We own and operate regional theme parks and waterparks. We are the largest regional theme park operator in the world and the largest operator of waterparks in North America. Of the 26 parks we currently own or operate, 23 parks are located in the United States, two parks are located in Mexico and one park is located in Montreal, Canada.

On April 1, 1998, we acquired the former Six Flags Entertainment Corporation ("Former SFEC", a corporation that has been merged out of existence and that has always been a separate corporation from the current Six Flags Entertainment Corporation ("Holdings")), which had operated regional theme parks and waterparks under the Six Flags name for nearly 40 years, and established an internationally recognized brand name. We own the "Six Flags" brand name in the United States and foreign countries throughout the world. To capitalize on this name recognition, 22 of our current parks are branded as "Six Flags" parks and beginning in 2014 we also began the development, with third-party partners, of Six Flags-branded parks outside of North America.

In response to the COVID-19 pandemic, federal, state and local governments implemented significant restrictions on travel, social conduct and business operations, including mass quarantine and social distancing mandates and orders. On March 13, 2020, we temporarily suspended operations at all of our theme parks and waterparks due to the COVID-19 pandemic. During 2020, 20 of our 26 parks operated for portions of the season but several of our larger parks could not operate rides. Parks that did operate had capacity and other operating limitations.

We quickly implemented plans to mitigate the impact of the COVID-19 pandemic on our business and ensure the health and safety of our employees and guests. In response to the challenging environment, we focused on the following actions:

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Implementing immediate cost controls by right-sizing marketing and temporarily reducing salaries of all full-time employees by 25%;

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Strengthening liquidity through expansion of our revolving credit facility, suspension of testing of certain maintenance covenants in our credit facility, issuance of senior secured notes, and suspension of dividend payments and stock repurchase program;

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Enhancing financial flexibility by delaying or reducing capital expenses related new ride and attractions;

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Developing measures to preserve our season pass holders and members;

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Opening parks as quickly as possible, while following governmental and public health guidelines; and

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Creating new sources of revenue by introducing animal and holiday drive-thru experiences at many parks.

We resumed partial operations at many of our parks on a staggered basis near the end of the second quarter using a cautious and phased approach, including limiting attendance, in accordance with local conditions and government guidelines. Attendance trends in 2020 continued to improve throughout the year for the parks that were open. Several of our parks modified their operations by providing drive-through or walk-through experiences for the holiday season, and our parks in Mexico were able to operate for a portion of the fourth quarter. As a result, all of our theme parks and some of its water parks operated in at least some capacity for a portion of the season, albeit pursuant to reduced capacity and other operating limitations. Comparisons of open parks to prior year in the third quarter exclude attendance from Six Flags Discovery Kingdom and Six Flags Great America, as these parks had modified operations with minimal attendance in the third quarter of 2020.

We have taken measures to ensure sufficient liquidity to meet our cash flow needs and covenant compliance obligations for at least the next twelve months from the issuance of the financial statements. Additionally, we believe we have sufficient liquidity to meet our cash obligations through the end of 2021 even if our open parks are required to close. In addition to reducing expenses including capital expenditures, in April 2020, we increased the revolving credit

commitments under the Second Amended and Restated Revolving Loan by $131.0 million, increasing the facility from $350.0 million to $481.0 million. Also, in April, Six Flags Theme Parks Inc. (“SFTP”), Holdings’ indirect, wholly owned subsidiary, completed the private sale of $725.0 million in aggregate principal amount of 7.00% senior secured notes due 2025. In August 2020, we extended the increased revolving credit commitments under the Second Amended and Restated Revolving Loan through December 31, 2022 and extended the suspension of our senior secured leverage ratio financial maintenance covenant through the end of 2021. See Note 3, Long-Term Indebtedness, for more information on these transactions. In connection with the Second Amended and Restated Credit Agreement, we suspended our quarterly dividend payment and stock repurchase program until the earlier December 31, 2022, or such time as SFTP reduces the incremental revolving credit commitments by $131 million and begins using actual results to calculate covenant compliance.

The COVID-19 pandemic continues to present material uncertainty and risk with respect to our performance and financial results, including the ability to open all of our parks to guests. We will continue to consider near-term exigencies and the long-term financial health of the business as clear steps are taken to mitigate the consequences of the COVID-19 pandemic. The extent to which the COVID-19 pandemic impacts our business will depend on future developments, which are highly uncertain and cannot be predicted, including additional actions taken to contain COVID-19 or treat its impact, among others. Our business and financial results could be materially and adversely impacted.

Transformation Plan

Prior to the pandemic, we initiated a transformation plan. The transformation plan consists of five revenue initiatives and three cost initiatives designed to improve our core operational effectiveness and to support our strategy, delivering sustainable value creation over time. Our strategy is to create thrilling, memorable experiences at our regional parks, delivered by a diverse and empowered team, through industry-leading innovation and technology. The strategy is driven by three focus areas: (i) modernizing the guest experience through technology, (ii) continuously improving operational efficiency, and (iii) driving financial excellence. We plan to focus on our core business over the next two to three years; during this time, we will be cautious about expanding into adjacent domestic markets or entering into new international agreements.

Due to the outbreak of the COVID-19 pandemic in early 2020 and the resulting park closures, management redirected its focus on steering us through this crisis, causing a delay in our transformation plan. However, in the latter half of 2020, we made significant progress on each of the initiatives. We closed two satellite offices; reduced our full-time headcount costs; initiated centralized negotiations with several vendors to reduce procurement costs; and piloted a model to optimize park level variable labor. From a revenue perspective, we improved our menu assortment, pricing and merchandizing strategy; developed a new tool to optimize media spending; improved our website; and made progress on our initiative to attract more single day visitors.


Transformation Costs Breakout

	Year Ended
	December 31, 2020
Amounts included in "Other expense, net"
Consultant costs	$	20,460
Employee termination costs		4,362
Amounts included in "Loss on disposal of assets"
Ride / asset write-offs		9,754
Total transformation costs	$	34,576