Attached files

file filename
EXCEL - IDEA: XBRL DOCUMENT - Six Flags Entertainment CorpFinancial_Report.xls
EX-31.1 - SECTION 302 CEO CERTIFICATION - Six Flags Entertainment Corpex311_123114.htm
EX-21.1 - LIST OF SUBSIDIARIES - Six Flags Entertainment Corpex211_123114.htm
EX-32.2 - SECTION 906 CFO CERTIFICATION - Six Flags Entertainment Corpex322_123114.htm
EX-12.1 - COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES - Six Flags Entertainment Corpex121_123114.htm
EX-23.1 - CONSENT OF KPMG LLP - Six Flags Entertainment Corpex231_123114.htm
EX-31.2 - SECTION 302 CFO CERTIFICATION - Six Flags Entertainment Corpex312_123114.htm
EX-32.1 - SECTION 906 CEO CERTIFICATION - Six Flags Entertainment Corpex321_123114.htm
EX-10.44 - FORM OF DIRECTOR RESTRICTED STOCK AGREEMENT - Six Flags Entertainment Corpex1044_123114.htm

 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-K
 
ý
 
Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
for the fiscal year ended December 31, 2014 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, Texas
(Address of principal executive offices)
 
75050
(Zip Code)
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
 
New York Stock Exchange
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. ý
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 $3,116.0 million based on the closing price ($42.55) 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 13, 2015, there were 93,055,389 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 2015 annual meeting of stockholders, which will be filed by the registrant within 120 days after the close of its 2014 fiscal year.
 



TABLE OF CONTENTS
 
 
Page No.
 
 
 
 
 
 
 
 
 
 82

i


CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K (the "Annual Report") and the documents incorporated herein by reference contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements include all statements that are not historical facts and can be identified by words such as "anticipates," "intends," "plans," "seeks," "believes," "estimates," "expects," "may," "should," "could" and variations of such words or similar expressions. Forward-looking statements are based on our current beliefs, expectations and assumptions regarding our business, the economy and other future conditions. Because forward-looking statements relate to the future, they are, by their nature, 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. Therefore, we caution you 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 sold at our parks;
accidents occurring at our parks or other parks in the industry and adverse publicity concerning 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 entertainment alternatives;
dependence on a seasonal workforce;
unionization activities and labor disputes;
laws and regulations affecting labor and employee benefit costs, including increases in state and federally mandated minimum wages, and healthcare reform;
pending, threatened or future legal proceedings and the significant expenses associated with litigation;
cyber security risks; and
other factors described in "Item 1A. Risk Factors" included elsewhere in this Annual Report.
A more complete discussion of these factors and other risks applicable to our business is contained in "Part I, Item 1A. Risk Factors" included elsewhere in this Annual Report. All forward-looking statements in this report, or that are made on our behalf by our directors, officers or employees related to the information contained herein, apply only as of the date of this report or as of the date they were made. While we believe that the expectations reflected in such forward-looking statements are reasonable, we can give no assurance that 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 undertake no obligation, except as required by applicable law, to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise.
*        *        *        *        *
As used in this Annual Report, 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, Superman and Wonder Woman and all related characters, names and indicia are copyrights and trademarks of DC Comics. Yogi Bear, Scooby-Doo and The Flintstones and all related characters, names and indicia are copyrights and trademarks of Hanna-Barbera. Cartoon Network is a trademark of Cartoon Network. Six Flags and all related indicia are registered trademarks of Six Flags Theme Parks Inc.

ii


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 each of the top 10 designated market areas, as determined by a survey of television households within designated market areas published by A.C. Nielsen Media Research in September 2014. Our diversified portfolio of North American theme parks serves an aggregate population of approximately 100 million people and 175 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 2014, our parks offered approximately 800 rides, including over 130 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 and beginning in 2014 we are also involved in the development of Six Flags-branded theme parks outside of North America.
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") and certain of its domestic subsidiaries (collectively, 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. 9-12019) (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.
On April 30, 2010, the Bankruptcy Court entered an order confirming the Debtors' Modified Fourth Amended Joint Plan of Reorganization and the Debtors emerged from Chapter 11. Pursuant to the reorganization plan, all of SFI's common stock and other equity and debt securities were cancelled as of April 30, 2010. Also, on April 30, 2010, but after the reorganization plan became effective and prior to the issuance of securities under the reorganization plan, SFI changed its corporate name to Six Flags Entertainment Corporation ("Holdings"). On April 30, 2010, Holdings issued an aggregate of 109,555,556 shares of common stock at $0.025 par value, as adjusted to reflect the two-for-one stock splits in June 2011 and June 2013. On June 21, 2010, Holdings' common stock commenced trading on the New York Stock Exchange under the symbol "SIX."

1


Also in connection with the emergence from Chapter 11 and in accordance with the Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 852, Reorganizations, we adopted fresh start accounting, pursuant to which the Company's estimated fair value was allocated to its underlying assets and liabilities, which results in financial statements that are not comparable to financial statements for periods prior to emergence.
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)
Baltimore (26)
 
8.2 million—50 miles
13.7 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)
Sacramento (20)
 
6.3 million—50 miles
11.7 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
 
218 acres—combination theme and water park
 
Houston (10)
San Antonio (33)
Austin (39)
 
2.4 million—50 miles
4.5 million—100 miles
 
Sea World of Texas /
San Antonio, TX / 15 miles

Schlitterbahn /
New Braunfels, TX / 33 miles
Six Flags Great Adventure &
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)
Philadelphia (4)
 
13.9 million—50 miles
29.3 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)
Milwaukee (35)
 
8.8 million—50 miles
13.8 million—100 miles
 
Kings Island /
Cincinnati, OH / 350 miles

Cedar Point /
Sandusky, OH / 340 miles

Several water parks /
Wisconsin Dells Area / 170 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)
 
2.8 million—50 miles
4.0 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




2


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 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)
 
10.4 million—50 miles
18.6 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
Six Flags Mexico
Mexico City, Mexico
 
110 acres—theme park
 
N/A
 
18.3 million—50 miles
37.2 million—100 miles
 
Mexico City Zoo /
Mexico City, Mexico / 14 miles

La Feria /
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 (115)
 
3.4 million—50 miles
16.4 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 Atlanta
Marietta, GA
 
352 acres—separately gated theme and water park on 283 acres and water park on 69 acres
 
Atlanta (9)
 
5.6 million—50 miles
8.0 million—100 miles
 
Georgia Aquarium /
Atlanta, GA / 20 miles

Carowinds /
Charlotte, NC / 250 miles

Alabama Splash Adventures /
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)
 
6.7 million—50 miles
8.1 million—100 miles
 
Sea World of Texas /
San Antonio, TX / 285 miles

NRH2O Waterpark /
North Richland Hills, TX / 13 miles

The Great Wolf Lodge /
Grapevine, TX / 17 miles

Hawaiian Falls Waterparks /
Multiple Locations / 15 - 35 miles
La Ronde
Montreal, Canada
 
146 acres—theme park
 
N/A
 
4.8 million—50 miles
6.1 million—100 miles
 
Quebec City Waterpark /
Quebec City, Canada / 130 miles

Canada's Wonderland /
Vaughan, Ontario / 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)
 
1.1 million—50 miles
3.1 million—100 miles
 
Darien Lake /
Darien Center, NY / 311 miles
________________________________________
*
Based on a 9/27/14 survey of television households within designated market areas published by A.C. Nielsen Media Research.

3


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 $67.8 million in 2015 (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, 2014, our share of the distribution will be approximately $29.5 million) and (ii) minimum capital expenditures at each park during rolling five-year periods based generally on 6% of park 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 annually purchase all outstanding limited partnership units to the extent tendered by the unit holders (the "Partnership Park Put").
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 agreed price for units tendered in the Partnership Park Put is based on a valuation of each of the respective Partnership Parks (the "Specified Price") that is the greater of (i) a valuation for each of the respective Partnership Parks derived by multiplying such park's weighted average four year EBITDA (as defined in the agreements that govern the partnerships) by a specified multiple (8.0 in the case of SFOG and 8.5 in the case of SFOT) and (ii) a valuation derived from the highest prices previously paid for the units of the Partnership Parks by certain entities.  Pursuant to the valuation methodologies described in the preceding sentence, the Specified Price for the Partnership Parks, if determined as of December 31, 2014, is $310.4 million in the case of SFOG and $378.7 million in the case of SFOT. As of December 31, 2014, we owned approximately 30.5% and 53.1% of the Georgia limited partner interests and Texas limited partner interests, respectively. The remaining redeemable units of approximately 69.5% and 46.9% of the Georgia limited partner and Texas limited partner, respectively, represent a current redemption value for the limited partnership units of approximately $393.6 million. Our obligations with respect to SFOG and SFOT will continue until 2027 and 2028, respectively.
In connection with our acquisition of the 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 $22.0 million of capital expenditures at these parks during the 2014 season and intend to incur approximately $20.0 million of capital expenditures at these parks for the 2015 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 $58.4 million of cash in 2014 from operating activities after deduction of capital expenditures and excluding the impact of short-term intercompany advances from or payments to SFI or Holdings, as the case may be. As of December 31, 2014 and 2013, we had total loans receivable outstanding of $239.3 million from the partnerships that own the Partnership Parks. The proceeds from these loans were primarily used to fund the acquisition of Six Flags White Water Atlanta and to make capital improvements and distributions to the limited partners in prior years.
Pursuant to the 2014 annual offer, we did not purchase any units from the Georgia partnership and we purchased 0.0125 units from the Texas partnership for approximately $19,000 in May 2014. With respect to the 2014 "put" obligations, no borrowing occurred. The $300 million accordion feature on the Term Loan B (as defined in "Management's Discussion and Analysis - Liquidity and Capital Resources of Financial Condition and Results of Operations" in Item 7 of this Annual Report) under our $1,135.0 million credit agreement (the "2011 Credit Facility") is available for borrowing for future "put" obligations if necessary.

4


Marketing and Promotion
We attract visitors through multi-media marketing and promotional programs for each of our parks. The programs are designed to attract guests and 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 22%, 23%, and 25% of the aggregate attendance during the 2014, 2013 and 2012 seasons, respectively, 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.
During 2013 we launched a monthly membership program. Season pass and membership sales establish an attendance base in advance of the season, thus reducing exposure to inclement weather. In general, a season pass or membership guest contributes higher aggregate profitability to the Company over the course of a year compared to a single day ticket guest because a season pass or membership guest pays a higher ticket price and contributes to in-park guest spending over multiple visits. Additionally, guests enrolled in our membership program and season pass holders often bring paying guests and generate "word-of-mouth" advertising for the parks. During the 2014 and 2013 seasons, season pass and membership attendance constituted approximately 50% and 48%, respectively, of the total attendance at our parks. During the 2012 season, season pass attendance constituted approximately 44% 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 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.
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,

5


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 16 to the consolidated financial statements included elsewhere in this Annual Report for information concerning revenues and long-lived assets by domestic and international categories.
Capital Improvements and Other Initiatives
We regularly make capital investments for new rides and attractions in our parks that, in total, approximate 9% of revenues annually. We purchase both new and used rides and attractions. In addition, on occasion we relocate 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 2014, we (i) added the world's fastest wooden roller coaster with the world's tallest and steepest drop on a wooden roller coaster at Six Flags Great America (Gurnee, IL), the world's tallest vertical drop ride at Six Flags Great Adventure (Jackson, NJ) and the world's tallest swing ride at Six Flags New England (Agawam, MA); (ii) added a new water park at Six Flags Over Georgia (Austell, GA) and re-introduced the New Medusa Steel Coaster at Six Flags Mexico (Mexico City, Mexico); (iii) introduced a new Mardi Gras area with a spinning coaster at Six Flags America (outside Washington, D.C.); (iv) refreshed the kids' areas at Six Flags Over Texas (Arlington, TX) and Six Flags Magic Mountain (Valencia, CA); (v) expanded the water park at Six Flags Fiesta Texas (San Antonio, TX); (vi) added interactive water rides at Six Flags Discovery Kingdom (Vallejo, CA) and Six Flags St. Louis (Eureka, MO); (vii) added a water slide complex at Six Flags Hurricane Harbor (Arlington, TX) and a drop box speed slide at Six Flags Hurricane Harbor (Valencia, CA); and (viii) added a variety of rides, shows and attractions at several parks, including La Ronde (Montreal, Canada), The Great Escape (Queensbury, NY), Six Flags Hurricane Harbor (Jackson, NJ) and Six Flags White Water Atlanta (Marietta, GA).
Planned initiatives for 2015 include (i) adding a world-record-breaking hybrid roller coaster at Six Flags Magic Mountain (Valencia, CA), a state-of-the-art hybrid roller coaster at Six Flags New England (Agawam, MA), and a 4D wing roller coaster at Six Flags Fiesta Texas (San Antonio, TX); (ii) introducing all-new 3D interactive dark ride attractions at Six Flags Over Texas (Arlington, TX) and Six Flags St. Louis (Eureka, MO); (iii) debuting a looping coaster and expanding Fright Fest® with a new haunted house attraction at Six Flags Great Adventure (Jackson, NJ); (iv) adding a seven-story looping coaster and a classic spin ride at Six Flags Over Georgia (Austell, GA) and a water slide featuring a 90-degree drop, with riders plunging through a trap door and traveling down at speeds of more than 40 miles per hour at Six Flags White Water Atlanta (Marietta, GA); (v) upgrading the signature areas of Six Flags Great America (Gurnee, IL), Carousel Plaza and Hometown Square, and re-introducing children’s rides for families to share with the next generation of thrill-seekers; (vi) introducing a newly renovated family attraction and other updates to Splashwater Kingdom at The Great Escape (Queensbury, NY); (vii) adding a looping coaster with a unique ride experience at Six Flags Discovery Kingdom (Vallejo, CA) and Six Flags America (outside Washington, D.C.); (viii) adding a 242 foot tall swing ride at Six Flags Mexico (Mexico City, Mexico) and a year-round haunted attraction at La Ronde (Montreal, Canada); and (ix) introducing its first outdoor grill and new, luxury cabanas at Six Flags Hurricane Harbor (Jackson, NJ).
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.
Also during 2015, we plan to continue (i) our targeted marketing strategies to attract guests, including focusing on our breadth of product and value offerings and maintaining our focus on containing our operating expenses; (ii) improving and expanding upon our branded product offerings and guest-focused initiatives to continue driving guest spending growth,

6


including our All Season Dining Pass program, which enables season pass holders and members to eat lunch and dinner any day they visit the park for one upfront payment; and (iii) growing sponsorship and international revenue opportunities.
International Licensing
We have signed agreements to help third parties develop Six Flags-branded theme parks outside of North America. The agreements do not require us to make any capital investments in the parks. As compensation for our design and management services, the exclusivity rights granted, and the rights to use our brand, we will receive fees over the design and development period as well as an ongoing remuneration once the parks open to the public.
Maintenance and Inspection
Rides are inspected at various levels and frequencies in accordance with manufacturer specifications. 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. We continue to utilize a computerized maintenance management system across 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 types and in amounts that we believe are commercially reasonable and that are 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. 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. Defense costs are in addition to these retentions. 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. For workers' compensation claims arising after November 15, 2003, our deductible is $0.75 million ($0.5 million deductible for the period from November 15, 2001 to November 15, 2003). 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, 2015. 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 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, sporting events and vacation

7


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 safety and 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 December 31, 2014, we employed approximately 1,900 full-time employees, and over the course of the 2014 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 19.2% of our full-time and approximately 11.3% of our seasonal employees are subject to labor agreements with local chapters of national unions. These labor agreements expire in December 2015 (Six Flags Discovery Kingdom), December 2016 (Six Flags Over Georgia), December 2017 (Six Flags Magic Mountain and one union at Six Flags Great Adventure), January 2018 (Six Flags Over Texas and the other union at Six Flags Great Adventure), and January 2020 (Six Flags St. Louis). The labor agreements for La Ronde expire in various years ranging from December 2015 through December 2020. We consider our employee relations to be good.
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 the date of this report. 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.

8


Name
 
Age
 
Title
James Reid-Anderson*
 
55
 
Chairman, President and Chief Executive Officer
John M. Duffey*
 
54
 
Chief Financial Officer
Lance C. Balk*
 
57
 
General Counsel
John Bement
 
62
 
Senior Vice President, In-Park Services
Walter S. Hawrylak*
 
67
 
Senior Vice President, Administration
Michael S. Israel
 
48
 
Senior Vice President and Chief Information Officer
Tom Iven
 
56
 
Senior Vice President, U.S. Park Operations
Nancy A. Krejsa
 
56
 
Senior Vice President, Investor Relations and Corporate Communications
David McKillips
 
43
 
Senior Vice President, Corporate Alliances
John Odum
 
57
 
Senior Vice President, International Park Operations
Brett Petit*
 
51
 
Senior Vice President, Marketing
Leonard A. Russ*
 
41
 
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 for the industrial, energy and healthcare industries. 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  Inc., a company that manufactured medical diagnostics equipment and supplies, which he joined in August 1996. Mr. Reid-Anderson previously held roles of increasing responsibility at PepsiCo, Grand Metropolitan (now Diageo) and Mobil. Mr. Reid-Anderson is a fellow of the U.K. Association of Chartered Certified Accountants and holds a Bachelor of Commerce (Honor) 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 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.
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 SeaWorld, 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.

9


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 an 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, U.S. Park Operations in April 2014 and is responsible for the management of all of the Company's parks in the United States. 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. From 2010 until 2014, Mr. Iven was the Senior Vice President, Park Operations and was responsible for the management of the Company's parks in the Western region as well as the oversight of engineering, maintenance and operating efficiency programs for all Six Flags parks. 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 and public relations. Ms. Krejsa previously served as Senior Vice President, Strategy and Communications for Siemens Healthcare Diagnostics from November 2007 to 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 19 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 SeaWorld 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, International Park Operations in April 2014 and is responsible for the development and management of all parks outside of the United States. Additionally, he oversees the corporate design, engineering, maintenance, operations, aquatics, and entertainment functions for all parks. 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 and attractions and finance. Additionally, Mr. Odum has served as the Park President at Six Flags St. Louis, Six Flags Fiesta Texas and Six Flags Over Georgia. 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 maintenance, engineering and capital spending administration. From 2010 until 2014, Mr. Odum was the Senior Vice President, Park Operations and was responsible for the management of the Company's parks in the Eastern region as well as the oversight of operations, entertainment and design for all Six Flags parks. 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 31 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.

10


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.
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 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. 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 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.
Our success depends to a large extent on discretionary consumer spending, which is heavily influenced by general economic conditions and the availability of discretionary income. Difficult economic conditions and recessionary periods may have an adverse impact on our business and our financial condition. Negative economic conditions, coupled with high volatility and uncertainty as to the future global economic landscape, have had a negative effect on consumers' discretionary income and consumer confidence and similar impacts can be expected should such conditions recur. A decrease in discretionary spending due to decreases in consumer confidence in the economy or us, a continued economic slowdown or deterioration in the economy, could adversely affect the frequency with which guests choose to visit our parks and the amount that our guests spend when they visit. The actual or perceived weakness in the economy could also lead to decreased spending by our guests. Both attendance and total per capita spending at our parks are key drivers of our revenue and profitability, and reductions in either could materially adversely affect our business, financial condition and results of operations.
Additionally, difficult 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. Changes in exchange rates for foreign currencies could reduce international demand for our products, increase our labor and supply costs in non-U.S. markets or reduce the U.S. dollar value of revenue we earn in other markets.
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

11


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 and Project 600.
From time to time we establish aspirational goals for our operational and financial performance, including the "Project 500" goal established in mid-2011 to achieve Modified EBITDA of $500 million by 2015 and the "Project 600" goal established in mid-2014 to achieve Modified EBITDA of $600 million by 2017. 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.
Bad or extreme weather conditions and forecasts of bad or mixed weather conditions 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 or extreme weather conditions and forecasts of bad or mixed weather conditions, which negatively affects our revenues. The effects of bad weather on attendance can be more pronounced at our water parks. 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 and disproportionately impact our results of operations. Also, bad weather and forecasts of bad weather on weekends, holidays or other peak periods will typically have a greater negative impact on our revenues and could disproportionately impact our results of operations.
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 and could adversely impact our results of operations.
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, services and rides, 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 competitors, particularly an accident or injury involving the safety of guests and employees, that receive media attention, could negatively impact our brand or reputation, cause loss of consumer confidence in the Company, reduce attendance at our parks, and negatively impact our results of operations. The considerable expansion in the use of social media over recent years has compounded the impact of negative publicity. If any such incident occurs during a time of high seasonal demand, the effect could disproportionately impact our results of operations for the year.

12


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, sporting events, restaurants 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 consumer tastes and preferences for entertainment and consumer products.
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 and margins 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.
Our insurance coverage may not be adequate to cover all possible losses that we could suffer and our insurance costs may increase.
Although we maintain various safety and loss prevention programs and carry property and casualty insurance to cover certain risks, our insurance policies do not cover all types of losses and liabilities. Additionally, there can be no assurance that our insurance will be sufficient to cover the full extent of all losses or liabilities for which we are insured. The majority of our current insurance policies expire on December 31, 2015, and we cannot guarantee that we will be able to renew our current insurance policies on favorable terms, or at all. In addition, if we or other theme park operators sustain significant losses or make significant insurance claims, then our ability to obtain future insurance coverage at commercially reasonable rates could be materially adversely affected. If our insurance coverage is not adequate, or we become subject to damages that cannot by law be insured against, such as punitive damages or certain intentional misconduct by our employees, this could adversely affect our financial condition or results of operations.
If we are not able to fund capital expenditures and invest in future attractions and projects in our parks, our revenues could be negatively impacted.
Because a principal competitive factor for a theme park is the uniqueness and perceived quality of its rides and attractions, we need to make continued capital investments through maintenance and the regular addition of new rides and attractions. A key element for our revenue growth is strategic capital spending on such investments. 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 provide assurance 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.
We may be unable to purchase or contract with third parties to manufacture theme park rides and attractions.
We may be unable to purchase or contract with third parties to build high quality rides and attractions and to continue to service and maintain those rides and attractions at competitive or beneficial prices, or to provide the replacement parts needed to maintain the operation of such rides. In addition, if our third-party suppliers' financial condition deteriorates or they go out of business, we may not be able to obtain the full benefit of manufacturer warranties or indemnities typically contained in our contracts, or may need to incur greater costs for the maintenance, repair, replacement or insurance of these assets.

13


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 a 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, toys and other retail products, 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 are 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 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.
Adverse litigation judgments or settlements resulting from legal proceedings in which we may be involved in the normal course of our business could adversely affect our financial condition or results of operations.
We are subject to allegations, claims and legal actions arising in the ordinary course of our business, which may include claims by third parties, including guests who visit our parks, our employees or regulators. The outcome of these proceedings cannot be predicted. If any of these proceedings is determined adversely to us, we receive a judgment, a fine or a settlement involving a payment of a material sum of money, or injunctive relief is issued against us, our business, financial condition and results of operations could be materially adversely affected. Litigation can also 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.
Additionally, from time to time, animal activist and other third-party groups may make negative public statements about us or bring claims before government agencies or lawsuits against us. Such claims and lawsuits sometimes are based on allegations that we do not properly care for some of our featured animals. On other occasions, such claims and/or lawsuits are specifically designed to change existing law or enact new law in order to impede our ability to retain, exhibit, acquire or breed animals. While we seek to comply with all applicable federal and state laws and vigorously defend ourselves in any lawsuits, there are no assurances as to the outcome of future claims and lawsuits that could be brought against us. An unfavorable outcome in any legal proceeding could have a material adverse effect on our business, financial condition and results of operations. In addition, associated negative publicity could adversely affect our reputation, financial condition and results of operations.
Our intellectual property rights are valuable, and any inability to protect them could adversely affect our business.

14


Our intellectual property, including our trademarks and domain names and other proprietary rights, constitutes a significant part of our value. To protect our intellectual property rights, we rely upon a combination of trademark, trade secret and unfair competition laws of the United States and other countries, as well as contract provisions and third-party policies and procedures governing internet/domain name registrations. However, there can be no assurance that these measures will be successful in any given case, particularly in those countries where the laws do not protect our proprietary rights as fully as in the United States. We may be unable to prevent the misappropriation, infringement or violation of our intellectual property rights, breach of any contractual obligations to us, or independent development of intellectual property that is similar to ours, any of which could reduce or eliminate any competitive advantage we have developed, adversely affect our revenues or otherwise harm our business.
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 monetary 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 labor costs and 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. Increased labor costs due to competition, increased minimum wage or employee benefit costs or otherwise, would adversely impact our operating expenses. The Patient Protection and Affordable Care Act of 2010 and the amendments thereto contain provisions which will impact our future healthcare costs. We do not anticipate these changes will result in a material increase in our operating costs. Our results of operations are also substantially affected by costs of retirement, including as a result of macro-economic factors beyond our control, such as declines in investment returns on pension plan assets and changes in discount rates used to calculate pension and related liabilities.
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, which could materially adversely affect our financial condition.
Unionization activities or labor disputes may disrupt our operations and affect our profitability.
As of December 31, 2014, approximately 19.2% of our full-time and approximately 11.3% of our seasonal employees were subject to labor agreements with local chapters of national unions. We have collective bargaining agreements in place for certain employees at Six Flags Over Georgia, Six Flags Magic Mountain, Six Flags Great Adventure, Six Flags Over Texas, Six Flags St. Louis, Six Flags Discovery Kingdom and La Ronde. New unionization activity or a labor dispute involving our employees could disrupt our operations and reduce our revenues, and resolution of unionization activities or labor disputes could increase our costs. Litigation relating to employment and/or wage and hour disputes could also increase our operating expenses. Such disrupted operations, reduced revenues or increased costs could have a material adverse effect on our financial condition and results of operations.
We depend on a seasonal workforce, many of whom are paid at minimum wage.
Our park operations are dependent in part on a seasonal workforce, many of whom 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. We anticipate that the recent increases to the minimum wage will increase our salary, wage and benefit expenses in 2015 and future years and further legislative changes could continue to increase these expenses in the future.

15


Our operations and our ownership of property subject us to environmental, health and safety and other regulations, which create uncertainty regarding future 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.
We also are subject to federal and state laws which prohibit discrimination and other laws regulating the design and operation of facilities, such as the Americans With Disabilities Act. Compliance with these laws and regulations can be costly and increase our exposure to litigation and governmental proceedings, and a failure or perceived failure to comply with these laws could result in negative publicity that could harm our reputation, which could adversely affect our business.
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 and partnerships, 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 acquired businesses or assets. Additionally, any international transactions are subject to additional risks, including the performance of our partners, 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 a lesser degree of legal protection in certain jurisdictions, currency exchange fluctuations and potentially adverse tax consequences of overseas operations. If we do not realize the benefits of such transactions, it could have an adverse effect on our financial condition.
Risks Related to Our Indebtedness and Common Stock
A portion of our cash flow is required to be used to fund our substantial monetary 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 $67.8 million in 2015 (based on our ownership of units as of December 31, 2014, our share of the distribution will

16


be approximately $29.5 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 a current redemption value for the limited partnership units of approximately $393.6 million as of December 31, 2014. 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 $58.4 million of cash in 2014 from operating activities after deduction of capital expenditures and excluding the impact of short-term intercompany advances from or repayments to us. As of December 31, 2014, 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 in prior years 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 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, and we would lose control of the Partnership Parks. In addition, such a default could trigger an event of default under the 2011 Credit Facility. For more information regarding the Subordinated Indemnity Agreement, see "Business—Partnership Park Arrangements."
The vast majority of our capital expenditures in 2015 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 $107.8 million on capital expenditures, net of property insurance recoveries, for all of our continuing operations in the 2014 calendar year. 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, which could materially adversely affect our business, financial condition or results of operations:
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.
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 Holdings' $800.0 million of 5.25% senior unsecured

17


notes due January 15, 2021 (the "2021 Notes") and are unable to obtain a waiver or amendment, an event of default would result under the applicable debt instrument.
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 2021 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 the 2021 Notes could elect to declare the 2021 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 2021 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 provide assurance 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 2021 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 2021 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 provide assurance 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.
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;
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 &

18


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 2021 Notes in December 2012, Moody's assigned a B3 rating to the 2021 Notes, upgraded our credit facility rating to Ba2, and affirmed our B1 corporate family rating. Standard & Poor's assigned a BB- rating to the 2021 Notes and affirmed our BB corporate credit rating. In May 2013, Moody's affirmed the B3 rating on the 2021 Notes, the Ba2 rating on the credit facility and our B1 corporate family rating. In November 2014, Standard & Poor's affirmed our BB corporate credit rating and the BB- rating on the 2021 Notes. Both rating agencies have placed our ratings on "stable outlook." We cannot provide assurance 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.
Holdings is a holding company and is dependent on dividends and other distributions from its subsidiaries.
Holdings is a holding company and substantially all of its operations are conducted through direct and indirect subsidiaries. As a holding company, it has no significant assets other than its equity interests in its subsidiaries. Accordingly, Holdings is dependent on dividends and other distributions from its subsidiaries to meet its obligations including the obligations under the 2011 Credit Facility and the 2021 Notes, and to pay the dividend on Holdings' common stock. If these dividends and other distributions are not sufficient for Holdings to meets its financial obligations, or not available to Holdings due to restrictions in the instruments governing our indebtedness, it could cause Holdings to default on our debt obligations, which would impair our liquidity and adversely affect our financial condition and our business. We had $73.9 million of cash and cash equivalents on a consolidated basis at December 31, 2014, of which $11.8 million was held at Holdings.
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 2021 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.
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 Holdings' 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.

19


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 2014 fiscal year and that remain unresolved.
ITEM 2.
PROPERTIES
Set forth below is a brief description of our material real estate as of December 31, 2014. 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—218 acres (owned)
Six Flags Great Adventure & 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 but negotiations regarding the extension of the concession agreement are ongoing.
(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.
In addition to the foregoing, we also lease office space and a limited number of rides and attractions at our parks. See Note 15 to the consolidated financial statements included elsewhere in this Annual Report 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. We have granted to our lenders under the 2011 Credit Facility agreement, a mortgage on substantially all of our owned United States properties.
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 Holdings, 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 sought damages and injunctive relief. On July 8, 2008, the Court entered a Stipulation and Order of Dismissal of Safety Braking Corporation leaving only Magnetar Technologies Corp. and G&T Conveyor Co. as plaintiffs. We required the manufacturers of the amusement rides that we believed to be impacted by this case to honor their indemnification obligations with respect to this case and tendered the defense of this case to certain of the ride manufacturers. The patent expired in October 2012. 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. On February 7, 2014, the Magistrate Judge issued an order on defendants' motions for summary judgment, recommending that United States Patent No. 5,277,125 be held invalid on the four separate grounds advanced by the defendants, and that certain rides would not infringe even if the patent was not invalid. On

20


July 24, 2014, the District Court entered an order adopting the Magistrate Judge’s recommendations in full. On August 27, 2014, the plaintiffs filed a notice of appeal with the United States Court of Appeals for the Federal Circuit.
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 adjacent to SFOG on July 3, 2007. Certain of the individuals were employees of the park, but were off-duty and not acting within the course or scope of their employment with SFOG at the time the altercation occurred. The plaintiff, who had exited the park, claimed that we were negligent in our security of the premises. Four of the individuals who allegedly participated in the altercation were also named as defendants in the litigation. Our motion for summary judgment was denied by the trial court on May 19, 2011. Pursuant to the trial that concluded on November 20, 2013, the jury returned a verdict in favor of the plaintiff for $35.0 million. The jury allocated 92% of the verdict against Six Flags and the judgment was entered on February 11, 2014. A notice of appeal was filed on September 19, 2014, which our insurers are pursuing on Six Flags' and the insurers' behalf, and on October 2, 2014, the plaintiff filed a notice of cross appeal. We have paid the full amount of our $2.5 million self-insurance retention to our insurers.
On June 27, 2012, Wishtoyo Foundation and its Ventura Coastkeeper program, Los Angeles Coastkeeper d/b/a Santa Monica Baykeeper, and Friends of the Santa Clara River, all non-profit corporations, filed a complaint against Holdings, SFTP and Magic Mountain LLC in the United States District Court for the Central District of California seeking declaratory and injunctive relief and civil penalties under, among others, the Federal Water Pollution Control Act (more commonly known as the Clean Water Act). The plaintiffs allege that Six Flags Magic Mountain discharged water in violation of its water discharge permits into the Santa Clara River. In January 2015, the parties agreed to settle the lawsuit.
On July 3, 2012, a civil action was commenced against us in the Superior Court of Solano County, California. The plaintiffs sought damages for personal injuries when a guest at Six Flags Discovery Kingdom jumped on a swinging gate arm that entered a passing tram carrying the plaintiffs on July 3, 2010. We have reserved the full amount of our $2.5 million self-insurance retention plus estimated litigation costs in connection with this incident. On October 24, 2014, the litigation was dismissed, without prejudice, with respect to one of the plaintiffs, a minor, who may reinstate the lawsuit at any time prior to two years following the date such plaintiff reaches the age of majority. In January 2015, an agreement was reached to settle the lawsuit with the remaining plaintiffs.
On July 19, 2013, a fatal accident occurred on a ride at our park in Arlington, Texas. Utilizing both internal and external experts, we completed the investigation of the accident and concluded that there was no mechanical failure of the ride. On September 10, 2013, a civil action against us was commenced in the District Court of Tarrant County, Texas in connection with the incident seeking monetary damages. On October 4, 2013, we filed an answer denying the claims. On October 14, 2013, the plaintiffs filed an amended complaint naming Gerstlauer Amusement Rides, GmbH, the ride manufacturer, as a co-defendant in the lawsuit. On February 14, 2014, we filed a cross action against Gerstlauer Amusement Rides, GmbH seeking statutory indemnity. On March 5, 2014, Gerstlauer Amusement Rides, GmbH filed an answer to our cross-action denying liability and asserting certain affirmative defenses. On March 7, 2014, Gerstlauer Amusement Rides, GmbH filed a cross-action against us for negligence and sought statutory indemnity. In December 2014, the parties entered into an agreement to settle the lawsuit, the terms of which are confidential.
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.

21


PART II
ITEM 5.
MARKET FOR THE REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Market Information
Holdings' common stock trades on the New York Stock Exchange under the symbol "SIX."
On May 5, 2011 and May 8, 2013, Holdings' Board of Directors approved two-for-one stock splits 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 dates for the stock splits were June 15, 2011 and June 12, 2013, respectively. The additional shares of common stock in connection with the stock splits were distributed on June 27, 2011 and June 26, 2013, respectively. 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 effect of these two-for-one stock splits. All share and per share amounts presented in this Annual Report have been retroactively adjusted to reflect these stock splits.
The table below presents the high and low sales price of our common stock and the quarterly dividend paid per share of common stock during the years ended December 31, 2014 and 2013:
 
Sales Price
Per Share
 
Dividends Declared
Per Share
 
High
 
Low
 
2015
 
 
 
 
 
First Quarter (through February 13, 2015)
$
45.57

 
$
42.23

 
$
0.52

2014
 
 
 
 
 
Fourth Quarter
$
43.60

 
$
31.77

 
$
0.52

Third Quarter
$
42.85

 
$
33.76

 
$
0.47

Second Quarter
$
43.19

 
$
38.02

 
$
0.47

First Quarter
$
42.94

 
$
33.96

 
$
0.47

2013
 
 
 
 
 
Fourth Quarter
$
38.90

 
$
31.86

 
$
0.47

Third Quarter
$
37.90

 
$
32.73

 
$
0.45

Second Quarter
$
40.31

 
$
34.64

 
$
0.45

First Quarter
$
36.34

 
$
30.50

 
$
0.45

Holders of Record
As of February 13, 2015, there were approximately 55 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 October 2014, Holdings' Board of Directors increased the quarterly cash dividend from $0.47 per share of common stock to $0.52 per share of common stock.
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 2021 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 and Note 7 to the consolidated financial statements in Item 8 of this Annual Report.
Issuer Purchases of Equity Securities
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 "January 2012 Stock Repurchase Plan"). Under the January 2012 Stock Repurchase Plan, during the year ended December 31, 2012, Holdings repurchased an aggregate of 8,499,000 shares at a cumulative price of approximately $232.0 million. As of January 4, 2013,

22


Holdings had repurchased an additional 578,000 shares at a cumulative price of approximately $18.0 million and an average price per share of $31.16 to complete the permitted repurchases under the January 2012 Stock Repurchase Plan.
On December 11, 2012, Holdings' Board of Directors approved a new stock repurchase program that permitted Holdings to repurchase up to $500.0 million in shares of Holdings' common stock over a three-year period (the "December 2012 Stock Repurchase Plan"). As of December 31, 2013, Holdings had repurchased 14,775,000 shares at a cumulative price of approximately $500.0 million and an average price per share of $33.84 to complete the permitted repurchases under the December 2012 Stock Repurchase Plan.
On November 20, 2013, Holdings announced that its 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 four-year period (the "November 2013 Stock Repurchase Plan"). Under the November 2013 Stock Repurchase Plan, as of December 31, 2014, Holdings had repurchased an aggregate of 5,314,000 shares at a cumulative price of approximately $200.9 million and an average price per share of $37.81, leaving approximately $299.1 million for permitted repurchases.
The following table sets forth information regarding purchases of Holdings' common stock under the November 2013 Stock Repurchase Plan during the three months ended December 31, 2014:
 
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
Month 1
October 1 - October 31
 
1,590,995

 
$
36.09

 
1,590,995

 
$
318,420,000

Month 2
November 1 - November 30
 
364,800

 
$
39.96

 
364,800

 
$
303,841,000

Month 3
December 1 - December 31
 
114,100

 
$
41.76

 
114,100

 
$
299,076,000

 
 
 
2,069,895

 
$
37.08

 
2,069,895

 
$
299,076,000


23


Performance Graph
The following graph shows a comparison of the fifty-six 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 56 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
________________________________________
*
$100 invested on 5/10/10 in stock or 4/30/10 in index, including reinvestment of dividends.
Fiscal year ending December 31.
Copyright© 2015 S&P, a division of The McGraw-Hill Companies Inc. All rights reserved.
 
5/10/2010
 
12/31/2010
 
12/31/2011
 
12/31/2012
 
12/31/2013
 
12/31/2014
Six Flags Entertainment Corporation
$
100.00

 
$
185.11

 
$
282.11

 
$
441.34

 
$
558.90

 
$
687.98

S&P 500
$
100.00

 
$
107.48

 
$
109.76

 
$
127.32

 
$
168.56

 
$
191.63

S&P Midcap 400
$
100.00

 
$
111.34

 
$
109.41

 
$
128.97

 
$
172.18

 
$
188.99

S&P Movies & Entertainment
$
100.00

 
$
101.83

 
$
113.38

 
$
152.66

 
$
237.48

 
$
279.80


24


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 and the historical financial statements and related notes contained in this Annual Report.
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 parks not in operation subsequent to our emergence from Chapter 11 as discontinued operations.
As used in this Annual Report, "Successor" refers to Holdings as of April 30, 2010, the date the debtors emerged from Chapter 11 restructuring, and "Predecessor" refers to SFI together with its consolidated subsidiaries prior to that date.


25


 
Successor
 
 
Predecessor
 
Year Ended December 31,
 
Eight Months
Ended
December 31,
 
 
Four Months
Ended
April 30,
(Amounts in thousands, except per share data)
2014
 
2013
 
2012
 
2011
 
2010
 
 
2010
Statement of Operations Data:
 
 
 

 
 

 
 

 
 

 
 
 

Theme park admissions
$
641,535

 
$
602,204

 
$
576,708

 
$
541,744

 
$
452,189

 
 
$
59,270

Theme park food, merchandise and other
460,131

 
448,547

 
437,382

 
413,844

 
348,552

 
 
52,054

Sponsorship, licensing and other fees
57,250

 
42,179

 
39,977

 
42,380

 
37,877

 
 
11,259

Accommodations revenue
16,877

 
17,000

 
16,265

 
15,206

 
9,194

 
 
5,494

Total revenue
1,175,793

 
1,109,930

 
1,070,332

 
1,013,174

 
847,812

 
 
128,077

Operating expenses (excluding depreciation and amortization shown separately below)
437,431

 
417,482

 
411,679

 
397,874

 
292,550

 
 
115,636

Selling, general and administrative (excluding depreciation and amortization shown separately below)
310,955

 
189,218

 
225,875

 
215,059

 
142,079

 
 
47,608

Costs of products sold
90,515

 
86,663

 
80,169

 
77,286

 
66,965

 
 
12,132

Depreciation and amortization
108,107

 
128,075

 
148,045

 
168,999

 
118,349

 
 
45,675

Loss on disposal of assets
5,860

 
8,579

 
8,105

 
7,615

 
11,727

 
 
1,923

Gain on sale of investee
(10,031
)
 

 
(67,319
)
 

 

 
 

Interest expense, net
72,589

 
74,145

 
46,624

 
65,217

 
53,842

 
 
74,134

Equity in loss (income) of investee

 

 
2,222

 
3,111

 
1,372

 
 
(594
)
Loss on debt extinguishment, net

 
789

 
587

 
46,520

 
18,493

 
 

Other expense (income), net (1)
356

 
1,054

 
2,733

 
27,614

 
45,852

 
 
(820,275
)
Income from continuing operations before income taxes and discontinued operations
160,011

 
203,925

 
211,612

 
3,879

 
96,583

 
 
651,838

Income tax expense (benefit)
46,522

 
47,601

 
(184,154
)
 
(8,065
)
 
11,177

 
 
112,648

Income from continuing operations before discontinued operations
113,489

 
156,324

 
395,766

 
11,944

 
85,406

 
 
539,190

Income (loss) from discontinued operations
545

 
549

 
7,273

 
1,201

 
(565
)
 
 
9,759

Net income
114,034

 
156,873

 
403,039

 
13,145

 
84,841

 
 
548,949

Net income attributable to noncontrolling interests
(38,012
)
 
(38,321
)
 
(37,104
)
 
(35,805
)
 
(34,788
)
 
 
(76
)
Net income (loss) attributable to Six Flags Entertainment Corporation
$
76,022

 
$
118,552

 
$
365,935

 
$
(22,660
)
 
$
50,053

 
 
$
548,873

 
 
 
 
 
 
 
 
 
 
 
 
 
Amounts attributable to Six Flags Entertainment Corporation common stockholders:
 
 
 
 
 
 
 
 
 
 
 
 
Income (loss) from continuing operations
$
75,477

 
$
118,003

 
$
358,662

 
$
(23,861
)
 
$
50,618

 
 
$
539,114

Income (loss) from discontinued operations
545

 
549

 
7,273

 
1,201

 
(565
)
 
 
9,759

Net income (loss)
$
76,022

 
$
118,552

 
$
365,935

 
$
(22,660
)
 
$
50,053

 
 
$
548,873

 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted-average common shares outstanding (2):
 
 
 
 
 
 
 
 
 
 
 
 
Weighted-average common shares outstanding—basic:
94,477

 
96,940

 
107,684

 
110,150

 
110,600

 
 
98,054

Weighted-average common shares outstanding—diluted:
98,139

 
100,371

 
110,936

 
110,150

 
110,600

 
 
98,054

 
 
 
 
 
 
 
 
 
 
 
 
 
Net income (loss) per average common share outstanding—basic (2):
 
 
 
 
 

 
 
 
 
 
 
 
Income (loss) from continuing operations
$
0.79

 
$
1.21

 
$
3.33

 
$
(0.22
)
 
$
0.46

 
 
$
5.50

Income (loss) from discontinued operations
0.01

 
0.01

 
0.07

 
0.01

 
(0.01
)
 
 
0.10

Net income (loss)
$
0.80

 
$
1.22

 
$
3.40

 
$
(0.21
)
 
$
0.45

 
 
$
5.60

 
 
 
 
 
 
 
 
 
 
 
 
 
Net income (loss) per average common share outstanding—diluted (2):
 
 
 
 
 

 
 
 
 
 
 
 
Income (loss) from continuing operations
$
0.76

 
$
1.17

 
$
3.23

 
$
(0.22
)
 
$
0.46

 
 
$
5.50

Income (loss) from discontinued operations
0.01

 
0.01

 
0.07

 
0.01

 
(0.01
)
 
 
0.10

Net income (loss)
$
0.77

 
$
1.18

 
$
3.30

 
$
(0.21
)
 
$
0.45

 
 
$
5.60

 
 
 
 
 
 
 
 
 
 
 
 
 
Cash dividends declared per common share (2)
$
1.93

 
$
1.82

 
$
1.35

 
$
0.09

 
$
0.015

 
 
$


26


 
December 31,
(Amounts in thousands)
2014
 
2013
 
2012
 
2011
 
2010
Balance Sheet Data:
 
 
 

 
 

 
 

 
 

Cash and cash equivalents (3)
$
73,884

 
$
169,310

 
$
629,208

 
$
231,427

 
$
187,061

Total assets
2,534,919

 
2,607,814

 
3,056,391

 
2,648,178

 
2,733,253

Total long-term debt (excluding current maturities)
1,389,215

 
1,394,334

 
1,398,966

 
921,940

 
938,195

Total debt
1,395,516

 
1,400,603

 
1,405,206

 
957,236

 
971,154

Redeemable noncontrolling interests
437,545

 
437,569

 
437,941

 
440,427

 
441,655

Stockholders' equity
223,895

 
373,337

 
884,732

 
763,478

 
863,708

Noncontrolling interests (4)

 

 
3,934

 
3,670

 
4,455

________________________________________
(1)
Includes a nominal recovery of costs related to reorganization items for the year ended December 31, 2013 and $2.2 million, $2.5 million and $7.5 million of costs and expenses directly related to the reorganization, including fees associated with advisors to the Debtors, certain creditors and the creditors' committee, for the years ended December 31, 2012 and 2011 and for the eight months ended December 31, 2010, respectively. Other expense (income), net also reflects a favorable impact of $819.5 million for the four months ended April 30, 2010 primarily due to the settlement of certain liabilities subject to compromise in conjunction with the reorganization.
(2)
All Successor share and per share amounts have been retroactively adjusted to reflect Holdings' two-for-one stock splits in June 2011 and June 2013, as described in Note 12 to the consolidated financial statements included elsewhere in this Annual Report.
(3)
Excludes restricted cash.
(4)
Reflects impact of the FASB ASC 810 adoption on January 1, 2010. See Note 5 to the consolidated financial statements included elsewhere in this Annual Report.

27


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, 2014, 2013 and 2012 and 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, 2014 and our outstanding debt and commitments existing as of December 31, 2014.
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 included elsewhere in this Annual Report.
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 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 (which accounted for approximately 55% of total revenues during the year ended December 31, 2014), (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, including revenue earned under international development contracts. 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 2014, our park earnings before interest, taxes, depreciation and amortization ("Park EBITDA") improved primarily as a result of revenue growth, partially offset by an increase in cash operating costs. The increase in revenue was primarily driven by a 7% increase in total guest spending per capita, which excludes sponsorship, Six Flags Great Escape Lodge & Indoor Waterpark accommodations and other fees, as well as revenue earned under international development contracts which began during 2014, partially offset by a 2% decrease in attendance. Our cash operating costs increased primarily as a result of (i) increased salary, wage and benefit expense primarily driven by an increase in operating days resulting from the extension of Fright Fest® through an additional weekend and the introduction of Holiday in the Park® at two additional parks, (ii) increased maintenance and utility costs, (iii)

28


costs associated with the international park development agreements which began during 2014 and (iv) an increase in advertising costs. These increases in cash operating costs were partially offset by reduced insurance expenses.
Our principal costs of operations include salaries and wages, employee benefits, advertising, third party services, repairs and maintenance, utilities and insurance. A large portion of our expenses is relatively fixed as our costs for full-time employees, maintenance, utilities, advertising and insurance do not vary significantly with attendance.
Critical Accounting Policies
The preparation of financial statements in conformity with accounting principles generally accepted in the United States ("U.S. GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities as of the date of the financial statements and the reported amounts of revenues and expenses earned and incurred during the reporting period. Critical accounting estimates are fundamental to the portrayal of both our financial condition and results of operations and often require difficult, subjective and complex estimates and judgments. We evaluate our estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment, which we believe to be reasonable under the circumstances. We adjust such estimates and assumptions when facts and circumstances dictate. As future events and their effects cannot be determined with precision, actual results could differ significantly from these estimates. Changes in these estimates resulting from the continuing changes in the economic environment will be reflected in the financial statements in future periods. The following discussion addresses the items we have identified as our critical accounting estimates. See Note 2 to the consolidated financial statements included elsewhere in this Annual Report for further discussion of these and other accounting policies.
Property and Equipment
Property and equipment additions are recorded at cost and the carrying value is depreciated using the straight-line method over the estimated useful lives of the 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
Goodwill and intangible assets with indefinite useful lives are tested for impairment annually, or more frequently if events or circumstances indicate 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). Accordingly, no impairment has been 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, including finite-lived intangible assets subject to amortization, for impairment upon the occurrence of events or changes in circumstances that would indicate that the carrying value of an asset or groups of assets 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 the 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 asset or group of assets exceeds its respective fair value. 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 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 differing treatment of items, such as depreciation periods for our property and

29


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 $97.3 million and $186.4 million as of December 31, 2014 and 2013, respectively, due to uncertainties related to our ability to utilize some of our deferred tax assets, primarily consisting of certain state net operating loss and other carryforwards, before they expire. As of December 31, 2014 and 2013, the valuation allowance is primarily related to certain net operating loss carryforwards for states in which we no longer have operations and will not generate any future taxable income. 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 the utilization of net operating loss carryforwards prior to their expiration. See Note 2 and Note 11 to the consolidated financial statements included elsewhere in this Annual Report for further discussion. Due to an increase in our profitability, we are able to project future taxable income and further assess our valuation allowance.
Revenue Recognition
We recognize revenue upon admission into our parks, provision of our services, or when products are delivered to our guests. Revenues are presented in the accompanying consolidated statements of operations net of sales taxes collected from our guests and remitted to government taxing authorities. During 2013, we launched a membership program. In contrast to our season pass and other multi-use offerings that expire at the end of each operating season, the membership program does not expire. It automatically renews on a month-to-month basis after the initial twelve-month membership term, and can be canceled any time after the initial term pursuant to the terms of the membership program. Guests enrolled in the membership program can visit our parks an unlimited number of times anytime they are open as long as the guest remains enrolled in the membership program. For season pass, memberships in the initial twelve-month term and other multi-use admissions, we estimate a redemption rate based on historical experience and other factors and assumptions we believe to be customary and reasonable and recognize a pro-rata portion of the revenue as the guest attends our parks. We review the estimated redemption rate regularly and on an ongoing basis and revise it as necessary throughout the year. Amounts received for multi-use admissions in excess of redemptions are recognized in deferred income. For active memberships after the initial-twelve month term, we recognize revenue monthly as payments are received. As of December 31, 2014, deferred income was primarily comprised of (i) advance sales of season pass and other admissions for the 2015 operating season, (ii) unredeemed portions of the membership program that will be recognized in 2015, (iii) sponsorship revenue that will be recognized in 2015 and (iv) a nominal amount for the remaining unredeemed season pass revenue and pre-sold single-day admissions revenue for the 2014 operating season that was redeemed during the completion of the 2014 operating season, which ended the first week of 2015.
During 2014, we entered into two agreements to assist third parties in the planning, design, development and operation of Six Flags-branded theme parks outside of North America. Pursuant to these agreements, we agreed to provide exclusivity, brand licensing, and other services to assist in the design, development, and project management of Six Flags-branded theme parks, as well as initial and ongoing management services. Each significant deliverable qualifies as a separate unit of accounting. We recognize revenue under these agreements over the relevant service period of each unit of accounting based on its relative selling price, as determined by our best estimate of selling price. Our best estimate of selling price is established consistent with our overall pricing strategy and includes, but is not limited to, consideration of current market conditions, various risk factors and our required return and profit objectives. We review the service period of each unit of accounting on an ongoing basis and

30


revise it as necessary throughout the year. Revisions to the relevant service periods of the units of accounting may result in revisions to revenue in future periods and are recognized in the period in which the change is identified.
Recent Events
We have signed agreements to help third parties develop Six Flags-branded theme parks outside of North America. The agreements do not require us to make any capital investments in the parks. As compensation for our design and management services, the exclusivity rights granted, and the rights to use our brand, we will receive fees over the design and development period as well as an ongoing remuneration once the parks open to the public.
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 have declared and paid quarterly cash dividends each quarter beginning with the fourth quarter of 2010. Holdings' Board of Directors has since increased the quarterly cash dividend multiple times. On October 21, 2014, we announced that Holdings' Board of Directors approved an increase in our ongoing quarterly cash dividend from $0.47 per share of common stock to $0.52 per share of common stock.
On October 21, 2014, we established a performance award based on our new long-term aspirational goal of achieving $600 million of Modified EBITDA by the year 2017 (the "2017 Performance Award") upon which an aggregate of up to approximately 2,400,000 shares of common stock, along with dividend equivalent rights equal in number to the number of shares granted, would be issued to certain key employees. The number and timing of any issuances of common stock under the 2017 Performance Award will depend on progress toward the $600 million Modified EBITDA target and the timing of that progress.
Results of Operations
The following table sets forth summary financial information for the years ended December 31, 2014, 2013 and 2012:
 
Year Ended December 31,
 
Percentage Changes
(Amounts in thousands, except per capita data) 
2014
 
2013
 
2012
 
2014
vs
2013
 
2013
vs
2012
Total revenue
$
1,175,793

 
$
1,109,930

 
$
1,070,332

 
6
 %
 
4
 %
Operating expenses
437,431

 
417,482

 
411,679

 
5
 %
 
1
 %
Selling, general and administrative
310,955

 
189,218

 
225,875

 
64
 %
 
(16
)%
Cost of products sold
90,515

 
86,663

 
80,169

 
4
 %
 
8
 %
Depreciation and amortization
108,107

 
128,075

 
148,045

 
(16
)%
 
(13
)%
Loss on disposal of assets
5,860

 
8,579

 
8,105

 
(32
)%
 
6
 %
Gain on sale of investee
(10,031
)
 

 
(67,319
)
 
N/M

 
N/M

Interest expense, net
72,589

 
74,145

 
46,624

 
(2
)%
 
59
 %
Equity in loss of investee

 

 
2,222

 
N/M

 
N/M

Loss on debt extinguishment

 
789

 
587

 
N/M

 
34
 %
Other expense, net
356

 
1,054

 
2,733

 
(66
)%
 
(61
)%
Income from continuing operations before income taxes
160,011

 
203,925

 
211,612

 
(22
)%
 
(4
)%
Income tax expense (benefit)
46,522

 
47,601

 
(184,154
)
 
(2
)%
 
(126
)%
Income from continuing operations
113,489

 
156,324

 
395,766

 
(27
)%
 
(61
)%
Income from discontinued operations
545

 
549

 
7,273

 
(1
)%
 
(92
)%
Net income
114,034

 
156,873

 
403,039

 
(27
)%
 
(61
)%
Less: Net income attributable to noncontrolling interests
(38,012
)
 
(38,321
)
 
(37,104
)
 
(1
)%
 
3
 %
Net income attributable to Six Flags Entertainment Corporation
$
76,022

 
$
118,552

 
$
365,935

 
(36
)%
 
(68
)%
 
 
 
 
 
 
 
 
 
 
Other Data:
 
 
 
 
 
 
 
 
 
Attendance
25,638

 
26,149

 
25,735

 
(2
)%
 
2
 %
Total revenue per capita
$
45.86

 
$
42.45

 
$
41.59

 
8
 %
 
2
 %
Year Ended December 31, 2014 vs. Year Ended December 31, 2013
Revenue
Revenue for the year ended December 31, 2014 totaled $1,175.8 million, a 6% increase compared to $1,109.9 million for the year ended December 31, 2013. Total revenue per capita, calculated as total revenue divided by total attendance,

31


increased $3.41, or 8%, for the year ended December 31, 2014 relative to the year ended December 31, 2013. The increase in revenue and total revenue per capita was primarily attributable to continued growth in per capita guest spending, which excludes sponsorship, Six Flags Great Escape Lodge & Indoor Waterpark accommodations and other fees, as well as revenue earned under international development contracts, which began during 2014. The increase in revenue and total revenue per capita was partially offset by a 2% decline in attendance driven primarily by the decline in attendance during the first half of the year due to lingering effects of the long, harsh winter that extended school calendars and slowed early-season attendance. Attendance throughout the second half of the 2014 operating season increased 4% relative to the comparable period in 2013. Per capita guest spending increased $2.79, or 7%, to $42.97 during the year ended December 31, 2014 from $40.18 during the year ended December 31, 2013. The increase in per capita guest spending related primarily to continued improvements in admissions pricing and in-park spending, including the success of our All-Season Dining Pass, partially offset by a continued increase in season pass and membership attendance mix, which lowers per capita guest spending but increases overall guest spending.
Admissions revenue per capita increased $1.99, or 9%, during the year ended December 31, 2014 relative to the year ended December 31, 2013. The increase in admissions revenue per capita was primarily driven by continued pricing improvements on both multi- and single-use ticket offerings, including a reduction in discounts and promotions, and continued growth in the number of guests enrolled in our membership program who have remained members following the initial twelve-month term and continue to pay on a month-to-month basis, which allows us to record the respective revenue on a lower attendance base. These increases were partially offset by continued increases in the season pass and membership attendance mix, which lowers admissions revenue per capita but increases overall admissions revenue. Non-admissions per capita guest spending increased $0.80, or 5%, during the year ended December 31, 2014 relative to the year ended December 31, 2013, primarily as a result of food and beverage sales growth driven by the success of our All-Season Dining Pass and other food and beverage product offerings, partially offset by a reduction in parking revenue due to the strong sales of our premium-priced gold season passes and memberships, which include parking.
Operating expenses
Operating expenses for the year ended December 31, 2014 increased $19.9 million, or 5%, relative to the year ended December 31, 2013 primarily as a result of (i) a $14.1 million increase in salaries, wages and benefits primarily related to increases in incentive-based compensation, higher numbers of employees over the summer months and for our expanded Fright Fest and Holiday in the Park events, and increases in minimum wage rates at many of our parks, (ii) a $2.8 million increase in repairs and maintenance and utilities costs, (iii) a $2.0 million increase in credit card processing fees related to our increased revenue and (iv) a $0.6 million increase in operating tax expenses related to a refund received in the prior year.
Selling, general and administrative expenses
Selling, general and administrative expenses for the year ended December 31, 2014 increased $121.7 million, or 64%, compared to the year ended December 31, 2013, primarily as a result of (i) a $118.7 million increase in salaries, wages and benefits primarily related to a $113.0 million increase in stock-based compensation expense resulting from the cumulative catch-up of non-cash compensation costs related to the 2015 Performance Award, which we began accruing during 2014 upon the determination that achievement of this award is now probable, (ii) $2.7 million of costs associated with our international development contracts, which began during 2014, (iii) a $2.0 million increase in advertising costs and (iv) a $1.4 million increase in legal costs. These increases were partially offset by a $3.0 million reduction in insurance costs primarily resulting from the increase in our reserves in the prior year related to the accident that occurred at our park in Arlington, Texas.
Cost of products sold
Cost of products sold for the year ended December 31, 2014 increased $3.9 million, or 4%, compared to the year ended December 31, 2013, primarily as a result of the increase in food and beverage sales. Cost of products sold as a percentage of non-admission revenue for the year ended December 31, 2014 increased slightly relative to the comparable period in the prior year primarily as a result of product mix, including the impact of a reduction in parking revenue due to the strong sales of our premium-priced gold season passes and memberships, which include parking.
Depreciation and amortization expense
Depreciation and amortization expense for the year ended December 31, 2014 decreased $20.0 million, or 16%, compared to the year ended December 21, 2013. The reduction in depreciation and amortization expense is primarily due to certain property, equipment and identifiable intangibles that became fully depreciated and amortized during 2013 and 2014.

32


Loss on disposal of assets
Loss on disposal of assets decreased by $2.7 million, or 32%, for the year ended December 31, 2014 relative to the year ended December 31, 2013, as a result of the disposal of fewer assets in conjunction with the execution of our ongoing capital program during the current year relative to the prior year.
Gain on sale of investee
During the year ended December 31, 2014, the favorable resolution of certain items pertaining to the sale of our interest in dick clark productions, inc. ("DCP") in September 2012 resulted in the recognition of a $10.0 million gain on sale of investee for amounts previously held in escrow. See Note 5 to the consolidated financial statements included elsewhere in this Annual Report for further discussion.
Interest expense, net
Interest expense, net decreased $1.6 million, or 2%, for the year ended December 31, 2014 relative to the year ended December 31, 2013 as a result of a lower debt balance outstanding throughout the current year due to quarterly principal payments made on the Term Loan B that began in March 2013.
Loss on debt extinguishment
The $0.8 million loss on debt extinguishment for the year ended December 31, 2013 was recognized in conjunction with the 2013 Credit Facility Amendment. See Note 7 to the consolidated financial statements included elsewhere in this Annual Report for further discussion.
Income tax expense
Income tax expense decreased $1.1 million, or 2%, for the year ended December 31, 2014 compared to the year ended December 31, 2013 as a result of lower taxable income resulting primarily from an increase in stock-based compensation expenses due to the cumulative catch-up of non-cash compensation costs related to the 2015 Performance Award partially offset by an increase in our effective tax rate. Our effective tax rate increased primarily as a result of the effect of foreign and state income tax expenses, net of the federal benefit.
Year Ended December 31, 2013 vs. Year Ended December 31, 2012
Revenue
Revenue for the year ended December 31, 2013 totaled $1,109.9 million, a 4% increase compared to $1,070.3 million for the year ended December 31, 2012. The increase in revenue was primarily attributable to an $0.86, or 2%, increase in total revenue per capita, which is calculated as total revenue divided by total attendance, as well as a 2% increase in attendance. The increase in attendance was primarily driven by increased season pass unit sales and sales of our new membership program, which was launched in 2013, as well as the successful introduction and marketing of our strong 2013 lineup of new rides and attractions. The increase in attendance includes the adverse impact of cooler temperatures and increased precipitation, and the accident that occurred at our park in Arlington, Texas. Total per capita guest spending, which excludes sponsorships, licensing, Six Flags Great Escape Lodge & Indoor Waterpark accommodations and other fees, increased $0.77, or 2%, to $40.18 during the year ended December 31, 2013 from $39.41 during the year ended December 31, 2012. During the year ended December 31, 2012, we received business interruption insurance proceeds from a claim relating to Hurricane Irene totaling $3.0 million. Excluding the insurance proceeds benefit, total guest spending per capita increased $0.89, or 2%, during the year ended December 31, 2013.
Admissions revenue per capita increased $0.62, or 3%, during the year ended December 31, 2013 relative to the year ended December 31, 2012. The increase in admissions revenue per capita was primarily driven by higher pricing, including reduced discounts and strong sales of our premium-priced gold season passes and memberships, partially offset by (i) continued increases in the season pass and membership attendance mix, which lowers admission revenue per capita but increases overall admissions revenue and (ii) the ticket-related portion of the Hurricane Irene insurance proceeds received in the prior year. Non-admissions per capita guest spending increased $0.15, or 1%, during the year ended December 31, 2013 relative to the year ended December 31, 2012, primarily as a result of increased food, beverage and Flash Pass sales partially offset by the increase in season pass and membership attendance mix, a reduction in parking revenue due to the strong sales of our premium-priced gold season passes and memberships, which include parking, as well as the non-admissions related portion of the Hurricane

33


Irene insurance proceeds received in the prior year. Excluding the insurance proceeds benefit, admissions revenue per capita increased $0.68, or 3%, and non-admissions revenue per capita guest spending increased $0.21, or 1%.
Operating expenses
Operating expenses for the year ended December 31, 2013 increased $5.8 million, or 1%, relative to the year ended December 31, 2012. The increase in operating expenses was primarily driven by (i) a $3.0 million increase in repair and maintenance, utility and rent costs, (ii) a $2.7 million increase in salaries, wages and benefits resulting from an increase in operating days during the year ended December 31, 2013 relative to the year ended December 31, 2012 and our assumption of the operations of many in-park concessions that were previously operated by third parties and (iii) an expense reduction of $1.0 million in the prior year related to the favorable settlement of potential claims at two of our parks. These increases were partially offset by a $1.3 million reduction in operating tax expenses.
Selling, general and administrative expenses
Selling, general and administrative expenses for the year ended December 31, 2013 decreased $36.7 million, or 16%, compared to the year ended December 31, 2012, primarily as a result of a $42.2 million reduction in salaries, wages and benefits, primarily related to reduced stock-based compensation as well as a $1.4 million reduction in consulting services. These reductions were partially offset by a $4.5 million increase in our reserves for ongoing litigation, which includes the $3.0 million reserve related to the accident that occurred at our park in Arlington, Texas, and a $2.2 million decrease resulting from the favorable settlement of an old property claim and proceeds received from a class action settlement, both of which occurred in the prior year.
Cost of products sold
Cost of products sold for the year ended December 31, 2013 increased $6.5 million, or 8%, compared to the year ended December 31, 2012, primarily as a result of the increased costs related to our assumption of operations of many in-park concessions that were previously operated by third parties as well as increased food, beverage, retail and games sales.
Depreciation and amortization expense
Depreciation and amortization expense for the year ended December 31, 2013 decreased $20.0 million, or 13%, compared to the year ended December 31, 2012. The continued reduction in depreciation and amortization expense is primarily the result of annual depreciation expense outpacing annual capital expenditures in recent years. Additionally, certain property and equipment became fully amortized or depreciated during 2012, which also contributed to the reduction in depreciation and amortization expense during the year ended December 31, 2013.
Loss on disposal of assets
Loss on disposal of assets increased by $0.5 million, or 6%, for the year ended December 31, 2013 relative to the year ended December 31, 2012, as a result of the disposal of assets during the current year in conjunction with the implementation of our ongoing capital program.
Gain on sale of investee
We recognized a $67.3 million gain on the sale of an investee in conjunction with the sale of our interest in DCP in September 2012. The $2.2 million equity in loss of investee for the year ended December 31, 2012 included our portion of the loss of DCP prior to the sale of our interest. See Note 5 to the consolidated financial statements included elsewhere in this Annual Report for further discussion.
Interest expense, net
Interest expense, net increased $27.5 million, or 59%, for the year ended December 31, 2013 relative to the year ended December 31, 2012 as a result of the incremental interest on a higher debt balance outstanding as a result of the 2021 Notes that were issued in December 2012.
Loss on debt extinguishment
The $0.8 million loss on debt extinguishment for the year ended December 31, 2013 was recognized in conjunction with the 2013 Credit Facility Amendment. The $0.6 million loss on debt extinguishment for the year ended December 31, 2012 was recognized on the repayment in full and termination of the $72.2 million Term Loan A and the partial repayment of

34


$277.8 million of the Term Loan B in conjunction with the 2012 Credit Facility Amendment. See Note 7 to the Consolidated Financial Statements included elsewhere in this Annual Report for further discussion.
Income tax expense (benefit)
Income tax expense increased $231.8 million, or 126%, for the year ended December 31, 2013 compared to the year ended December 31, 2012 primarily as a result of the release of our valuation allowance that we had on certain of our deferred tax assets prior to 2012. We released the valuation allowance in 2012 because the taxable income generated in 2012 and our future taxable income projections showed utilization of the majority of our federal net operating loss ("NOL") carryforwards and partial utilization of our state NOL carryforwards before they expired. As a result, we believed that it was more likely than not that we would utilize our deferred tax assets prior to their expiration. As of December 31, 2013, we estimate we had approximately $0.8 billion of NOL carryforwards for federal income tax purposes and $5.0 billion of NOL carryforwards for state income tax purposes.
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.
During the years ended December 31, 2014, 2013 and 2012, Holdings paid $184.3 million, $176.2 million and $148.3 million, respectively, in cash dividends on its common stock. In February 2012, Holdings' Board of Directors increased the quarterly cash dividend from $0.03 per share of common stock to $0.30 per share of common stock. In October 2012, Holdings' Board of Directors increased the quarterly cash dividend from $0.30 per share of common stock to $0.45 per share of common stock. In November 2013, Holdings' Board of Directors again increased the quarterly cash dividend from $0.45 per share of common stock to $0.47 per share of common stock. In October 2014, Holdings' Board of Directors again increased the quarterly cash dividend from $0.47 per share of common stock to $0.52 per share of common stock. 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 $195.0 million in total cash dividends on our common stock during the 2015 calendar year.
In February 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 "February 2011 Stock Repurchase Plan"). Under the February 2011 Stock Repurchase Plan, during the twelve months ended December 31, 2011, Holdings repurchased an aggregate of 3,235,000 shares at a cumulative price of approximately $60.0 million. The small amount of remaining shares that were permitted to be repurchased under the February 2011 Stock Repurchase Plan were repurchased in January 2012.
In January 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 "January 2012 Stock Repurchase Plan"). Under the January 2012 Stock Repurchase Plan, during the year ended December 31, 2012, Holdings repurchased an aggregate of 8,499,000 shares at a cumulative price of approximately $232.0 million. The remaining 578,000 shares permitted to be repurchased under the January 2012 Stock Repurchase Plan were repurchased in January 2013 at a cumulative price of approximately $18.0 million and an average price per share of $31.16.
In December 2012, Holdings' Board of Directors approved a new stock repurchase program that permitted Holdings to repurchase up to $500.0 million in shares of Holdings' common stock over a three-year period (the "December 2012 Stock Repurchase Plan"). As of December 31, 2013, Holdings had repurchased 14,775,000 shares at a cumulative price of approximately $500.0 million and an average price per share of $33.84 to complete the permitted repurchases under the December 2012 Stock Repurchase Plan.
In November 2013, 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 four-year period (the "November 2013 Stock Repurchase Plan"). Under the November 2013 Stock Repurchase Plan, as of December 31, 2014, Holdings had repurchased an aggregate of 5,314,000 shares at a cumulative price of approximately $200.9 million and an average price per share of $37.81, leaving approximately $299.1 million for permitted repurchases.

35


All of the foregoing share and per share amounts have been adjusted to reflect Holdings' two-for-one stock splits in June 2011 and June 2013.
On December 20, 2011, we entered into a $1,135.0 million credit agreement (the "2011 Credit Facility") with several lenders including Wells Fargo Bank National Association, as administrative agent, and related loan and security documentation agents. The 2011 Credit Facility was comprised of a 5-year $200.0 million revolving credit loan facility (the "Revolving Loan"), a 5-year $75.0 million Tranche A Term Loan facility ("Term Loan A") and a 7-year $860.0 million Tranche B Term Loan facility ("Term Loan B" and together with the Term Loan A, the "Term Loans").
Based on historical and anticipated operating results, we believe that cash flows from operations, available unrestricted cash and amounts available under the 2011 Credit Facility will be adequate to meet our liquidity needs, including any anticipated requirements for working capital, capital expenditures, common stock dividends, scheduled debt service, obligations under arrangements relating to the Partnership Parks and discretionary common stock repurchases. Additionally, based on our current federal net operating loss carryforwards, we believe we will continue to pay minimal United States cash taxes for the next two to three years.
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 Ebola or swine or avian flu, accidents or the occurrence of an event or condition at our parks, including terrorist acts or threats inside or outside of our parks, negative publicity or significant local competitive events, which could significantly reduce paid attendance and revenue related to that attendance 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 and 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 Revolving Loan or may 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" included elsewhere in this Annual Report.
As of December 31, 2014, our total indebtedness, net of discount, was approximately $1,395.5 million. Based on (i) non-revolving credit debt outstanding on that date, (ii) anticipated levels of working capital revolving borrowings during 2015, (iii) estimated interest rates for floating-rate debt, and (iv) the 2021 Notes, we anticipate annual cash interest payments of approximately $65.0 million during both 2015 and 2016. Under the 2011 Credit Facility, approximately 97% of the amount outstanding under the Term Loan B is not due until 2018.
As of December 31, 2014, we had approximately $73.9 million of unrestricted cash and $179.2 million available for borrowing under the Revolving Loan. Our ability to borrow under the Revolving Loan is dependent upon compliance with certain conditions, including a maximum senior leverage maintenance covenant, 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 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 Revolving Loan could permit the lenders under the 2011 Credit Facility to accelerate the obligations thereunder. The 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 7 to the consolidated financial statements included elsewhere in this Annual Report.
We currently plan on spending approximately 9% of annual revenues on capital expenditures during the 2015 calendar year.
During the year ended December 31, 2014, net cash provided by operating activities was $392.3 million. Net cash used in investing activities during the year ended December 31, 2014 was $98.3 million, consisting primarily of capital expenditures partially offset by proceeds from property insurance recoveries and asset sales, including cash receipts resulting from the release of previously escrowed proceeds from the sale of our interest in DCP in September 2012. Net cash used in financing activities during the year ended December 31, 2014 was $385.2 million, primarily attributable to stock repurchases totaling $195.4 million, the payment of $184.3 million in cash dividends and distributions of $38.0 million to our noncontrolling interests. These uses of cash were partially offset by $38.8 million in proceeds from the exercise of stock options.

36


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 most 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 as of December 31, 2014 was $1,395.5 million, which included $800.0 million of the 2021 Notes, $565.3 million outstanding under the 2011 Credit Facility and $30.2 million outstanding under the HWP Refinance Loan. See Note 7 to the consolidated financial statements included elsewhere in this Annual Report 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 $67.8 million in 2015 (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, 2014, our share of the distribution will be approximately $29.5 million), (ii) minimum capital expenditures at each of the Partnership Parks during rolling five-year periods, based generally on 6% of the Partnership Park's revenues, (iii) an annual offer to purchase all outstanding limited partnership units at the Specified Price to the extent tendered by the unit holders, which annual offer must remain open from March 31 through late April of each year, and any limited partnership interest tendered 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 15 to consolidated financial statements included elsewhere in this Annual Report 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
We had no off-balance sheet arrangements as of December 31, 2014.
Contractual Obligations
Set forth below is certain information regarding our debt, lease and purchase obligations as of December 31, 2014:
 
Payment Due by Period
(Amounts in thousands)
2015
 
2016 - 2017
 
2018 - 2019
 
2020 and beyond
 
Total
Long term debt — including current portion (1)
$
6,301

 
$
41,352

 
$
553,078

 
$
800,000

 
$
1,400,731

Interest on long-term debt (2)
64,877

 
128,235

 
103,281

 
63,000

 
359,393

Real estate and operating leases (3)
6,002

 
11,921

 
6,992

 
138,134

 
163,049

Purchase obligations (4)
121,998

 
9,160

 
8,000

 
4,000

 
143,158

Total
$
199,178

 
$
190,668

 
$
671,351

 
$
1,005,134

 
$
2,066,331

________________________________________
(1)
Payments are shown at principal amount. See Note 7 to the consolidated financial statements included elsewhere in this Annual Report for further discussion on long-term debt.
(2)
See Note 7 to the consolidated financial statements included elsewhere in this Annual Report for further discussion on long-term debt. Amounts shown reflect variable interest rates in effect at December 31, 2014.
(3)
Assumes future payments at 2014 revenue levels for lease payments based on a percentage of revenues. 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, 2014.
(4)
Represents obligations as of December 31, 2014 with respect to insurance, inventory, media and advertising commitments, computer systems and hardware, estimated annual license fees to Warner Bros. (through 2020) and new rides and attractions. Of the amount shown for 2015, approximately $73.0 million represents capital items. The amounts in respect of new rides and attractions were computed as of December 31, 2014 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 as of December 31, 2014, 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 which are individually material.

37


Other Obligations
During the years ended December 31, 2014, 2013 and 2012, we made contributions to our defined benefit pension plan of $6.0 million, $6.0 million and $6.1 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 2015 to our pension plan based on the 2014 actuarial valuation. We plan to make a contribution to our 401(k) plan in 2015, and our estimated expense for employee health insurance for 2015 is $13.8 million. See Note 13 to the consolidated financial statements included elsewhere in this Annual Report for more information on our pension benefit plan.
The vast majority of our capital expenditures in 2015 and beyond will be made on a discretionary basis. We plan on spending approximately 9% of annual revenues on capital expenditures during the 2015 calendar year.
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 premiums and self-insurance retention levels have remained relatively constant during the three-year period ending December 31, 2014. 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" and Note 15 to the consolidated financial statements included elsewhere in this Annual Report 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 (the "Interest Rate Cap 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 7 to the consolidated financial statements included elsewhere in this Annual Report) over 1.00%. Upon execution, the Interest Rate Cap Agreement was designated and documented as a cash flow hedge. The Interest Rate Cap Agreement expired in March 2014.
In April 2014, we entered into three separate interest rate swap agreements (collectively, the "Interest Rate Swap Agreements") that we designated and documented as cash flow hedges. We entered into the Interest Rate Swap Agreements with a notional amount of $200.0 million to mitigate the risk of an increase in the LIBOR interest rate above the 0.75% minimum LIBOR rate in effect on the Term Loan B. The Interest Rate Swap Agreements expire in December 2017. See Note 6 to the consolidated financial statements included elsewhere in this Annual Report for further discussion.
The following is an analysis of 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 as of December 31, 2014. 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.
As of December 31, 2014, we had total debt of $1,395.5 million, of which $1,030.2 million represents fixed-rate debt, after giving effect to the Interest Rate Swap Agreements that we put in place in April 2014 (see Note 6 to the consolidated financial statements included elsewhere in this Annual Report). The remaining $365.3 million balance represents floating-rate debt. For fixed-rate debt, interest rate changes affect the fair market value but do not 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.

38


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 $3.7 million. See Note 7 to the consolidated financial statements included elsewhere in this Annual Report for information on interest rates under our debt agreements.
Recently Issued Accounting Pronouncements
In May 2014, the FASB issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers ("ASU 2014-09"). The amendments in ASU 2014-09 provide for a single, principles-based model for revenue recognition that replaces the existing revenue recognition guidance. ASU 2014-09 is effective for annual and interim periods beginning on or after December 15, 2016 and will replace most existing revenue recognition guidance under U.S. GAAP when it becomes effective. It permits the use of either a retrospective or cumulative effect transition method and early adoption is not permitted. We have not yet selected a transition method and are in the process of evaluating the effect this standard will have on our consolidated financial statements and related disclosures.
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 is incorporated by reference into this Item 7A.

39


ITEM 8.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
SIX FLAGS ENTERTAINMENT CORPORATION
Index to Consolidated Financial Statements

40


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 (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on our evaluation under the framework in Internal Control—Integrated Framework (2013), our management concluded that our internal control over financial reporting was effective as of December 31, 2014.
The effectiveness of our internal control over financial reporting as of December 31, 2014 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 19, 2015

41


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, 2014 and 2013, and the related consolidated statements of operations, comprehensive income (loss), equity and cash flows for each of the years in the three-year period ended December 31, 2014. We also have audited the Company's internal control over financial reporting as of December 31, 2014, based on criteria established in Internal Control - Integrated Framework (2013) 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, 2014 and 2013, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2014, in conformity with U.S. generally accepted accounting principles. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2014, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

KPMG LLP
Dallas, Texas
February 19, 2015

42

SIX FLAGS ENTERTAINMENT CORPORATION
Consolidated Balance Sheets

 
December 31,
(Amounts in thousands, except share data)
2014
 
2013
ASSETS
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
73,884

 
$
169,310

Accounts receivable, net
58,823

 
51,609

Inventories
21,099

 
22,172

Prepaid expenses and other current assets
44,705

 
39,006

Deferred income taxes
102,413

 
71,761

Total current assets
300,924

 
353,858

Property and equipment, net:
 
 
 
Property and equipment, at cost
1,797,617

 
1,716,975

Accumulated depreciation
(579,511
)
 
(485,292
)
Total property and equipment, net
1,218,106

 
1,231,683

Other assets:
 
 
 
Debt issuance costs
19,062

 
23,821

Restricted-use investment securities
2,471

 
1,823

Deposits and other assets
4,750

 
4,268

Goodwill
630,248

 
630,248

Intangible assets, net of accumulated amortization
359,358

 
362,113

Total other assets
1,015,889

 
1,022,273

Total assets
$
2,534,919

 
$
2,607,814

 
 
 
 
LIABILITIES AND EQUITY
 
 
 
Current liabilities:
 
 
 
Accounts payable
$
19,315

 
$
24,464

Accrued compensation, payroll taxes and benefits
37,463

 
29,277

Accrued insurance reserves
41,276

 
50,771

Accrued interest payable
19,542

 
19,598

Other accrued liabilities
36,176

 
25,988

Deferred income
71,598

 
60,443

Current portion of long-term debt
6,301

 
6,269

Total current liabilities
231,671

 
216,810

Noncurrent Liabilities:
 
 
 
Long-term debt
1,389,215

 
1,394,334

Other long-term liabilities
65,396

 
39,934

Deferred income taxes
187,197

 
145,830

Total noncurrent liabilities
1,641,808

 
1,580,098

Total liabilities
1,873,479

 
1,796,908

 
 
 
 
Redeemable noncontrolling interests
437,545

 
437,569

 
 
 
 
Stockholders' equity:
 
 
 
Preferred stock, $1.00 par value

 

Common stock, $0.025 par value, 140,000,000 shares authorized and 92,937,619 and 94,857,347 shares issued and outstanding at December 31, 2014 and December 31, 2013, respectively
2,323

 
2,371

Capital in excess of par value
983,317

 
842,488

Accumulated deficit
(702,116
)
 
(438,825
)
Accumulated other comprehensive loss, net of tax
(59,629
)
 
(32,697
)
Total stockholders' equity
223,895

 
373,337

Total liabilities and equity
$
2,534,919

 
$
2,607,814

See accompanying notes to consolidated financial statements.

43

SIX FLAGS ENTERTAINMENT CORPORATION
Consolidated Statements of Operations

 
Year Ended December 31,
(Amounts in thousands, except per share data)
2014
 
2013
 
2012
Theme park admissions
$
641,535

 
$
602,204

 
$
576,708

Theme park food, merchandise and other
460,131

 
448,547

 
437,382

Sponsorship, licensing and other fees
57,250

 
42,179

 
39,977

Accommodations revenue
16,877

 
17,000

 
16,265

Total revenue
1,175,793

 
1,109,930

 
1,070,332

Operating expenses (excluding depreciation and amortization shown separately below)
437,431

 
417,482

 
411,679

Selling, general and administrative (including stock-based compensation of $140,038, $27,034 and $62,875 in 2014, 2013 and 2012, respectively, and excluding depreciation and amortization shown separately below)
310,955

 
189,218

 
225,875

Costs of products sold
90,515

 
86,663

 
80,169

Depreciation
105,449

 
113,682

 
132,397

Amortization
2,658

 
14,393

 
15,648

Loss on disposal of assets
5,860

 
8,579

 
8,105

Gain on sale of investee
(10,031
)
 

 
(67,319
)
Interest expense
73,057

 
75,044

 
47,444

Interest income
(468
)
 
(899
)
 
(820
)
Equity in loss of investee

 

 
2,222

Loss on debt extinguishment

 
789

 
587

Other expense, net
356

 
1,054

 
2,733

Income from continuing operations before income taxes and discontinued operations
160,011

 
203,925

 
211,612

Income tax expense (benefit)
46,522

 
47,601

 
(184,154
)
Income from continuing operations before discontinued operations
113,489

 
156,324

 
395,766

Income from discontinued operations
545

 
549

 
7,273

Net income
114,034

 
156,873

 
403,039

Net income attributable to noncontrolling interests
(38,012
)
 
(38,321
)
 
(37,104
)
Net income attributable to Six Flags Entertainment Corporation
$
76,022

 
$
118,552

 
$
365,935

 
 
 
 
 
 
Amounts attributable to Six Flags Entertainment Corporation:
 

 
 

 
 

Income from continuing operations
$
75,477

 
$
118,003

 
$
358,662

Income from discontinued operations
545

 
549

 
7,273

Net income
$
76,022

 
$
118,552

 
$
365,935

 
 
 
 
 
 
Weighted-average common shares outstanding (1):
 
 
 
 
 
Weighted-average common shares outstanding—basic:
94,477

 
96,940