SIX FLAGS INC - 10-Q Quarterly Report

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

ý	Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the Quarterly period ended March 31, 2005

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, INC.

(Exact Name of Registrant as Specified in Its Charter)

Delaware		13-3995059
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

11501 Northeast Expressway, Oklahoma City, Oklahoma 73131

(Address of Principal Executive Offices, Including Zip Code)

(405) 475-2500

(Registrant’s Telephone Number, Including Area Code)

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 x No o

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes ý No o

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:

At May 2, 2005, Six Flags, Inc. had outstanding 93,106,528 shares of Common Stock, par value $.025 per share.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This document contains “forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as “anticipates,” “intends,” “plans,” “seeks,” “believes,” “estimates,” “expects” and similar references to future periods. Examples of forward-looking statements include, but are not limited to, statements we make regarding (i) our belief that cash flows from operations, available cash and available amounts under our credit agreement will be adequate to meet our future liquidity needs for at least the next several years and (ii) our expectation to refinance all or a portion of our existing debt on or prior to maturity.

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. 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, events, disturbances and terrorist activities;

• accidents occurring at our parks;

• adverse weather conditions;

• competition with other theme parks and other recreational alternatives;

• changes in consumer spending patterns; and

• pending, threatened or future legal proceedings.

A more complete discussion of these factors and other risks applicable to our business is contained under the caption “Business – Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2004. See “Available Information” below.

Any forward-looking statement made by us in this document speaks only as of the date on which we make it. 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 undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise.

Available Information

Copies of our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, are available free of charge through our website (www.sixflags.com) as soon as reasonably practicable after we electronically file the material with, or furnish it to, the Securities and Exchange Commission.

PART I — FINANCIAL INFORMATION

Item 1 — Financial Statements

SIX FLAGS, INC.

CONSOLIDATED BALANCE SHEETS

	March 31, 2005		December 31, 2004
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	64,184,000	$	68,807,000
Accounts receivable	27,161,000		22,438,000
Inventories	42,255,000		27,832,000
Prepaid expenses and other current assets	42,094,000		37,013,000
Restricted-use investment securities	—		134,508,000
Total current assets	175,694,000		290,598,000

Other assets:
Debt issuance costs	48,687,000		50,347,000
Deposits and other assets	45,713,000		46,528,000
Total other assets	94,400,000		96,875,000

Property and equipment, at cost	2,919,244,000		2,874,593,000
Less accumulated depreciation	888,303,000		854,555,000
Total property and equipment	2,030,941,000		2,020,038,000

Intangible assets, net of accumulated amortization	1,234,366,000		1,234,716,000
Total assets	$	3,535,401,000	$	3,642,227,000

See accompanying notes to consolidated financial statements

SIX FLAGS, INC.

CONSOLIDATED BALANCE SHEETS

	March 31, 2005			December 31, 2004
	(Unaudited)
LIABILITIES and STOCKHOLDERS’ EQUITY

Current liabilities:
Accounts payable	$	42,586,000		$	25,817,000
Accrued compensation, payroll taxes and benefits	9,542,000			8,652,000
Accrued insurance reserves	27,298,000			22,830,000
Accrued interest payable	46,087,000			37,812,000
Other accrued liabilities	40,185,000			42,583,000
Deferred income	33,497,000			9,392,000
Debt called for prepayment	—			123,068,000
Current portion of long-term debt	171,384,000			24,394,000
Total current liabilities	370,579,000			294,548,000

Long-term debt	2,137,048,000			2,125,121,000
Minority interest	50,368,000			60,911,000
Other long-term liabilities	39,943,000			38,846,000
Deferred income taxes	14,614,000			14,491,000

Mandatorily redeemable preferred stock (redemption value of $287,500,000)	282,527,000			282,245,000

Stockholders’ equity:
Preferred stock, $1.00 par value	—			—
Common stock, $.025 par value	2,328,000			2,326,000
Capital in excess of par value	1,751,129,000			1,750,766,000
Accumulated deficit	(1,093,346,000		)	(909,134,000		)
Deferred compensation	(2,786,000		)	(2,709,000		)
Accumulated other comprehensive income (loss)	(17,003,000		)	(15,184,000		)

Total stockholders’ equity	640,322,000			826,065,000

Total liabilities and stockholders’ equity	$	3,535,401,000		$	3,642,227,000

See accompanying notes to consolidated financial statements

SIX FLAGS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

THREE MONTHS ENDED MARCH 31, 2005 AND 2004

(UNAUDITED)

	2005			2004
Revenue:
Theme park admissions	$	26,029,000		$	21,082,000
Theme park food, merchandise and other	28,351,000			23,731,000
Total revenue	54,380,000			44,813,000

Operating costs and expenses:
Operating expenses	90,390,000			83,193,000
Selling, general and administrative	37,976,000			37,643,000
Noncash compensation (primarily selling, general and administrative)	288,000			161,000
Costs of products sold	5,340,000			4,068,000
Depreciation	37,246,000			36,656,000
Amortization	222,000			326,000
Total operating costs and expenses	171,462,000			162,047,000
Loss from operations	(117,082,000		)	(117,234,000		)
Other income (expense):
Interest expense	(46,527,000		)	(52,208,000		)
Interest income	1,782,000			301,000
Minority interest in loss	6,563,000			7,354,000
Early repurchase of debt	(19,303,000		)	(25,177,000		)
Other income (expense)	(3,197,000		)	(2,945,000		)
Total other income (expense)	(60,682,000		)	(72,675,000		)
Loss from continuing operations before income taxes	(177,764,000		)	(189,909,000		)
Income tax expense (benefit)	955,000			(69,994,000		)
Loss from continuing operations	(178,719,000		)	(119,915,000		)
Discontinued operations, net of tax benefit of $55,759,000 in 2004	—			(284,904,000		)
Net loss	$	(178,719,000	)	$	(404,819,000	)
Net loss applicable to common stock	$	(184,212,000	)	$	(410,312,000	)
Weighted average number of common shares outstanding - basic and diluted:	93,104,000			93,018,000
Net loss per average common share outstanding - basic and diluted:
Loss from continuing operations	$	(1.98	)	$	(1.35	)
Discontinued operations, net of tax benefit	—			(3.06		)
Net loss	$	(1.98	)	$	(4.41	)

See accompanying notes to consolidated financial statements

SIX FLAGS, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

THREE MONTHS ENDED MARCH 31, 2005 AND 2004

(UNAUDITED)

	2005			2004

Net loss	$	(178,719,000	)	$	(404,819,000	)
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustment	(1,314,000		)	(12,580,000		)
Net change in fair value of derivative instruments	(1,290,000		)	(3,048,000		)
Reclassifications of amounts taken to operations	785,000			1,788,000

Comprehensive loss	$	(180,538,000	)	$	(418,659,000	)

See accompanying notes to consolidated financial statements

SIX FLAGS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

THREE MONTHS ENDED MARCH 31, 2005 AND 2004

(UNAUDITED)

	2005			2004
Cash flow from operating activities:
Net loss	$	(178,719,000	)	$	(404,819,000	)

Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	37,468,000			36,982,000
Minority interest in loss	(6,563,000		)	(7,354,000		)
Partnership and joint venture distributions	(3,980,000		)	(2,463,000		)
Noncash compensation	288,000			161,000
Interest accretion on notes payable	81,000			134,000
Early repurchase of debt	19,303,000			25,177,000
Loss on discontinued operations	—			281,383,000
Amortization of debt issuance costs	2,107,000			2,113,000
Other including loss on disposal of fixed assets	3,649,000			2,937,000
(Increase) decrease in accounts receivable	(4,752,000		)	2,821,000
Increase in inventories, prepaid expenses and other current assets	(19,535,000		)	(10,711,000		)
Decrease in deposits and other assets	815,000			2,388,000
Increase in accounts payable, deferred income, accrued liabilities and other long-term liabilities	44,142,000			39,557,000
Increase (decrease) in accrued interest payable	8,275,000			(1,787,000		)
Deferred income tax (benefit) expense	123,000			(70,637,000		)
Total adjustments	81,421,000			300,701,000
Net cash used in operating activities	(97,298,000		)	(104,118,000		)
Cash flow from investing activities:
Additions to property and equipment	(52,599,000		)	(22,083,000		)
Purchase of identifiable intangible assets	—			(500,000		)
Capital expenditures of discontinued operations	—			(2,070,000		)
Maturities of restricted-use investments	134,508,000			317,913,000
Proceeds from sale of assets	84,000			1,562,000
Net cash provided by investing activities	81,993,000			294,822,000
Cash flow from financing activities:
Repayment of long-term debt	(322,273,000		)	(443,614,000		)
Proceeds from borrowings	342,525,000			263,500,000
Payment of cash dividends	(5,211,000		)	(5,211,000		)
Payment of debt issuance costs	(4,234,000		)	(2,052,000		)
Net cash provided by (used in) financing activities	10,807,000			(187,377,000		)
Effect of exchange rate changes on cash	(125,000		)	(59,000		)
Increase (decrease) in cash and cash equivalents	(4,623,000		)	3,268,000
Cash and cash equivalents at beginning of year	68,807,000			98,189,000
Cash and cash equivalents at end of period	$	64,184,000		$	101,457,000
Supplemental cashflow information:
Cash paid for interest	$	36,063,000		$	51,747,000
Cash paid for income taxes	$	1,013,000		$	657,000

See accompanying notes to consolidated financial statements

SIX FLAGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. General — Basis of Presentation

We own and operate regional theme and water parks. As used in this Report, unless the context requires otherwise, the terms “we,” “our” or “Six Flags” refer to Six Flags, Inc. and its consolidated subsidiaries. As used herein, Holdings refers only to Six Flags, Inc., without regard to its subsidiaries.

As of March 31, 2004, we owned or operated 39 parks. In April 2004 we sold in two separate transactions seven parks in Europe and Six Flags Worlds of Adventure in Ohio. As of March 31, 2005, we owned or operated 30 parks, including 28 domestic parks, one park in Mexico and one park in Canada. The accompanying consolidated financial statements as of and for the three months ended March 31, 2004 reflect the assets, liabilities and results of the sold facilities as discontinued operations. See Note 3.

Management’s Discussion and Analysis of Financial Condition and Results of Operations which follows these notes contains additional information on our results of operations and our financial position. Those comments should be read in conjunction with these notes. Our annual report on Form 10-K for the year ended December 31, 2004 includes additional information about us, our operations and our financial position, and should be referred to in conjunction with this quarterly report on Form 10-Q. The information furnished in this report reflects all adjustments (which are normal and recurring) which are, in the opinion of management, necessary to present a fair statement of the results for the periods presented.

Results of operations for the three-month period ended March 31, 2005 are not indicative of the results expected for the full year. In particular, our theme park operations contribute a significant majority of their annual revenue during the period from Memorial Day to Labor Day each year.

Basis of Presentation

The consolidated financial statements include our accounts, our majority and wholly owned subsidiaries, and limited partnerships and limited liability companies in which we beneficially own 100% of the interests.

We also consolidate the partnerships and joint ventures that own Six Flags Over Texas, Six Flags Over Georgia, Six Flags White Water Atlanta and Six Flags Marine World as we have determined that we have the most significant economic interest since we receive a majority of these entities’ expected losses or expected residual returns and have the ability to make decisions that significantly affect the results of the activities of these entities. The equity interests owned by nonaffiliated parties in these entities are reflected in the accompanying consolidated balance sheets as minority interest. The portion of earnings or loss from these parks owned by non-affiliated parties in these entities is reflected as minority interest in (earnings) loss in the accompanying consolidated statements of operations and in the consolidated statements of cash flows.

Income Taxes

Income taxes are accounted for under the asset and liability method. At December 31, 2004, we had recorded a valuation allowance of $153,384,000 due to uncertainties related to our ability to utilize some of our deferred tax assets, primarily consisting of certain net operating losses carried forward and tax credits, before they expire. Due to the seasonal nature of our business, we generate a net loss in the

first quarter which is larger than the full year results. As a result, and in light of the uncertainties referred to in the preceding sentence, we added $67,246,000 to the valuation allowance at March 31, 2005 in respect of the loss before income taxes generated during the first quarter of 2005.

Long-Lived Assets

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 considered to be impaired, the 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.

Derivative Instruments

In February 2000, we entered into three interest rate swap agreements that effectively converted $600,000,000 of the term loan component of the Credit Facility (see Note 4(a)) into a fixed rate obligation. The terms of the agreements, as subsequently extended, each of which had a notional amount of $200,000,000, began in March 2000. One expired on March 6, 2005 and the other two expire in June 2005. Our term loan borrowings bear interest based upon LIBOR plus a fixed margin. Our interest rate swap arrangements were designed to “lock-in” the LIBOR component at rates after March 6, 2003, ranging from 2.065% to 3.50% (with an average of 3.01%) and after March 6, 2005, ranging from 3.47% to 3.50% (with an average of 3.49%). The counterparties to these transactions are major financial institutions, which minimizes the credit risk.

FASB Statement No. 133, “Accounting for Derivative Instruments and Hedging Activities,” as amended by SFAS No. 138, establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities. It requires an entity to recognize all derivatives as either assets or liabilities in the consolidated balance sheet and measure those instruments at fair value. If certain conditions are met, a derivative may be specifically designated as a hedge for accounting purposes. The accounting for changes in the fair value of a derivative (that is gains and losses) depends on the intended use of the derivative and the resulting designation.

The Partnership Parks are also party to interest rate swap agreements with respect to an aggregate of $9,933,000 of indebtedness at March 31, 2005 and December 31, 2004.

During the first quarters of 2005 and 2004, we have designated all of the interest rate swap agreements as cash-flow hedges.

We formally document all relationships between hedging instruments and hedged items, as well as our risk-management objective and our strategy for undertaking various hedge transactions. This process includes linking all derivatives that are designated as cash-flow hedges to forecasted transactions. We also assess, both at the hedge’s inception and on an ongoing basis, whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in cash flows of hedged items.

Changes in the fair value of a derivative that is effective and that is designated and qualifies as a cash-flow hedge are recorded in other comprehensive income (loss), until operations are affected by the

variability in cash flows of the designated hedged item. Changes in fair value of a derivative that is not designated as a hedge are recorded in operations on a current basis.

During the first quarters of 2005 and 2004, there were no gains or losses reclassified into operations as a result of the discontinuance of hedge accounting treatment for any of our derivatives.

By using derivative instruments to hedge exposures to changes in interest rates, we are exposed to credit risk and market risk. Credit risk is the failure of the counterparty to perform under the terms of the derivative contract. To mitigate this risk, the hedging instruments were placed with counterparties that we believe are minimal credit risks.

Market risk is the adverse effect on the value of a financial instrument that results from a change in interest rates, commodity prices, or currency exchange rates. The market risk associated with interest rate swap agreements is managed by establishing and monitoring parameters that limit the types and degree of market risk that may be undertaken.

We do not hold or issue derivative instruments for trading purposes. Changes in the fair value of derivatives that are designated as hedges are reported on the consolidated balance sheet in “Accumulated other comprehensive income (loss)” (“AOCL”). These amounts are reclassified to interest expense when the forecasted transaction takes place.

From February 2001 through March 2005, the critical terms, such as the index, settlement dates, and notional amounts, of the derivative instruments were substantially the same as the provisions of our hedged borrowings under the Credit Facility. As a result, no ineffectiveness of the cash-flow hedges was recorded in the consolidated statements of operations.

As of March 31, 2005, approximately $655,000 of net deferred losses on derivative instruments accumulated in AOCL are expected to be reclassified to operations during the next 12 months. Transactions and events expected to occur over the next 12 months that will necessitate reclassifying these derivatives’ losses to operations are the periodic payments that are required to be made on outstanding borrowings. The maximum term over which we are hedging exposures to the variability of cash flows for commodity price risk is 2 months.

Loss Per Common Share

The weighted average number of shares of Common Stock used in the calculations of diluted loss per share for the three-month periods ended March 31, 2005 and 2004 does not include the effect of potential common shares issuable upon the exercise of employee stock options, the impact in either period of the potential conversion of our outstanding convertible preferred stock or, in the 2005 period, the impact of the potential conversion of the $299,000,000 principal amount of our 4.5% Convertible Senior Notes due 2015 (the “Convertible Notes”) issued in November 2004 as the effects of the exercise of such options and such conversion and resulting decrease in preferred stock dividends or interest payments, as the case may be, is antidilutive. Our Preferred Income Equity Redeemable Shares (“PIERS”), which are shown as mandatorily redeemable preferred stock on our consolidated balance sheets, were issued in January 2001 and are convertible into 13,789,000 shares of common stock. The Convertible Notes are convertible into 47,087,000 shares of common stock, although we can satisfy conversions by delivering cash in lieu of shares. See Note 4(g).

Stock Compensation

We apply the intrinsic-value based method of accounting prescribed by APB Opinion No. 25 and related interpretations in accounting for our stock option plans. Under this method, compensation expense for unconditional employee stock options is recorded on the date of grant only if the current market price of the underlying stock exceeds the exercise price. For employee stock options that are conditioned upon the achievement of performance goals, compensation expense, as determined by the extent that the quoted market price of the underlying stock at the time that the condition for exercise is achieved exceeds the stock option exercise price, is recognized over the service period. For stock options issued to nonemployees, we recognize compensation expense at the time of issuance based upon the fair value of the options issued.

No compensation cost has been recognized for the unconditional stock options in the consolidated financial statements. Had we determined compensation cost based on the fair value at the grant date for all our unconditional stock options under SFAS 123, “Accounting for Stock Based Compensation,” and as provided for under SFAS No. 148, “Accounting for Stock-Based Compensation – Transition and Disclosure, an Amendment of FASB Statement No. 123,” our net loss applicable to common stock would have been increased to the pro forma amounts below:

	Three months ended March 31,
	2005			2004
Net loss applicable to common stock:
As reported	$	(184,212,000	)	$	(410,312,000	)
Add: Noncash compensation	288,000			161,000
Deduct: Total stock-based employee compensation expense determined under fair value based method for all awards, net of related tax effects	(731,000		)	(717,000		)
Pro forma	$	(184,655,000	)	$	(410,868,000	)
Net loss per weighted average common share outstanding – basic and diluted:
As reported	$	(1.98	)	$	(4.41	)
Pro forma	$	(1.98	)	$	(4.42	)

2. Preferred Stock

In January 2001, we issued 11,500,000 PIERS, for proceeds of $277,834,000, net of the underwriting discount and offering expenses of $9,666,000. We used the net proceeds of the offering to fund our acquisition in that year of the former Sea World of Ohio, to repay borrowings under the working capital revolving credit portion of our senior credit facility (see Note 4(a)) and for working capital. Each PIERS represents one one-hundredth of a share of our 7¼% mandatorily redeemable preferred stock (an aggregate of 115,000 shares of preferred stock). The PIERS accrue cumulative dividends (payable, at our option, in cash or shares of common stock) at 7¼% per annum (approximately $20,844,000 per annum).

Prior to August 15, 2009, each of the PIERS is convertible at the option of the holder into 1.1990 common shares (equivalent to a conversion price of $20.85 per common share), subject to adjustment in certain circumstances (the “Conversion Price”). At any time on or after February 15, 2004 and at the then applicable conversion rate, we may cause the PIERS, in whole or in part, to be automatically converted if for 20 trading days within any period of 30 consecutive trading days, including the last day of such period, the closing price of our common stock exceeds 120% of the then prevailing Conversion Price. On

August 15, 2009, the PIERS are mandatorily redeemable in cash equal to 100% of the liquidation preference (initially $25.00 per PIERS), plus any accrued and unpaid dividends.

3. Disposition of Theme Parks

On April 8, 2004, we sold substantially all of the assets used in the operation of Six Flags World of Adventure near Cleveland, Ohio (other than the marine and land animals located at that park and certain assets related thereto) for a cash purchase price of $144.3 million. In a separate transaction, on the same date, we sold all of the stock of Walibi S.A., our wholly-owned subsidiary that directly owned the seven parks we owned in Europe. The purchase price was approximately $200 million, of which Euro 10.0 million ($12.1 million as of April 8, 2004) was received in the form of a nine and one-half year note from the buyer, and $11.6 million represented the assumption of certain debt by the buyer, with the balance paid in cash. Net cash proceeds from these transactions were used to pay down debt and to fund investments in our remaining parks. Through March 31, 2005, approximately $248,588,000 of debt had been repaid with such proceeds, not including the debt assumed by the buyer of our European parks.

The net loss from discontinued operations was classified on the consolidated statement of operations for the three months ended March 31, 2004 as “Loss from discontinued operations.” Summarized results of discontinued operations are as follows:

	Three Months Ended March 31,2004
	(in thousands)

Operating revenue	$	3,286

Accrued loss on sale of discontinued operations	(306,831		)
Loss from discontinued operations before income taxes	(33,832		)
Income tax benefit	55,759
Net results of discontinued operations	$	(284,904	)

Our long-term debt is at the consolidated level and is not reflected at each individual park. Thus, we have not allocated a portion of interest expense to the discontinued operations.

During November 2004 we agreed with the owner of the park we managed in Spain to terminate the management agreement and to transfer our 5% investment in the equity of the park for nominal consideration. By virtue of the foregoing, we recognized losses of approximately $6.7 million and $8.3 million, representing the carrying amount of our investment in the park and certain intangible assets related to non-compete agreements and licenses, respectively. These losses were recorded in other income (expense) in the third quarter of 2004.

4. Long-Term Indebtedness

(a) On November 5, 1999, Six Flags Theme Parks Inc. (SFTP), a direct wholly owned subsidiary of Six Flags Operations Inc., our principal direct subsidiary, entered into a senior credit facility (the Credit Facility), which was amended and restated on July 8, 2002 and further amended on November 25, 2003, January 14, 2004, March 26, 2004, November 5, 2004 and April 22, 2005. The Credit Facility includes a $300,000,000 five-year revolving credit facility ($135,000,000 and $125,000,000 of which was outstanding at March 31, 2005 and 2004, respectively), a $100,000,000 multicurrency reducing revolver facility (of which none was outstanding at March 31, 2005 or 2004)

and a six-year term loan ($650,088,000 and $730,000,000 of which was outstanding at March 31, 2005 and 2004, respectively). In April 2004, we repaid $75,000,000 of the term loan from a portion of the proceeds of the sale of the discontinued operations, permanently reducing the amount of the term loan facility to $655,000,000. Borrowings under the five-year revolving credit facility (US Revolver) must be repaid in full for thirty consecutive days each year. The interest rate on borrowings under the Credit Facility can be fixed for periods ranging from one to six months. At our option the interest rate is based upon specified levels in excess of the applicable base rate or LIBOR. At March 31, 2005, the weighted average interest rate for borrowings under the US Revolver and the term loan was 5.28% and 5.70%, respectively. The multicurrency facility permits optional prepayments and reborrowings and requires quarterly mandatory reductions in the initial commitment (together with repayments, to the extent that the outstanding borrowings thereunder would exceed the reduced commitment) of 2.5% of the committed amount thereof commencing on December 31, 2004, 5.0% commencing on March 31, 2006, 7.5% commencing on March 31, 2007 and 18.75% commencing on March 31, 2008. This facility and the U.S. Revolver terminate on June 30, 2008. The term loan facility requires quarterly repayments of 0.25% of the outstanding amount thereof commencing on September 30, 2004 and 24.0% commencing on September 30, 2008. The term loan matures on June 30, 2009, provided however, that the maturity of the term loan will be shortened to December 31, 2008, if prior to such date our outstanding preferred stock is not redeemed or converted into common stock. A commitment fee of .50% of the unused credit of the facility is due quarterly in arrears. The principal borrower under the facility is SFTP, and borrowings under the Credit Facility are guaranteed by Holdings, Six Flags Operations and all of Six Flags Operations’ domestic subsidiaries and are secured by substantially all of Six Flags Operations’ domestic assets and a pledge of Six Flags Operations’ capital stock. See Note 1 regarding interest rate hedging activities with respect to the term loan component of the Credit Facility.

On November 25, 2003, we entered into an amendment to the Credit Facility pursuant to which we amended the covenants relating to the leverage ratio through 2005 and the fixed charge coverage ratio through June 30, 2007 in order to provide us with additional financial flexibility. In addition, pursuant to the amendment we are permitted to enter into fixed-to-floating rate debt swap agreements so long as our total floating rate debt does not exceed 50% of our total debt as of the swap date. In exchange for our lenders’ consent to the amendment, we agreed to an increase of 0.25% in the interest rates we are charged on our borrowings under the Credit Facility.

On November 5, 2004, we entered into an additional amendment to the Credit Facility which further relaxed the leverage ratio through 2006 and the fixed charge coverage ratio through 2007. In exchange for our lenders’ consent to the amendment, we agreed to a further increase of 0.25% in certain circumstances in the interest rates we are charged on our borrowings under the Credit Agreement. We also agreed to pay a 1% prepayment penalty if we refinance all or any portion of the term loans outstanding under the Credit Facility prior to November 4, 2005.

On January 14, 2004, we completed a $130,000,000 increase of the term loan portion of the Credit Facility and used all of the proceeds of the additional loan to redeem the remaining balance of our 9 ¾% Senior Notes due 2007 then outstanding. See Note 4(b) below. In March 2004, we amended the term loan in order to permit the sales of the discontinued operations. In April 2004, we permanently repaid $75,000,000 of the term loan from a portion of the proceeds of the sale of the discontinued operations and recognized a gross loss of $1,216,000 for the write off of debt issuance costs.

The Credit Facility contains restrictive covenants that, among other things, limit the ability of Six Flags Operations and its subsidiaries to dispose of assets; incur additional indebtedness or liens; repurchase stock; make investments; engage in mergers or consolidations; pay dividends (except that (i) dividends of up to $75,000,000 in the aggregate (of which $8,900,000 had been dividended prior to March 31, 2005) may be made from cash from operations in order to enable us to pay amounts in respect of any refinancing or repayment of Holdings’ senior notes and (ii) subject to covenant compliance, dividends will be permitted to allow Holdings to meet cash interest obligations with respect to its Senior Notes, cash dividend payments on our PIERS and our obligations to the limited partners in Six Flags

Over Georgia and Six Flags Over Texas) and engage in certain transactions with subsidiaries and affiliates. In addition, the Credit Facility requires that Six Flags Operations comply with certain specified financial ratios and tests.

(b) On June 30, 1999, Holdings issued $430,000,000 principal amount of 9¾% Senior Notes due 2007 (the 2007 Senior Notes). In December 2002, we repurchased $7,000,000 principal amount of the 2007 Senior Notes. In January 2004, we redeemed the 2007 Senior Notes in full from the proceeds of the December 2003 issuance of our 9 5/8% Senior Notes due 2014 (see Note 4(f) below) and the proceeds of the $130,000,000 increase in our term loan (see Note 4(a) above). A gross loss of $25,178,000 due to the redemption of the 2007 Senior Notes was recognized in the first quarter of 2004.

(c) On February 2, 2001, Holdings issued $375,000,000 principal amount of 9 ½% Senior Notes due 2009 (the 2009 Senior Notes). As of December 31, 2004, we had repurchased $70.3 million of the 2009 Senior Notes from a portion of the proceeds of the sale of the discontinued operations (see Note 3) and a portion of the proceeds of the November 2004 offering of our 4 ½% Convertible Senior Notes due 2015 (the Convertible Notes). See Note 4(g). A gross loss of $3,922,000 due to the repurchase of the 2009 Notes was recognized in 2004. On February 1, 2005 we redeemed $123,500,000 aggregate principal amount of the 2009 Notes with a portion of the net proceeds of the Convertible Notes. We redeemed the balance of the 2009 Notes on February 7, 2005 with the proceeds of the January 2005 offering of $195,000,000 of additional 9 5/8% Senior Notes due 2014 (see Note 4(f)). A gross loss of $19,303,000 due to the redemptions of the 2009 Notes was recognized in the first quarter of 2005.

(d) On February 11, 2002, Holdings issued $480,000,000 principal amount of 8 7/8% Senior Notes due 2010 (the 2010 Senior Notes). As of December 31, 2004, we had repurchased $179.7 million of the 2010 Senior Notes from a portion of the proceeds of the sale of the discontinued operations (see Note 3) and a portion of the proceeds of the November 2004 offering of our Convertible Notes (see Note 4(g)). A gross loss of $4,599,000 due to the repurchase of the 2010 Notes was recognized in 2004. We have not repurchased or retired any additional 2010 Senior Notes since December 31, 2004. The 2010 Senior Notes are senior unsecured obligations of Holdings, are not guaranteed by subsidiaries and rank equal to the other Senior Notes of Holdings. The 2010 Senior Notes require annual interest payments of approximately $26,652,000 (8⁷/₈ % per annum) and, except in the event of a change in control of Holdings and certain other circumstances, do not require any principal payments prior to their maturity in 2010. The 2010 Senior Notes are redeemable, at Holding’s option, in whole or in part, at any time on or after February 1, 2006, at varying redemption prices beginning at 104.438% and reducing annually until maturity. The net proceeds of the 2010 Senior Notes were used to fund the redemptions of senior notes of Holdings and Six Flags Operations.

The indenture under which the 2010 Senior Notes were issued limits our ability, among other things, to dispose of assets; incur additional indebtedness or liens; pay dividends; engage in mergers or consolidations; and engage in certain transactions with affiliates.

(e) On April 16, 2003, Holdings issued $430,000,000 principal amount of 9 ¾% Senior Notes due 2013 (the 2013 Senior Notes). As of December 31, 2004 we had repurchased $42,000,000 principal amount of the 2013 Senior Notes. A gross loss of $1,979,000 due to this repurchase was recognized in 2004. We have not repurchased or retired any additional 2013 Senior Notes since December 31, 2004. The 2013 Senior Notes are senior unsecured obligations of Holdings, are not guaranteed by subsidiaries and rank equal to the other Holdings Senior Notes. The 2013 Senior Notes require annual interest payments of approximately $37,830,000 (9 3/4% per annum) and, except in the event of a change in control of the Company and certain other circumstances, do not require any principal payments prior to their maturity in 2013. The 2013 Senior Notes are redeemable, at Holdings’ option, in whole or in part, at any time on or after April 15, 2008, at varying redemption prices beginning at 104.875% and reducing annually until maturity. The indenture under which the 2013 Senior Notes were issued contains covenants substantially similar to those relating to the other Holdings

Senior Notes. All of the net proceeds of the 2013 Senior Notes were used to fund the tender offer and redemption of other senior notes of Holdings.

(f) On December 5, 2003, Holdings issued $325,000,000 principal amount of 9 5/8% Senior Notes due 2014 (the 2014 Senior Notes). As of December 31, 2004, we had repurchased $16,350,000 principal amount of the 2014 Senior Notes. A gross loss of $837,000 due to this repurchase was recognized in 2004. In January 2005, we issued an additional $195,000,000 of 2014 Senior Notes, the proceeds of which were used to fund the redemption of $181,155,000 principal amount of the 2009 Senior Notes (see 4(c)). The 2014 Senior Notes are senior unsecured obligations of Holdings, are not guaranteed by subsidiaries and rank equal to the other Holdings Senior Notes. The 2014 Senior Notes require annual interest payments of approximately $48,476,000 (9 5/8% per annum) and, except in the event of a change in control of the Company and certain other circumstances, do not require any principal payments prior to their maturity in 2014. The 2014 Senior Notes are redeemable, at Holdings’ option, in whole or in part, at any time on or after June 1, 2009, at varying redemption prices beginning at 104.813% and reducing annually until maturity. The indenture under which the 2014 Senior Notes were issued contains covenants substantially similar to those relating to the other Holdings Senior Notes. All of the net proceeds of the original issuance of 2014 Senior Notes were used to redeem a portion of the 2007 Senior Notes (see Note 4(b)).

(g) On November 19, 2004, Holdings issued $299,000,000 principal amount of Convertible Notes. The Convertible Notes are senior unsecured obligations of Holdings, are not guaranteed by subsidiaries and rank equal to the other Holdings Senior Notes. Except during specified non-convertibility periods, the Convertible Notes are convertible into our common stock at an initial conversion rate of 157.4803 shares of common stock for each $1,000 principal amount of Convertible Notes, subject to adjustment, representing an initial conversion price of $6.35 per share. Upon conversion of the notes, we have the option to deliver common stock, cash or a combination of cash and common stock. The Convertible Notes require annual interest payments of approximately $13,455,000 (4 ½% per annum) and, except in the event of a change in control of Holdings and certain other circumstances, do not require any principal payments prior to their maturity in 2015. The Convertible Notes are redeemable, at Holdings’ option, in whole or in part, at any time after May 15, 2010 at varying redemption prices beginning at 102.143% and reducing annually until maturity. The net proceeds of the Convertible Notes were used to repurchase and redeem a portion of the 2009 Senior Notes (see Note 4(c)) and repurchase a portion of the 2010 Senior Notes (see Note 4 (d)).

5. Commitments and Contingencies

On April 1, 1998 we acquired all of the capital stock of Six Flags Entertainment Corporation for $976,000,000, paid in cash. In addition to our obligations under outstanding indebtedness and other securities issued or assumed in the Six Flags acquisition, we also guaranteed in connection therewith certain contractual obligations relating to the partnerships that own the two Partnership Parks, Six Flags Over Texas and Six Flags Over Georgia. Specifically, we guaranteed the obligations of the general partners of those partnerships to (i) make minimum annual distributions of approximately $54,915,000 (as of 2005 and subject to annual cost of living adjustments thereafter) to the limited partners in the Partnership Parks and (ii) make minimum capital expenditures at each of the Partnership Parks during rolling five-year periods, based generally on 6% of such park’s revenues. Cash flow from operations at the Partnership Parks is used to satisfy these requirements first, before any funds are required from us. We also guaranteed the obligation of our subsidiaries to purchase a maximum number of 5% per year (accumulating to the extent not purchased in any given year) of the total limited partnership units outstanding as of the date of the agreements (the “Partnership Agreements”) that govern the partnerships (to the extent tendered by the unit holders). The agreed price for these purchases is based on a valuation for each respective Partnership Park equal to the greater of (i) a value derived by multiplying such park’s weighted-average four-year EBITDA (as defined in the Partnership Agreements) by a specified multiple (8.0 in the case of the Georgia park and 8.5 in the case of the Texas park) or (ii) $250.0 million in the

case of the Georgia park and $374.8 million in the case of the Texas park. Our obligations with respect to Six Flags Over Georgia and Six Flags Over Texas will continue until 2027 and 2028, respectively.

As we purchase units relating to either Partnership Park, we are entitled to the minimum distribution and other distributions attributable to such units, unless we are then in default under the applicable agreements with our partners at such Partnership Park. On March 31, 2005, we owned approximately 25.3% and 37.5%, respectively, of the limited partnership units in the Georgia and Texas partnerships. No units were tendered in April 2004 or 2005. The maximum unit purchase obligations for 2006 at both parks will aggregate approximately $246,569,000.

We maintain multi-layered general liability policies that provide for excess liability coverage of up to $100,000,000 per occurrence. For incidents arising after November 15, 2003, our self-insured retention is $2,500,000 per occurrence ($2,000,000 per occurrence for the twelve months ended November 15, 2003 and $1,000,000 per occurrence for the twelve months ended on November 15, 2002) for our domestic parks and a nominal amount per occurrence for our international parks. Our self-insured retention after November 15, 2003 is $750,000 for workers compensation claims ($500,000 for the period from November 15, 2001 – November 15, 2003). For most incidents prior to November 15, 2001, our policies did not provide for a self-insured retention. Based upon reported claims and an estimate for incurred, but not reported claims, we accrue a liability for our self-insured retention contingencies.

We are party to various other legal actions arising in the normal course of business. Matters that are probable of unfavorable outcome to us and which can be reasonably estimated are accrued. Such accruals are based on information known about the matters, our estimate of the outcomes of such matters and our experience in contesting, litigating and settling similar matters. None of the legal actions are believed by management to involve amounts that would be material to our consolidated financial position, results of operations, or liquidity after consideration of recorded accruals.

In December 2004, we guaranteed the payment of a $31.0 million construction term loan incurred by HWP Development LLC (a joint venture in which we own a 41% interest) for the purpose of financing the construction and development of a hotel and indoor water park project to be located adjacent to our Great Escape park near Lake George, New York. At March 31, 2005, $3,796,000 was outstanding under the loan. One of our partners in the joint venture also guaranteed the loan. Our guarantee will be released upon full payment and discharge of the loan, which matures on December 17, 2009. As security for the guarantee, we deposited $8.0 million in a cash collateral account (which is included in deposits and other assets in the accompanying consolidated balance sheets). We have entered into a management agreement to manage and operate the project upon its completion.

6. Minority Interest, Partnerships and Joint Ventures

Minority interest represents the third parties’ share of the assets of the four parks that are less than wholly-owned, Six Flags Over Texas, Six Flags Over Georgia (including Six Flags White Water Atlanta which is owned by the partnership that owns Six Flags Over Georgia) and Six Flags Marine World. Minority interest in loss shown is reduced by depreciation and other non-operating expenses of $1,220,000 and $1,371,000, respectively, for the quarters ended March 31, 2005 and 2004.

In April 1997, we became manager of Marine World (subsequently renamed Six Flags Marine World), then a marine and exotic wildlife park located in Vallejo, California, pursuant to a contract with an agency of the City of Vallejo under which we are entitled to receive an annual base management fee of $250,000 and up to $250,000 annually in additional management fees based on park revenues. In November 1997, we exercised our option to lease approximately 40 acres of land within the site for nominal rent and an initial term of 55 years (plus four ten-year and one four-year renewal options). We have added theme park rides and attractions on the leased land, which is located within the existing park, in order to create one fully-integrated regional theme park at the site. We are entitled to receive, in

addition to the management fee, 80% of the cash flow generated by the combined operations at the park, after combined operating expenses and debt service on outstanding third party debt obligations relating to the park. We also have an option through February 2007 to purchase the entire site at a purchase price equal to the greater of the then principal amount of the debt obligations of the seller (expected to aggregate $52,000,000) or the then fair market value of the seller’s interest in the park (based on a formula relating to the seller’s 20% share of Marine World’s cash flow).

See note 5 for a description of the partnership arrangements applicable to Six Flags Over Texas and Six Flags Over Georgia (the Partnership Parks).

7. Business Segments

We manage our operations on an individual park location basis. Discrete financial information is maintained for each park and provided to our management for review and as a basis for decision making. The primary performance measure used to allocate resources is earnings before interest, tax expense, depreciation and amortization (“EBITDA”). All of our parks provide similar products and services through a similar process to the same class of customer through a consistent method. As such, we have only one reportable segment - - operation of theme parks. The following tables present segment financial information and a reconciliation of the primary segment performance measure to loss from continuing operations before income taxes. Park level expenses exclude all noncash operating expenses, principally depreciation and amortization, and all non-operating expenses.

	Three Months Ended March 31,
	2005			2004
	(In thousands)
Theme park revenue	$	54,380		$	44,813
Theme park cash expenses	(127,452		)	(119,132		)
Aggregate park EBITDA	(73,072		)	(74,319		)
Minority interest in earnings - EBITDA	5,343			5,983
Corporate expenses	(6,254		)	(5,772		)
Non-cash compensation	(288		)	(161		)
Other income (expense)	(22,500		)	(28,122		)
Minority interest in earnings – depreciation and other expense	1,220			1,371
Depreciation and amortization	(37,468		)	(36,982		)
Interest expense	(46,527		)	(52,208		)
Interest income	1,782			301
Loss from continuing operations before income taxes	$	(177,764	)	$	(189,909	)

After giving effect to the discontinued operations, all of our parks are located in the United States except one park located in Mexico and one located in Canada. The following information reflects our long-lived assets and revenue by domestic and foreign categories as of and for the first quarter of 2005 and 2004.

	(In thousands)
2005	Domestic		International		Total
Long-lived assets	$	3,132,111	$	133,196	$	3,265,307
Revenue	41,514		12,866		54,380

	(In thousands)
2004	Domestic		International		Total
Long-lived assets	$	3,186,486	$	124,384	$	3,310,870
Revenue	37,517		7,296		44,813

Long-lived assets include property and equipment and intangible assets.

8. Pension Benefits

As part of the acquisition of the former Six Flags, we assumed the obligations related to the SFTP Defined Benefit Plan (the Plan). The Plan covered substantially all of SFTP’s employees. During 1999 the Plan was amended to cover substantially all of our domestic full-time employees. During 2004, the Plan was further amended to cover certain seasonal workers, retroactive to January 1, 2003. The Plan permits normal retirement at age 65, with early retirement at ages 55 through 64 upon attainment of ten years of credited service. The early retirement benefit is reduced for benefits commencing before age 62. Plan benefits are calculated according to a benefit formula based on age, average compensation over the highest consecutive five-year period during the employee’s last ten years of employment and years of service. Plan assets are invested primarily in common stock and mutual funds. The Plan does not have significant liabilities other than benefit obligations. Under our funding policy, contributions to the Plan are determined using the projected unit credit cost method. This funding policy meets the requirements under the Employee Retirement Income Security Act of 1974.

In December 2003, FASB Statement No. 132 (revised), “Employers’ Disclosures about Pensions and Other Postretirement Benefits,” was issued. Statement 132 (revised) prescribes employers’ disclosures about pension plans and other postretirement benefit plans; it does not change the measurement or recognition of those plans. The Statement retains and revises the disclosure requirements contained in the original Statement 132. It also requires additional annual and quarterly disclosures about the assets, obligations, cash flows, and net periodic benefit cost of defined benefit pension plans and other post retirement benefit plans. The Statement generally is effective for fiscal years ending after December 15, 2003. The following disclosures incorporate the requirements of Statement 132 (revised).

Components of Net Periodic Benefit Cost

	Three Months Ended March 31,
	2005*			2004
Service cost	$	1,527,000		$	1,308,000
Interest cost	2,298,000			2,076,000
Expected return on plan assets	(2,205,000		)	(1,987,000		)
Amortization of prior service cost	140,000			75,000
Recognized net actuarial loss	687,000			663,000
Net periodic benefit cost	$	2,447,000		$	2,135,000

Weighted-average assumptions used to determine net cost

Discount rate	5.875	%	6.125	%
Rate of compensation increase	3.750	%	3.750	%
Expected return on plan assets	8.500	%	8.750	%

* The pension cost shown for the first quarter of 2005 is an estimate. We will reflect the actual 2005 cost in future interim filings once it is actuarially determined.

Employer Contributions

We expect to contribute approximately $9,432,000 to the Plan during fiscal year 2005, none of which was made during the quarter ended March 31, 2005.

Item 2 — Management’s Discussion and Analysis of

Financial Condition and Results of Operations

RESULTS OF OPERATIONS

General

As of March 31, 2004, we owned or operated 39 parks. In April 2004 we sold in two separate transactions seven parks in Europe and Six Flags Worlds of Adventure in Ohio. In November 2004 we agreed with the owner of the park that we managed in Spain to terminate the management agreement. As of March 31, 2005, we owned or operated 30 parks, including 28 domestic parks, one park in Mexico and one park in Canada. The accompanying consolidated financial statements as of and for the three months ended March 31, 2004 reflect the assets, liabilities and results of the sold facilities as discontinued operations.

Our revenue is primarily derived from the sale of tickets for entrance to our parks (approximately 47.9% of revenues in 2005) and the sale of food, merchandise, games and attractions inside our parks. Although revenues in the first quarter of 2005 increased 21.3% over the comparable period of 2004, revenues for the first quarter of any year are not meaningful since most of our parks are not in operation during the first quarter.

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

We plan to make approximately $140 million of capital expenditures for the 2005 season adding a wide array of attractions at many of our parks. These additions include a major expansion to our New Jersey facility, which will include the introduction of a major new roller coaster, and the addition of a water park to our Chicago park. We plan to showcase the new rides and attractions in the second year of the new marketing and advertising campaigns we launched in 2004. We also plan to continue in 2005 the guest service enhancements we introduced in 2004.

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 our consolidated financial statements in conformity with accounting principles generally accepted in the United States of America. Our Annual Report on Form 10-K for the year ended December 31, 2004 (the “2004 Form 10-K”) discussed our most critical accounting policies. As of March 31, 2005 solely as a result of our first quarter 2005 off-season results, we had increased our valuation allowance in respect of income taxes by $67,246,000 as described in Note 1 to Notes to the Consolidated Financial Statements. Except for the foregoing, there have been no material developments with respect to any critical accounting policies discussed in the 2004 Form 10-K since December 31, 2004.

Summary of Operations

Summary data for the three months ended March 31 were as follows (in thousands, except per capita revenue):

							Percentage Changes
	2005			2004			2005 v. 2004

Total revenue	$	54,380		$	44,813		21.3	%
Operating expenses	90,390			83,193			8.7
Selling, general and administrative	37,976			37,643			0.9
Noncash compensation	288			161			78.9
Costs of products sold	5,340			4,068			31.3
Depreciation and amortization	37,468			36,982			1.3
Loss from operations	(117,082		)	(117,234		)	(0.1	)
Interest expense, net	(44,745		)	(51,907		)	(13.8	)
Minority interest	6,563			7,354			(10.8	)
Early repurchase of debt	(19,303		)	(25,177		)	(23.3	)
Other expense	(3,197		)	(2,945		)	8.6
Loss from continuing operations before income taxes	(177,764		)	(189,909		)	(6.4	)
Income tax expense (benefit)	955			(69,994		)	N/M
Loss from continuing operations	$	(178,719	)	$	(119,915	)	49.0	%

Other Data:
Attendance	1,644			1,314			25.1
Per capita revenue	$	33.08		$	34.10		(3.0	)

Three months ended March 31, 2005 vs. three months ended March 31, 2004

Revenue in the first quarter of 2005 totaled $54.4 million compared to $44.8 million for the first quarter of 2004, representing a 21.3% increase. The increase in the 2005 period results primarily from a 25.1% increase in attendance offset in part by a 3.0% decrease in per capita revenue. The increase in attendance was the result of an increase in operating days in the 2005 quarter as compared to the prior-year period, due largely to the presence of the Easter holiday in the first quarter of 2005, as well as a stronger performance at several parks, particularly our park in Mexico City. Per capita revenue includes certain revenue sources unrelated to attendance, including sponsorship revenue. The decrease in per capita revenue in the first quarter of 2005 reflects that this non-attendance based revenue in the 2005 period did not increase at the same rate as the attendance increase, and to the increased percentage of attendance coming from our Mexico City park, which historically generates lower levels of in-park spending than the Company-wide average.

Operating expenses for the first quarter of 2005 increased $7.2 million compared to expenses for the first quarter of 2004. The increase reflects the increase in operating days in the quarter, as well as anticipated increases in salary and wage expense and repair and maintenance expenditures.

Selling, general and administrative expenses for the first quarter of 2005 increased $0.3 million compared to comparable expenses for the first quarter of 2004. The increase primarily relates to increased real estate taxes and accounting and other third party fees offset in part by lower insurance and advertising expense.

The increase in the 2005 quarter in noncash compensation reflects the grant in that quarter of an aggregate of 65,000 shares of restricted stock to our Chief Executive Officer and Chief Financial Officer pursuant to their employment agreements.

Costs of products sold in the 2005 period increased $1.3 million compared to costs for the first quarter of 2004, reflecting primarily the increase in in-park revenues. As a percentage of our in-park spending (excluding third party concessionaire sales), cost of sales remained relatively constant in the two quarters.

Depreciation and amortization expense for the first quarter of 2005 increased $0.5 million compared to the first quarter of 2004. The increase compared to the 2004 level was attributable to our on-going capital program. Interest expense, net decreased $7.2 million compared to the first quarter of 2004, reflecting primarily lower debt levels and the benefit of the lower rate convertible note issue effected in November 2004.

Minority interest in loss reflects the third party share of the operations of the parks that are not wholly-owned by us, Six Flags Over Georgia (including White Water Atlanta), Six Flags Over Texas and Six Flags Marine World.

The expense in the first quarter of 2005 for early repurchase of debt reflects the redemption in February 2005 of our 2009 Senior Notes. The expense in the first quarter of 2004 for early repurchase of debt reflects the redemption in January 2004 of our 2007 Senior Notes. See Notes 4(b), (c), (f) and (g) to Notes to Consolidated Financial Statements. We refinance our public debt primarily to extend maturities.

Income tax expense was $1.0 million for the first quarter of 2005 compared to a $70.0 million benefit for the first quarter of 2004. The tax expense for the first quarter of 2005 was primarily the result of the $67.2 million valuation allowance established in that quarter and discussed in Note 1 to Notes to Consolidated Financial Statements.

Results of Discontinued Operations

On April 8, 2004, we sold substantially all of the assets used in the operation of Six Flags World of Adventure near Cleveland, Ohio (other than the marine and land animals located at that park and certain assets related thereto) for a cash purchase price of $144.3 million. In a separate transaction on the same date, we sold all of the stock of Walibi S.A., our wholly-owned subsidiary that indirectly owned the seven parks we owned in Europe. The purchase price was approximately $200 million, of which Euro 10.0 million ($12.1 million as of April 8, 2004) was received in the form of a nine and one half year note from the buyer and $11.6 million represented the assumption of certain debt by the buyer, with the balance paid in cash. Net cash proceeds from these transactions were used to pay down debt and to make investments in our remaining parks. See Note 3 to Notes to Consolidated Financial Statements.

Pursuant to SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” the consolidated financial statements have been reclassified for all periods presented to reflect the operations, assets and liabilities of the parks being sold as discontinued operations.

Following are components of the net results of discontinued operations for the quarter ended March 31, 2004.

	Three Months Ended March 31, 2004
	(in thousands)
Accrued loss on sale of discontinued operations	$	(306,831	)
Loss from discontinued operations before income taxes	(33,832		)
Income tax benefit	55,759
Net results of discontinued operations	$	(284,904	)

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 and acquisitions), preferred stock dividends and payments to our partners in the Partnership Parks. We did not pay a dividend on our common stock during 2004, nor do we expect to pay such dividends in 2005. We believe that, based on historical and anticipated operating results, cash flows from operations, available cash and available amounts under our credit agreement will be adequate to meet our future liquidity needs, including anticipated requirements for working capital, capital expenditures, scheduled debt and preferred stock requirements and obligations under arrangements relating to the Partnership Parks, for at least the next several years. Our current and future liquidity is, however, 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 unfavorable weather, accidents or the occurrence of an event or condition, including terrorist acts or threats, negative publicity or significant local competitive events, that significantly reduces paid attendance and, therefore, revenue at any of our theme parks. See “Business – Risk Factors,” contained in the 2004 Form 10-K. In that case, we might need to seek additional financing. In addition, we expect to refinance all or a portion of our existing debt on or prior to maturity and to seek additional financing. The degree to which we are leveraged could adversely affect our ability to obtain any new financing or to effect any such refinancing. See “Cautionary Note Regarding Forward-Looking Statements.”

At March 31, 2005, our total debt aggregated $2,308.4 million, of which approximately $171.4 million was scheduled to mature prior to March 31, 2006. Of the current portion of long-term debt, $135.0 million represents borrowings under the working capital revolving credit component of our credit facility and $16.5 million consists of working capital borrowings under separate facilities of the Partnership Parks. Based on interest rates at March 31, 2005 for floating rate debt and after giving effect to the interest rate swaps described herein, annual cash interest payments for 2005 on non-revolving credit debt outstanding at March 31, 2005 and anticipated levels of working capital revolving borrowings for the year will aggregate approximately $168 million. In addition, annual dividend payments on our outstanding preferred stock total $20.8 million, payable at our option in cash or shares of common stock. We plan on spending approximately $140 million on capital expenditures for the 2005 season. At March 31, 2005, we had approximately $64.2 million of cash and $237.2 million available under our credit facility.

Due to the seasonal nature of our business, we are largely dependent upon our $300.0 million working capital revolving credit portion of our credit agreement in order to fund off season expenses.

Our ability to borrow under the working capital revolver is dependent upon compliance with certain conditions, including financial ratios and the absence of any material adverse change. We are currently in compliance with all of these conditions. If we were to become unable to borrow under the facility, we would likely be unable to pay in full our off-season obligations. The working capital facility expires in June 2008. The terms and availability of our credit facility and other indebtedness would not be affected by a change in the ratings issued by rating agencies in respect of our indebtedness.

During the quarter ended March 31, 2005, net cash used in operating activities was $97.3 million. Since our business is both seasonal and involves significant levels of cash transactions, factors impacting our net operating cash flows are the same as those impacting our cash-based revenues and expenses discussed above. Net cash provided by investing activities in the first quarter of 2005 was $82.0 million, consisting primarily of maturities of restricted-use investments (representing the net proceeds from our November 2004 offering of the Convertible Notes, which had been held in escrow to fund a portion of the redemption in February 2005 of the 2009 Senior Notes), offset in part by capital expenditures. Net cash provided by financing activities in the first quarter of 2005 was $10.8 million, representing primarily the proceeds of the January 2005 issuance of $195.0 million in additional 2014 Senior Notes and $135.0 million in borrowings under the credit facility, offset by the payment of $319.1 million to redeem public debt and the payment of preferred stock dividends as well as debt issuance costs.

Long-term debt and preferred stock

Our debt at March 31, 2005 included $1,489.4 million of fixed-rate senior notes, with staggered maturities ranging from 2010 to 2015, $785.1 million under our credit facility and $34.0 million of other indebtedness, including $28.9 million of indebtedness at Six Flags Over Texas and Six Flags Over Georgia. Except in certain circumstances, the public debt instruments do not require principal payments prior to maturity. Our credit facility includes a $655.0 million term loan ($650.1 million of which was outstanding at March 31, 2005); a $100.0 million multicurrency reducing revolver facility (none of which was outstanding at March 31, 2005) and a $300.0 million working capital revolver ($135.0 million of which was outstanding at that date). The working capital facility must be repaid in full for 30 consecutive days during each year and terminates on June 30, 2008. The multicurrency reducing revolving credit facility, which permits optional prepayments and reborrowings, requires quarterly mandatory reductions in the initial commitment (together with repayments, to the extent that the outstanding borrowings thereunder would exceed the reduced commitment) of 2.5% of the committed amount thereof commencing on December 31, 2004, 5.0% commencing on March 31, 2006, 7.5% commencing on March 31, 2007 and 18.75% commencing on March 31, 2008 and this facility terminates on June 30, 2008. The term loan facility requires quarterly repayments of 0.25% of the outstanding amount thereof commencing on September 30, 2004 and 24.0% commencing on September 30, 2008. The term loan matures on June 30, 2009. Under the credit facility, the maturity of the term loan will be shortened to December 31, 2008, if prior to such date our outstanding preferred stock is not converted into common stock or redeemed. All of our outstanding preferred stock ($287.5 million liquidation preference) must be redeemed on August 15, 2009 (to the extent not previously converted into common stock). See Notes 2 and 4 to Notes to Consolidated Financial Statements for additional information regarding our indebtedness and preferred stock.

Partnership Park Obligations

In connection with our 1998 acquisition of the former Six Flags, we guaranteed certain obligations relating to Six Flags Over Georgia and Six Flags Over Texas. These obligations continue until 2027, in the case of the Georgia park and 2028, in the case of the Texas park. Among such obligations are (i) minimum annual distributions (including rent) of approximately $54.9 million in 2005 (subject to cost of living adjustments in subsequent years) to partners in these two Partnerships Parks (of

which we will be entitled to receive in 2004 approximately $17.7 million based on our present ownership of 25% of the Georgia partnership and 37% of the Texas partnership), (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 a maximum number of 5% per year (accumulating to the extent not purchased in any given year) of limited partnership units at specified prices.

We plan to make approximately $6.2 million of capital expenditures at these parks for the 2005 season, an amount in excess of the minimum required expenditure. We were not required to purchase any units in the 2005 offer to purchase. Because we have not been required since 1998 to purchase a material amount of units, our maximum unit purchase obligation for both parks in 2006 is an aggregate of approximately $246.6 million, representing approximately 45.0% of the outstanding units of the Georgia park and 36.1% of the outstanding units of the Texas park. The annual unit purchase obligation (without taking into account accumulation from prior years) aggregates approximately $31.1 million for both parks based on current purchase prices. As we purchase additional units, we are entitled to a proportionate increase in our share of the minimum annual distributions.

Cash flows from operations at these 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 $58.7 million of aggregate net cash provided by operating activities during 2004. At March 31, 2005, we had total loans outstanding of $127.5 million to the partnerships that own these parks, primarily to fund the acquisition of Six Flags White Water Atlanta and to make capital improvements.

Off-balance sheet arrangements and aggregate contractual obligations

In December 2004, we guaranteed the payment of a $31.0 million construction term loan incurred by HWP Development LLC (a joint venture in which we own a 41% interest) for the purpose of financing the construction and development of a hotel and indoor water park project to be located adjacent to our Great Escape park near Lake George, New York. The hotel is scheduled to open in early 2006; accordingly, we have not yet received any revenues from the joint venture but had advanced the joint venture approximately $828,000 at March 31, 2005. We acquired our interest in the joint venture through a contribution of land and a restaurant, valued at $5.0 million

The loan was also guaranteed by one of our venture partners. The guarantee will be released upon full payment and discharge of the loan, which matures on December 17, 2009. As security for the guarantee, we deposited $8.0 million in a cash collateral account. At March 31, 2005, approximately $3.8 million was outstanding under the construction term loan. In the event we are required to fund amounts under the guarantee, our joint venture partners either must reimburse us for their respective pro rata share (based on their percentage interests in the venture) or their interests in the joint venture will be diluted or, in certain cases, forfeited. We have entered into a management agreement to manage and operate the project upon its completion. As of December 31, 2004, we were not involved in any other off-balance sheet arrangements.

Other obligations

In addition to the debt, preferred stock, lease obligations applicable to several of our parks and our commitments to the partnerships that own Six Flags Over Texas and Six Flags Over Georgia discussed above, our contractual commitments include commitments for license fees to Warner Bros. and commitments relating to capital expenditures. License fees to Warner Bros. for our domestic parks aggregate $2.5 million annually through May 2005. Effective June 1, 2005, the license fee is payable based upon the number of domestic parks utilizing the licensed characters. Based on current usage, the annual fee will increase to approximately $4.0 million at that time. In addition to the licensee fee, we also

pay a royalty fee on merchandise sold using the licensed characters, generally equal to 12% of the cost of the merchandise. We expect to make contributions of approximately $9.4 million in 2005 in respect to our pension plans and $2.3 million in 2005 to our 401(k) plan. Our estimated expense for employee health insurance for 2005 is $7.5 million.

Although we are contractually committed to make specified levels of capital expenditures at selected parks for the next several years, the vast majority of our capital expenditures in 2005 and beyond will be made on a discretionary basis. We plan on spending approximately $140 million on capital expenditures for the 2005 season.

During the three years ended December 31, 2003, insurance premiums and self-insurance retention levels increased substantially. However, as compared to the policies that expired in 2004, the current policies, which expire in October 2005, cover substantially the same risks (neither property insurance policy covered terrorist activities), do not require higher aggregate premiums and do not have substantially larger self-insurance retentions (liability insurance retentions increased from $2.0 million to $2.5 million per occurrence and workers’ compensation retentions increased from $500,000 to $750,000). 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, such as terrorism.

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.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

The information included in “Quantitative and Qualitative Disclosures About Market Risk” in Item 7A of our 2004 Form 10-K is incorporated herein by reference. Such information includes a description of our potential exposure to market risks, including interest rate risk and foreign currency risk. As of March 31, 2005, there have been no material changes in our market risk exposure from that disclosed in the 2004 Form 10-K.

Item 4. Controls and Procedures

The Company’s management evaluated, with the participation of the Company’s principal executive and principal financial officers, the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of March 31, 2005. Based on their evaluation, the Company’s principal executive and principal financial officers concluded that the Company’s disclosure controls and procedures were effective as of March 31, 2005.

There has been no change in the Company’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the Company’s fiscal quarter ended March 31, 2005, that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II — OTHER INFORMATION

Items 1 – 5

Not applicable.

Item 6 - Exhibits and Reports on Form 8-K

(a)	Exhibits

	Exhibit 10.1	Fifth Amendment, dated as of April 22, 2005, to the Amended and Restated Credit Agreement, dated as of July 8, 2002, among the Registrant, certain of its subsidiaries named therein, the lenders from time to time party thereto and Lehman Commercial Paper Inc., as administrative agent.

	Exhibit 31.1	Certification of Chief Executive Officer,
		pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
	Exhibit 31.2	Certification of Chief Financial Officer,
		pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
	Exhibit 32.1	Certification of Chief Executive Officer,
		pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
	Exhibit 32.2	Certification of Chief Financial Officer,
		pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

	SIX FLAGS, INC.
	(Registrant)

	/s/ Kieran E. Burke
	Kieran E. Burke
	Chairman and Chief Executive Officer

	/s/ James F. Dannhauser
	James F. Dannhauser
	Chief Financial Officer