting existing rides, are expensed as incurred and are not included in capital expenditures.

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Maintenance and Inspection

        Rides are inspected at various levels and frequencies in accordance with manufacturer specification. Our rides are inspected daily during the operating season by our maintenance personnel. These inspections include safety checks, as well as regular maintenance, and are made through both visual inspection and test operations of the rides. Our senior management and the individual park personnel evaluate the risk aspects of each park's operation. Potential risks to employees and staff as well as to the public are evaluated. Contingency plans for potential emergency situations have been developed for each facility. During the off-season, maintenance personnel examine the rides and repair, refurbish and rebuild them where necessary. This process includes x-raying and magnafluxing (a further examination for minute cracks and defects) steel portions of certain rides at high-stress points. We have approximately 800 full-time employees who devote substantially all of their time to maintaining the parks and our rides and attractions. In 2010, we began implementing a computerized maintenance management system across all of our parks and we are currently using this system at all of our domestic parks.

        In addition to our maintenance and inspection procedures, third-party consultants are retained by us or our insurance carriers to perform an annual inspection of each park and all attractions and related maintenance procedures. The results of these inspections are reported in written evaluation and inspection reports, as well as written suggestions on various aspects of park operations. In certain states, state inspectors also conduct annual ride inspections before the beginning of each season. Other portions of each park are subject to inspections by local fire marshals and health and building department officials. Furthermore, we use Ellis & Associates as water safety consultants at our water parks in order to train life guards and audit safety procedures.

Insurance

        We maintain insurance of the type and in amounts that we believe is commercially reasonable and that is available to businesses in our industry. We maintain multi-layered general liability policies that provide for excess liability coverage of up to $100.0 million per occurrence. For incidents arising after November 15, 2003 but prior to December 31, 2008, our self-insured retention is $2.5 million per occurrence ($2.0 million per occurrence for the twelve months ended November 15, 2003 and $1.0 million per occurrence for the twelve months ended November 15, 2002) for our domestic parks and a nominal amount per occurrence for our international parks. Defense costs are in addition to these retentions. In addition, for incidents arising after November 1, 2004 but prior to December 31, 2008, we have a one-time additional $0.5 million self-insured retention, in the aggregate, applicable to all claims in the policy year. For incidents arising on or after December 31, 2008, our self-insured retention is $2.0 million, followed by a $0.5 million deductible per occurrence applicable to all claims in the policy year for our domestic parks and our park in Canada and a nominal amount per occurrence for our park in Mexico. Our deductible after November 15, 2003 is $0.75 million for workers' compensation claims ($0.5 million deductible for the period from November 15, 2001 to November 15, 2003). Our general liability policies cover the cost of punitive damages only in certain jurisdictions. Based upon reported claims and an estimate for incurred, but not reported claims, we accrue a liability for our self-insured retention contingencies. We also maintain fire and extended coverage, business interruption, terrorism and other forms of insurance typical to businesses in this industry. The all peril property coverage policies insure our real and personal properties (other than land) against physical damage resulting from a variety of hazards. Additionally, we maintain information security and privacy liability insurance in the amount of $10.0 million with a $0.25 million self-insured retention per event.

        The majority of our current insurance policies expire on December 31, 2013. We generally renegotiate our insurance policies on an annual basis. We cannot predict the level of the premiums that we may be required to pay for subsequent insurance coverage, the level of any self-insurance retention

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applicable thereto, the level of aggregate coverage available or the availability of coverage for specific risks.

Competition

        Our parks compete directly with other theme parks, water and amusement parks and indirectly with all other types of recreational facilities and forms of entertainment within their market areas, including movies, sports attractions and vacation travel. Accordingly, our business is and will continue to be subject to factors affecting the recreation and leisure time industries generally, such as general economic conditions and changes in discretionary consumer spending habits. See "Item 1A. Risk Factors." Within each park's regional market area, the principal factors affecting direct theme park competition include location, price, the uniqueness and perceived quality of the rides and attractions in a particular park, the atmosphere and cleanliness of a park and the quality of its food and entertainment.

Seasonality

        Our operations are highly seasonal, with approximately 80% of park attendance and revenues occurring in the second and third calendar quarters of each year, with the most significant period falling between Memorial Day and Labor Day.

Environmental and Other Regulations

        Our operations are subject to federal, state and local environmental laws and regulations including laws and regulations governing water and sewer discharges, air emissions, soil and groundwater contamination, the maintenance of underground and above-ground storage tanks and the disposal of waste and hazardous materials. In addition, our operations are subject to other local, state and federal governmental regulations including, without limitation, labor, health, safety, zoning and land use and minimum wage regulations applicable to theme park operations, and local and state regulations applicable to restaurant operations at each park. Finally, certain of our facilities are subject to laws and regulations relating to the care of animals. We believe that we are in substantial compliance with applicable environmental and other laws and regulations and, although no assurance can be given, we do not foresee the need for any significant expenditures in this area in the near future.

        Portions of the undeveloped areas at certain of our parks are classified as wetlands. Accordingly, we may need to obtain governmental permits and other approvals prior to conducting development activities that affect these areas, and future development may be prohibited in some or all of these areas. Additionally, the presence of wetlands in portions of our undeveloped land could adversely affect our ability to dispose of such land and/or the price we receive in any such disposition.

Employees

        As of February 1, 2013, we employed approximately 1,900 full-time employees, and over the course of the 2012 operating season we employed approximately 39,000 seasonal employees. In this regard, we compete with other local employers for qualified students and other candidates on a season-by-season basis. As part of the seasonal employment program, we employ a significant number of teenagers, which subjects us to child labor laws.

        Approximately 17.8% of our full-time and approximately 12.2% of our seasonal employees are subject to labor agreements with local chapters of national unions. These labor agreements expire in December 2013 (Six Flags Over Georgia), December 2014 (Six Flags Magic Mountain and one union at Six Flags Great Adventure), and January 2015 (Six Flags Over Texas, Six Flags St. Louis and the other union at Six Flags Great Adventure). The labor agreements for La Ronde expire in various years ranging from December 2010 (currently under negotiation) through December 2015. We consider our employee relations to be good.

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Executive Officers and Certain Significant Employees

        The following table sets forth the name of the members of the Company's senior leadership team, the position held by such officer and the age of such officer as of February 1, 2013. The officers of the Company are generally elected each year at the organizational meeting of Holdings' Board of Directors, which follows the annual meeting of stockholders, and at other Board of Directors meetings, as appropriate.

Name   Age   Title

James Reid-Anderson*

    53   Chairman, President and Chief Executive Officer

John M. Duffey*

    52   Chief Financial Officer

Lance C. Balk*

    55   General Counsel

John Bement

    60   Senior Vice President, In-Park Services

Walter S. Hawrylak*

    65   Senior Vice President, Administration

Michael S. Israel

    46   Senior Vice President and Chief Information Officer

Tom Iven

    54   Senior Vice President, Park Operations—West Coast

Nancy A. Krejsa

    54   Senior Vice President, Investor Relations and Corporate Communications

David McKillips

    41   Senior Vice President, Corporate Alliances

John Odum

    55   Senior Vice President, Park Operations—East Coast

Brett Petit*

    49   Senior Vice President, Marketing

Leonard A. Russ*

    39   Vice President and Chief Accounting Officer

*
Executive Officers

        James Reid-Anderson was named Chairman, President and Chief Executive Officer of Six Flags in August 2010. Prior to joining Six Flags, Mr. Reid-Anderson was an adviser to Apollo Management L.P., a private equity investment firm, commencing January 2010, and from December 2008 to March 2010 was an adviser to the managing board of Siemens AG, a worldwide manufacturer and supplier of electronics and electrical engineering in the industrial, energy and healthcare sectors. From May through November 2008, Mr. Reid-Anderson was a member of Siemens AG's managing board and Chief Executive Officer of Siemens' Healthcare Sector, and from November 2007 through April 2008 he was the Chief Executive Officer of Siemens' Healthcare Diagnostics unit. Prior to the sale of the company to Siemens, Mr. Reid-Anderson served as Chairman, President and Chief Executive Officer of Dade Behring Holdings, Inc., a company that manufactured testing equipment and supplies for the medical diagnostics industry, which he joined in August 1996. Mr. Reid-Anderson previously held roles of increasing importance at PepsiCo, Grand Metropolitan (now Diageo) and Mobil. Mr. Reid-Anderson is a fellow of the U.K. Association of Chartered Certified Accountants and received a BCom (Hons) commerce degree from the University of Birmingham (U.K.).

        John M. Duffey was named Chief Financial Officer of Six Flags in September 2010 and is responsible for the finance and information technology functions in the company. Mr. Duffey previously served as Executive Vice President and Chief Integration Officer of Siemens Healthcare Diagnostics from November 2007 to January 2010, and was responsible for leading the integration of Siemens Medical Solutions Diagnostics and Dade Behring. Prior to Dade Behring's acquisition by Siemens AG, from 2001 to November 2007, Mr. Duffey served as the Executive Vice President and Chief Financial Officer of Dade Behring Inc., where he negotiated and led the company through a debt restructuring and entry into the public equity market. Prior to joining Dade Behring, Mr. Duffey was with Price

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Waterhouse in the Chicago and Detroit practice offices as well as the Washington D.C. National Office. Mr. Duffey holds a B.A. degree in Accounting from Michigan State University.

        Lance C. Balk was named General Counsel of Six Flags in September 2010. Mr. Balk previously served as Senior Vice President and General Counsel of Siemens Healthcare Diagnostics from November 2007 to January 2010. Prior to Dade Behring's acquisition by Siemens AG, he served in the same capacity at Dade Behring Inc. from May 2006 to November 2007. In these roles Mr. Balk was responsible for global legal matters. Before joining Dade Behring, Mr. Balk was a partner at the law firm Kirkland & Ellis LLP, where he co-founded the firm's New York corporate and securities practices. Mr. Balk holds a J.D. and an M.B.A. from the University of Chicago, and a B.A. degree in Philosophy from Northwestern University.

        John Bement was named Senior Vice President, In-Park Services for Six Flags in January 2006 and is responsible for food, retail, games, rentals, parking and other services offered throughout the 18 parks. Mr. Bement began his career with Six Flags in 1967 as a seasonal employee and became full-time in 1971. He held a number of management positions at several parks including Six Flags Over Texas, Six Flags Magic Mountain, and Six Flags Great Adventure before being named Park President at Six Flags Over Georgia in 1993. In 1998, Mr. Bement was promoted to Executive Vice President of the Western Region, a post held until 2001, when he was named Executive Vice President of In-Park Services. In 2006 Mr. Bement was named Senior Vice President, and in his current role, is responsible for in-park revenues for all Six Flags properties.

        Walter S. Hawrylak was named Senior Vice President, Administration of Six Flags in June 2002 and is responsible for Human Resources, Benefits, Training, Risk Management, Safety and Insurance. He joined Six Flags in 1999 bringing a rich background in the theme park industry. He previously worked for Sea World, Universal Studios and Wet N Wild where he has held a variety of positions ranging from Director of Finance to General Manager to CFO. Mr. Hawrylak holds a B.A. degree in Accounting from Ohio Northern University. Mr. Hawrylak is a CPA and started his career in public accounting.

        Michael S. Israel was named Chief Information Officer of Six Flags in April 2006 and is responsible for managing and updating the Company's Information Systems infrastructure. Mr. Israel began his career in technology sales and in 1998 became Chief Operating Officer for AMC Computer Corp.—a high-end, solutions-based systems integration consulting firm, and then served as a consultant at Financial Security Assurance from October 2004 to April 2006. Prior to this, he was Vice President of Word Pro's Business Systems for eight years. Mr. Israel holds a M.B.A. from St. John's University and a Bachelors of Business Administration degree in Marketing from The George Washington University. He also participated in the MIT Executive Program in Corporate Strategy.

        Tom Iven was named Senior Vice President, Park Operations for Six Flags' West Coast parks in May 2010. Mr. Iven began his career at Six Flags in 1976 as a seasonal employee and became a full-time employee in 1981. He held a number of management positions within several parks including Six Flags Magic Mountain and Six Flags Over Texas before being named General Manager of Six Flags St. Louis in 1998. In 2001, Mr. Iven was promoted to Executive Vice President, Western Region comprised of 17 parks, a post he held until 2006 when he was named Senior Vice President. In his current role, Mr. Iven is responsible for managing all operating functions for Six Flags' eight Western parks as well as oversight of Engineering and the Project Management Office, overseeing operating efficiency programs for all 18 parks in the Six Flags portfolio. Mr. Iven holds a B.S. degree from Missouri State University.

        Nancy A. Krejsa was named Senior Vice President, Investor Relations and Corporate Communications at Six Flags in October 2010 and is responsible for investor relations, corporate communications, public relations and international strategy. Ms. Krejsa previously served as Senior Vice President, Strategy and Communications for Siemens Healthcare Diagnostics from November 2007 to

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September 2010. Prior to Siemens' acquisition of Dade Behring, Ms. Krejsa was responsible for Corporate Communications and Investor Relations for Dade Behring. Ms. Krejsa joined Dade Behring in 1994 and held a number of Financial and Operational roles at Dade Behring, including Assistant Controller, Treasurer and Vice President of U.S. Operations. Prior to joining Dade Behring, Ms. Krejsa held a number of financial management positions at American Hospital Supply and Baxter International, including Vice President, Controller of the $5 billion Hospital Supply Distribution business. Ms. Krejsa has a B.S. in Finance from Indiana University and an M.B.A. in Accounting from DePaul University.

        David McKillips was named Senior Vice President, Corporate Alliances of Six Flags in September 2010 and is responsible for managing corporate sponsorships, media networks and licensed promotions. Mr. McKillips has 18 years of experience in the entertainment and theme park industry, specializing in promotion, sponsorship and consumer product licensing sales. In his current role, Mr. McKillips oversees the company's local, national and international sponsorship and media sales teams. Prior to joining Six Flags, from November 1997 to April 2006, Mr. McKillips served as Vice President of Advertising & Custom Publishing Sales for DC Comics, a division of Warner Bros. Entertainment and home to some of the world's most iconic superheroes, including Superman, Batman and Wonder Woman. He started his career with Busch Entertainment, serving roles within the operations, entertainment, group sales and promotions departments at Sea World in Orlando, Florida and then at Sesame Place in Langhorne, Pennsylvania, as Manager of Promotions. Mr. McKillips holds a B.A. degree in Speech Communication from the University of Georgia.

        John Odum was named Senior Vice President, Park Operations for Six Flags' East Coast parks in May 2010. Mr. Odum began his career with Six Flags in 1974 where he held multiple supervisory and management positions within the areas of Entertainment, Rides, Park Services, Security, Admissions, Food Service, Merchandise, Games & Attractions and Finance. Additionally, Mr. Odum has served as the Park President in St. Louis, San Antonio and Atlanta. In 2003, he moved into an Executive Vice President role overseeing all operations for the 10 central division parks while also assuming company-wide responsibilities for the Maintenance/Engineering Division and Capital Spending administration. In his current role, Mr. Odum is responsible for managing all operating functions for Six Flags' 10 East Coast parks as well as the oversight of Operations, Entertainment and Design for all 18 parks in the Six Flags portfolio. Mr. Odum holds a B.S. in Business Management from Presbyterian College.

        Brett Petit was named Senior Vice President, Marketing of Six Flags in June 2010. Mr. Petit has 30 years in the theme and water park industry, managing marketing strategy for more than 65 different theme parks, water parks and family entertainment centers across the country. In his role, he oversees all aspects of marketing strategy, advertising, promotions, group sales and online marketing. Prior to joining Six Flags, Mr. Petit served from March 2007 to June 2010 as Senior Vice President of Marketing & Sales for Palace Entertainment, an operator of theme parks and attractions with 38 locations hosting 14 million visitors. Before that, he worked 12 years as Senior Vice President of Marketing for Paramount Parks with over 12 million visitors and spent 13 years with Busch Entertainment Theme Parks as Marketing Vice President and Director of Sales. Mr. Petit holds a B.A. from University of South Florida.

        Leonard A. Russ was named Vice President and Chief Accounting Officer of Six Flags in October 2010 and is responsible for overseeing the Company's accounting function and the finance functions of the West Coast parks. Mr. Russ began his career at Six Flags in 1989 as a seasonal employee and became a full-time employee in 1995. He held a number of management positions within the Company before being named Director of Internal Audit in 2004. In 2005, Mr. Russ was promoted to Controller, a position he held until being promoted to Chief Accounting Officer. Mr. Russ holds a Bachelor of Business Administration degree in Accounting from the University of Texas at Arlington.

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Available Information

        Copies of our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports, are available free of charge through our website at www.sixflags.com/investors. References to our website in this Annual Report on Form 10-K are provided as a convenience and do not constitute an incorporation by reference of the information contained on, or accessible through, the website. Therefore, such information should not be considered part of this Annual Report on Form 10-K. These reports, and any amendments to these reports, are made available on our website as soon as reasonably practicable after we electronically file such reports with, or furnish them to, the United States Securities and Exchange Commission (the "SEC"). Copies are also available, without charge, by sending a written request to Six Flags Entertainment Corporation, 924 Avenue J East, Grand Prairie, TX 75050, Attn: Investor Relations.

        Our website, www.sixflags.com/investors, also includes items related to corporate governance matters including the charters of our Audit Committee, Nominating and Corporate Governance Committee and Compensation Committee, our Corporate Governance Principles, our Code of Business Conduct and our Code of Ethics for Senior Financial Management. Copies of these materials are also available, without charge, by sending a written request to Six Flags Entertainment Corporation, 924 Avenue J East, Grand Prairie, TX 75050, Attn: Investor Relations.

ITEM 1A.    RISK FACTORS

        Set forth below are the principal risks that we believe are material to our business and should be considered by our security holders. We operate in a continually changing business environment and, therefore, new risks emerge from time to time. This section contains forward-looking statements. For an explanation of the qualifications and limitations on forward-looking statements, see "Cautionary Note Regarding Forward-Looking Statements."

Risks Relating to Our Business

General economic conditions throughout the world may have an adverse impact on our business, financial condition or results of operations.

        General economic conditions and the global recession may have an adverse impact on our business and our financial condition. The current negative economic conditions affect our guests' levels of discretionary spending. A decrease in discretionary spending due to decreases in consumer confidence in the economy or us, a continued economic slowdown or further deterioration in the economy, could adversely affect the frequency with which our guests choose to visit our theme parks and the amount that our guests spend on our products when they visit. This could lead to a decrease in our revenues, operating income and cash flows.

        Additionally, general economic conditions throughout the world could impact our ability to obtain supplies, services and credit as well as the ability of third parties to meet their obligations to us, including, for example, payment of claims by our insurance carriers and/or the funding of our lines of credit.

Our growth strategy may not achieve the anticipated results.

        Our future success will depend on our ability to grow our business, including through capital investments to improve existing parks, rides, attractions and shows, as well as in-park services and product offerings. Our growth and innovation strategies require significant commitments of management resources and capital investments and may not grow our revenues at the rate we expect or at all. As a result, we may not be able to recover the costs incurred in developing our new projects and

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initiatives or to realize their intended or projected benefits, which could materially adversely affect our business, financial condition or results of operations.

We may not obtain the desired improvements in operational and financial performance established in our aspirational goals, including those related to Project 500.

        From time to time we establish aspirational goals for our operational and financial performance, including the "Project 500" aspirational goal established in mid-2011 to achieve Modified EBITDA of $500 million by 2015. We may seek to reach our aspirational goals through programs targeted at our key revenue drivers, marketing programs, pricing programs, operational changes and process improvements that are intended to increase revenue, reduce costs and improve our operational and financial performance. There is no assurance that these programs, changes and improvements will be successful or that we will achieve our aspirational goals at all or in the timeframe in which we seek to achieve them.

The theme park industry competes with numerous entertainment alternatives and such competition may have an adverse impact on our business, financial condition or results of operations.

        Our parks compete with other theme, water and amusement parks and with other types of recreational facilities and forms of entertainment, including movies, home entertainment options, sports attractions and vacation travel. Our business is also subject to factors that affect the recreation and leisure time industries generally, such as general economic conditions, including relative fuel prices, and changes in consumer spending habits. The principal competitive factors of a park include location, price, the uniqueness and perceived quality of the rides and attractions, the atmosphere and cleanliness of the park and the quality of its food and entertainment. If we are unable to compete effectively against entertainment alternatives or on the basis of principal competitive factors of the park, our business, financial condition or results of operations may be adversely affected.

We could be adversely affected by changes in public and consumer tastes.

        The success of our parks depends substantially on consumer tastes and preferences that can change in often unpredictable ways and on our ability to ensure that our parks meet the changing preferences of the broad consumer market. We carry out research and analysis before acquiring new parks or opening new rides or attractions and often invest substantial amounts before we learn the extent to which these new parks and new rides or attractions will earn consumer acceptance. If visitor volumes at our parks were to decline significantly or if new rides and entertainment offerings at our parks do not achieve sufficient consumer acceptance, revenues may decline. Our results of operations may also be adversely affected if we fail to retain long term customer loyalty or provide satisfactory customer service.

Adverse weather conditions—bad weather can adversely impact attendance at our parks.

        Because most of the attractions at our theme parks are outdoors, attendance at our parks is adversely affected by bad weather and forecasts of bad weather. The effects of bad weather on attendance can be more pronounced at our water parks. Bad weather and forecasts of bad or mixed weather conditions can reduce the number of people who come to our parks, which negatively affects our revenues. We believe that our operating results in certain years were adversely affected by abnormally hot, cold and/or wet weather in a number of our major U.S. markets. In addition, since a number of our parks are geographically concentrated in the eastern portion of the United States, a weather pattern that affects that area could adversely affect a number of our parks. Also, bad weather and forecasts of bad weather on weekend days have greater negative impact than on weekdays because weekend days are typically peak days for attendance at our parks.

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Our operations are seasonal.

        Our operations are seasonal. Approximately 80% of our annual park attendance and revenue occurs during the second and third calendar quarters of each year. As a result, when conditions or events described in the above risk factors occur during the operating season, particularly during the peak months of July and August, there is only a limited period of time during which the impact of those conditions or events can be mitigated. Accordingly, such conditions or events may have a disproportionately adverse effect on our revenues and cash flow. In addition, most of our expenses for maintenance and costs of adding new attractions are incurred when the parks are closed in the mid to late autumn and winter months. For this reason, a sequential quarter-to-quarter comparison is not a good indication of our performance or of how we will perform in the future.

Local conditions, events, natural disasters, disturbances, contagious diseases and terrorist activities can adversely impact park attendance.

        Lower attendance at our parks may be caused by various local conditions, events, weather, contagious diseases, or natural disasters. In addition, since some of our parks are near major urban areas and appeal to teenagers and young adults, there may be disturbances at one or more parks which could negatively affect our image. This may result in a decrease in attendance at the affected parks.

        Our business and financial results were adversely impacted by the terrorist activities occurring in the United States on September 11, 2001. Terrorist alerts and threats of future terrorist activities may adversely affect attendance at our parks. We cannot predict what effect any further terrorist activities that may occur in the future may have on our business, financial condition or results of operations.

There is a risk of accidents occurring at our parks or competing parks which may reduce attendance and negatively impact our operations.

        Our brand and our reputation are among our most important assets. Our ability to attract and retain customers depends, in part, upon the external perceptions of the Company, the quality and safety of our parks and services and our corporate and management integrity. While we carefully maintain the safety of our rides, there are inherent risks involved with these attractions. An accident or an injury (including water-borne illnesses on water rides) at any of our parks or at parks operated by our competitors, particularly accidents or injuries involving the safety of guests and employees, and the media coverage thereof, could negatively impact our brand or reputation, reduce attendance at our parks, cause a decrease in revenues and negatively impact our results of operations. The considerable expansion in the use of social media over recent years has compounded the potential scope of the negative publicity that could be generated by such incidents. If any such incident occurs during a time of high seasonal demand, the effect could disproportionately impact our results of operations for the year. Our current insurance policies may not provide adequate coverage in the event we are found liable in connection with such an incident. In addition, the majority of our current insurance policies expire on December 31, 2013. We cannot predict the level of the premiums that we may be required to pay for subsequent insurance coverage, the level of any self-insurance retention applicable to any subsequent insurance coverage, the level of aggregate coverage available or the availability of coverage for specific risks. If we become subject to damages that cannot by law be insured against, such as punitive damages or certain intentional misconduct by employees, there may be a material adverse effect on our operations.

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If we are not able to fund capital expenditures and invest in future attractions and projects in our parks, or unanticipated construction delays in completing such projects, or significant ride downtime, occur, these events could adversely affect our revenues.

        A principal competitive factor for a theme park is the uniqueness and perceived quality of its rides and attractions. Accordingly, the regular addition of new rides and attractions is important, and a key element for our revenue growth is strategic capital spending on new rides and attractions. Our ability to fund capital expenditures will depend on our ability to generate sufficient cash flow from operations and to raise capital from third parties. We cannot assure that our operations will be able to generate sufficient cash flow to fund such costs, or that we will be able to obtain sufficient financing on adequate terms, or at all, which could cause us to delay or abandon certain projects or plans. In addition, any construction delays or ride downtime can adversely affect our attendance and our ability to realize revenue growth.

Our leases contain default provisions that, if enforced or exercised by the landlord, could significantly impact our operations at those parks.

        Certain of our leases permit the landlord to terminate the lease if there is a default under the lease, including, for example, our failure to pay rent, utilities and applicable taxes in a timely fashion or to maintain certain insurance. If a landlord were to terminate its lease, it would halt our operations at that park and, depending on the size of the park, could have a negative impact on our financial condition and results of operations. In addition, any disputes that may result from such a termination may be expensive to pursue and may divert money and management's attention from our other operations and adversely affect our business, financial condition or results of operations.

Product recalls, product liability claims and associated costs could adversely affect our reputation and our financial condition.

        We sell food, toys and other retail products, the sale of which involves legal and other risks. We may need to recall food products if they become contaminated, and we may need to recall toys, games or other retail merchandise if there is a design or product defect. Even though we are resellers of food and retail merchandise, we may be liable if the consumption or purchase of any of the products we sell causes illness or injury. A recall could result in losses due to the cost of the recall, the destruction of product and lost sales due to the unavailability of product for a period of time. A significant food or retail product recall could also result in adverse publicity, damage to our reputation and loss of consumer confidence in our parks, which could have a material adverse effect on our business, financial condition or results of operations.

Cyber security risks and the failure to maintain the integrity of internal or guest data could expose us to data loss, litigation and liability, and our reputation could be significantly harmed.

        We collect and retain large volumes of internal and guest data, including credit card numbers and other personally identifiable information, for business purposes, including for transactional or target marketing and promotional purposes, and our various information technology systems enter, process, summarize and report such data. We also maintain personally identifiable information about our employees. The integrity and protection of our guest, employee and Company data is critical to our business and our guests and employees have a high expectation that we will adequately protect their personal information. The regulatory environment, as well as the requirements imposed on us by the credit card industry, governing information, security and privacy laws is increasingly demanding and continue to evolve. Maintaining compliance with applicable security and privacy regulations could adversely impact our ability to market our parks, products and services to our guests. In addition, such compliance measures as well as protecting our guests from consumer fraud could increase our operating costs. Furthermore, a penetrated or compromised data system or the intentional, inadvertent

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or negligent release or disclosure of data could result in theft, loss, fraudulent or unlawful use of guest, employee or Company data which could harm our reputation, disrupt our operations, or result in remedial and other costs, fines or lawsuits.

Current or future litigation costs may adversely affect our business, financial condition or results of operations.

        We have been and continue to be involved in legal proceedings, claims and other litigation that arise in the ordinary course of business. Litigation can be expensive, lengthy and disruptive to normal business operations, including to our management due to the increased time and resources required to respond to and address the litigation. The results of complex legal proceedings are often uncertain and difficult to predict. An unfavorable outcome of any particular matter or any future legal proceedings could have a material adverse effect on our business, financial condition or results of operations. In the future, we could incur judgments or enter into settlements of claims that could harm our financial position and results of operations. For additional information regarding certain lawsuits in which we have been or are involved, see "Business—Legal Proceedings."

We may be subject to claims for infringing the intellectual property rights of others, which could be costly and result in the loss of intellectual property rights.

        We cannot be certain that we do not and will not infringe the intellectual property rights of others. We have been in the past, and may be in the future, subject to litigation and other claims in the ordinary course of our business based on allegations of infringement or other violations of the intellectual property rights of others. Regardless of their merits, intellectual property claims can divert the efforts of our personnel and are often time-consuming and expensive to litigate or settle. In addition, to the extent claims against us are successful, we may have to pay substantial money damages or discontinue, modify, or rename certain products or services that are found to be in violation of another party's rights. We may have to seek a license (if available on acceptable terms, or at all) to continue offering products and services, which may increase our operating expenses.

Increased costs of labor, pension, post-retirement and medical and other employee health and welfare benefits may reduce our results of operations.

        Labor is a primary component in the cost of operating our business. We devote significant resources to recruiting and training our managers and employees. As of December 31, 2012, approximately 17.8% of our full-time and approximately 12.2% of our seasonal employees are subject to labor agreements with local chapters of national unions. These labor agreements expire in December 2013 (Six Flags Over Georgia), December 2014 (Six Flags Magic Mountain and one union at Six Flags Great Adventure), and January 2015 (Six Flags Over Texas, Six Flags St. Louis and the other union at Six Flags Great Adventure). The labor agreements for La Ronde expire in various years ranging from December 2010 (currently under negotiation) through December 2015. We could experience a material labor disruption, significantly increased labor costs or litigation relating to employment and/or wage and hour disputes. Increased labor costs, due to competition, increased minimum wage or employee benefit costs or otherwise, would adversely impact our operating expenses. In addition, our success depends on our ability to attract, motivate and retain qualified employees to keep pace with our needs. If we are unable to do so, our results of operations may be adversely affected.

        With approximately 1,900 full-time employees, our results of operations are also substantially affected by costs of retirement and medical benefits. In recent years, we have experienced increases in these costs as a result of macro-economic factors beyond our control, including increases in health care costs, declines in investment returns on pension plan assets and changes in discount rates used to calculate pension and related liabilities. At least some of these macro-economic factors may continue to put pressure on the cost of providing pension and medical benefits. Changes to the U.S. healthcare

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laws that become effective in 2014 may cause our healthcare costs to increase as well. There can be no assurance that we will succeed in limiting cost increases, and continued upward pressure, including any as a result of new legislation, could reduce the profitability of our businesses.

        Additionally, we contribute to multiple defined benefit multiemployer pension plans on behalf of our collectively bargained employees of Six Flags Great Adventure LLC. If we were to cease contributing to or otherwise incur a withdrawal from any such plans, we could be obligated to pay withdrawal liability assessments based on the underfunded status (if any) of such plans at the time of the withdrawal. The amount of any multiemployer pension plan underfunding can fluctuate from year to year, and thus there is a possibility that the amount of withdrawal liability that we could incur in the future could be material.

We depend on a seasonal workforce, many of which are paid at minimum wage.

        Our park operations are dependent in part on a seasonal workforce, many of which are paid at minimum wage. We manage seasonal wages and the timing of the hiring process to ensure the appropriate workforce is in place for peak and low seasons. We cannot guarantee that material increases in the cost of securing our seasonal workforce will not occur in the future. Increased state or federal minimum wage requirements, seasonal wages or an inadequate workforce could have an adverse impact on our results of operations.

Our operations and our ownership of property subject us to environmental, health and safety regulations, which create uncertainty regarding future environmental expenditures and liabilities.

        Our operations involve wastewater and stormwater discharges and air emissions, and as a result are subject to environmental, health and safety laws, regulations and permitting requirements. These requirements are administered by the U.S. Environmental Protection Agency and the states and localities where our parks are located (and can also often be enforced through citizen suit provisions), and include the requirements of the Clean Water Act and the Clean Air Act. Our operations also involve maintaining underground and aboveground storage tanks, and managing and disposing of hazardous substances, chemicals and materials and are subject to federal, state and local laws and regulations regarding the use, generation, manufacture, storage, handling and disposal of these substances, chemicals and materials, including the Resource Conservation and Recovery Act and the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"). A portion of our capital expenditures budget is intended to ensure continued compliance with environmental, health and safety laws, regulations and permitting requirements. In the event of contamination or injury as a result of a release of or exposure to regulated materials, we could be held liable for any resulting damages. For example, pursuant to CERCLA, past and current owners and operators of facilities and persons arranging for disposal of hazardous substances may be held strictly, jointly and severally liable for costs to remediate releases and threatened releases of hazardous substances. The costs of investigation, remediation or removal of regulated materials may be substantial, and the presence of those substances, or the failure to remediate property properly, may impair our ability to use, transfer or obtain financing regarding our property. Our activities may be affected by new legislation or changes in existing environmental, health and safety laws. For example, the state or federal government having jurisdiction over a given area may enact legislation and the U.S. Environmental Protection Agency or applicable state entity may propose new regulations or change existing regulations that could require our parks to reduce certain emissions or discharges. Such action could require our parks to install costly equipment or increase operating expenses. We may be required to incur costs to remediate potential environmental hazards, mitigate environmental risks in the future, or comply with other environmental requirements.

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We may not be able to attract and retain key management and other key employees.

        Our employees, particularly our key management, are vital to our success and difficult to replace. We may be unable to retain them or to attract other highly qualified employees, particularly if we do not offer employment terms competitive with the rest of the market. Failure to attract and retain highly qualified employees, or failure to develop and implement a viable succession plan, could result in inadequate depth of institutional knowledge or skill sets, adversely affecting our business.

We may not realize the benefits of acquisitions or other strategic initiatives.

        Our business strategy may include selective expansion, both domestically and internationally, through acquisitions of assets or other strategic initiatives, such as joint ventures, that allow us to profitably expand our business and leverage our brand. The success of our acquisitions depends on effective integration of acquired businesses and assets into our operations, which is subject to risks and uncertainties, including realization of anticipated synergies and cost savings, the ability to retain and attract personnel, the diversion of management's attention from other business concerns, and undisclosed or potential legal liabilities of an acquired businesses or assets. Additionally, any international transactions are subject to additional risks, including the impact of economic fluctuations in economies outside of the United States, difficulties and costs of staffing and managing foreign operations due to distance, language and cultural differences, as well as political instability and lesser degree of legal protection in certain jurisdictions, currency exchange fluctuations and potentially adverse tax consequences of overseas operations.

Risks Related to Our Indebtedness and Common Stock

Our substantial monetary obligations require that a portion of our cash flow be used to pay interest and fund other obligations.

        We must satisfy the following obligations with respect to the Partnership Parks:

    We must make annual distributions to our partners in the Partnership Parks, which will amount to approximately $66.3 million in 2013 (based on our ownership of units as of December 31, 2012, our share of the distribution will be approximately $28.8 million), with similar amounts (adjusted for changes in cost of living) payable in future years.

    We must spend a minimum of approximately 6% of each of the Partnership Parks' annual revenues over specified periods for capital expenditures.

    Each year we must offer to purchase all outstanding limited partnership units from our partners in the Partnership Parks. The remaining redeemable units of the Georgia limited partner and Texas limited partner, respectively, represent an ultimate redemption value for the limited partnership units of approximately $348.2 million at December 31, 2012. As we purchase additional units, we are entitled to a proportionate increase in our share of the minimum annual distributions. In future years, we may need to incur indebtedness under the 2011 Credit Facility to satisfy such unit purchase obligations.

        We expect to use cash flow from the operations at the Partnership Parks to satisfy all or part of our annual distribution and capital expenditure obligations with respect to these parks before we use any of our other funds. The two partnerships generated approximately $52.8 million of cash in 2012 from operating activities after deduction of capital expenditures and excluding the impact of short-term intercompany advances from or repayments to us. At December 31, 2012 and 2011, we had loans outstanding of $239.3 million to the partnerships that own the Partnership Parks, primarily to fund the acquisition of Six Flags White Water Atlanta, working capital and capital improvements. The obligations relating to SFOG continue until 2027 and those relating to SFOT continue until 2028. In the event of a default by us under the Subordinated Indemnity Agreement or of our obligations to our

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partners in the Partnership Parks, these arrangements would permit Time Warner to take full control of both the entities that own limited partnership units and the managing partner. For more information regarding the Subordinated Indemnity Agreement, see "Business—Partnership Park Arrangements."

        The vast majority of our capital expenditures in 2013 and beyond will be made on a discretionary basis, although such expenditures are important to the parks' ability to sustain and grow revenues. We spent $98.5 million on capital expenditures for all of our continuing operations in the 2012 calendar year (net of property insurance recoveries). Our business plan includes targeted annual capital spending of approximately 9% of revenues. We may not, however, achieve our targeted rate of capital spending, which may cause us to spend in excess of, or less than, our anticipated rate.

        Our indebtedness under the 2011 Credit Facility and our other obligations could have important negative consequences to us and investors in our securities. These include the following:

    We may not be able to satisfy all of our obligations, including, but not limited to, our obligations under the instruments governing our outstanding debt, which may cause a cross-default or cross-acceleration on other debt we may have incurred.

    We could have difficulties obtaining necessary financing in the future for working capital, capital expenditures, debt service requirements, refinancing or other purposes.

    We could have difficulties obtaining additional financing to fund our annual Partnership Park obligations if the amount of the 2011 Credit Facility is insufficient.

    We will have to use a significant part of our cash flow to make payments on our debt and to satisfy the other obligations set forth above, which may reduce the capital available for operations and expansion.

    Adverse economic or industry conditions may have more of a negative impact on us.

        We cannot be sure that cash generated from our parks will be as high as we expect or that our expenses will not be higher than we expect. Because a portion of our expenses are fixed in any given year, our operating cash flows are highly dependent on revenues, which are largely driven by attendance levels, in-park sales and sponsorship and licensing activity. A lower amount of cash generated from our parks or higher expenses than expected, when coupled with our debt obligations, could adversely affect our ability to fund our operations.

        Holdings is a holding company whose primary assets consist of shares of stock or other equity interests in its subsidiaries, and Holdings conducts substantially all of its current operations through its subsidiaries. Almost all of its income is derived from its subsidiaries. Accordingly, Holdings is dependent on dividends and other distributions from its subsidiaries to generate the funds necessary to meet its obligations. We had $629.2 million of cash and cash equivalents on a consolidated basis at December 31, 2012, of which $55.4 million was held at Holdings.

The instruments governing our indebtedness include financial and other covenants that will impose restrictions on our financial and business operations.

        The instruments governing our indebtedness restrict our ability to, among other things, incur additional indebtedness, incur liens, make investments, sell assets, pay dividends, repurchase stock or engage in transactions with affiliates. In addition, the 2011 Credit Facility contains financial covenants that will require us to maintain a minimum interest coverage ratio and a maximum senior secured leverage ratio. These covenants may have a material impact on our operations. If we fail to comply with the covenants in the 2011 Credit Facility or the indenture governing the senior unsecured notes and are unable to obtain a waiver or amendment, an event of default would result under the applicable debt instrument.

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        Events beyond our control, such as weather and economic, financial and industry conditions, may affect our ability to continue meeting our financial covenant ratios under the 2011 Credit Facility. The need to comply with these financial covenants and restrictions could limit our ability to execute our strategy and expand our business or prevent us from borrowing more money when necessary.

        The 2011 Credit Facility and the indenture governing the senior unsecured notes also contain other events of default customary for financings of these types, including cross defaults to certain other indebtedness, cross acceleration to other indebtedness and certain change of control events. If an event of default were to occur, the lenders under the 2011 Credit Facility could declare outstanding borrowings under the 2011 Credit Facility immediately due and payable and the holders of senior unsecured notes could elect to declare the notes to be due and payable, together with accrued and unpaid interest. We cannot provide assurance that we would have sufficient liquidity to repay or refinance such indebtedness if it was accelerated upon an event of default. In addition, an event of default or declaration of acceleration under the 2011 Credit Facility could also result in an event of default under other indebtedness.

        We can make no assurances that we will be able to comply with these restrictions in the future or that our compliance would not cause us to forego opportunities that might otherwise be beneficial to us.

We may be unable to service our indebtedness.

        Our ability to make scheduled payments on and to refinance our indebtedness, including the 2011 Credit Facility and the senior unsecured notes, depends on and is subject to our financial and operating performance, which in turn is affected by general and regional economic, financial, competitive, business and other factors beyond our control, including the availability of financing in the banking and capital markets. We cannot assure you that our business will generate sufficient cash flow from operations or that future borrowings will be available to us in an amount sufficient to enable us to service our debt, including the senior unsecured notes, to refinance our debt or to fund our other liquidity needs. If we are unable to meet our debt obligations or to fund our other liquidity needs, we may be forced to reduce or delay scheduled expansion and capital expenditures, sell material assets or operations, obtain additional capital or restructure our debt, including the senior unsecured notes, which could cause us to default on our debt obligations and impair our liquidity. Any refinancing of our indebtedness could be at higher interest rates and may require us to comply with more onerous covenants which could further restrict our business operations. If we are required to dispose of material assets or operations or restructure our debt to meet our debt service and other obligations, we cannot assure you that the terms of any such transaction will be satisfactory to us or if, or how soon, any such transaction could be completed.

The market price of Holdings' common stock may be volatile, which could cause the value of an investment in Holdings' common stock to decline.

        The ownership in Holdings' common stock is slightly concentrated, which might limit the liquidity of the market for Holdings' common stock. We can give no assurances about future liquidity in the trading market for Holdings' common stock. If there is limited liquidity in the trading market for Holdings' common stock, a sale of a large number of shares of Holdings' common stock could be adversely disruptive to the market price of Holdings' common stock.

        Numerous factors, including many over which we have no control, may have a significant impact on the market price of Holdings' common stock. These risks include those described or referred to in this "Risk Factors" section and in other documents incorporated herein by reference as well as, among other things:

    Our operating and financial performance and prospects;

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    Our ability to repay our debt;

    Our access to financial and capital markets to refinance our debt or replace the existing credit facilities;

    Investor perceptions of us and the industry and markets in which we operate;

    Our dividend policy;

    Our stock repurchase program;

    Future sales of equity or equity-related securities;

    Changes in earnings estimates or buy/sell recommendations by analysts; and

    General financial, domestic, economic and other market conditions.

Changes in our credit ratings could adversely affect the price of Holdings' common stock.

        Credit rating agencies continually review their ratings for the companies they follow including our company. Upon our emergence from bankruptcy the rating agencies evaluated our new credit facilities. Moody's Investors Service and Standard & Poor's provided an initial corporate family rating of B2 and B, respectively. In November 2010, Moody's upgraded our credit rating to B1 and Standard & Poor's upgraded our credit rating to B+. In February 2011, Standard & Poor's increased our credit rating to BB-. In November 2011, Standard & Poor's updated our credit rating to BB. In connection with the issuance of the senior unsecured notes in December 2012, Moody's assigned a B3 rating to the notes, upgraded our credit facility rating to Ba2, and affirmed our B1 corporate family rating. Standard & Poor's assigned a BB- rating to the notes and affirmed our BB corporate credit rating. Both rating agencies have placed our ratings on "stable outlook." We cannot assure you that our ratings will not experience a negative change in the future. A negative change in our ratings or the perception that such a change might occur could adversely affect the market price of Holdings' common stock.

Various factors could affect Holdings' ability to sustain its dividend.

        Holdings' ability to pay a dividend on its common stock or sustain it at current levels is subject to our ability to generate sufficient cash flow to pay dividends. In addition, our debt agreements contain certain limitations on the amount of cash we are permitted to distribute to our stockholders by way of dividend or stock repurchase. Lastly, a portion of our indebtedness bears interest at a floating rate and substantial increases in interest rates could limit the amount of cash we have available to pay dividends.

Provisions in Holdings' corporate documents and the law of the State of Delaware as well as change of control provisions in certain of our debt and other agreements could delay or prevent a change of control, even if that change would be beneficial to stockholders, or could have a materially negative impact on our business.

        Certain provisions in Holdings' Restated Certificate of Incorporation, the 2011 Credit Facility and the indenture governing the senior unsecured notes may have the effect of deterring transactions involving a change in control of us, including transactions in which stockholders might receive a premium for their shares.

        Holdings' Certificate of Incorporation provides for the issuance of up to 5,000,000 shares of preferred stock with such designations, rights and preferences as may be determined from time to time by Holdings' Board of Directors. The authorization of preferred shares empowers Holdings' Board of Directors, without further stockholder approval, to issue preferred shares with dividend, liquidation, conversion, voting or other rights that could adversely affect the voting power or other rights of the holders of the common stock. If issued, the preferred stock could also dilute the holders of Holdings' common stock and could be used to discourage, delay or prevent a change of control of us.

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        Holdings is also subject to the anti-takeover provisions of the Delaware General Corporation Law, which could have the effect of delaying or preventing a change of control in some circumstances. All of the foregoing factors could materially adversely affect the price of the common stock.

        The 2011 Credit Facility contains provisions pursuant to which it is an event of default if any "person" becomes the beneficial owner of more than 35% of the common stock. This could deter certain parties from seeking to acquire us and if any "person" were to become the beneficial owner of more than 35% of the common stock, we may not be able to repay such indebtedness.

        We have the exclusive right to use certain Warner Bros. and DC Comics characters in our theme parks in the United States (except in the Las Vegas metropolitan area), Canada, Mexico and certain other countries. Warner Bros. can terminate these licenses under certain circumstances, including the acquisition of us by persons engaged in the movie or television industries. This could deter certain parties from seeking to acquire us.

ITEM 1B.    UNRESOLVED STAFF COMMENTS

        We have received no written comments regarding our periodic or current reports from the staff of the SEC that were issued 180 days or more preceding the end of our 2012 fiscal year and that remain unresolved.

ITEM 2.    PROPERTIES

        Set forth below is a brief description of our material real estate at February 1, 2013. See also "Business—Description of Parks."

Six Flags America, Largo, Maryland—515 acres (owned)
Six Flags Discovery Kingdom, Vallejo, California—135 acres (owned)
Six Flags Fiesta Texas, San Antonio, Texas—216 acres (owned)
Six Flags Great Adventure & Wild Safari and Hurricane Harbor, Jackson, New Jersey—2,200 acres
      (owned)
Six Flags Great America, Gurnee, Illinois—304 acres (owned)
Six Flags Hurricane Harbor, Arlington, Texas—47 acres (owned)
Six Flags Hurricane Harbor, Valencia, California—12 acres (owned)
Six Flags Magic Mountain, Valencia, California—250 acres (owned)
Six Flags Mexico, Mexico City, Mexico—110 acres (occupied pursuant to concession agreement)(1)
Six Flags New England, Agawam, Massachusetts—262 acres (substantially all owned)
Six Flags Over Georgia, Austell, Georgia—283 acres (leasehold interest)(2)
Six Flags Over Texas, Arlington, Texas—217 acres (leasehold interest)(2)
Six Flags St. Louis, Eureka, Missouri—503 acres (owned)
Six Flags White Water Atlanta, Marietta, Georgia—69 acres (owned)(3)
La Ronde, Montreal, Canada—146 acres (leasehold interest)(4)
The Great Escape, Queensbury, New York—345 acres (owned)


(1)
The concession agreement is with the Federal District of Mexico City. The agreement expires in 2017.

(2)
Lessor is the limited partner of the partnership that owns the park. The SFOG and SFOT leases expire in 2027 and 2028, respectively, at which time we have the option to acquire all of the interests in the respective lessor that we have not previously acquired.

(3)
Owned by the Georgia partnership.

(4)
The site is leased from the City of Montreal. The lease expires in 2065.

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        We have granted to our lenders under the 2011 Credit Facility agreement, a mortgage on substantially all of our owned United States properties.

        In addition to the foregoing, we also lease office space and a limited number of rides and attractions at our parks. See Note 16 to the Consolidated Financial Statements for a discussion of lease commitments.

        We consider our properties to be well maintained, in good condition and adequate for their present uses and business requirements.

ITEM 3.    LEGAL PROCEEDINGS

        The nature of the industry in which we operate tends to expose us to claims by guests, generally for injuries. Accordingly, we are party to various legal actions arising in the normal course of business, including the proceedings discussed below.

        On March 1, 2007, Safety Braking Corporation, Magnetar Technologies Corp. and G&T Conveyor Co. filed a Complaint for Patent Infringement (the "Patent Complaint") in the United States District Court for the District of Delaware naming SFI, SFTP, and certain of our other subsidiaries as defendants, along with other industry theme park owners and operators. The Patent Complaint alleges that we are liable for direct or indirect infringement of United States Patent No. 5,277,125 because of our ownership and/or operation of various theme parks and amusement rides. The Patent Complaint seeks damages and injunctive relief. On July 8, 2008, the Court entered a Stipulation and Order of Dismissal of Safety Braking Corporation. Thus, as of that date, only Magnetar Technologies Corp. and G&T Conveyor Co. remain as plaintiffs. We have contacted the manufacturers of the amusement rides that we believe may be impacted by this case, requiring such manufacturers to honor their indemnification obligations with respect to this case. We tendered the defense of this matter to certain of the ride manufacturers. Fact and expert discovery has concluded and summary judgment motions were filed in January 2013. The defendants moved for summary judgment that United States Patent No. 5,277,125 was invalid on four separate grounds, that damages for certain rides were barred by the doctrine of laches and/or by the patent owner's failure to mark the patent number on products embodying the patented invention, and that certain rides do not infringe the patent. The plaintiffs moved for summary judgment that certain rides do infringe. Summary judgment briefing is scheduled to be completed in 2013. No trial date has been set. The patent expired in October 2012.

        On January 6, 2009, a civil action against us was commenced in the State Court of Cobb County, Georgia. The plaintiff sought damages for personal injuries, including an alleged brain injury, as a result of an altercation with a group of individuals on property next to SFOG on July 3, 2007. Certain of the individuals were employees of the park and were off-duty at the time the altercation occurred. The plaintiff, who had exited the park, claims that we were negligent in our security of the premises. Four of the individuals who allegedly participated in the altercation are also named as defendants in the litigation. Our motion to dismiss the action was denied.

        We are party to various other legal actions, including intellectual property disputes and employment and/or wage and hour litigation, arising in the normal course of business. We do not expect to incur any material liability by reason of such actions.

ITEM 4.    MINE SAFETY DISCLOSURES

        Not applicable.

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PART II

ITEM 5.    MARKET FOR THE REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market Information

        Prior to April 18, 2009, SFI's common stock traded on the New York Stock Exchange under the symbol "SIX." From April 18, 2009 through the Effective Date, prices for SFI's common stock were quoted on the over-the-counter market under the symbol "SIXFQ." On the Effective Date, all of the outstanding common stock and all other outstanding equity securities of SFI, including all options and restricted stock awards, were cancelled pursuant to the terms of the Plan.

        Holdings' common stock currently trades on the New York Stock Exchange under the symbol "SIX." The stock began trading on New York Stock Exchange on June 21, 2010.

        On May 5, 2011, Holdings' Board of Directors approved a two-for-one stock split of Holdings' common stock effective in the form of a stock dividend of one share of common stock for each outstanding share of common stock. The record date for the stock split was June 15, 2011 and the additional shares of common stock were distributed on June 27, 2011. In accordance with the provisions of our stock benefit plans and as determined by Holdings' Board of Directors, the number of shares available for issuance, the number of shares subject to outstanding equity awards and the exercise prices of outstanding stock option awards were adjusted to equitably reflect the two-for-one stock split.

        The table below presents the high and low sales price of our common stock and the quarterly dividend paid per share of common stock, as adjusted to reflect Holdings' two-for-one stock split in June 2011:

 
  Sales Price
Per Share
   
 
 
  Dividend Paid
Per Share
 
 
  High   Low  

2013

                   

First Quarter (through February 19, 2013)

  $ 65.94   $ 60.99      

2012

                   

Fourth Quarter

  $ 64.95   $ 53.21   $ 0.90  

Third Quarter

  $ 62.37   $ 52.48   $ 0.60  

Second Quarter

  $ 54.23   $ 43.13   $ 0.60  

First Quarter

  $ 49.04   $ 40.44   $ 0.60  

2011

                   

Fourth Quarter

  $ 41.64   $ 24.72   $ 0.06  

Third Quarter

  $ 39.99   $ 27.70   $ 0.06  

Second Quarter

  $ 40.25   $ 33.25   $ 0.03  

First Quarter

  $ 36.21   $ 26.98   $ 0.03  

Holders of Record

        As of February 15, 2013, there were approximately 63 stockholders of record of Holdings' common stock. This does not reflect holders who beneficially own common stock held in nominee or street name.

Increase in Quarterly Dividends

        In February 2012, Holdings' Board of Directors increased the quarterly cash dividend from $0.06 per share of common stock to $0.60 per share. In October 2012, Holdings' Board of Directors

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approved a further increase to the quarterly cash dividend from $0.60 per share of common stock to $0.90 per share.

        The amount and timing of any future dividends payable on Holdings' common stock are within the sole discretion of Holdings' Board of Directors. Holdings' Board of Directors currently anticipates continuing to pay cash dividends on Holdings' common stock on a quarterly basis. However, the declaration and amount of any future dividends depend on various factors including the Company's earnings, cash flows, financial condition and other factors. Furthermore, the 2011 Credit Facility and the indenture governing the senior unsecured notes include certain limitations on Holdings' ability to pay dividends. For more information, see "Management's Discussion and Analysis—Liquidity and Capital Resources of Financial Condition and Results of Operations" in Item 7 of this Annual Report on Form 10-K and Note 8 to the Consolidated Financial Statements.

Issuer Purchases of Equity Securities

        On February 24, 2011, Holdings' Board of Directors approved a stock repurchase program that permitted Holdings to repurchase up to $60.0 million in shares of Holdings' common stock over a three-year period (the "First Stock Repurchase Plan"). Under the First Stock Repurchase Plan, during the twelve months ended December 31, 2011, Holdings repurchased an aggregate of 1,617,000 shares at a cumulative price of approximately $60.0 million. The small amount of remaining shares that were permitted to be repurchased under the First Stock Repurchase Plan were repurchased in January 2012.

        On January 3, 2012, Holdings' Board of Directors approved a new stock repurchase program that permitted Holdings to repurchase up to $250.0 million in shares of Holdings' common stock over a four-year period (the "Second Stock Repurchase Plan"). Under the Second Stock Repurchase Plan, during the nine months ended September 30, 2012, Holdings repurchased an aggregate of 2,077,000 shares at a cumulative price of approximately $98.4 million and at an average price per share of $47.37. The following table sets forth information regarding purchases of Holdings' common stock during the three-month period ended December 31, 2012:

Period
  Total number of
shares purchased
  Average price
paid per share
  Total number of
shares purchased
as part of publicly
announced plans
or programs
  Approximate dollar
value of shares
that may yet
be purchased
under the plans
or programs
 

September 30

            2,077,000   $ 151,604,000  

October 1 - October 31

    1,110,000   $ 62.37     3,187,000   $ 82,358,000  

November 1 - November 30

            3,187,000   $ 82,358,000  

December 1 - December 31

    1,062,000   $ 60.60     4,249,000   $ 18,021,000  
                   

    2,172,000   $ 61.51     4,249,000   $ 18,021,000  
                   

        As of January 4, 2013, Holdings had repurchased an additional 289,000 shares at a cumulative price of $18.0 million and an average price per share of $62.31 to complete the permitted repurchases under the Second Stock Repurchase Plan.

        On December 11, 2012, Holdings' Board of Directors approved a new stock repurchase program that permits Holdings to repurchase up to $500.0 million in shares of Holdings' common stock over a three-year period (the "Third Stock Repurchase Plan"). As of February 26, 2013, Holdings had repurchased 3,339,000 shares at a cumulative price of approximately $212.3 million and an average price per share of $63.60 under the Third Stock Repurchase Plan.

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Performance Graph

        The following graph shows a comparison of the thirty-two month cumulative total stockholder return on Holdings' common stock (assuming all dividends were reinvested), The Standard & Poor's ("S&P") 500 Stock Index, The S&P Midcap 400 Index and The S&P Entertainment Movies & Entertainment Index. The stock price performance shown in the graph is not necessarily indicative of future price performance.


COMPARISON OF 32 MONTH CUMULATIVE TOTAL RETURN*
Among Six Flags Entertainment Corporation, the S&P 500 Index, the S&P Midcap 400 Index,
and the S&P Movies & Entertainment Index

GRAPHIC


*
$100 invested on 5/10/10 in stock or 4/30/10 in index, including reinvestment of dividends.
Fiscal year ending December 31.

    Copyright© 2013 S&P, a division of The McGraw-Hill Companies Inc. All rights reserved.

 
  5/10/10   12/31/10   12/31/11   12/31/12  

Six Flags Entertainment Corporation

  $ 100.00   $ 185.11   $ 282.11   $ 441.34  

S&P 500

  $ 100.00   $ 107.48   $ 109.76   $ 127.32  

S&P Midcap 400

  $ 100.00   $ 111.34   $ 109.41   $ 128.97  

S&P Movies & Entertainment

  $ 100.00   $ 101.83   $ 113.38   $ 152.66  

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ITEM 6.    SELECTED FINANCIAL DATA

        The following financial data is derived from our audited financial statements. You should review this information in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Item 7 of this Annual Report on Form 10-K and the historical financial statements and related notes contained in this Annual Report on Form 10-K.

        Upon emergence from Chapter 11, we adopted fresh start reporting which resulted in our Company becoming a new entity for financial reporting purposes. Accordingly, consolidated financial data on or after May 1, 2010 is not comparable to the consolidated financial data prior to that date.

        Our audited financial statements included herein and the following selected historical financial data for the five-year period ended on that date reflect the effects of our reclassification of the results of thirteen parks, including the seven parks which were sold in April 2007 and the Louisville and New Orleans parks, as discontinued operations (in thousands, except per share data).

 
  Successor    
  Predecessor  
 
  Year Ended
December 31,
   
   
   
  Year Ended
December 31,
 
 
  Eight Months
Ended
December 31,
2010
   
  Four Months
Ended
April 30,
2010
 
 
   
 
 
  2012   2011    
  2009   2008  
 
   
 

Statement of Operations Data:

                                         

Theme park admissions

  $ 576,708   $ 541,744   $ 452,189       $ 59,270   $ 482,670   $ 526,550  

Theme park food, merchandise and other

    437,382     413,844     348,552         52,054     374,685     420,994  

Sponsorship, licensing and other fees

    39,977     42,380     37,877         11,259     41,577     58,251  

Accommodations revenue

    16,265     15,206     9,194         5,494          
                               

Total revenue

    1,070,332     1,013,174     847,812         128,077     898,932     1,005,795  
                               

Operating expenses (excluding depreciation and amortization shown separately below)

    411,679     397,874     292,550         115,636     413,817     407,766  

Selling, general and administrative (excluding depreciation and amortization shown separately below)

    225,875     215,059     142,079         47,608     192,618     211,512  

Costs of products sold

    80,169     77,286     66,965         12,132     75,296     84,680  

Depreciation and amortization

    148,045     168,999     118,349         45,675     141,707     135,439  

Loss on disposal of assets

    8,105     7,615     11,727         1,923     11,135     17,123  

Gain on sale of investee

    (67,319 )                        

Interest expense, net

    46,624     65,217     53,842         74,134     105,435     183,028  

Equity in loss (income) of investee

    2,222     3,111     1,372         (594 )   (3,122 )   806  

Loss (gain) on debt extinguishment, net

    587     46,520     18,493                 (107,743 )

Other expense (income), net

    612     73     956         (802 )   17,304     14,627  

Restructure (recovery) costs

    (47 )   25,086     37,417                  
                               

Income (loss) from continuing operations before reorganization items, income taxes and discontinued operations

    213,780     6,334     104,062         (167,635 )   (55,258 )   58,557  

Reorganization items, net

    2,168     2,455     7,479         (819,473 )   101,928      
                               

Income (loss) from continuing operations before income taxes, and discontinued operations

    211,612     3,879     96,583         651,838     (157,186 )   58,557  

Income tax (benefit) expense

    (172,228 )   (8,065 )   11,177         112,648     2,902     116,630  
                               

Income (loss) from continuing operations before discontinued operations

    383,840     11,944     85,406         539,190     (160,088 )   (58,073 )

Income (loss) from discontinued operations

    7,273     1,201     (565 )       9,759     (34,007 )   (21,016 )
                               

Net income (loss)

    391,113     13,145     84,841         548,949     (194,095 )   (79,089 )

Less: Net income attributable to noncontrolling interests

    (37,104 )   (35,805 )   (34,788 )       (76 )   (35,072 )   (40,728 )
                               

Net income (loss) attributable to Six Flags Entertainment Corporation

  $ 354,009   $ (22,660 ) $ 50,053       $ 548,873   $ (229,167 ) $ (119,817 )
                               

Net income (loss) applicable to Six Flags Entertainment Corporation common stockholders

  $ 354,009   $ (22,660 ) $ 50,053       $ 548,873   $ (245,509 ) $ (141,787 )
                               

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  Successor    
  Predecessor  
 
  Year Ended
December 31,
   
   
   
  Year Ended
December 31,
 
 
  Eight Months
Ended
December 31,
2010
   
  Four Months
Ended
April 30,
2010
 
 
   
 
 
  2012   2011    
  2009   2008  
 
   
 

Net income (loss) per common share outstanding—basic:(1)

                                         

Income (loss) from continuing operations applicable to Six Flags Entertainment Corporation common stockholders

  $ 6.44   $ (0.43 ) $ 0.92       $ 5.50   $ (2.16 ) $ (1.25 )

Income (loss) from discontinued operations applicable to Six Flags Entertainment Corporation common stockholders

    0.13     0.02     (0.01 )       0.10     (0.35 )   (0.21 )
                               

Net income (loss) applicable to Six Flags Entertainment Corporation common stockholders

  $ 6.57   $ (0.41 ) $ 0.91       $ 5.60   $ (2.51 ) $ (1.46 )
                               

Weighted average number of common shares outstanding—basic(1)

    53,842     55,075     55,300         98,054     97,720     96,950  

Net income (loss) per common share outstanding—diluted:(1)

                                         

Income (loss) from continuing operations applicable to Six Flags Entertainment Corporation common stockholders

  $ 6.25   $ (0.43 ) $ 0.92       $ 5.50   $ (2.16 ) $ (1.25 )

Income (loss) from discontinued operations applicable to Six Flags Entertainment Corporation common stockholders

    0.13     0.02     (0.01 )       0.10     (0.35 )   (0.21 )
                               

Net income (loss) applicable to Six Flags Entertainment Corporation common stockholders

  $ 6.38   $ (0.41 ) $ 0.91       $ 5.60   $ (2.51 ) $ (1.46 )
                               

Weighted average number of common shares outstanding—diluted(1)

    55,468     55,075     55,300         98,054     97,720     96,950  
                               

Cash dividends declared per common share

  $ 2.70   $ 0.18     0.03                  
                               

(1)
All Successor per share amounts have been retroactively adjusted to reflect holdings' two-for-one stock split in June 2011, as described in Note 12 to the Consolidated Financial Statements.

 
  Successor    
  Predecessor  
 
  December 31,    
  December 31,  
 
  2012   2011   2010    
  2009   2008  
 
   
 

Balance Sheet Data:

                                   

Cash and cash equivalents(1)

  $ 629,208   $ 231,427   $ 187,061       $ 164,830   $ 210,332  

Total assets

  $ 3,056,391   $ 2,648,178   $ 2,733,253       $ 2,907,652   $ 3,030,129  

Total long-term debt (excluding current maturities)(2)

  $ 1,398,966   $ 921,940   $ 938,195       $ 1,966,754   $ 2,044,230  

Total debt(2)

  $ 1,405,206   $ 957,236   $ 971,154       $ 2,406,580   $ 2,298,200  

Redeemable noncontrolling interests

  $ 437,941   $ 440,427   $ 441,655       $ 355,933   $ 414,394  

Mandatorily redeemable preferred stock (represented by the PIERS)

  $   $   $       $ 306,650   $ 302,382  

Stockholders' equity (deficit)

  $ 892,219   $ 763,478   $ 863,708       $ (584,174 ) $ (376,499 )

Noncontrolling interests(3)

  $ 3,934   $ 3,670   $ 4,455              

(1)
Excludes restricted cash.

(2)
Includes debt classified in liabilities subject to compromise at December 31, 2009.

(3)
Reflects impact of the FASB ASC 810 adoption on January 1, 2010. See Note 6 to the Consolidated Financial Statements.

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ITEM 7.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

        Significant components of the Management's Discussion and Analysis of Financial Condition and Results of Operations section include:

    Overview.  The overview section provides a summary of Six Flags and the principal factors affecting our results of operations.

    Critical Accounting Policies.  The critical accounting policies section provides detail with respect to accounting policies that are considered by management to require significant judgment and use of estimates and that could have a significant impact on our financial statements.

    Recent Events.  The recent events section provides a brief description of recent events occurring in our business.

    Results of Operations.  The results of operations section provides an analysis of our results for the years ended December 31, 2012 and 2011, the eight months ended December 31, 2010 and the four months ended April 30, 2010. The four months ended April 30, 2010 and the eight months ended December 31, 2010 are distinct reporting periods as a result of our emergence from bankruptcy on April 30, 2010. In addition, we provide a discussion of items affecting the comparability of our financial statements.

    Liquidity, Capital Commitments and Resources.  The liquidity, capital commitments and resources section provides a discussion of our cash flows for the year ended December 31, 2012 and of our outstanding debt and commitments existing as of December 31, 2012.

    Market Risks and Security Analyses.  We are principally exposed to market risk related to interest rates and foreign currency exchange rates, which are described in the market risks and security analyses section.

    Recently Issued Accounting Pronouncements.  This section provides a discussion of recently issued accounting pronouncements applicable to Six Flags, including a discussion of the impact or potential impact of such standards on our financial statements when applicable.

        The following discussion and analysis contains forward-looking statements relating to future events or our future financial performance, which involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements. Please see the discussion regarding forward-looking statements included under the caption "Cautionary Note Regarding Forward-Looking Statements" and "Item 1A. Risk Factors" for a discussion of some of the uncertainties, risks and assumptions associated with these statements.

        The following discussion and analysis presents information that we believe is relevant to an assessment and understanding of our consolidated financial position and results of operations. This information should be read in conjunction with the Consolidated Financial Statements and the notes thereto. The Consolidated Financial Statements and this discussion and analysis reflect the effects of our reclassification of the assets, liabilities and results of parks previously divested, including our Louisville and New Orleans parks, as discontinued operations.

        See Note 1 to the Consolidated Financial Statements regarding the impact of the Chapter 11 Filing in June 2009 and our emergence on April 30, 2010.

Overview

        We are the largest regional theme park operator in the world based on the number of parks we operate. Of our 18 regional theme and water parks, 16 are located in the United States, one is located in Mexico City, Mexico and one is located in Montreal, Canada. Our parks are located in

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geographically diverse markets across North America and they generally offer a broad selection of state-of-the-art and traditional thrill rides, water attractions, themed areas, concerts and shows, restaurants, game venues and retail outlets, thereby providing a complete family-oriented entertainment experience. We work continuously to improve our parks and our guests' experiences and to meet our guests' evolving needs and preferences.

        Our revenue is primarily derived from (i) the sale of tickets for entrance to our parks (approximately 54% of revenue in 2012), (ii) the sale of food and beverages, merchandise, games and attractions, parking and other services inside our parks, and (iii) sponsorship, licensing and other fees. Revenues from ticket sales and in park sales are primarily impacted by park attendance. Revenues from sponsorship, licensing and other fees can be impacted by the term, timing and extent of services and fees under these arrangements, which can result in fluctuations from year to year. During 2012, our park earnings before interest, tax expense, depreciation and amortization (Park EBITDA) improved as a result of increased revenues. The increase in revenue was driven by a 6% increase in attendance during 2012. Our cash operating costs increased primarily as a result of labor and fringe benefit costs associated with the increased volume demands and incentive compensation.

        Our principal costs of operations include salaries and wages, employee benefits, advertising, outside services, maintenance, utilities and insurance. A large portion of our expenses is relatively fixed because our costs for full-time employees, maintenance, utilities, advertising and insurance do not vary significantly with attendance.

Critical Accounting Policies

        In the ordinary course of business, we make a number of estimates and assumptions relating to the reporting of results of operations and financial condition in the preparation of the Consolidated Financial Statements in conformity with GAAP. Results could differ significantly from those estimates under different assumptions and conditions. We believe that the following discussion addresses our critical accounting policies, which are those that are most important to the portrayal of our consolidated financial condition and results and require management's most difficult, subjective and complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain.

Accounting for the Chapter 11 Filing

        We follow the accounting prescribed by FASB ASC 852, which provides guidance for periods subsequent to a Chapter 11 filing regarding the presentation of liabilities that are and are not subject to compromise by the Bankruptcy Court proceedings, as well as the treatment of interest expense and presentation of costs associated with the proceedings.

        In accordance with FASB ASC 852, debt discounts or premiums as well as debt issuance costs should be viewed as valuations of the related debt. When the debt has become an allowed claim and the allowed claim differs from the carrying amount of the debt, the recorded carrying amount should be adjusted to the allowed claim. During the second quarter of 2009, we wrote-off costs that were associated with unsecured debt that was included in liabilities subject to compromise at April 30, 2010. Premiums and discounts as well as debt issuance cost on debt that was not subject to compromise, such as fully secured claims, were not adjusted.

        Because the former stockholders of SFI owned less than 50% of the voting shares after SFI emerged from bankruptcy, we adopted fresh start accounting effective May 1, 2010 whereby our assets and liabilities were recorded at their estimated fair value using the principles of purchase accounting contained in FASB ASC Topic 805. The difference between our estimated fair value and our identifiable assets and liabilities was recorded as goodwill. See Note 1(b) to the Consolidated Financial Statements for a discussion of application of fresh start accounting and effects of the Plan. The

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implementation of the Plan and the application of fresh start accounting as discussed in Note 1(b) to the Consolidated Financial Statements results in financial statements that are not comparable to financial statements in periods prior to emergence.

Property and Equipment

        With the adoption of fresh start accounting on April 30, 2010, property and equipment was revalued based on the new replacement cost less depreciation valuation methodology. See Note 1(b) to the Consolidated Financial Statements for assumptions used in determining the fair value of property and equipment under fresh start accounting. Property and equipment additions are recorded at cost and the carrying value is depreciated on a straight-line basis over the estimated useful lives of those assets. Changes in circumstances such as technological advances, changes to our business model or changes in our capital strategy could result in the actual useful lives differing from our estimates. In those cases in which we determine that the useful life of property and equipment should be shortened, we depreciate the remaining net book value in excess of the salvage value over the revised remaining useful life, thereby increasing depreciation expense evenly through the remaining expected life.

Valuation of Long-Lived Assets

        Long-lived assets totaled $2,261.4 million at December 31, 2012, consisting of property and equipment ($1,254.6 million), goodwill ($630.2 million) and other intangible assets ($376.6 million). With our adoption of fresh start accounting upon emergence, assets were initially revalued based on the fair values of long-lived assets. See Note 1(b) to the Consolidated Financial Statements for assumptions used in determining fair value of long-lived assets under fresh start accounting.

        Goodwill and intangible assets with indefinite useful lives are tested for impairment annually, or more frequently if indicators are identified that an asset may be impaired. We identify our reporting units and determine the carrying value of each reporting unit by assigning the assets and liabilities, including the existing goodwill and intangible assets, to those reporting units. We then determine the fair value of each reporting unit and compare it to the carrying amount of the reporting unit. We are a single reporting unit. For each year, the fair value of the single reporting unit exceeded our carrying amount (based on a comparison of the market price of our common stock to the carrying amount of our stockholders' equity (deficit)). Accordingly, no impairment was required.

        If the fair value of the reporting unit were to be less than the carrying amount, we would compare the implied fair value of the reporting unit goodwill with the carrying amount of the reporting unit goodwill. The implied fair value of goodwill is determined by allocating the fair value of the reporting unit to all of the assets (recognized and unrecognized) and liabilities of the reporting unit in a manner similar to a purchase price allocation. The residual fair value after this allocation is the implied fair value of the reporting unit goodwill.

        We review long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset or group of assets to future net cash flows expected to be generated by the asset or group of assets. If such assets are not considered to be fully recoverable, any impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell.

Accounting for Income Taxes

        As part of the process of preparing the Consolidated Financial Statements, we are required to estimate our income taxes in each of the jurisdictions in which we operate. This process involves us estimating our actual current tax exposure together with assessing temporary differences resulting from

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differing treatment of items, such as depreciation periods for our property and equipment and recognition of our deferred revenue, for tax and financial accounting purposes. These differences result in deferred tax assets and liabilities, which are included in our consolidated balance sheet. We must then assess the likelihood that our deferred tax assets (primarily net operating loss carryforwards) will be recovered by way of offset against taxable income. To the extent we believe that recovery is not likely, we must establish a valuation allowance. To the extent we establish a valuation allowance or increase or decrease this allowance in a period, we must reflect such amount as income tax expense or benefit in the consolidated statements of operations.

        Significant management judgment is required in determining our provision or benefit for income taxes, our deferred tax assets and liabilities and any valuation allowance recorded against our net deferred tax assets. We have recorded a valuation allowance of $169.9 million, $426.6 million and $420.1 million at December 31, 2012, December 31, 2011 and December 31, 2010, respectively, due to uncertainties related to our ability to utilize some of our deferred tax assets, primarily consisting of certain net operating loss carryforwards and tax credits, before they expire. The valuation allowance at December 31, 2012 is primarily related to state net operating loss carryforwards that cannot be used because we no longer have operations in the states where they were generated. The valuation allowance at December 31, 2011 and December 31, 2010 was based on our estimates of taxable income solely from the reversal of existing deferred tax liabilities by jurisdiction in which we operate and the period over which deferred tax assets reverse. In the event that actual results differ from these estimates or we adjust these estimates in future periods, we may need to increase or decrease our valuation allowance which could materially impact our consolidated financial position and results of operations.

        Variables that will impact whether our deferred tax assets will be utilized prior to their expiration include, among other things, attendance, per capita spending and other revenues, capital expenditures, levels of debt, interest rates, operating expenses, sales of assets, and changes in state or federal tax laws. In determining the valuation allowance we do not consider, and under generally accepted accounting principles cannot consider, the possible changes in state or federal tax laws until the laws change. To the extent we reduce capital expenditures, our future accelerated tax deductions for our rides and equipment will be reduced, and our interest expense deductions would decrease as the debt balances are reduced by cash flow that previously would have been utilized for capital expenditures. Increases in capital expenditures without corresponding increases in net revenues would reduce short-term taxable income and increase the likelihood of additional valuation allowances being required as net operating loss carryforwards expire prior to their utilization. Conversely, increases in revenues in excess of operating expenses would reduce the likelihood of additional valuation allowances being required as the short-term taxable income would increase net operating loss carryforwards prior to their expiration. See Note 3(s) to the Consolidated Financial Statements. Subsequent to our emergence from Chapter 11 proceedings, our profitability has increased which has allowed us to begin to project future taxable income after 2012 and assess our valuation allowance as well.

Recent Events

        On December 21, 2012, Holdings issued $800.0 million of 5.25% senior unsecured notes due January 15, 2021 (the "2021 Notes"). Also, on December 21, 2012, we entered into an amendment to the 2011 Credit Facility (the "2012 Credit Facility Amendment") that among other things, permitted us to (i) issue the 2021 Notes, (ii) use $350.0 million of the proceeds of the 2021 Notes issuance to repay the $72.2 million that was outstanding under the Term Loan A and $277.8 million of the outstanding balance of the Term Loan B, (iii) use the remaining $450.0 million of proceeds from the 2021 Notes issuance for share repurchases and other corporate matters, and (iv) reduce the interest rate payable on the Term Loan B by 25 basis points. In connection with the 2012 Credit Facility Amendment, the issuance of the 2021 Notes and the repayment of the Term Loan A and a portion of the Term Loan B, we recorded a $0.6 million loss on debt extinguishment for the year ended December 31, 2012.

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        On December 20, 2011, we entered into a new $1,135.0 million credit agreement (the "2011 Credit Facility"), which replaced the First Lien Amendment and related facilities. The 2011 Credit Facility was comprised of a $200.0 million revolving credit loan facility (the "2011 Revolving Loan"), a $75.0 million Tranche A Term Loan facility (the "Term Loan A") and an $860.0 million Tranche B Term Loan facility (the "Term Loan B" and together with the Term Loan A, the "2011 Term Loans") prior to being amended on December 21, 2012. In certain circumstances, the Term Loan B can be increased by $300.0 million. In connection with the 2011 Credit Facility, we terminated the Senior Credit Facility, repaid in full the $950.0 million Senior Term Loan, and recorded a $42.2 million loss on debt extinguishment for the year ended December 31, 2011. See Note 8 to the Consolidated Financial Statements.

        One of our fundamental business goals is to generate superior returns for our stockholders over the long term. As part of our strategy to achieve this goal, we declared and paid quarterly cash dividends in the fourth quarter of 2010 and each quarter during 2011 and 2012. In February 2012, Holdings' Board of Directors increased the quarterly cash dividend from $0.06 per share of common stock to $0.60 per share. In October 2012, Holdings' Board of Directors further increased the quarterly cash dividend from $0.60 per share of common stock to $0.90 per share.

Results of Operations

        Summary data for the year ended December 31, 2012, December 31, 2011, the eight months ended December 31, 2010 and the four months ended April 30, 2010 are set forth in the below table (in thousands, except per capita revenue). The four months ended April 30, 2010 and the eight months ended December 31, 2010 are distinct reporting periods as a result of our emergence from bankruptcy

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on April 30, 2010. References in results of operations and percentage change combine the two periods in order to provide comparability of such information to the year ended December 31, 2011.

 
  Successor    
  Predecessor   Percentage
Changes
 
 
  Year Ended
December 31,
2012
  Year Ended
December 31,
2011
  Eight Months
Ended
December 31,
2010
   
  Four Months
Ended
April 30,
2010
  2012
vs
2011
  2011
vs
2010
 

Total revenue

  $ 1,070,332   $ 1,013,174   $ 847,812       $ 128,077     6 %   4 %
                                   

Operating expenses

    411,679     397,874     292,550         115,636     3     (3 )

Selling, general and administrative

    225,875     215,059     142,079         47,608     5     13  

Cost of products sold

    80,169     77,286     66,965         12,132     4     (2 )

Depreciation and amortization

    148,045     168,999     118,349         45,675     (12 )   3  

Loss on disposal of assets

    8,105     7,615     11,727         1,923     6     (44 )

Gain in sale of investee

    (67,319 )                   N/M     N/M  

Interest expense, net

    46,624     65,217     53,842         74,134     (29 )   (49 )

Equity in loss (income) of investee

    2,222     3,111     1,372         (594 )   (29 )   N/M  

Loss on debt extinguishment

    587     46,520     18,493             N/M     152  

Other expense (income), net

    612     73     956         (802 )   N/M     (53 )

Restructure costs

    (47 )   25,086     37,417             N/M     (33 )
                                   

Income (loss) from continuing operations before reorganization items and income taxes

    213,780     6,334     104,062         (167,635 )   3,275     (110 )

Reorganization items, net

    2,168     2,455     7,479         (819,473 )   (12 )   (67 )
                                   

Income (loss) from continuing operations before income taxes

    211,612     3,879     96,583         651,838     5,355     (99 )

Income tax (benefit) expense

    (172,228 )   (8,065 )   11,177         112,648     N/M     (107 )
                                   

Income (loss) from continuing operations

  $ 383,840   $ 11,944   $ 85,406       $ 539,190     3,114     (98 )
                                   

Other Data:

                   

Attendance

    25,735     24,295     21,272         3,018     6      

Total revenue per capita

  $ 41.59   $ 41.70   $ 39.86       $ 42.43         4  

Year Ended December 31, 2012 vs. Year Ended December 31, 2011

        Revenue.    Revenue in 2012 totaled $1,070.3 million compared to $1,013.2 million in 2011, representing a 6% increase. The increase in revenues is attributable to a 1.4 million (6%) increase in attendance, partially offset by an $0.11 (0%) decrease in total revenue per capita primarily related to a significantly higher mix of season pass attendance, the negative exchange rate impact on revenue at our parks located in Mexico City and Montreal and decreased sponsorship revenues. The increase in attendance was driven by our strategy to increase season pass sales and the successful marketing of our new rides and attractions. Per capita guest spending increased $0.08 (0%) to $39.41 in 2012 from $39.33 in the prior year. In the first quarter of 2012, we received business interruption insurance proceeds from a claim relating to Hurricane Irene totaling $3.0 million. Excluding the insurance proceeds benefit and the unfavorable foreign currency exchange rate impacts, total guest spending per capita increased $0.16 (0%).

        Admissions revenue per capita was up $0.11 (0%) in 2012 compared to the prior year, and reflects primarily a 6% increase in attendance (primarily due to season pass visitation, which lowers per capita spending but increases overall admissions revenue), that was partially offset by (i) increased prices and reduced discounts and (ii) the ticket-related portion of the Hurricane Irene insurance proceeds in the

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prior year period. The increase in attendance drove increased revenues from food and beverage, rentals, retail, parking and other guest services, but the increased mix of season pass attendance and the negative foreign currency exchange rate impact related to our parks in Mexico City and Montreal resulted in a $0.04 (0%) decrease in non-admissions per capita guest spending in 2012, including the non-admission portion of the insurance proceeds. The non-admissions per capita spending was negatively impacted by $0.10 of foreign currency exchange fluctuation at our parks in Mexico City and Montreal.

        Operating Expenses.    Operating expenses for 2012 increased $13.8 million (3%) compared to operating expenses in 2011. This increase was primarily driven by increases in (i) salaries, wages and benefits ($13.8 million), and (ii) an increase in operating tax expense primarily related to a refund that was received in 2011 ($1.6 million), offset by a favorable exchange rate impact at our parks in Mexico City and Montreal ($1.6 million).

        Selling, general and administrative.    Selling, general and administrative expenses for 2012 increased $10.8 million (5%) compared to 2011. The increase primarily reflects an increase in salaries, wages and benefits ($16.0 million) primarily related to an ($8.6 million) increase in stock-based compensation, partially offset by (i) reduced insurance costs ($2.2 million), (ii) the favorable settlement of an old property claim ($1.3 million), (iii) a decrease in advertising expense ($0.7 million) and (iv) a favorable exchange rate impact at our parks in Mexico City and Montreal ($0.6 million).

        Costs of products sold.    Costs of products sold in 2012 increased $2.9 million (4%) compared to 2011, primarily due to increased revenues in food and beverage and retail partially offset by a favorable exchange rate impact at our parks in Mexico City and Montreal. As a percentage of our in-park guest spending (excluding the Six Flags Great Escape Lodge and Indoor Waterpark), cost of products sold decreased in 2012 compared to 2011.

        Depreciation and amortization.    Depreciation and amortization expense for 2012 decreased $21.0 million (12%) compared to 2011. The decrease in depreciation and amortization expense is attributable to assets that were fully depreciated and amortized in 2012 as compared to 2011.

        Loss on disposal of assets.    Loss on disposal of assets increased by $0.5 million in 2012 compared to 2011 primarily related to the loss associated with the transfer to an unrelated third party of our killer whale formerly located at Six Flags Discovery Kingdom, partially offset by a gain recognized from insurance proceeds received in the first quarter of 2012 for certain assets at our East Coast parks damaged by Hurricane Irene during the third quarter of 2011.

        Gain on sale of investee.    Gain on sale of investee for 2012 of $67.3 million was related to the sale of our interest in DCP.

        Interest expense, net.    Interest expense, net, for 2012 decreased $18.6 million (29%) compared to 2011, primarily reflecting reduced interest rates resulting from the December 2011 debt refinancing transaction, partially offset by increased interest expense resulting from the 2021 Notes issuance that closed in December 2012.

        Equity in loss (income) of investee.    The $0.9 million decrease in equity in loss of investee in 2012 compared to 2011 is attributable to selling our interest in DCP in September 2012.

        Loss on debt extinguishment.    The $0.6 million loss on debt extinguishment in 2012 was recognized on the repayment in full and termination of the $72.2 million Term Loan A and the partial repayment of $277.8 million of the Term Loan B during the 2012 Credit Facility Amendment.

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        The $46.5 million loss on debt extinguishment in 2011 was primarily the result of the repayment in full and termination of the $950.0 million Senior Term Loan and the termination of the TW Loan in December 2011 in conjunction with the 2011 Credit Facility.

        Restructure recovery (costs).    During 2012 we recovered the remaining restructure costs that were accrued in 2011. During 2011, restructure costs incurred were attributable to a $23.7 million settlement reached with our former Executive Vice President and Chief Financial Officer during May 2011. During the year ended December 31, 2011, we recorded $25.1 million of restructuring charges for the aforementioned settlement and related costs after consideration of amounts previously accrued.

        Reorganization items, net.    During 2012 and 2011, we incurred $2.2 million and $2.5 million, respectively, of reorganization items for costs and expenses directly related to the reorganization including fees associated with advisors to the Debtors, certain creditors and the Creditors' Committee (as such term is defined in the Plan). As of December 31, 2012 all of our cases have been closed and there should be minimal reorganization costs, if any, in future periods.

        Income tax (benefit) expense.    Income tax benefit was $172.2 million in 2012 and $8.1 million for 2011. The 2012 benefit was the result of the release of our valuation allowance that we had on certain of our deferred tax assets. We released the valuation allowance because of our 2012 taxable income generated and our future taxable income projections showed full utilization of our federal net operating loss ("NOL") carryforwards and partial utilization of our state NOL carryforwards before they expired. As a result, we believe that it is more likely than not that we will utilize our deferred tax assets prior to their expiration. The benefit in 2011 was primarily related to reflecting the utilization of NOL carryforwards during 2011. At December 31, 2012, we estimate we had approximately $0.9 billion of NOL carryforwards for federal income tax purposes and $4.7 billion of NOL carryforwards for state income tax purposes. See Note 3(s) and Note 11 to the Consolidated Financial Statements.

Year Ended December 31, 2011 vs. Year Ended December 31, 2010

        Revenue.    Revenue in 2011 increased $37.3 million (4%) to $1,013.2 million compared to $975.9 million in 2010 reflecting increased per capita guest spending. Per capita guest spending, which excludes sponsorship, licensing, accommodations at the Six Flags Great Escape Lodge and other fees, increased $1.78 (5%) to $39.33 in 2011 compared to $37.55 in 2010. Admissions revenue per capita increased $1.24 (6%) to $22.30 in 2011 compared to $21.06 in 2010, and was driven primarily by improved yield on single day tickets and season pass pricing coupled with a favorable exchange rate impact on admissions revenue per capita at our parks in Mexico City and Montreal of $0.09. Increased revenues from rentals, food and beverage, retail, paid attractions and catering during 2011 resulted in a $0.54 (3%) increase in non-admissions per capita guest spending compared to the prior year period, of which approximately $0.05 was attributable to the stronger Mexican peso and Canadian dollar.

        Operating Expenses.    Operating expenses for 2011 decreased $10.3 million (3%) compared to operating expenses in 2010. This decrease was primarily driven by decreases in (i) salaries, wages and benefits ($5.7 million), (ii) utilities ($3.3 million), (iii) contract shows ($1.8 million), and (iv) royalty expense ($1.4 million). These decreases were primarily related to our ongoing cost reduction program, our planned reduction in low margin operating days and a reduction in operating days due to adverse weather and were partially offset by an unfavorable exchange rate impact at our parks in Mexico City and Montreal ($1.7 million).

        Selling, general and administrative.    Selling, general and administrative expenses for 2011 increased $25.4 million (13%) compared to 2010. The increase primarily reflects an increase in non-cash stock-based compensation ($34.9 million) partially offset by (i) a decrease in advertising expense ($6.7 million) and (ii) a decrease in consulting services ($2.7 million).

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        Costs of products sold.    Costs of products sold in 2011 decreased $1.8 million (2%) compared to 2010, primarily due to our strategic decision to replace external vendors with in-house operations, which led to an improvement in gross margins.

        Depreciation and amortization.    Depreciation and amortization expense for 2011 increased $5.0 million (3%) compared to 2010. The increase was primarily attributable to the full year amortization of the intangible assets that were recorded as a result of the application of fresh start accounting.

        Loss on disposal of assets.    Loss on disposal of assets decreased by $6.0 million in 2011 compared to 2010 primarily due to the write-off of a project that was terminated at our park in Jackson, New Jersey in 2010.

        Interest expense, net.    Interest expense, net, for 2011 decreased $62.8 million (49%) compared to 2010, primarily reflecting the $45.3 million of interest accrued on the $400 million outstanding aggregate principal amount of the 2016 Notes to record the liability at the probable estimated allowed claim as of March 31, 2010, as well as a reduction in debt resulting from (i) the confirmation of the Plan, (ii) the August 2010 prepayment on the Exit First Lien Term Loan, and (iii) the December 2010 debt refinancing transaction.

        Equity in loss (income) of investee.    The $2.3 million increase in equity in loss of investee in 2011 compared to 2010 is attributable to our investment in DCP and their reduced net income in 2011 primarily related to increased costs from their ongoing lawsuit with the Hollywood Foreign Press and increased interest expense.

        Loss on debt extinguishment.    The $46.5 million loss on debt extinguishment in 2011 was recognized on the repayment in full and termination of the $950.0 million Senior Term Loan and the termination of the TW Loan in December 2011 in conjunction with the 2011 Credit Facility.

        The $18.5 million loss on debt extinguishment in 2010 was primarily the result of the $17.5 million loss recognized on the repayment in full, and termination, of the $250.0 million senior secured second lien term loan facility in December 2010 in conjunction with the First Lien Amendment. In addition, a $957,000 net loss on debt extinguishment was recognized in August 2010 as a result of the $25.0 million prepayment made on the Exit First Lien Term Loan.

        Restructure costs.    During 2011, restructure costs incurred were attributable to a $23.7 million settlement reached with our former Executive Vice President and Chief Financial Officer during May 2011. During the year ended December 31, 2011, we recorded $25.1 million of restructuring charges for the aforementioned settlement and related costs after consideration of amounts previously accrued. During 2010, restructure costs were $37.4 million, consisting primarily of severance and other costs related to our former Chief Executive Officer and other executives leaving the Company, a company-wide workforce reduction and contract terminations related to our new strategic direction.

        Reorganization items, net.    During 2011, we incurred $2.5 million of reorganization items for costs and expenses directly related to the reorganization including fees associated with advisors to the Debtors, certain creditors and the Creditors' Committee (as such term is defined in the Plan). During 2010, the $812.0 million favorable impact of reorganization items was due to the $1,087.5 million gain on settlement of liabilities subject to compromise recognized on the Effective Date, partially offset by $178.5 million of fresh start accounting adjustments and $89.6 million of other costs and expenses directly related to the reorganization.

        Income tax (benefit) expense.    Income tax benefit was $8.1 million for 2011 compared to an income tax expense of $123.8 million for 2010, primarily reflecting the utilization of NOL carryforwards. At December 31, 2011, we estimate we had approximately $1.1 billion of NOL carryforwards for federal

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income tax purposes and $4.5 billion of NOL carryforwards for state income tax purposes. See Note 3(s) and Note 11 to the Consolidated Financial Statements.

Results of Discontinued Operations

        The consolidated balance sheets and the consolidated statements of operations for all periods presented reflect select assets of the parks that have been sold or operations discontinued, including the Louisville and New Orleans parks, as assets held for sale, select liabilities as liabilities from discontinued operations and the operating results as results of discontinued operations. See Note 4 to the Consolidated Financial Statements for more information on the impact of the disposition of theme parks on our financial position and results of operations.

Liquidity, Capital Commitments and Resources

General

        Our principal sources of liquidity are cash generated from operations, funds from borrowings and existing cash on hand. Our principal uses of cash include the funding of working capital obligations, debt service, investments in parks (including capital projects), common stock dividends, payments to our partners in the Partnership Parks, and common stock repurchases. SFI did not pay a dividend on SFI's common stock during the four months ended April 30, 2010. During the years ended December 31, 2012, 2011 and 2010, Holdings paid $148.3 million, $9.8 million and $1.6 million, respectively, in cash dividends on its common stock. In February 2012, Holdings' Board of Directors increased the quarterly cash dividend from $0.06 per share of common stock to $0.60 per share. In October 2012, Holdings' Board of Directors further increased the quarterly cash dividend from $0.60 per share of common stock to $0.90 per share. The amount and timing of any future dividends payable on Holdings' common stock are within the sole discretion of Holdings' Board of Directors. Based on (i) our current number of shares outstanding and (ii) estimates of share repurchases, restricted stock vesting and option exercises, we currently anticipate paying approximately $175.0 million in cash dividends on our common stock for the 2013 calendar year.

        In February 2011, we initiated a stock repurchase program (the "First Stock Repurchase Plan"), which permitted Holdings to repurchase up to $60 million shares of its common stock over a three-year period. Under the First Stock Repurchase Plan, during the twelve months ended December 31, 2011, Holdings repurchased an aggregate of 1,617,000 shares at a cumulative price of approximately $60.0 million. The small amount of remaining shares that were permitted to be repurchased under the First Stock Repurchase Plan were repurchased in January 2012. On January 3, 2012, Holdings' Board of Directors approved a new stock repurchase program that permitted Holdings to repurchase up to $250.0 million in shares of Holdings' common stock over a four-year period (the "Second Stock Repurchase Plan"). During the twelve months ended December 31, 2012, Holding repurchased an aggregate of 4,249,000 shares at a cumulative price of approximately $232.0 million under the Second Stock Repurchase Plan. As of January 4, 2013, Holdings had repurchased an additional 289,000 shares at a cumulative price of approximately $18.0 million and an average price per share of $62.31 to complete the permitted repurchases under the Second Stock Repurchase Plan. On December 11, 2012, Holdings' Board of Directors approved a new stock repurchase program that permits Holdings to repurchase up to an additional $500.0 million in shares of Holdings' common stock over a three-year period (the "Third Stock Repurchase Plan"). As of February 26, 2013, Holdings has repurchased 3,339,000 shares at a cumulative price of approximately $212.3 million and an average price per share of $63.60 under the Third Stock Repurchase Plan.

        We believe that, based on historical and anticipated operating results, cash flows from operations, available cash and available amounts under the 2011 Credit Facility will be adequate to meet our liquidity needs, including anticipated requirements for working capital, capital expenditures, common

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stock dividends, scheduled debt requirements, obligations under arrangements relating to the Partnership Parks and discretionary common stock repurchases.

        Our current and future liquidity is greatly dependent upon our operating results, which are driven largely by overall economic conditions as well as the price and perceived quality of the entertainment experience at our parks. Our liquidity could also be adversely affected by a disruption in the availability of credit as well as unfavorable weather, contagious diseases, such as swine or avian flu, accidents or the occurrence of an event or condition at our parks, including terrorist acts or threats, negative publicity or significant local competitive events, that could significantly reduce paid attendance and, therefore, revenue at any of our parks. While we work with local police authorities on security-related precautions to prevent certain types of disturbances, we can make no assurance that these precautions will be able to prevent these types of occurrences. However, we believe that our ownership of many parks in different geographic locations reduces the effects of adverse weather or these other types of occurrences on our consolidated results. If such an adverse event were to occur, we may be unable to borrow under the 2011 Revolving Loan or be required to repay amounts outstanding under the 2011 Credit Facility and/or may need to seek additional financing. In addition, we expect that we may be required to refinance all or a significant portion of our existing debt on or prior to maturity and potentially seek additional financing. The degree to which we are leveraged could adversely affect our ability to obtain any additional financing. See "Cautionary Note Regarding Forward-Looking Statements" and "Item 1A. Risk Factors" contained in this Annual Report on Form 10-K.

        As of December 31, 2012, our total indebtedness, net of discount, was approximately $1,405.2 million. Based on (i) non-revolving credit debt outstanding on that date, (ii) anticipated levels of working capital revolving borrowings during 2013, (iii) estimated interest rates for floating-rate debt, and (iv) the 2021 Notes, we anticipate annual cash interest payments will aggregate $49.0 million for 2013 and approximately $70.0 million in 2014. The lower amount for 2013 is primarily due to the timing of interest payments on the 2021 Notes in the first year after they were issued. Under the 2011 Credit Facility, approximately 94% of the 2011 Term Loan B is not due until December 2018.

        As of December 31, 2012, we had approximately $629.2 million of unrestricted cash and $181.8 million available for borrowing under the 2011 Revolving Loan. Our ability to borrow under the 2011 Revolving Loan is dependent upon compliance with certain conditions, including a maximum senior leverage maintenance covenant and a minimum interest coverage 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 2011 Revolving Loan, and we failed to meet our projected results from operations significantly, we might be unable to pay in full our off-season obligations. A default under the 2011 Revolving Loan could permit the lenders under the 2011 Credit Facility to accelerate the obligations thereunder. The 2011 Revolving Loan expires on December 20, 2016. The terms and availability of the 2011 Credit Facility and other indebtedness are not affected by changes in the ratings issued by rating agencies in respect of our indebtedness. For a more detailed description of our indebtedness, see Note 8 to the Consolidated Financial Statements.

        We currently plan on spending approximately 9% of revenues on capital expenditures for the 2013 calendar year.

        During the year ended December 31, 2012, net cash provided by operating activities before reorganization items was $373.4 million. Net cash used in investing activities in 2012 was $27.7 million, consisting primarily of capital expenditures, partially offset by $70.0 million of proceeds we received from the sale of DCP. Net cash provided by financing activities in 2012 was $51.7 million, primarily attributable to the proceeds received from the issuance of the 2021 Notes and the proceeds from the issuance of common stock due to stock option exercises, partially offset by the repurchase of stock, the payment of cash dividends, distributions to our noncontrolling interests, the payment of deferred financing costs and the repayment of borrowings during the 2012 Credit Facility Amendment.

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        Since our business is both seasonal in nature and involves significant levels of cash transactions, our net operating cash flows are largely driven by attendance and per capita spending levels because much of our cash-based expenses are relatively fixed and do not vary significantly with either attendance or per capita spending. These cash-based operating expenses include salaries and wages, employee benefits, advertising, third party services, repairs and maintenance, utilities and insurance.

Long-Term Debt

        Our total debt at December 31, 2012 was $1,405.2 million, which included approximately $800.0 million of the 2021 Notes, $574.1 million under the 2011 Credit Facility and $31.1 million under the HWP Refinance Loan. See Note 8 to the Consolidated Financial Statements for further information on our debt obligations.

Partnership Park Obligations

        We guarantee certain obligations relating to the Partnership Parks. These obligations include (i) minimum annual distributions (including rent) of approximately $66.3 million in 2013 (subject to cost of living adjustments in subsequent years) to the limited partners in the Partnerships Parks (based on our ownership of units as of December 31, 2012, our share of the distribution will be approximately $28.8 million), (ii) minimum capital expenditures at each park during rolling five-year periods based generally on 6% of park revenues, (iii) an annual offer to purchase all outstanding limited partnership units at the Specified Prices, which annual offer must remain open from March 31 through late April of each year, and any limited partnership interest "put" during such time period must be fully paid for no later than May 15th of that year, (iv) making annual ground lease payments, and (v) either (a) purchasing all of the outstanding limited partnership interests in the Partnership Parks through the exercise of a call option upon the earlier of the occurrence of certain specified events and the end of the term of the partnerships that hold the Partnership Parks in 2027 (in the case of Georgia) and 2028 (in the case of Texas), or (b) causing each of the partnerships that hold the Partnership Parks to have no indebtedness and to meet certain other financial tests as of the end of the term of such partnership. See Note 16 to Consolidated Financial Statements for additional information.

        After payment of the minimum distribution, we are entitled to a management fee equal to 3% of prior year gross revenues and, thereafter, any additional cash will be distributed first to management fee in arrears, repayment of any interest and principal on intercompany loans with any additional cash being distributed 95% to us, in the case of SFOG, and 92.5% to us, in the case of SFOT.

Off-Balance Sheet Arrangements and Aggregate Contractual Obligations

        We had guaranteed the payment of a $32.2 million construction term loan incurred by HWP Development LLC ("HWP") for the purpose of financing the construction and development of a hotel and indoor water park located adjacent to The Great Escape theme park in Queensbury, New York, which opened in February 2006. On November 5, 2007, we refinanced the loan with a $33.0 million term loan (the "Refinance Loan") ($31.1 million and $31.5 million of which was outstanding at December 31, 2012 and 2011, respectively), the proceeds of which were used to repay the existing loan. In connection with the refinancing, we replaced our unconditional guarantee with a limited guarantee of the loan, which becomes operative under certain limited circumstances, including the voluntary bankruptcy of HWP or its managing member (in which we own an approximate 49% interest as of December 31, 2012).

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Contractual Obligations

        Set forth below is certain information regarding our debt, lease and purchase obligations at December 31, 2012 (in thousands):

 
  Payment Due by Period  
Contractual Obligations
  2013   2014 - 2015   2016 - 2017   2018 and
beyond
  Total  

Long term debt(1)—including current portion

  $ 6,240   $ 12,644   $ 41,353   $ 1,353,078   $ 1,413,315  

Interest on long-term debt(2)

    49,017     136,605     134,078     169,036     488,736  

Real estate and operating leases(3)

    6,581     11,995     16,408     159,147     194,131  

Purchase obligations(4)

    118,153     7,850     8,600     4,000     138,603  
                       

Total

  $ 179,991   $ 169,094   $ 200,439   $ 1,685,261   $ 2,234,785  
                       

(1)
Payments are shown at principal amount. See Note 8 to the Consolidated Financial Statements for further discussion on long-term debt.

(2)
See Note 8 to the Consolidated Financial Statements for further discussion on long-term debt. Amounts shown reflect variable interest rates in effect at December 31, 2012.

(3)
Assumes for lease payments based on a percentage of revenues, future payments at 2012 revenue levels. Also does not give effect to cost of living adjustments. Obligations not denominated in U.S. Dollars have been converted based on the exchange rates existing on December 31, 2012.

(4)
Represents obligations at December 31, 2012 with respect to insurance, inventory, media and advertising commitments, computer systems and hardware, estimated annual license fees to Warner Bros. (through 2018 only), and new rides and attractions. Of the amount shown for 2013, approximately $67.7 million represents capital items. The amounts in respect of new rides and attractions were computed at December 31, 2012 and include estimates by us of costs needed to complete such improvements that, in certain cases, were not legally committed at that date. Amounts shown do not include obligations to employees that cannot be quantified at December 31, 2012 which are discussed below. Amounts shown also do not include purchase obligations existing at the individual park-level for supplies and other miscellaneous items. None of the park-level obligations is individually material.

Other Obligations

        During the years ended December 31, 2012, 2011 and 2010, we made contributions to our defined benefit pension plan of $6.1 million, $3.7 million and $2.2 million, respectively. To control increases in costs, our pension plan was "frozen" effective March 31, 2006, pursuant to which participants (excluding certain union employees whose benefits have subsequently been frozen) no longer continue to earn future pension benefits. We expect to make contributions of approximately $6.0 million in 2013 to our pension plan based on the 2012 actuarial valuation. We plan to make a contribution to our 401(k) plan in 2013, and our estimated expense for employee health insurance for 2013 is $12.7 million. See Note 13 and Note 14 to the Consolidated Financial Statements for more information on our pension benefit and 401(k) plans.

        The vast majority of our capital expenditures in 2013 and beyond will be made on a discretionary basis. We plan on spending approximately 9% of revenues on capital expenditures for all of our operations in the 2013 season.

        We maintain insurance of the type and in amounts that we believe is commercially reasonable and that is available to businesses in our industry. See "Insurance" under "Item 1. Business." Our insurance

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premiums and self-insurance retention levels have remained relatively constant during the three-year period ending December 31, 2012. We cannot predict the level of the premiums that we may be required to pay for subsequent insurance coverage, the level of any self-insurance retention applicable thereto, the level of aggregate coverage available or the availability of coverage for specific risks.

        We are party to various legal actions arising in the normal course of business. See "Legal Proceedings" for information on certain significant litigation.

        We may from time to time seek to retire our outstanding debt through cash purchases and/or exchanges for equity securities, in open market purchases, privately negotiated transactions or otherwise. Such repurchases or exchanges, if any, will depend on the prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. The amounts involved may be material.

Market Risks and Sensitivity Analyses

        Like other companies, we are exposed to market risks relating to fluctuations in interest rates and currency exchange rates. The objective of our financial risk management is to minimize the negative impact of interest rate and foreign currency exchange rate fluctuations on our operations, cash flows and equity. We do not acquire market risk sensitive instruments for trading purposes.

        In March 2012, we entered into a floating-to-fixed interest rate agreement with a notional amount of $470.0 million in order to limit exposure to an increase in the LIBOR interest rate of the Term Loan B (see Note 8 to the Consolidated Financial Statements). Our Term Loan B borrowings bear interest on LIBOR plus an applicable margin. The interest rate agreement capped the LIBOR component of the interest rate at 1.00%. The term of the agreement began in March 2012 and expires in March 2014. Upon executing the agreement, we designated and documented the interest rate agreement as a cash flow hedge.

        In February 2008, we entered into two interest rate swap agreements that effectively converted $600 million of the term loan component under our Prepetition Credit Agreement into a fixed rate obligation. The terms of the agreements, each of which had a notional amount of $300 million, began in February 2008 and were scheduled to expire in February 2011. Our prepetition term loan borrowings bore interest based upon LIBOR plus a fixed margin. Under our interest rate swap arrangements, our interest rates ranged from 5.325% to 5.358% (with an average of 5.342%). As a result of the Chapter 11 Filing, the interest rate swap agreements were terminated by our counterparties and we recorded a $16.4 million loss in other expense in 2009. On the Effective Date, we settled all obligations under the interest rate swaps. As a result of fresh start accounting, the remaining accumulated other comprehensive income balance was eliminated and recorded as part of the reorganization items. See Note 7 to the Consolidated Financial Statements for more information on our interest rate swaps.

        The following analysis presents the sensitivity of the market value, operations and cash flows of our market-risk financial instruments to hypothetical changes in interest rates as if these changes occurred at December 31, 2012. The range of potential change in the market chosen for this analysis reflects our view of changes that are reasonably possible over a one-year period. Market values are the present values of projected future cash flows based on the interest rate assumptions. These forward-looking disclosures are selective in nature and only address the potential impacts from financial instruments. They do not include other potential effects which could impact our business as a result of these changes in interest and foreign currency exchange rates.

        At December 31, 2012, we had total debt of $1,405.2 million, of which $1,301.1 million represents fixed-rate debt, after giving effect to the floating-to-fixed interest rate agreement that we put in place in March 2012 (see Note 7 to the Consolidated Financial Statements), and the balance represents floating-rate debt. For fixed-rate debt, interest rate changes affect the fair market value but do not

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impact book value, operations or cash flows. Conversely, for floating-rate debt, interest rate changes generally do not affect the fair market value but do impact future operations and cash flows, assuming other factors remain constant.

        Assuming other variables remain constant (such as foreign exchange rates and debt levels), the pre-tax operating and cash flow impact resulting from a one percentage point increase in interest rates would be approximately $1.8 million. See Note 8 to the Consolidated Financial Statements for information on interest rates under our debt agreements.

Recently Issued Accounting Pronouncements

        In September 2012, the FASB issued an amendment to the accounting for goodwill and other intangible assets. This update permits an entity first to assess qualitative factors to determine whether it is more likely than not that an indefinite-lived intangible asset is impaired as a basis for determining whether it is necessary to perform a quantitative impairment test. The more-likely-than-not threshold is defined as having a likelihood of more than 50 percent. The previous guidance required an entity to test indefinite-lived intangible assets for impairment, on at least an annual basis, by comparing the fair value of the asset with its carrying amount. The amendment gives an entity the option not to calculate annually the fair value of an indefinite-lived intangible asset if the entity determines that it is not more likely than not that the asset is impaired. These amendments, which permit an entity to assess qualitative factors when testing indefinite-lived intangible assets for impairment, result in guidance that is similar to the goodwill impairment testing guidance. The new guidance is effective as of the beginning of interim and annual reporting periods that begin after September 15, 2012.

        We adopted the new guidance at September 15, 2012. As a result, we assessed qualitative factors to determine if it was more likely than not that our indefinite-lived trade name intangible asset was impaired at December 31, 2012. Based on our qualitative assessment, we determined that our trade name intangible asset was not impaired at December 31, 2012 and therefore we did not perform a quantitative analysis. See Note 3(o) to the Consolidated Financial Statements.

        In June 2009, the FASB issued an amendment to the accounting for variable interest entities. This update changes the consolidation guidance applicable to a variable interest entity. It also amends the guidance governing the determination of whether an enterprise is the primary beneficiary of a variable interest entity, and is, therefore, required to consolidate an entity, by requiring a qualitative analysis rather than a quantitative analysis. The qualitative analysis will include, among other things, consideration of who has the power to direct the activities of the entity that most significantly impact the entity's economic performance and who has the obligation to absorb losses or the right to receive benefits of the variable interest entity that could potentially be significant to the variable interest entity. This standard also requires continuous reassessments of whether an enterprise is the primary beneficiary of a variable interest entity. Previously, the applicable guidance required reconsideration of whether an enterprise was the primary beneficiary of a variable interest entity only when specific events had occurred. Qualifying special-purpose entities, which were previously exempt from the application of this standard, will be subject to the provisions of this standard when it becomes effective. This update also requires enhanced disclosures about an enterprise's involvement with a variable interest entity. The new guidance is effective as of the beginning of interim and annual reporting periods that begin after November 15, 2009.

        We adopted the new guidance at January 1, 2010. As a result of adopting this update, we consolidated HWP Development, LLC joint venture as of January 1, 2010, which resulted in a $38.8 million and a $33.8 million increase in our assets and liabilities, respectively. The equity interests owned by non-affiliated parties in HWP are reflected in the accompanying consolidated balance sheets as noncontrolling interest. The portion of earnings attributable to the non-affiliated parties is reflected as net income attributable to noncontrolling interest in the accompanying consolidated statements of

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operations for periods ended December 31, 2011, December 31, 2010 and April 30, 2010. The adoption of this updated amendment did not change the accounting treatment of the partnerships that own SFOT and SFOG, which we continued to consolidate. See Note 6 to the Consolidated Financial Statements.

ITEM 7A.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

        The information set forth under "Management's Discussion and Analysis of Financial Condition and Results of Operations—Market Risks and Sensitivity Analyses" of this Annual Report on Form 10-K is incorporated by reference into this Item 7A.

ITEM 8.    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

        The financial statements and schedules listed in Item 15(a)(1) and (2) are included in this Annual Report on Form 10-K beginning on page F-1.

ITEM 9.    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

        We have had no disagreements with our independent registered public accounting firm on any matter of accounting principles or practices or financial statement disclosure.

ITEM 9A.    CONTROLS AND PROCEDURES

Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures

        Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation, as of December 31, 2012, of the effectiveness of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) or 15(d)-15(e) promulgated under 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.

Management's Report on Internal Control Over Financial Reporting

        Management's Report on Internal Control Over Financial Reporting, which appears on page F-2 of this Annual Report on Form 10-K, is incorporated by reference herein.

Changes in Internal Control Over Financial Reporting During the Quarter Ended December 31, 2012

        There were no changes in our internal control over financial reporting that occurred during the quarter ended December 31, 2012 that have materially affected, or are reasonable likely to materially affect, our internal control over financial reporting.

ITEM 9B.    OTHER INFORMATION

        None.

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PART III

ITEM 10.    DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

        The information required by this item regarding our executive officers is provided in "Item 1. Business—Executive Officers and Certain Significant Employees" of this Annual Report on Form 10-K. The information required by this item concerning our directors, compliance with Section 16 of the Exchange Act, our code of ethics and other corporate governance information is incorporated by reference to the information set forth in the sections entitled "Proposal 1: Election of Directors," "Section 16(a) Beneficial Ownership Reporting Compliance" and "Corporate Governance" in our Proxy Statement for our 2013 annual meeting of stockholders to be filed with the SEC not later than 120 days after the fiscal year ended December 31, 2012 (the "2013 Proxy Statement").

ITEM 11.    EXECUTIVE COMPENSATION

        The information required by this item is incorporated by reference to the information set forth in the sections entitled "Executive Compensation," "Corporate Governance" and "Compensation Committee Report" in the 2013 Proxy Statement.

ITEM 12.    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

        The information required by this item concerning security ownership of certain beneficial owners and management is incorporated by reference to the information set forth in the section entitled "Security Ownership of Certain Beneficial Owners and Management" in the 2013 Proxy Statement.

Equity Compensation Plan Information

        The following table contains information as of December 31, 2012 regarding shares of common stock that may be issued under equity compensation plans approved by our stockholders (Employee Stock Purchase Plan and Long-Term Incentive Plan).

Plan Category
  (a)
Number of securities
to be
issued upon exercise
of outstanding options,
warrants and rights
  (b)
Weighted-average
exercise price of
outstanding
options, warrants
and rights
  (c)
Number of securities
remaining available
for future issuance
under equity
compensation plans
 

Equity compensation plans approved by security holders(1)

    4,718,000 (1) $ 30.07 (2)   4,089,000 (3)

Equity compensation plans not approved by security holders

    N/A     N/A     N/A  
                 

Total

    4,718,000   $ 30.07     4,089,000  

(1)
Excludes restricted stock units outstanding under the Company's Long-Term Incentive Plan. We are unable to ascertain with specificity the number of securities to be issued upon exercise of outstanding rights under the Company's Employee Stock Purchase Plan.

(2)
Outstanding rights under the Company's Employee Stock Purchase Plan and restricted stock units under the Company's Long-Term Incentive Plan are not taken into account for purposes of determining the weighted average exercise price.

(3)
Consists of 959,000 shares reserved for issuance under the Company's Employee Stock Purchase Plan and 3,130,000 shares reserved for issuance under Long-Term Incentive Plan. The ESPP allows eligible employees to purchase shares at 90% of the lower of the fair market value on the first or last trading day of each six month offering period. Shares available for issuance under the

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    Long-Term Incentive Plan can be granted pursuant to stock options, stock appreciation rights, restricted stock or units, performance units, performance shares and any other stock based award selected by the committee.

ITEM 13.    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE

            The information required by this item is incorporated by reference to the information set forth in the sections entitled "Transactions with Related Persons" and "Corporate GovernanceIndependence" in the 2013 Proxy Statement.

ITEM 14.    PRINCIPAL ACCOUNTING FEES AND SERVICES

            The information required by this item is incorporated by reference to the information set forth in the section entitled "Audit, Audit-Related and Tax Fees" in the 2013 Proxy Statement.

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PART IV

ITEM 15.    EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

        (a)(1) and (2) Financial Statements and Financial Statement Schedules

        The following Consolidated Financial Statements of Six Flags Entertainment Corporation and its subsidiaries, the notes thereto, the related report thereon of the independent registered public accounting firm, and financial statement schedules are filed under Item 8 of this Annual Report on Form 10-K:

Management's Report on Internal Control Over Financial Reporting

  F-2

Report of Independent Registered Public Accounting Firm

 
F-3

Six Flags Entertainment Corporation Consolidated Balance Sheets—December 31, 2012 and December 31, 2011

 
F-5

Six Flags Entertainment Corporation Consolidated Statements of Operations Year Ended December 31, 2012, December 31, 2011, Eight Months Ended December 31, 2010 (Successor) and Four Months Ended April 30, 2010 (Predecessor)

 
F-6

Six Flags Entertainment Corporation Consolidated Statement of Comprehensive Income (Loss) Year Ended December 31, 2012, December 31, 2011, Eight Months Ended December 31, 2010 (Successor) and Four Months Ended April 30, 2010 (Predecessor)

 
F-7

Six Flags Entertainment Corporation Consolidated Statement of Equity (Deficit) Year Ended December 31, 2012, December 31, 2011, Eight Months Ended December 31, 2010 (Successor) and Four Months Ended April 30, 2010 (Predecessor)

 
F-8

Six Flags Entertainment Corporation Consolidated Statement of Cash Flows Year Ended December 31, 2012, December 31, 2011, Eight Months Ended December 31, 2010 (Successor) and Four Months Ended April 30, 2010 (Predecessor)

 
F-10

Notes to Consolidated Financial Statements

 
F-11

        Schedules for which provision is made in the applicable accounting regulations of the SEC are omitted because they either are not required under the related instructions, are inapplicable, or the required information is shown in the financial statements or notes thereto.

    (a)(3) See Exhibit Index

    (b)
    Exhibits

      See Item 15(a)(3) above.

        Neither Six Flags Entertainment Corporation, nor any of its consolidated subsidiaries, has outstanding any instrument with respect to its long-term debt, other than those filed as an exhibit to this Annual Report on Form 10-K, under which the total amount of securities authorized exceeds 10% of the total assets of Six Flags Entertainment Corporation and its subsidiaries on a consolidated basis. Six Flags Entertainment Corporation hereby agrees to furnish to the SEC, upon request, a copy of each instrument that defines the rights of holders of such long-term debt that is not filed or incorporated by reference as an exhibit to this Annual Report on Form 10-K.

        Six Flags Entertainment Corporation will furnish any exhibit upon the payment of a reasonable fee, which fee will be limited to Six Flags Entertainment Corporation's reasonable expenses in furnishing such exhibit.

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SIGNATURES

        Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: February 27, 2013

  SIX FLAGS ENTERTAINMENT CORPORATION



 

By:

 

/s/ JAMES REID-ANDERSON

James Reid-Anderson
Chairman, President and Chief Executive Officer

        Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the Registrant and in the following capacities on the dates indicated.

Signature
 
Title
 
Date

 

 

 

 

 
/s/ JAMES REID-ANDERSON

James Reid-Anderson
  Chairman of the Board, President and Chief Executive Officer (Principal Executive Officer)   February 27, 2013

/s/ JOHN M. DUFFEY

John M. Duffey

 

Executive Vice President and Chief Financial Officer (Principal Financial Officer)

 

February 27, 2013

/s/ LEONARD A. RUSS

Leonard A. Russ

 

Vice President and Chief Accounting Officer (Principal Accounting Officer)

 

February 27, 2013

/s/ JOHN W. BAKER

John W. Baker

 

Director

 

February 27, 2013

/s/ KURT CELLAR

Kurt Cellar

 

Director

 

February 27, 2013

/s/ CHARLES A. KOPPELMAN

Charles A. Koppelman

 

Director

 

February 27, 2013

/s/ JON L. LUTHER

Jon L. Luther

 

Director

 

February 27, 2013

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Signature
 
Title
 
Date

 

 

 

 

 
/s/ USMAN NABI

Usman Nabi
  Director   February 27, 2013

/s/ STEPHEN D. OWENS

Stephen D. Owens

 

Director

 

February 27, 2013

/s/ RICHARD W. ROEDEL

Richard W. Roedel

 

Director

 

February 27, 2013

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SIX FLAGS ENTERTAINMENT CORPORATION

Index to Consolidated Financial Statements

Management's Report on Internal Control Over Financial Reporting

  F-2

Report of Independent Registered Public Accounting Firm

 
F-3

Six Flags Entertainment Corporation Consolidated Balance Sheets—December 31, 2012 and December 31, 2011 (Successor)

 
F-5

Six Flags Entertainment Corporation Consolidated Statements of Operations Year Ended December 31, 2012, December 31, 2011, Eight Months Ended December 31, 2010 (Successor) and Four Months Ended April 30, 2010 (Predecessor)

 
F-6

Six Flags Entertainment Corporation Consolidated Statements of Comprehensive Income (Loss) Year Ended December 31, 2012, December 31, 2011, Eight Months Ended December 31, 2010 (Successor) and Four Months Ended April 30, 2010 (Predecessor)

 
F-7

Six Flags Entertainment Corporation Consolidated Statements of Equity (Deficit) Year Ended December 31, 2012, December 31, 2011, Eight Months Ended December 31, 2010 (Successor) and Four Months Ended April 30, 2010 (Predecessor)

 
F-8

Six Flags Entertainment Corporation Consolidated Statements of Cash Flows Year Ended December 31, 2012, December 31, 2011, Eight Months Ended December 31, 2010 (Successor) and Four Months Ended April 30, 2010 (Predecessor)

 
F-10

Notes to Consolidated Financial Statements

 
F-11

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Management's Report on Internal Control Over Financial Reporting

        Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f). Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on our evaluation under the framework in Internal Control—Integrated Framework, our management concluded that our internal control over financial reporting was effective as of December 31, 2012.

        The effectiveness of our internal control over financial reporting as of December 31, 2012 has been audited by KPMG LLP, the independent registered public accounting firm that audited our financial statements included herein, as stated in their report which is included herein.

    /s/ JAMES REID-ANDERSON

James Reid-Anderson
President and Chief Executive Officer

 

 

/s/ JOHN M. DUFFEY

John M. Duffey
Executive Vice President and Chief Financial Officer

February 27, 2013

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Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders
Six Flags Entertainment Corporation:

        We have audited the accompanying consolidated balance sheets of Six Flags Entertainment Corporation and subsidiaries (the Company) as of December 31, 2012 and 2011, and the related consolidated statements of operations, equity (deficit), comprehensive income (loss), and cash flows for the years ended December 31, 2012 and 2011 (Successor), the eight months ended December 31, 2010 (Successor), and the four months ended April 30, 2010 (Predecessor). We also have audited the Company's internal control over financial reporting as of December 31, 2012, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on these consolidated financial statements and an opinion on the Company's internal control over financial reporting based on our audits.

        We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the consolidated financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

        A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

        Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

        In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2012 and 2011, and the results of its operations and its cash flows for the years ended December 31, 2012 and 2011 (Successor), the eight months ended December 31, 2010 (Successor), and the four months ended April 30, 2010 (Predecessor), in conformity with U.S. generally accepted accounting principles. Also in

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our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2012, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

        As discussed in Note 1 to the consolidated financial statements, the Company filed a petition for reorganization under Chapter 11 of the United States Bankruptcy Code on June 13, 2009. The Company's plan of reorganization became effective and the Company emerged from bankruptcy protection on April 30, 2010. In connection with its emergence from bankruptcy, the Company adopted the guidance for fresh start accounting in conformity with FASB ASC Topic 852, Reorganizations, effective as of April 30, 2010. Accordingly, the Company's consolidated financial statements prior to April 30, 2010 are not comparable to its consolidated financial statements for periods after April 30, 2010.

        As described in Note 3 to the consolidated financial statements, the Company changed its method of evaluating variable interest entities as of January 1, 2010 due to the adoption of a new accounting pronouncement issued by the Financial Accounting Standards Board.

KPMG LLP

Dallas, Texas
February 27, 2013

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SIX FLAGS ENTERTAINMENT CORPORATION

Consolidated Balance Sheets

(in thousands)

 
  December 31,  
 
  2012   2011  

ASSETS

             

Current assets:

             

Cash and cash equivalents

 
$

629,208
 
$

231,427
 

Accounts receivable

    29,523     18,461  

Inventories

    22,280     20,973  

Prepaid expenses and other current assets

    37,490     38,668  

Deferred income taxes

    44,973      
           

Total current assets

    763,474     309,529  

Other assets:

             

Debt issuance costs

    26,043     13,026  

Restricted-use investment securities

    1,218     513  

Deposits and other assets

    4,214     10,477  
           

Total other assets

    31,475     24,016  

Property and equipment, at cost

   
1,635,190
   
1,544,351
 

Accumulated depreciation

    (380,561 )   (252,514 )
           

Total property and equipment

    1,254,629     1,291,837  

Goodwill

    630,248     630,248  

Intangible assets, net of accumulated amortization

    376,565     392,548  
           

Total assets

  $ 3,056,391   $ 2,648,178  
           

LIABILITIES AND EQUITY

             

Current liabilities:

             

Accounts payable

  $ 23,580   $ 23,823  

Accrued compensation, payroll taxes and benefits

    35,949     59,441  

Accrued insurance reserves

    35,369     34,128  

Accrued interest payable

    2,359     1,071  

Other accrued liabilities

    25,663     29,834  

Deferred income

    52,703     38,156  

Current portion of long-term debt

    6,240     35,296  
           

Total current liabilities

    181,863     221,749  

Long-term debt

   
1,398,966
   
921,940
 

Other long-term liabilities

    76,398     76,180  

Deferred income taxes

    65,070     220,734  

Redeemable noncontrolling interests

   
437,941
   
440,427
 

Stockholders' equity:

             

Preferred stock, $1.00 par value

         

Common stock, $0.025 par value, 140,000,000 shares authorized and 53,818,762 and 54,641,885 shares issued and outstanding at December 31, 2012 and December 31, 2011, respectively

    1,345     1,366  

Capital in excess of par value

    904,713     832,112  

Retained earnings (accumulated deficit)

    15,849     (20,088 )

Accumulated other comprehensive loss

    (29,688 )   (49,912 )
           

Total Six Flags Entertainment Corporation stockholders' equity

    892,219     763,478  

Noncontrolling interests

    3,934     3,670  
           

Total equity

    896,153     767,148  
           

Total liabilities and equity

  $ 3,056,391   $ 2,648,178  
           

   

See accompanying notes to Consolidated Financial Statements.

F-5


Table of Contents


SIX FLAGS ENTERTAINMENT CORPORATION

Consolidated Statements of Operations

(in thousands, except per share data)

 
  Successor    
  Predecessor  
 
   
 
 
  Year
Ended
December 31,
2012
  Year
Ended
December 31,
2011
  Eight
Months Ended
December 31,
2010
   
  Four
Months Ended
April 30,
2010
 

Theme park admissions

  $ 576,708   $ 541,744   $ 452,189       $ 59,270  

Theme park food, merchandise and other

    437,382     413,844     348,552         52,054  

Sponsorship, licensing and other fees

    39,977     42,380     37,877         11,259  

Accommodations revenue

    16,265     15,206     9,194         5,494  
                       

Total revenue

    1,070,332     1,013,174     847,812         128,077  

Operating expenses (excluding depreciation and amortization shown separately below)

    411,679     397,874     292,550         115,636  

Selling, general and administrative (including stock-based compensation of $62,875 in 2012, $54,261 in 2011, $18,668 in the eight months ended December 31, 2010 and $718 in the four months ended April 30, 2010, and excluding depreciation and amortization shown separately below)

    225,875     215,059     142,079         47,608  

Costs of products sold

    80,169     77,286     66,965         12,132  

Depreciation

    132,397     150,952     106,315         45,373  

Amortization

    15,648     18,047     12,034         302  

Loss on disposal of assets

    8,105     7,615     11,727         1,923  

Gain on sale of investee

    (67,319 )                

Interest expense (contractual interest expense was $65,820 for the four months ended April 30, 2010)

    47,444     66,214     54,455         74,375  

Interest income

    (820 )   (997 )   (613 )       (241 )

Equity in loss (income) of investee

    2,222     3,111     1,372         (594 )

Loss on debt extinguishment

    587     46,520     18,493          

Other expense (income), net

    612     73     956         (802 )

Restructure (recovery) costs, net

    (47 )   25,086     37,417          
                       

Income (loss) from continuing operations before reorganization items, income taxes and discontinued operations

    213,780     6,334     104,062         (167,635 )

Reorganization items, net

    2,168     2,455     7,479         (819,473 )
                       

Income from continuing operations before income taxes and discontinued operations

    211,612     3,879     96,583         651,838  

Income tax (benefit) expense

    (172,228 )   (8,065 )   11,177         112,648  
                       

Income from continuing operations before discontinued operations

    383,840     11,944     85,406         539,190  

Income (loss) from discontinued operations

    7,273     1,201     (565 )       9,759  
                       

Net income

    391,113     13,145     84,841         548,949  

Less: Net income attributable to noncontrolling interests

    (37,104 )   (35,805 )   (34,788 )       (76 )
                       

Net income (loss) attributable to Six Flags Entertainment Corporation

  $ 354,009   $ (22,660 ) $ 50,053       $ 548,873  
                       

Net income (loss) attributable to Six Flags Entertainment Corporation common stockholders

  $ 354,009   $ (22,660 ) $ 50,053       $ 548,873  
                       

Weighted average common shares outstanding—basic(1):

    53,842     55,075     55,300         98,054  
                       

Weighted average common shares outstanding—diluted(1):

    55,468     55,075     55,300         98,054  
                       

Net income (loss) per average common share outstanding—basic(1):

                             

Income (loss) from continuing operations applicable to Six Flags Entertainment Corporation common stockholders

  $ 6.44   $ (0.43 ) $ 0.92       $ 5.50  

Income (loss) from discontinued operations applicable to Six Flags Entertainment Corporation common stockholders

    0.13     0.02     (0.01 )       0.10  
                       

Net income (loss) applicable to Six Flags Entertainment Corporation common stockholders

  $ 6.57   $ (0.41 ) $ 0.91       $ 5.60  
                       

Net income (loss) per average common share outstanding—diluted(1):

                             

Income (loss) from continuing operations applicable to Six Flags Entertainment Corporation common stockholders

  $ 6.25   $ (0.43 ) $ 0.92       $ 5.50  

Income (loss) from discontinued operations applicable to Six Flags Entertainment Corporation common stockholders

    0.13     0.02     (0.01 )       0.10  
                       

Net income (loss) applicable to Six Flags Entertainment Corporation common stockholders

  $ 6.38   $ (0.41 ) $ 0.91       $ 5.60  
                       

Cash dividends declared per common share(1)

  $ 2.70   $ 0.18   $ 0.03          

Amounts attributable to Six Flags Entertainment Corporation:

                             

Income (loss) from continuing operations

  $ 346,736   $ (23,861 ) $ 50,618       $ 539,114  

Income (loss) from discontinued operations

    7,273     1,201     (565 )       9,759  
                       

Net income (loss)

  $ 354,009   $ (22,660 ) $ 50,053       $ 548,873  
                       

(1)
All Successor share and per share amounts have been retroactively adjusted to reflect Holdings' two-for-one stock split in June 2011, as described in Note 12 to the Consolidated Financial Statements.

   

See accompanying notes to Consolidated Financial Statements.

F-6


Table of Contents


SIX FLAGS ENTERTAINMENT CORPORATION

Consolidated Statements of Comprehensive Income (Loss)

(in thousands)

 
   
   
   
   
   
 
 
  Successor    
  Predecessor  
 
  Year Ended
December 31,
2012
  Year Ended
December 31,
2011
  Eight Months
Ended
December 31,
2010
   
  Four Months
Ended
April 30,
2010
 

Net income

  $ 391,113   $ 13,145   $ 84,841       $ 548,949  

Other comprehensive income (loss), net of tax in 2012:

                             

Foreign currency translation adjustment(1)

    6,835     (9,154 )   2,539         5,419  

Defined benefit retirement plan(2)

    13,890     (36,566 )   (6,731 )       1,902  

Change in cash flow hedging(3)

    (501 )               (559 )
                       

Net other comprehensive income (loss)

    20,224     (45,720 )   (4,192 )       6,762  
                       

Comprehensive income (loss)

    411,337     (32,575 )   80,649         555,711  

Comprehensive income attributable to noncontrolling interests

    (37,104 )   (35,805 )   (34,788 )       (76 )
                       

Comprehensive income (loss) attributable to Six Flags Entertainment Corporation

  $ 374,233   $ (68,380 ) $ 45,861       $ 555,635  
                       

(1)
Foreign currency translation adjustment presented net of taxes of $0.1 million for the year ended December 31, 2012.

(2)
Defined benefit retirement plan is presented net of taxes of $19.2 million for the year ended December 31, 2012.

(3)
Change in cash flow hedging is reported net of taxes of $0.3 million for the year ended December 31, 2012.

   

See accompanying notes to Consolidated Financial Statements.

F-7


Table of Contents

SIX FLAGS ENTERTAINMENT CORPORATION

Consolidated Statements of Equity (Deficit)

(in thousands, except share data)

 
  Preferred stock   Common stock    
   
   
   
   
   
 
 
   
  (Accumulated
deficit)
retained
earnings
  Accumulated
other
comprehensive
(loss) income
   
   
   
 
 
  Shares
issued
  Amount   Shares
issued(1)
  Amount   Capital in
excess
of par value
  Total Six Flags
Entertainment
Corporation
  Non-
controlling
interests
  Total  

Balances at December 31, 2009 (Predecessor)

            98,325,936     2,458     1,506,152     (2,059,487 )   (33,297 )   (584,174 )       (584,174 )

Stock-based compensation

                    2,003             2,003         2,003  

Net income

                        548,873         548,873         548,873  

Net other comprehensive income

                            6,762     6,762         6,762  

Adoption of FASB ASC 810 as of January 1, 2010 (Note 3)

                                    5,016     5,016  

Cancellation of Predecessor Company common stock

            (98,325,936 )   (2,458 )   (1,508,155 )           (1,510,613 )       (1,510,613 )

Elimination of Predecessor Company accumulated deficit and accumulated other comprehensive loss

                        1,510,614     26,535     1,537,149     127     1,537,276  

Issuance of new common stock

            54,777,778     685     805,106             805,791         805,791  

Net income attributable to noncontrolling interest

                                    76     76  
                                           

Balances at April 30, 2010 (Successor)

            54,777,778     685     805,106             805,791     5,219     811,010  

Issuance of common stock

            950,440     12     587             599         599  

Stock-based compensation

                    13,106             13,106         13,106  

Dividends declared to common shareholders

                        (1,649 )       (1,649 )       (1,649 )

Net income

                        50,053         50,053         50,053  

Net other comprehensive loss

                            (4,192 )   (4,192 )       (4,192 )

Net income attributable to noncontrolling interest

                                    (764 )   (764 )
                                           

Balances at December 31, 2010 (Successor)

            55,728,218   $ 697   $ 818,799   $ 48,404   $ (4,192 ) $ 863,708   $ 4,455   $ 868,163  
                                           

F-8


Table of Contents

SIX FLAGS ENTERTAINMENT CORPORATION
Consolidated Statements of Equity (Deficit) (Continued)
(in thousands, except share data)

 
  Preferred stock   Common stock    
   
   
   
   
   
 
 
   
  Retained
earnings
(accumulated
deficit)
  Accumulated
other
comprehensive
loss
  Total Six
Flags
Entertainment
Corporation
   
   
 
 
  Shares
issued
  Amount   Shares
issued(1)
  Amount   Capital in
excess
of par value
  Non-
controlling
interests
  Total  

Balances at December 31, 2010 (Successor)

            55,728,218   $ 697   $ 818,799   $ 48,404   $ (4,192 ) $ 863,708   $ 4,455   $ 868,163  

Issuance of common stock

            511,623     13     9,109             9,122         9,122  

Stock-based compensation

                    28,479             28,479         28,479  

Dividends declared to common shareholders

                        (9,929 )       (9,929 )       (9,929 )

Repurchase of common stock

            (1,617,373 )   (26 )   (23,772 )   (36,200 )       (59,998 )       (59,998 )

Two-for-one common stock split

                682     (682 )                    

Employee stock purchase plan

            19,417         578             578         578  

Fresh start valuation adjustment for SFOT units purchased

                        280         280         280  

Net loss

                        (22,660 )       (22,660 )       (22,660 )

Net other comprehensive loss

                            (45,720 )   (45,720 )       (45,720 )

Purchase of HWP ownership interests

                    (399 )   17         (382 )   (602 )   (984 )

Net loss attributable to noncontrolling interest

                                    (183 )   (183 )
                                           

Balances at December 31, 2011 (Successor)

            54,641,885   $ 1,366   $ 832,112   $ (20,088 ) $ (49,912 ) $ 763,478   $ 3,670   $ 767,148  

Issuance of common stock

            2,011,616     50     39,983     9         40,042         40,042  

Issuance of restricted stock units

            1,393,360     35     31,311             31,346         31,346  

Stock-based compensation

                    62,556             62,556         62,556  

Dividends declared to common shareholders

                        (149,111 )       (149,111 )       (149,111 )

Repurchase of common stock

            (4,249,284 )   (106 )   (62,455 )   (169,423 )       (231,984 )       (231,984 )

Employee stock purchase plan

            21,185         1,206             1,206         1,206  

Fresh start valuation adjustment for SFOG and SFOT units purchased

                        453         453         453  

Net income

                        354,009         354,009         354,009  

Net other comprehensive income, net of tax

                            20,224     20,224         20,224  

Net income attributable to noncontrolling interest

                                    264     264  
                                           

Balances at December 31, 2012 (Successor)

            53,818,762   $ 1,345   $ 904,713   $ 15,849   $ (29,688 ) $ 892,219   $ 3,934   $ 896,153  
                                           

(1)
All Successor share amounts have been retroactively adjusted to reflect Holdings' two-for-one common stock split in June 2011, as described in Note 12 to the Consolidated Financial Statements.

See accompanying notes to Consolidated Financial Statements.

F-9


Table of Contents


SIX FLAGS ENTERTAINMENT CORPORATION

Consolidated Statements of Cash Flows

(in thousands)

 
  Successor    
  Predecessor  
 
   
   
  Eight
Months
Ended
December 31,
2010
   
  Four
Months
Ended
April 30,
2010
 
 
  Year
Ended
December 31,
2012
  Year
Ended
December 31,
2011
   
 
 
   
 
 
   
 
 
   
 

Cash flow from operating activities:

                             

Net income

  $ 391,113   $ 13,145   $ 84,841       $ 548,949  

Adjustments to reconcile net income to net cash (used in) provided by operating activities before reorganization activities:

                             

Depreciation and amortization

    148,045     168,999     118,349         45,675  

Reorganization items, net

    2,168     2,455     7,479         (819,473 )

Stock-based compensation

    62,875     54,261     18,668         718  

Interest accretion on notes payable

    1,201     1,870     1,096          

Loss on debt extinguishment

    587     46,520     18,493          

Gain on discontinued operations

            (89 )       (8,323 )

Amortization of debt issuance costs

    2,411     7,751     4,642         962  

Other, including loss on disposal of assets

    8,247     7,168     12,751         1,830  

Gain on sale of investee

    (67,319 )                

(Increase) decrease in accounts receivable

    (10,497 )   844     11,456         (11,375 )

(Increase) decrease in inventories, prepaid expenses and other current assets

    (2,352 )   (549 )   17,480         (6,483 )

Decrease in deposits and other assets

    5,439     6,151     49,559         232  

Increase (decrease) in accounts payable, deferred income, accrued liabilities and other long-term liabilities

    12,455     817     (52,757 )       27,268  

Increase (decrease) in accrued interest payable

    1,288     (2,342 )   3,204         (34,132 )

Deferred income tax (benefit) expense

    (182,241 )   (14,701 )   8,011         108,557  
                       

Total adjustments

    (17,693 )   279,244     218,342         (694,544 )
                       

Net cash (used in) provided by operating activities before reorganization activities

    373,420     292,389     303,183         (145,595 )

Cash flow from reorganization activities:

                             

Net cash used in reorganization activities

    (1,788 )   (17,452 )   (30,371 )       (62,325 )
                       

Total net cash provided by (used in) operating activities

    371,632     274,937     272,812         (207,920 )

Cash flow from investing activities:

                             

Additions to property and equipment

    (99,989 )   (91,680 )   (52,171 )       (42,956 )

Property insurance recovery

    1,494     536     9,885         5,831  

Capital expenditures of discontinued operations

                    (110 )

Acquisition of theme park assets

        (25 )           (48 )

Purchase of restricted-use investments

    (706 )       (312 )       (17 )

Maturities of restricted-use investments

        2,425     98         25  

Proceeds from sale of DCP

    69,987                  

Proceeds from sale of assets

    1,557     216     60         12  

Proceeds from sale of discontinued operations

            2,339          

Return of capital from DCP

            38,122          

Cash from the consolidation of HWP Development, LLC

                    462  
                       

Net cash used in investing activities

    (27,657 )   (88,528 )   (1,979 )       (36,801 )

Cash flow from financing activities:

                             

Repayment of borrowings

    (353,230 )   (959,412 )   (283,591 )       (1,470,255 )

Proceeds from borrowings

    800,000     934,400     200,250         1,013,050  

Payment of debt issuance costs

    (16,878 )   (16,584 )   (13,674 )       (40,001 )

Net proceeds from issuance of common stock

    40,929     9,700     599         630,500  

Stock repurchases

    (231,984 )   (59,998 )            

Payment of cash dividends

    (148,286 )   (9,791 )   (1,649 )        

Purchase of HWP ownership interests

        (984 )            

Purchase of redeemable noncontrolling interest

    (2,033 )   (948 )   (4,794 )        

Noncontrolling interest distributions

    (36,840 )   (35,988 )   (35,552 )        
                       

Net cash provided by (used in) financing activities

    51,678     (139,605 )   (138,411 )       133,294  

Effect of exchange rate on cash

    2,128     (2,438 )   129         1,107  
                       

Increase (decrease) in cash and cash equivalents

    397,781     44,366     132,551         (110,320 )

Cash and cash equivalents at beginning of period

    231,427     187,061     54,510         164,830  
                       

Cash and cash equivalents at end of period

  $ 629,208   $ 231,427   $ 187,061       $ 54,510  
                       

Supplemental cash flow information

                             

Cash paid for interest

  $ 42,545   $ 58,935   $ 45,512       $ 106,954  
                       

Cash paid for income taxes

  $ 9,435   $ 7,945   $ 4,068       $ 4,005  
                       

   

See accompanying notes to Consolidated Financial Statements.

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SIX FLAGS ENTERTAINMENT CORPORATION

Notes to Consolidated Financial Statements

1. Chapter 11 Reorganization

        On June 13, 2009, Six Flags, Inc. ("SFI"), Six Flags Operations Inc. ("SFO") and Six Flags Theme Parks Inc. ("SFTP") and certain of SFTP's domestic subsidiaries (the "SFTP Subsidiaries" and, collectively with SFI, SFO and SFTP, the "Debtors") filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware (the "Bankruptcy Court") (Case No. 09-12019) (the "Chapter 11 Filing"). SFI's subsidiaries that own interests in Six Flags Over Texas ("SFOT") and Six Flags Over Georgia (including Six Flags White Water Atlanta) ("SFOG" and together with SFOT, the "Partnership Parks") and the parks in Canada and Mexico were not debtors in the Chapter 11 Filing.

    (a)    Plan of Reorganization

        On April 30, 2010 (the "Effective Date"), the Bankruptcy Court entered an order confirming the Debtors' Modified Fourth Amended Joint Plan of Reorganization (the "Plan") and the Debtors emerged from Chapter 11 by consummating their restructuring through a series of transactions contemplated by the Plan including the following:

    Name Change.  On the Effective Date, but after the Plan became effective and prior to the distribution of securities under the Plan, SFI changed its corporate name to Six Flags Entertainment Corporation. As used herein, unless the context requires otherwise, the terms "we," "our," and "Six Flags" refer collectively to Six Flags Entertainment Corporation and its consolidated subsidiaries, and "Holdings" refers only to Six Flags Entertainment Corporation, without regard to the respective subsidiaries. As used herein, "SFI" means Six Flags, Inc. as a Debtor or prior to its name change to Six Flags Entertainment Corporation. As used herein, the "Company" refers collectively to SFI or Holdings, as the case may be, and its consolidating subsidiaries.

    Common Stock.  Pursuant to the Plan, all of SFI's common stock, preferred stock purchase rights, preferred income equity redeemable shares ("PIERS") and any other ownership interest in SFI including all options, warrants or rights, contractual or otherwise (including, but not limited to, stockholders agreements, registration rights agreements and rights agreements) were cancelled as of the Effective Date.

      On the Effective Date, Holdings issued an aggregate of 54,777,778 shares of common stock at $0.025 par value as follows: (i) 5,203,888 shares of common stock to the holders of unsecured claims against SFI, (ii) 4,724,618 shares of common stock to certain holders of the 121/4% Notes due 2016 (the "2016 Notes") in exchange for such 2016 Notes in the aggregate amount of $69.5 million, (iii) 34,363,950 shares of common stock to certain "accredited investors" that held unsecured claims who participated in a $505.5 million rights offering, (iv) 6,798,012 shares of common stock in an offering to certain purchasers for an aggregate purchase price of $75.0 million, (v) 3,399,006 shares of common stock in an offering to certain purchasers for an aggregate purchase price of $50.0 million and (vi) 288,304 shares of common stock were issued to certain other equity purchasers as consideration for their commitment to purchase an additional $25.0 million of common stock on or before June 1, 2011, following approval by a majority of the members of Holdings' Board of Directors (the "Delayed Draw Equity Purchase"). On June 1, 2011, the Delayed Draw Equity Purchase option expired. These share amounts have been retroactively adjusted to reflect the June 2011 two-for-one stock split as described in Note 12.

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SIX FLAGS ENTERTAINMENT CORPORATION

Notes to Consolidated Financial Statements (Continued)

1. Chapter 11 Reorganization (Continued)

      On June 21, 2010, the common stock commenced trading on the New York Stock Exchange under the symbol "SIX."

    Prepetition Indebtedness.  Pursuant to the Plan and on the Effective Date, all outstanding obligations under notes issued by SFI and SFO (collectively, the "Prepetition Notes") were cancelled and the indentures governing such obligations were cancelled, except to the extent to allow the Debtors, Reorganized Debtors (as such term is defined in the Plan) or the relevant Prepetition Notes indenture trustee, as applicable, to make distributions pursuant to the Plan on account of claims related to such Prepetition Notes. The Prepetition Notes were as follows: (i) SFI's 87/8% Senior Notes due 2010 (the "2010 Notes"), (ii) SFI's 93/4% Senior Notes due 2013 (the "2013 Notes"), (iii) SFI's 95/8% Senior Notes due 2014 (the "2014 Notes"), (iv) SFI's 4.50% Convertible Senior Notes due 2015 (the "2015 Notes"), and (v) the 2016 Notes.

      Pursuant to the Plan and on the Effective Date, the Second Amended and Restated Credit Agreement, dated as of May 25, 2007 (as amended, modified or otherwise supplemented from time to time, the "Prepetition Credit Agreement"), among SFI, SFO, SFTP (as the primary borrower), certain of SFTP's foreign subsidiaries party thereto, the lenders thereto, the agent banks party thereto and JPMorgan Chase Bank, N.A., as Administrative Agent (in such capacity, the "Administrative Agent"), was cancelled (except that the Prepetition Credit Agreement continued in effect solely for the purposes of allowing creditors under the Prepetition Credit Agreement to receive distributions under the Plan and allowing the Administrative Agent to exercise certain rights).

    Financing at Emergence.  On the Effective Date, we entered into two exit financing facilities: (i) an $890.0 million senior secured first lien credit facility comprised of a $120.0 million revolving loan facility, which could have been increased up to $150.0 million in certain circumstances, and a $770.0 million term loan facility (the "Exit First Lien Term Loan") and (ii) a $250.0 million senior secured second lien term loan facility (the "Exit Second Lien Facility" and, together with the Exit First Lien Facility, the "Exit Facilities").

      Also on the Effective Date, SFOG Acquisition A, Inc., SFOG Acquisition B, L.L.C., SFOT Acquisition I, Inc. and SFOT Acquisition II, Inc. (collectively, the "TW Borrowers") entered into a credit agreement with TW-SF, LLC comprised of a $150.0 million multi-draw term loan facility (the "TW Loan") for use with respect to the Partnership Parks "put" obligations.

      See Note 8 for a discussion of the terms and conditions of these facilities and subsequent amendments, early repayments, and terminations from debt extinguishment transactions.

    Fresh Start Accounting.  As required by accounting principles generally accepted in the United States ("GAAP"), we adopted fresh start accounting effective May 1, 2010 following the guidance of Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 852, Reorganizations ("FASB ASC 852"). The financial statements for the periods ended prior to April 30, 2010 do not include the effect of any changes in our capital structure or changes in the fair value of assets and liabilities as a result of fresh start accounting. The implementation of the Plan and the application of fresh start accounting results in financial statements that are not comparable to financial statements in periods prior to emergence. See Note 1(b) for a detailed explanation of the impact of emerging from Chapter 11 and applying fresh start accounting on our financial position.

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SIX FLAGS ENTERTAINMENT CORPORATION

Notes to Consolidated Financial Statements (Continued)

1. Chapter 11 Reorganization (Continued)

      As used herein, "Successor" refers to the Company as of the Effective Date and "Predecessor" refers to SFI together with its consolidated subsidiaries prior to the Effective Date.

    (b)    Fresh Start Accounting and the Effects of the Plan

        Fresh start accounting results in a new basis of accounting and reflects the allocation of the Company's estimated fair value to its underlying assets and liabilities. The Company's estimates of fair value are inherently subject to significant uncertainties and contingencies beyond the Company's reasonable control. Accordingly, there can be no assurance that the estimates, assumptions, valuations, appraisals and financial projections will be realized, and actual results could vary materially. The implementation of the Plan and the application of fresh start accounting results in financial statements that are not comparable to financial statements in periods prior to emergence.

        Fresh start accounting provides, among other things, for a determination of the value to be assigned to the equity of the emerging company as of a date selected for financial reporting purposes, which for the Company is April 30, 2010, the date that the Debtors emerged from Chapter 11. The Plan required the contribution of equity from the creditors representing the unsecured senior noteholders of SFI, of which $555.5 million was raised at a price of $14.71 per share, as adjusted to reflect the June 2011 two-for-one stock split described in Note 12. Holdings also issued stock at $14.71 per share to pay $146.1 million of SFO and SFI claims. The Company's reorganization value reflected the fair value of the new equity and the new debt, the conditions of which were determined after extensive arms-length negotiations between the Debtors' creditors, which included the input of several independent valuation experts representing different creditor interests, who used discounted cash flow, comparable company and precedent transaction analyses.

        The analysis supporting the final reorganization value was based upon expected future cash flows of the business after emergence from Chapter 11, discounted at a rate of 11.5% and assuming a perpetuity growth rate of 3.0%. The reorganization value and the equity value are highly dependent on the achievement of the future financial results contemplated in the projections that were set forth in the Plan. The estimates and assumptions made in the valuation are inherently subject to significant uncertainties. The primary assumptions for which there is a reasonable possibility of the occurrence of a variation that would have significantly affected the reorganization value include the assumptions regarding revenue growth, operating expense growth rates, the amount and timing of capital expenditures and the discount rate utilized.

        The four-column consolidated statement of financial position as of April 30, 2010 (see below) reflects the implementation of the Plan. Reorganization adjustments have been recorded within the condensed consolidated balance sheets as of April 30, 2010 to reflect effects of the Plan, including discharge of liabilities subject to compromise and the adoption of fresh start accounting in accordance with FASB ASC 852. The reorganization value of the Company of approximately $2.3 billion was based

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SIX FLAGS ENTERTAINMENT CORPORATION

Notes to Consolidated Financial Statements (Continued)

1. Chapter 11 Reorganization (Continued)

on the equity value of equity raised plus new indebtedness and fair value of Partnership Parks "put" obligations as follows (in thousands):

Equity value based on equity raised(1)

  $ 805,791  

Add: Redeemable noncontrolling interests(2)

    446,449  

Add: Exit First Lien Facility

    770,000  

Add: Exit Second Lien Facility

    250,000  

Add: Other debt(3)

    35,360  

Add: Noncontrolling interests

    5,219  

Less: Net discounts on Exit Facilities

    (11,450 )
       

Total emergence enterprise value

  $ 2,301,369  
       

(1)
Equity balance is calculated based on 54,777,778 shares of Holdings common stock at the price of $14.71 per share pursuant to the Plan, as adjusted to reflect the June 2011 two-for-one stock split described in Note 12.

(2)
Redeemable noncontrolling interests are stated at fair value determined using the discounted cash flow methodology. The valuation was performed based on multiple scenarios with a certain number of "put" obligations assumed to be put each year. The analysis used a 9.8% rate of return adjusted for annual inflation for the annual guaranteed minimum distributions to the holders of the "put" rights and a discount rate of 7%.

(3)
Other debt includes a $33.0 million refinance loan (the "Refinance Loan") for HWP Development, LLC, $32.2 million of which was outstanding as of April 30, 2010, as well as capitalized leases of approximately $2.1 million and short-term bank borrowings of $1.0 million. See Note 8 for a discussion of the terms and conditions of the Refinance Loan.

        Under fresh start accounting, the total Company value is adjusted to reorganization value and is allocated to our assets and liabilities based on their respective fair values in conformity with the purchase method of accounting for business combinations in FASB ASC Topic 805, Business Combination ("FASB ASC 805"). The excess of reorganization value over the fair value of tangible and identifiable intangible assets and liabilities is recorded as goodwill. Liabilities existing as of the Effective Date, other than deferred taxes, were recorded at the present value of amounts expected to be paid using appropriate risk adjusted interest rates. Deferred taxes were determined in conformity with applicable income tax accounting standards. Predecessor accumulated depreciation, accumulated amortization, retained deficit, common stock and accumulated other comprehensive loss were eliminated.

        The valuations required to determine the fair value of the Company's assets as presented below represent the results of valuation procedures performed by independent valuation specialists. The estimates of fair values of assets and liabilities have been reflected in the Successor Company consolidated balance sheet as of April 30, 2010.

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SIX FLAGS ENTERTAINMENT CORPORATION

Notes to Consolidated Financial Statements (Continued)

1. Chapter 11 Reorganization (Continued)

        The adjustments below are to our April 30, 2010 balance sheet. The balance sheet reorganization adjustments presented below summarize the impact of the Plan and the adoption of fresh start accounting as of the Effective Date.


SIX FLAGS ENTERTAINMENT CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET
(in thousands)

 
  April 30, 2010  
 
  Predecessor   Reorganization
Adjustments(1)
  Fresh Start
Adjustments(2)
  Successor  

ASSETS

                         

Current assets:

                         

Cash and cash equivalents

  $ 75,836   $ (21,326 ) $   $ 54,510  

Accounts receivable

    36,288         4,876     41,164  

Inventories

    37,811         (193 )   37,618  

Prepaid expenses and other current assets

    49,671     (9,750 )   (456 )   39,465  

Assets held for sale

    681             681  
                   

Total current assets

    200,287     (31,076 )   4,227     173,438  

Other assets:

                         

Debt issuance costs

    11,817     28,184         40,001  

Restricted-use investment securities

    2,753             2,753  

Deposits and other assets

    97,677         6,643     104,320  
                   

Total other assets

    112,247     28,184     6,643     147,074  

Property and equipment, at cost, net

    1,507,677         (78,304 )   1,429,373  

Assets held for sale

    6,978             6,978  

Intangible assets, net of accumulated amortization(3)

    10,164         412,591     422,755  

Goodwill(4)

    1,051,089         (420,841 )   630,248  
                   

Total assets

  $ 2,888,442   $ (2,892 ) $ (75,684 ) $ 2,809,866  
                   

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SIX FLAGS ENTERTAINMENT CORPORATION

Notes to Consolidated Financial Statements (Continued)

1. Chapter 11 Reorganization (Continued)

SIX FLAGS ENTERTAINMENT CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET (Continued)
(in thousands)

 
  April 30, 2010  
 
  Predecessor   Reorganization
Adjustments(1)
  Fresh Start
Adjustments(2)
  Successor  

LIABILITIES and EQUITY (DEFICIT)

                         

Liabilities not subject to compromise:

                         

Current liabilities:

                         

Accounts payable

  $ 92,198   $ (20,272 ) $   $ 71,926  

Accrued compensation, payroll taxes and benefits

    15,019     1,442         16,461  

Accrued insurance reserves

    16,492     19,074     (5,118 )   30,448  

Accrued interest payable

    26,839     (26,630 )       209  

Other accrued liabilities

    52,753     2,883     1,438     57,074  

Deferred income

    61,033         (1,324 )   59,709  

Liabilities from discontinued operations

    5,409             5,409  

Current portion of long-term debt

    352,623     (317,946 )       34,677  
                   

Total current liabilities not subject to compromise

    622,366     (341,449 )   (5,004 )   275,913  

Long-term debt

    818,808     190,425         1,009,233  

Other long-term liabilities

    46,868         (9,383 )   37,485  

Deferred income taxes

    118,821         110,955     229,776  
                   

Total liabilities not subject to compromise

    1,606,863     (151,024 )   96,568     1,552,407  

Liabilities subject to compromise

    1,745,175     (1,745,175 )        
                   

Total liabilities

    3,352,038     (1,896,199 )   96,568     1,552,407  

Redeemable noncontrolling interests

   
355,933
   
   
90,516
   
446,449
 

Stockholders' equity (deficit):

                         

Preferred stock, $1.00 par value

                 

New common stock

        685         685  

Old common stock

    2,458     (2,458 )        

Capital in excess of par value

    1,508,155     (703,049 )       805,106  

Accumulated deficit

    (2,308,699 )   2,598,129     (289,430 )    

Accumulated other comprehensive loss

    (26,535 )       26,535      
                   

Total stockholders' (deficit) equity

    (824,621 )   1,893,307     (262,895 )   805,791  

Noncontrolling interests

    5,092         127     5,219  
                   

Total (deficit) equity

    (819,529 )   1,893,307     (262,768 )   811,010  
                   

Total liabilities and equity (deficit)

  $ 2,888,442   $ (2,892 ) $ (75,684 ) $ 2,809,866  
                   

(1)
Represents amounts recorded on the Effective Date for the implementation of the Plan, including the settlement of liabilities subject to compromise and related payments, the incurrence of new indebtedness under the Exit Facilities and repayment of the Prepetition Credit Agreement and

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SIX FLAGS ENTERTAINMENT CORPORATION

Notes to Consolidated Financial Statements (Continued)

1. Chapter 11 Reorganization (Continued)

    Prepetition Notes, distributions of cash and Holdings common stock and the cancellation of SFI common stock.

    The Plan's impact resulted in a net decrease of $21.3 million in cash and cash equivalents. The significant sources and uses of cash were as follows (in thousands):

Sources:

       

Net amount borrowed under the Exit First Lien Term Loan

 
$

762,300
 

Net amount borrowed under the Exit Second Lien Loan Facility

    246,250  

Proceeds from the Equity Offering

    630,500  
       

Total sources

    1,639,050  
       

Uses:

       

Repayments of amounts owed:

       

Prepetition Credit Agreement—long term portion of term loan

    818,125  

2016 Notes

    330,500  

Prepetition Credit Agreement—revolving portion

    270,269  

Prepetition TW Promissory Note

    30,677  

Prepetition interest rate hedging derivatives

    19,992  

Prepetition Credit Agreement—current portion of term loan

    17,000  

Payments:

       

Exit Facilities' debt issuance costs

    29,700  

Accrued interest

    96,950  

Professional fees and other accrued liabilities

    47,163  
       

Total uses

    1,660,376  
       

Net cash uses

  $ (21,326 )
       

    The gain on the cancellation of liabilities subject to compromise, before income taxes, was calculated as follows:

Extinguishment of the 2010 Notes, 2013 Notes, 2014 Notes and 2015 Notes (collectively, the "SFI Senior Notes")

  $ 868,305  

Extinguishment of the PIERS

    306,650  

Write-off of the accrued interest on the SFI Senior Notes

    29,868  

Write-off debt issuance costs on the Prepetition Credit Agreement and the Prepetition TW Promissory Note

    (11,516 )

Issuance of Holdings' common stock

    (105,791 )
       

Gain on the cancellation of liabilities subject to compromise, before income taxes

  $ 1,087,516  
       
(2)
Reflects the adjustments to assets and liabilities to estimated fair value, or other measurements specified by FASB ASC 805, in conjunction with the adoption of fresh start accounting. Significant adjustments are summarized as follows and all are considered a Level 3 fair value measurement with the exception of the land values which are Level 2 fair value measurements.

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SIX FLAGS ENTERTAINMENT CORPORATION

Notes to Consolidated Financial Statements (Continued)

1. Chapter 11 Reorganization (Continued)

    Deposits and other assets—note receivable—An adjustment of approximately $7.4 million was recorded to the book value of a note receivable to its $8.4 million estimated fair value, which was determined based on the discounted cash flow method over the life of the note.

    Deposits and other assets—investment in nonconsolidated joint venture—This account was adjusted to its estimated fair values based on customary valuation methodologies, including comparable earnings multiples, discounted cash flows and negotiated transaction values.

    Property and equipment, at cost—An adjustment of approximately $78.3 million was recorded to adjust the net book value of property, plant and equipment to fair value based on the new replacement cost less depreciation valuation methodology. Key assumptions used in the valuation of the Company's property, plant and equipment were based on a combination of the cost or market approach adjusted for economic obsolescence where appropriate. The land value was obtained using a sales comparison approach.

    General liability and workers compensation—An adjustment of approximately $5.1 million was recorded to adjust the value of the general liability and workers compensation accruals for future receipts from deposits and payments for claims discounted at the weighted average debt rate upon emergence from Chapter 11 of 7%.

    Deferred revenue—An adjustment of approximately $1.3 million was recorded to adjust