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Six Flags - Mark Shapiro online Conference Call

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Mark Shapiro recently held a conference call with bloggers to discuss many current issues going on with Six Flags.


Below is a transcript of the whole call



Operator:Good afternoon. My name is Heather and I will be your conference operator today. At this time, I'd like to welcome everyone to the Six Flags blogger conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session.


If you would like to ask a question during this time, simply press star then the number one on your telephone keypad. If you would like to withdraw your question, press the pound key. Thank you. I'd like to now turn the call over to Angel Ariston. Ma'am, you may begin.


Angel Ariston:Good afternoon. My name is Angel Ariston on behalf of Six Flags. It is a pleasure to welcome you all to today's bloggers conference call. In a moment, we will be joined by Six Flags President and CEO Mark Shapiro who will give you some information about the company and then open it up to your questions.


We have about 60 minutes scheduled for this call, and should you have additional questions today or throughout the season, please do not hesitate to email myself for your point of contact. Please note this call may include forward-looking statements within the meaning of the Federal Security Laws.


You may refer to the company's quarterly report on Form 10-Q for the quarter ended September 30, 2009, which is posted on our website for a detailed discussion of risks associated with any forward-looking statements. With that, it is my pleasure to turn the call over to Six Flags' President and CEO Mark Shapiro.


Mark Shapiro:Thank you, Angel. And thanks to all of you for joining us today on our – it's becoming a periodic ritual for us. Happy New Year to all of you. These blogger calls provide a good opportunity for me to connect with you and with many of our guests, many of whom, as you all very well know, get their news and information from you or get their news and information (inaudible).


They reach your blog. They reach your posts, your comments. There is chatter out there all the time on the blog this year about Six Flags. Plenty of coaster groups that are always in the know or always wanted to be in the know. And many of our guests and our fans, as I like to call them, are the part of those conversations.


So these calls, as they have come to be identified as blogger calls, will continue into this New Year and/or throughout the season. We are not necessarily on a schedule. Just periodically we will set them up and you are welcome to join the dialog. And please, when we get to the Q&A, that's really what these calls are about, come with questions, anything you want to ask.


Nothing is off limits. I'm happy to be as candid as possible. I think you've grown accustom to getting that from me and expecting that from me, and I'll do my best to answer any question. Those we don't know, we will surely get back to you.


Also want to remind you, you don't have to wait, you don't have to pause, you don't have to essentially sit and expect a letter or a note from Angel for one of these calls. At any time, you can contact my office through our communications team, and happy to get on the phone with you at any time. I think messaging and news and information is very important rather than have people guess or speculate about the goings on at the company. I'll try to get you the information just as quick and readily as you need it.


At the same time, I truly believe we have the best communications team in the industry, bar none. And they are available year-round, in-season, off-season, peak season, off-peak, you name it, to get your questions answered. So please come one, come all, and don't hesitate.


To keep things off, just a couple of notes about our 2009 season, all of which has been well documented. We began the year, of course, with significant challenges that impacted our business all year long, including unusually inclement weather in the Northeast, particularly in June and then ending in October.


The swine flu wreaked havoc on our Mexico City properly, let alone our two Texas parks. And of course, just a general economy, lack of discretionary spending, high unemployment, and our re-organization process to boot didn't help matters and certainly put a nice rip right into our season.


In June of 2009, Six Flags commenced the Chapter 11 case in order to restructure over 2.7 billion of debt and preferred equity obligations that were incurred in connection with a series of strategic decisions made between 1998 and 2005 to acquire theme parks, including international parks, and execute significant capital expenditures for new attractions.


The current management team led by me and the Board in early '06 – 2006 in an (area) of a highly levered balance sheet, a story that has not too often been told, a brand that had been tarnished over the course of several years with regard to the product, and because of that, a business in dire need of comprehensive operational restructuring.


Good news is we did that. Product has never been stronger. The presentation has never been stronger. The parks have been repositioned to the family, and the family has come back to Six Flags, which is clearly a great story for us and something we take a lot of pride in.


I want to repeat, this bankruptcy process, this restructuring, this re-organization was not an operational restructuring. It was simply a balance sheet restructuring. There was well overdue. In an effort to address these issues, our management team has worked diligently these past three years to expand and improve our product offerings, to diversify our revenue streams, to grow our revenue streams, to set us up for long-term growth, and to increase our operational efficiency and cash flows going forward. And that's the operational end.


When you combine that with the balance sheet being restructured, we sit in a good position to really thrive beginning in 2010. We believe the restructuring of our debt will allow us to focus our resources on specifically and single-handedly the operation of our parks and to continue the recent operational successes we've had with the appropriate liquidity and a sustainable capital structure going forward.


Six Flags does anticipate completing the bankruptcy process by end of March. Our team has been working for months to arrange an $830 million senior secured credit facility to finance our exit. The loans include a $150 million five-year revolving credit facility and of course a $680 million six-year term loan.


The loans also will include $115 million financing commitment from Time Warner Inc. if necessary to cover put obligations from our partnership parks at Six Flags over Georgia in Atlanta and Six Flags Over Texas in Arlington. It's a solid plan and one that, as I said, set this up for growth and stability for the long-term.


Despite the bankruptcy filing, 2009 saw market improvement and overall appearance and cleanliness of our parts. If you've been to any of our parks, at any time over the last two years, you would see in fact a market improvement. The way the parks look, the feel of them, the way we enforce our code of conduct, the diversified entertainment, the friendliness, the cleanliness, the anti-smoking policies we've put up, it's a completely different experience. And candidly and personally, it's an experience I grew up on at Six Flags Great America just outside in Chicago.


We launched new attraction this past year with Sasquatch, the tower ride at our Great Escape park in Lake George, New York; the Dark Knight at Six Flags Mexico themed after the franchise film. We opened an exciting new wooden roller coaster at Six Flags Magic Mountain, Terminator Salvation, also themed after the feature film.


We've built another Wiggles World play area for our young children, this one at Fiesta Texas in San Antonio. And we added our exciting and critically acclaimed Glow in the Park closing night parade at two additional parks, Six Flags St. Louis and Six Flags Over Texas.


We also upgraded and relaunched Medusa at Six Flags Great Adventure and Superman Ride of Steel at Six Flags New England, renaming those coasters Bizarro. Both rides opened a ray of reviews and the one in New England of course won its fifth Golden Ticket from Amusement Today as the Best Steel Coaster, and just this week in the annual roller coaster poll, which is published in the L.A. Times, it also won the Best Steel Coaster.


The 2010 season will focus once again on the guest experience, the family guest experience. We are ramping up concerts with even more top name access in the last year. We will bring back the Glow in the Park parade at Six Flags New England, which had a one year hiatus last year, but it has come back by popular demand.


We are introducing that same parade at Six Flags Great America outside of Chicago. And Great America, of course, recently purchased the Little Dipper coaster from Kiddie Land, which is shut down. And we are excited to add that iconic ride to our lineup and it will of course keep its original name. And then of course at our La Ronde park in Montreal, Canada, we have a top flight coaster being launched there with a name and theme yet to be announced. So stay tuned for that.


One of our big headlines for the year is we dropped 2010 Season Pass prices at several of our parks. So for less than the price of a one day ticket at Disney park, you get an entire year at Six Flags with no blackout date. And that's something that often gets lost. Despite all the discounting that's going on and all the value-added packages, just about every consumer, customer service business like Disney, we at Six Flags aren't taking that same route.


We are lowering our prices and adding more value to our Season Pass, our most loyal fans and guests of the park. Disney of course announced increase in their season – in their one day price, if you will, but they have been discounting everywhere else. And this is going to be a special year for us. I mean, really prices you've never seen before.


For me, the headline is really Six Flags Over Texas and Six Flags Fiesta Texas, just as examples. The general admission price for both of those parks is $49.99. And we are offering a new Play Pass for these at the same price. So buy a day, get a year, $49.99. Never been done before at either one of those parks. And it's a new tier of pricing. It's a new tier of ticket, if you will.


The Play Pass gets you unlimited visits just for, say, Six Flags Over Texas for the year, but that also gets you entrance to all Six Flags theme parks across the country. The difference of that and a Season Pass is Season Pass of course gets the Season Pass coupon book, which has over $300 of in-park, savings on food and fun, also comes with a host of other affinity benefits and sets you up for other value opportunities inside the park. When you are buying, flash your Season Pass and you can save on retail and merchandise and everything else. So it's a big difference.


The Play Pass, the Season Pass, and then of course our one day pass that you can buy either at the gate or online. Also other parks are seeing prices never seen before. Magic Mountain, general admission there is $54.99, the lowest it's been in years. The Play Pass there is also $54.99. At Six Flags Over Georgia, our general admission is $44.99, our Season Pass is only $5 at $49.99.


At Kentucky Kingdom, Six Flags Kentucky Kingdom at Louisville, our general admission is $29.99, very low, our lowest price of all our parks. And the Play Pass there is also $29.99. Great Adventure has their lowest prices in years. Great America has the lowest prices in years. So the pricing is there, the value is there, the product is not where it needs to be, and we are excited for an exceptional year once we emerge from the re-organization process.


What I do want to say is this is truly going to be once in a lifetime. These prices are not going to be here when we head into our 50th anniversary season. So it's an opportunity for folks to come and enjoy the season in 2010 at never before seen prices. But like Disney has announced, we will be gradually raising our prices and ridding ourselves of some of these discounts as the year goes on this year.


Finally, before I take your questions, we are eagerly anticipating and planning our 50th anniversary celebration, as I mentioned, for 2011, 50 years of it. Really Six Flags has been a part of the American culture, the fabric of this country. Five generations of families that have looked to Six Flags for the rides, the overall entertainment. Bugs Bunny, Funnel Cakes and even some of our new ITs like Tony Hawk and Thomas the Tank Engine, and of course the Wiggles.


They have looked to us for memories, they have looked to us for a communal experience, they have looked to us for escape, they have looked to us for storytelling, and they have looked to us to grow up with and take their imagination and run wild and of course share those experiences with their children and their grandchildren.


So we want to continue to celebrate that legacy and have our guests play a role in our celebration in a big way. Every single park guest will feel the excitement as soon as they enter the gates. While we will have a new attraction at every single park, this experience, this celebration will be very show orientated as well. We are taking a page out of our Six Flags Fiesta Texas park and we will be very show centric for 2011.


Finally, of course the Texas Giant will probably be the biggest attraction we put in at all of our parks. We are redoing the ride. We've shut it down for 2010. It exists and is located, as you know, at Six Flags Over Texas. It will be smoother, it will be faster, and it will have higher barrier – higher degrees of turns than any wooden coaster in the world, reclaiming its position amongst the pantheon of legendary coasters.


So that's the snapshot of where we were, where we are, and where we are going. And as I said, I'm happy to have you on the call. And at this time, I'm happy to take any questions you might have about the company and its ongoings.


Operator:At this time, if you'd like to ask a question, press star one on your telephone keypad. We'll pause for just a moment to compile the Q&A roster. Again, that is star one. And your first question comes from the line of (Sean Arney).


(Sean Arney):Yes, Mr. Shapiro. I was curious about the Play Pass. Did you say that if you buy the Play Pass, it's good at all parks?


Mark Shapiro:Yes, if you buy a Play Pass, it's good at all Six Flags theme parks as well as unlimited visits for that one park that you bought.


(Sean Arney):And how many visits does it get you to the other parks?


Mark Shapiro:Unlimited visits. So unlimited visits at the park you bought it at and unlimited visits at all parks. And this is totally – this is something that folks at Six Flags Magic Mountain are pretty familiar with. We've had this program there for several years. But we've never had it, for example, at Kentucky Kingdom in Louisville. We've never had it at Fiesta Texas in San Antonio and we've never had it in our Arlington, Dallas Park Six Flags Over Texas.


So it's – we recognize and where we – we need to be (inaudible) to those families that are being crunched in this unemployment economy and this tough recession, but yet still want to enjoy a get-away or an escape or a vacation or a daycation at Six Flags parks. So we are doing our best to make the pricing easier and give people kind of different à la carte choices, if you will, (Sean).


(Sean Arney):Well, do you have any (inaudible) of someone, say, buying numerous passes at the Kentucky park for $29.99 and then selling it for just $1 or $2 more to people so that they can use them anywhere.


Mark Shapiro:You can't do that, because when you get a Play Pass, you got your picture taken. So...


(Sean Arney):OK.


Mark Shapiro:Yes.


(Sean Arney):That's what I was curious about.


Mark Shapiro:Thanks for looking out for our business.


(Sean Arney):Thank you.


Operator:Your next question comes from the line of (Charles Decab).


(Charles Decab):Hello. I write in the Washing D.C. area. I was in the Thomas the Tank Engine town. What can we expect to see new in – at Six Flags America in Maryland this year in terms of shows, rides, concerts?


Mark Shapiro:Well, we haven't gotten out yet. It's a little early, just being January. So we want to wait a little bit to announce our concert and show lineup. We will have an expanded fleet of concerts there this year, up from 2009, which is a record year for concerts. We will also have new shows. And of course, it's not just Thomas the Tank Engine, as you know, it's an entire kids' land, if you will. It's an entire Thomas area. So there will be eight new rides in attraction. So it's one of the biggest expansions in park history, certainly as it relates to the kids attractions.


(Charles Decab):And when is the Thomas town would open? That (inaudible) opening day in March or…?


Mark Shapiro:We haven't finalized yet opening day, but most likely it will be Memorial Day just as we head into our peak full-time everyday season.


(Charles Decab):I see. OK. And in this particular park in Maryland, what – how is the price going to be compared to last year?


Mark Shapiro:Six Flags America – hang on one second as I check my trustee notes prepared by my communications team. The general admission, of course, is $49.99 and the Season Pass price is also $49.99. But that's just for a limited time, (Charles). We are not going to keep it like that all year long.


So it's very similar to our Play Pass program, but it's even better, because all those things you don't get with the Play Pass, which is the coupon book which contains coupons for over – at that park, $400 in in-park savings, plus the benefits you get for flashing your pass in park, it includes all that and free tickets for your friends. Free tickets for friends are not given out if you buy the Play Pass. But at Six Flags America, you buy a Season Pass for the same price as a one day admission and you get all those benefits I just mentioned.


(Charles Decab):I see. OK.


Mark Shapiro:And that's what people will lose out to understand. If you buy a Play Pass, you won't get five free tickets for friends like we usually give out when you buy a Season Pass, but you will get unlimited visits to your park and you will get unlimited visits to all Six Flags parks. So it's – again, it's a tier pricing, it's an à la carte pricing, and it's going to be different flavors for a given guest.


(Charles Decab):OK. And just – so the Thomas thing is probably going to open up around Memorial Day during – if opening in the spring, you also said March 27th, but – if I showed up in the spring, can I expect to see anything new or different than I saw last year?


Mark Shapiro:Absolutely. And it will be out with our show lineup and our concert lineup just as we get closer. Plus we will be open for spring break this year, and we weren't open for spring break last year.


(Charles Decab):I see.


Mark Shapiro:So the season will expand. So not only are you getting the great price of $49.99 with all those benefits, but you're going to get a longer operating season than last year as well.


(Charles Decab):OK. When is spring break?


Mark Shapiro:Off the top of my head, that one I don't have (inaudible).


(Charles Decab):OK.


Mark Shapiro:I don't have the exact date, but we will – our communication team will follow up, but you see you get the dates.


(Charles Decab):Great. Thank you.


Mark Shapiro:Thank you.


Operator:Your next question comes from the line of (Robert Niles).


(Robert Niles):I'm just curious, what – which factor hurt you the most? What do you fear most going into 2010, bad weather or high gas prices?


Mark Shapiro:I have to say truthfully, neither. For me, it's just the uncertain economy. That's the number one, (Robert). You know, it's – we've been through gas prices before. Remember, when those gas prices go up, first of all, I don't think they will go back to the levels of what was at 2007.


And secondly, when they go up, so does airfare. And it makes traveling harder and more expensive. It makes destination parks like Disney certainly a much bigger expenditure, if you will. And that's on top of, of course, the baggage fees, which I'm sure you've noticed over the last two days, which have been hiked up at all or at least dealt in Continental so far. So it's expensive. It's getting more expensive to travel. And as gas prices go up, that will become more expensive.


So – does it have an impact? Of course. But a drive away, a daycation I think still plays into our favor. As far as bad weather, you know, you really can't control that. Much has been made about my comments of whether I thought the former regime use that as an excuse, and I really – I still think it's an excuse in terms of bad performance.


Don't get me wrong. Weather is a huge factor and a huge barrier. Bad weather is a huge barrier to attendance and obviously business success. But you are always going to have some kind of bad weather in some portions of the country. What we had last year is what I would call irregular or abnormal bad weather patterns. And that certainly can play as we cannot call that out when I think that happens.


But it's the uncertain economy that is the biggest unknown, if you will. Unemployment still at 10 percent, jobs coming back at a slow pace, and stimulus necessarily won't be there – won't necessarily be there next summer, the way it has been the last two summers. And so I think the uncertainty about the economy is really the biggest barrier and the biggest obstacle to our success. It's just really the biggest unknown.


(Robert Niles):If I can follow up on the uncertainty...


Mark Shapiro:Of course.


(Robert Niles):…of the economy at this point. How is that affecting your capital development plans going forward if you're looking few years down the road like you have to. Particularly given your expressed concern to kind of reposition the capital development to make the parks more attractive to families, is this slowing down your timeline, or what kind of effect does it have?


Mark Shapiro:No, it's not slowing our timeline. As part of our re-organization process, we actually publicly released a five-year plan of numbers we expect to hit in the capital expenditures we plan to make. And we are going to stick to that. We are going to stick to that budget, we are going to stick to that plan, and we are going to stick to the performance that our investors and equity owners will expect of us. So we are on target to spend 91 million in CapEx in 2010 and just south of that in 2011, and we are going to stick with that.


(Robert Niles):OK. Thank you.


Mark Shapiro:Thank you.


Operator:Your next question comes from the line of (Michael Diamond).


(Michael Diamond):Hi, Mark.


Mark Shapiro:Hey, Michael, how are you?


(Michael Diamond):Fine. How are you?


Mark Shapiro:Good.


(Michael Diamond):I have a question getting back to what you were saying about, trying to eliminate some of the discounts as the year goes on.


Mark Shapiro:Sure.


(Michael Diamond):Can you give some examples. I mean, would you change the general admission price during the season or how would that work?


Mark Shapiro:Well, for example – I'll just give you one, OK? We were just talking about Six Flags America. The Season Pass price for Six Flags America is $49.99. And that's just for a period of time. As the year goes on, it will jump back up to $69.99. So our guests right now have an opportunity to get a Season Pass at a $20 discount to what it will be as we get closer to summer.


So as I said, gradually we will wean off the discounts. Of course, we'll write out the economy and we'll make adjustments if need be. But our plan right now is to make moves like that and get the prices more in line with what we believe our product demands. Having said that, even at $69.99, that's amongst the lower Season Pass price offerings that we have at any park – historically, excuse me.


(Michael Diamond):So last year were they discounted that much?


Mark Shapiro:No.


(Michael Diamond):And then when would you raise prices, like when can consumers expect to see higher prices?


Mark Shapiro:As we get closer to summer. We haven't put a definitive date on that.


(Michael Diamond):OK. And in terms of general admission price, that would stay pretty steady?


Mark Shapiro:General admission will probably stay steady. Season Pass and online is something that ultimately will rise up. You know, if the economy allows us to do that, if consumer spending patterns allow us to do that, I mean, I do want to reserve the right that if things stay in the doldrums, we may abandon those plans. But similar to Disney, we think there is going to be a slow rebound and I would underline the word slow, and out-of-the-country rebounds, out-of-the-economy rebounds. As one day the unemployment rate comes down to single digits and we see an opportunity to go back to our historical pricing, we will.


(Michael Diamond):Thank you.


Mark Shapiro:Thank you.


Operator:Your next question comes from the line of (Arthur Levine).


(Arthur Levine):Hi, Mark.


Mark Shapiro:Hey, Arthur, how are you doing?


(Arthur Levine):I'm wondering if you can update us on what's happening with your projects in Dubai and Nigeria and also talk about any other plans for expansion into countries outside of North America.


Mark Shapiro:Well, with regard to Dubai, as you know, the plan to launch the park has been delayed. We are probably looking at an opening of 2013 or 2014. But we have had discussions as recent as last week and our partners over in Dubai are committed to building a Six Flags park there. So they have begun to communicate plans to scale back on other partners they have signed up.


And I'm not going to go into those. That's for them to tell you. But Six Flags did not want them. They are committed to us and they have paid, I would add, their licensing fees, their development fees, their creative fees. They are not only up-to-date, but they are on time. So we've been pushed back, but we're still going to happen.


With regard to Nigeria, we signed up a deal to conceptually develop a theme park for the area within (caliber) coming up over the next year. So we are in a process of putting together create plans, designs, working with Jack Rouse & Associates ultimately to put it in front of the government and the folks that are making the investment there and then see if they want a green light. So – but they were only being paid for our conceptual development.


We have not landed a deal or signed up a deal to actually build the park. But Nigeria remains on target and on time. In fact, we have a meeting coming up in early spring in Nigeria to present some plans to them. And then as far as new places, we are constantly in conversation. Nothing to report right now.


Candidly it's a bit of a standstill right now. I think people are waiting while the markets have come back to a certain degree. Things were still a little slow in terms of outside investment for theme parks in new countries or new regions. So we are on the sidelines waiting, having lots of casual conversations, still generating a lot of interest, but so far nobody willing to put their money where their mouth is.


(Arthur Levine):OK. There has been some speculation that you may be working with – to develop some kind of a 5-D attraction for 2011. Is there anything you can say about that?


Mark Shapiro:Nothing I can say at this time.


(Arthur Levine):OK. OK. Thank you, Mark.


Mark Shapiro:Thank you.


Operator:Again, if you'd like to ask a question at this time, please press star one on your telephone keypad. Again, that is star one. Your next question is from the line of (Sabrina Miller).


(Sabrina Miller):Hi, Mark. If I remember correctly, you were originally hoping to exit bankruptcy by the end of 2009. And I know that some concerns have been expressed regarding (inaudible) which have been joining out but proceeding. So my question is, now that things have been delayed a bit and the earliest you would be able to exit bankruptcy is March. Has that had any impact on your plan for the 2010 as far as maintenance in other projects? And are there any parts that could potentially be in danger of not opening should the deal fall through in March?


Mark Shapiro:Great question. Thank you for asking that. No. The answer is unequivocally no. We'll have no impact. Our goal is, as we stated, was to get out by the end of 2009, which obviously was an aggressive goal. We didn't have for us an Obama behind us the way General Motors did, but we still thought it was a realistic goal. We went in June and while we were in discussion, that was our goal, and we had a timeline set with the court and we were on our way.


My job amongst other things is to maximize the return to all our constituencies in this restructuring process. I'm not tied to any one group or looking out for any one team or any one investor. It's everybody in this – in the restructuring process unfortunately doesn't necessarily come out on the right end or certainly receive the 100 cents on the dollar that they should have received.


That's the bad news of our restructuring, and anyone that held debt and certainly anyone that held equity. It is in many ways a bad situation. But it was a situation for our corporate structure. It was a situation in New York. It was a situation for our headquarters. It has nothing to do with the operational efficiency and the operational day-to-day of each of our parks.


All of our parks are profitable. And all of our parks went through the entire 2009 season yet affected by some of the factors that I mentioned upfront. But we didn't have those cutbacks, we didn't have layoffs, we didn't stop building, we didn't shorten our hours, we didn't close early, and that's not going to happen in 2010 either. But we have sufficient cash to keep running our business. We have liquidity. We didn't need any debt financing.


One of the reasons is because we came off a record-setting year in 2008. So we walked into the restructuring in decent shape from a cash perspective and of course once you are in restructuring, you're not paying interest and any of your debt. So that just emboldened our position. But I wanted to get out early and just be done with it and hope we can get the best resolution for everybody, but discussions went one way and another way.


And the court for their defense will have to give due process and make sure everyone is heard and everybody has a chance to get to the table and voice their concerns or their positions. And they have set confirmation for March 8th. I'm very much looking forward to that. There is only one set of creditors, the most junior set of creditors that are left to make a deal with us, including the Unsecured Creditors Committee.


I'm hopeful that we can reach a consensual deal before March 8th. But if we don't, we will have it out at the confirmation hearings. But no matter what happens before the confirmation hearings, at the confirmation hearings, or post the confirmation hearings, it will not have an effect on any of our works and their operations or their operating hours from opening day through the end of the year.


(Sabrina Miller):Thank you.


Mark Shapiro:Thank you.


Operator:Your next question comes from the line of (Robert Niles).


(Robert Niles):Hi, Mark. Getting back to the issue of attracting families, looking long-term here – I know this is not something that's really a 2010 issue, but more of a long-term management issue. In terms of developing the types of attractions that really appeal to families and (I'll just) repeat this, if you look at competitors like Disney and Universal, they have got extensive in-house attraction development teams such as the management there in Universal Creative. Do you foresee getting to the point where Six Flags starts moving in that direction?


Mark Shapiro:Not in the foreseeable future.


(Robert Niles):OK.


Mark Shapiro:Being a former Disney employee, I will tell you that one of my favorite shops was the Imagineering Department. It is very inspiring, it's very creative, so much talent there, and as you can see from the product, they ultimately put out the gold standard. And I love obviously the synergies and efficiencies you can get from doing it in-house. But to realistically say, that's somewhere in our near future just is not to be.


(Robert Niles):Thanks.


Operator:Your next question is from the line of (Michael Hammer).


(Michael Hammer): Mark, how are you?


Mark Shapiro: Hey, Michael. Good to talk to you.


(Michael Hammer):I noticed that it seems a lot of parks are painting coasters and things that people are (inaudible). We've talked in the previous calls about catching up on deferred maintenance. Is that a big focus of your capital money for 2010, maybe an anticipation of 2011 …


Mark Shapiro:Another great question. Thanks for asking. I'm really proud of this area. I make no bones or no secret about the fact that when I came aboard I was very displeased and frankly depressed at the state of our parks. Some obviously in better shape than others, but the amount of deferred maintenance had just built up to levels that had no business getting to. Just I saw that as I was in the proxy fight for the company and I saw that once I became CEO and made another tour. I knew we had a lot of work to do. But we spent the better part of $100 million over the last three years just on deferred maintenance.


So I would tell you now, you would see it an eye opening difference when you walk into our parks and look at the pavements, look at the building maintenance, you'll never see the roofs, but you can't imagine how many leaking roofs that I fixed, and especially the ride paint.


To your point, we painted 19 major rides this past year. 19, which is a company record for one year. I'm not necessarily proud to say that because it needed to be done, but I'm proud of the outcome. You go into Magic Mountain and you'll see Goliath looking the way it hasn't looked in – since it launched. You will see the same thing for the Batman coaster there. You will see obviously the way X2 looks and Déjà vu.


I mean, we have – we've spent a lot of money for the upkeep of these parks. And guess what. We are going to continue to spend a lot of money, because we are not there yet and we are only there when these parks are literally pristine. So we've really reserved about $20 million to $30 million a year for deferred maintenance in just overall upkeep and asset maintenance. And we are going to continue with that track.


We are going to stay disciplined to it. We are going to stay dedicated and committed to it. And it will remain a priority for the company. But we've made significant progress and our guests even noticed as much as our employees have, and that's a very high rate.


(Michael Hammer):Yes. I was at Great Adventure this past fall and it was looking pretty great though.


Mark Shapiro:Thank you. (Mark) and his team has done an exceptional job there. And now that our park presidents know we are committed to this and they have seen it the past three years, they have seen us put our money where our mouth is. You know, you wouldn't believe the list they turn in of their wants, their desires, their needs. And slowly but surely we'll get everything on that list, from landscaping to maintenance vehicles to ride paintings to new trains.


You know, that's – I think that's every much as part of the business, every much a part of the business as is new capital. If you can – anything that will improve the look of the park, the feel of the park and also the speed, you get new trains and new queue lines and obviously more labor, you can speed the lines we have in rides and waiting for food. And that's a secret to success. That's a recipe for success.


(Michael Hammer):Great. Good luck as always.


Mark Shapiro:Thank you so much, Mike.


(Michael Hammer):All right. Have a good one.


Mark Shapiro:Take care.


Operator:Your next question is from the line of (Arthur Levine).


(Arthur Levine):Yes. Hi again, Mark. Just wondering, I think you said earlier that you have $91 million budgeted for capital expenditures in 2010. And I'm just wondering if you can give a general sense of how that sort of breaks down in terms of parks and also maybe some of the new attractions and new things that you're going to be introducing this year.


Mark Shapiro:I would tell you, overall, without getting down to the fine detail, it's generally split between new capital for what I call – let's call it marketable capital. So new attractions coming on board this year and some pre-spending you have to do for some of the new attractions that we're launching in 2011. And in the other half is on asset maintenance, deferred maintenance and some of our IT investments.


As many of you well know, beyond improving the look and feel of the parks, we've invested in fiber lines and new POS terminals and obviously some of the assets for our Six Flags Television and our Corporate Alliances Division. So there is still a lot to be done there. Our ticketing systems – again, all with the intent of making things smoother and faster for the guests to make their way around the park.


Technologically this company was in the dark ages. If it's candidly a company with its – the former CEO didn't even do email. I mean, he didn't do email. If you wanted to – you wanted to communicate with him, you sent an email, his assistant printed it out, brought it to him, he read it, he wrote something, and she types it up and sent it back. You can imagine how that efficiency then translated on down the line.


And we are – look, for me, the three most important things to me about the company today and moving forward are, one, the people, investing in our people and making sure that proper benefits are there and growth and career opportunities and salary structure and bonus incentives.


And two is content, not just licensing the new content like we've done with the entertainment in the Wiggles and Tony Hawk and Warner Brothers, but creating our own contents, creating our own IT and managing our own destiny and own brand extensions. And then third is technology. And as I said, the other – of the 91, you split it up. Half is marketable capital and the other half is maintenance. And IT, IT is all about investing in technology. Better systems, better process, and a better foundation.


(Arthur Levine):On a completely unrelated note, one of the piece of mine is food, food at parks. And I know you've made a lot of changes with third party vendors coming in. Do you have any plans to do anything in-house and do anything to improve your food offerings and expand menus and things like that?


Mark Shapiro:To me, I don't see any five-star dining in our future. I'm – you know, I guess it's – to each zone – you know, when I go to one of our parks or our competitors' or a baseball game, I prepare. I kind of – I set up. I know them going in days in advance. I sort of adjust my diet so that when I get to the theme park, I can take part in what I think is typical theme park offerings, the funnel cakes and the cheese burgers and the pizza and the Pink Things at Six Flags Over Texas.


I mean, I've sort of ordered all in and I like to try everything. And by the way, that's not just our parks. I do that when I visited Kings Island last year and I went to Holiday World last year. I really made my way around the parks and our competitors' over the past 12 months. And I think by and large, while people want more diversity in our food offerings and we've made a big effort to go there. And they want more healthier offerings, and we've made a significant effort to go that route.


They get – they understand what they are going to get at the theme park. And for the most part, they like it. That doesn't mean there aren't people out there that don't, but they do like. And we've tried getting Papa John's, getting Johnny Rockets, getting Mrs. Fields, which is going to be coming in in 2010. We haven't announced that yet.


This is better product, better brands, better quality. And while it may still be in the category of food, you're not supposed to eat every day. It's something our guests like, and because of the brands, they know they are getting the value for their money. And we're going to continue on that road of branded items, branded food, branded retail, and just try to improve and keep stepping that up, if you will.


We did in Lake George, I would mention. We went to a – Lake George, which has our Great Escape Park. What do we call that food there? You know, the pans (inaudible). Yes, there have been skillets. We went to – I thought Sandra Daniels (inaudible) in there. We have skillets that we do cooking outside, sort of similar to Dollywood, if you will. And I think that's been a big win for us.


And the guest satisfaction scores from our guests with that new – those new food offerings in the presentation and the experience have been off the charts. So that's something we're going to continue to be very aggressive about. I want to do it in more parks. But to your point, I think it does expand the diversity and the food quality as well. You see it being cooked. It's fresh, it's hot, it's made to order, but we have a lot of laws in some of our states that won't let us do the outdoor cooking that we like to do. But that was a winner for us and I want to expand it.


In fact, I came up with that idea after visiting Dollywood. I saw what a hit it was and I had my French Fries that they call it and chilly cheese fries and steak sandwiches, and again, not necessarily healthy, but it was made fresh to order and hot and cooked in front of me and seems fun. And we've tried to import that into our parks and we're going to do more of that as the years go on.


(Arthur Levine):Well, that sounds intriguing. I mean, you can get Mrs. Fields' cookies and Papa John's Pizza just about anywhere when you go to a park. Of course, you can't get the roller coasters and some of the other experiences you offer. That's uniquely Six Flags. But through the years, there have been fabulous food items that have been associated with parts going back to the early years. And it seems to be sort of a large diet. And it would be nice to see Six Flags and other parks return to the Nathan's hot dogs and some of the other items that seem to have sort of fallen by the wayside through the...


Mark Shapiro:Well, I'd tell you, we have Nathan's hot dogs at our Great Adventure parks. And one of the reasons we don't have Nathan's hot dogs at some of our other parks out west is that Nathan's had no interest, for example, in going out west. They are a brand that is obviously heavily northeast centric. And while we're talking about going to other parks, they don't want to make that move, just like In-N-Out Burger, which I think is one of the best burgers that's out there, along with Johnny Rockets, is not interested in going east.


So there is a story behind some of the things that have faded away and/or there is a story some of the things that haven't come to fruition. But we've got plenty of food stands. So we are open to anything. I'm not just saying for you, but for your readers. If people have ideas of things that used to be there, they'd like to see return. I'm all for nostalgia. I'm going to throw back myself. So my favorite item at the Six Flags Over Texas is the Pink Thing, and that's been around forever. So if those things are missing and we can import, and we really think there is demand for it, believe me, we'll put it in in two seconds.


(Arthur Levine):Thanks, Mark.


Mark Shapiro:Thank you.


Operator:And there are no further questions at this time.


Mark Shapiro:Well, thanks everybody for joining the conference call, the blogger call. I do want to mention if the writer from Washington D.C. was still on, I did get that date for you. The spring break at Six Flags America is going to be March 27th. They were open for – they were open for the Super Bowl last year – spring break. Thank you. Too close. Thanks, (Anna). They were open for spring break last year.


So I actually gave you a bad information, but I think spring break is earlier this year and we're going to try to expand the days of the spring break in the hours. So we are holding true to having a longer operating season nevertheless. But thanks again to everybody for taking part in this and for being so engaged and having so many questions and for your support and coverage of Six Flags. Happy New Year, and we'll see you in the parks. Bye.


Operator:This does conclude today's conference call. You may now disconnect.

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Knowing this is a lot to read I'll summarize the topics covered:


Season Pass and Play Passes

Season Pass prices are lower at many parks this year in recognition of the economy, but prices may increase as it gets closer to the season. Prices could rise in 2011 when the economy recovers.


Play Passes are now available at more SF parks, including SFA, SFFT, SFoT and SFKK. Play passes are available at the same price as a one-day admission and are good for unlimited visits to all Six Flags parks. This difference between the Play Pass and the Season Pass is that only Season Pass holders get the coupon booklets, including 5 bring a friend tickets.



Six Flags expects to emerge from bankruptcy protection in March, and this will not affect any park opening dates.


Every SF park was profitbale in 2009.



Mark Shapiro is very proud of the attitudinal turnaround across the chain including: non-smoking policies, codes of conduct, park cleanliness and employee friendliness.


19 major rides were painted in 2009 and many structural improvements were made to existing buildings. i.e.: leaky roofs fixed


Food - Yes, Skillets (ala Dollywood) were added to Great Escape in 2009. Not expected to pop up everywhere but parks are free to experiment with ideas they see at other parks.


Also, he doesn't want to loss unique regional food options like Nathan's Hot Dogs at SFGAdv or Pink Things at SFoT.


2010 Improvements

The focus will continue to be on guest experience such as ramping up concerts and additional Glow in the Park Parades. New to SFGAm and also returns to SFNE. Don't expect any surprise 2009 ride announcements beyond what is already known.


International Expansion of the Brand Name

Six Flags Dubai - on track for 2013-2014

Six Flags Nigeria - still in conceptual development phase. Contracts have not been signed.


I hope this helps everyone.

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Honestly, I'd like to see Six Flags focus on their North American parks before opening across the world. Six Flags Nigeria? I don't understand that one...




Remeber that's just expected to be a licensing agreement, recurring revenue for Six Flags without any financial investment from Six Flags.


Not the same as the Six Flags Belgium and Holland deals.

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I found it interesting that when Shapiro mentions the "competition," he talks namely about touring Holiday World and Kings Island.


Maybe I'm just reading too far into this (as people tend to do with their homeparks), but could this be hinting that Shapiro is having extra concerns about SFKK...?

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Technologically this company was in the dark ages. If it's candidly a company with its – the former CEO didn't even do email. I mean, he didn't do email. If you wanted to – you wanted to communicate with him, you sent an email, his assistant printed it out, brought it to him, he read it, he wrote something, and she types it up and sent it back. You can imagine how that efficiency then translated on down the line.


Is Shapiro referring to Kieran Burke? If so, that is amazing and leads to my further concerns about Burke's new position at Nashville Shores here.

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If only sending emails made you a competent CEO, Six Flags's problems would be solved. When SIX emerges from bankruptcy, and if they face the same financial woes; will they still blame Kieren Burke? Will Snyder and Shapiro take responsibility or maintain their myopic view that everything wrong with this company is a result of "previous management", and not of their own making? Certainly the debt is not their fault, but they have failed to remotely "right the ship" financially in these past 4 years.

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Technologically this company was in the dark ages. If it's candidly a company with its – the former CEO didn't even do email. I mean, he didn't do email. If you wanted to – you wanted to communicate with him, you sent an email, his assistant printed it out, brought it to him, he read it, he wrote something, and she types it up and sent it back. You can imagine how that efficiency then translated on down the line.


Is Shapiro referring to Kieran Burke? If so, that is amazing and leads to my further concerns about Burke's new position at Nashville Shores here.


You wouldn't believe how many CEO's and head guys in the Theme Park Business do this exact practice. They just don't get / are overwhelmed by the email thing and have their emails printed out and put on their desks then the dictate a response to a secretary who then emails the sender back.


Cough Cedar Fair Cough

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Certainly the debt is not their fault, but they have failed to remotely "right the ship" financially in these past 4 years.

Depends on how you define failure - when's the last time the company was profitable? I'd say they have completed a goal of making the parks profitable, now they just need to be able to bring in enough to knock the debt down.


Will this continue once they get out of bankruptcy protection? Will they be able to handle the debt load? Surely cheaper season passes will boost attendance, but will it boost spending inside the park enough?

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Certainly the debt is not their fault, but they have failed to remotely "right the ship" financially in these past 4 years.

Depends on how you define failure - when's the last time the company was profitable? I'd say they have completed a goal of making the parks profitable, now they just need to be able to bring in enough to knock the debt down.


Will this continue once they get out of bankruptcy protection? Will they be able to handle the debt load? Surely cheaper season passes will boost attendance, but will it boost spending inside the park enough?

Factor out the "flagging", and PKS would have been profitable in the 1998 and 1999 seasons IIRC. The post 9/11 economic downturn severely impacted the company's ability to manage debt, generate revenue, and ruined subsequent profitability. 9/11 hurt the entire industry. Premier Parks did have a profitable quarter in 2005. I'm not sure if that was EBITDA or actual profits.


It makes me laugh when Mark Shapiro bashes "previous management", when it was that same previous management (namely the Six Flags over Georgia Limited Partnership) that procured the loan concession from Time Warner. Lord knows, it's keeping Six Flags on life support and helping them get credit from banks. PKS had these parks for 7 years. SIX has been in control for 4 years and will emerge from bankruptcy. Will they finally demonstrate the ability to *grow* this company outside of cost cutting and divestures (the same initiatives implemented by NBC's Jeff Zucker that are forcing the Comcast sale)?


Mark Shapiro worked at the very profitable ESPN. He never successfully turned around a company. For all the Kieran Burke bashing, he took Tierco/Premier into one of the largest theme park operators in the world in less than 6 years. That's before you factor in the Six Flags deal.


Factor out EBITDA, and Shapiro hasn't made a nickel for this company. His initiatives are purely the undertaking of cost cutting (not necessarily a bad thing).

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Thanks for taking the time to type all that up. Made for some interesting reading.


The one area where I think SF continually goes wrong, and has been for quite some time, is the pricing of everything else besides admission. It has never been "expensive" to enter the park with all the discounts around.


They might get a family into the park on a discounted admission rate, but sticker shock hits guest when it comes to parking. If it is significantly higher than other local venues, guests either than expect superior service or a facility. Neither is true of a SF parking lot. Therefore, it creates the first negative impression of the park.


The second major negative is the pricing of the food. From bizarre combos like a "family combo" for four that only comes with two drinks, or combos that don't include a beverage, it's just too much money for the quality of the food and the atmosphere. Usually, SF outdoor food courts are sub-par compared to every local mall.


The management of SFMM for example should go down the road to the mall and take a look at the food court. That is what consumers now are used to as the miminum standard in an acceptable eating atmosphere. SFMM's exposed park seating is absurdly primitve in comparison.


Guests may eat inside the park out of convenvience, but they need to focus on getting guests to eat there because they actually want / prefer eating there over somewhere other than the park. The negative impression that comes with the pricing, quality and atmosphere makes return visits unlikely.


The third issue is what to do with the walking around with purchases, when it comes to merchandise spending. It is in general a great idea for safety and speeding up the line to store loose articles, but the split second a guest buys a souvenir or a on-ride photo (talk about overpriced! bet they would sell more if they listed for 9.99 - it's just a digital photo!), they then are now faced with storage costs. That is customer unfriendly. To encourage in-park spending on merchandise, there has to be a system where guests can purchase items and then be able to store them somewhere for free.

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^So the question becomes.


Should Six Flags raise the ticket prices across the board by $15? The extra $15 in admission per ticket could lower the parking down to $5, save you 25% off each meal and allow for free storage.


Now if you visit the park as a four person family (who Six Flags is trying to draw to the park) let's look at the costs.


Current way:

$15 Parking

$80 Food (2 meals per person at $10/meal)

$5 Storage (assume you have to rent once every 2 hours)

$100 Total


Raise the ticket price $15:

$5 Parking

$60 Same food at 25% discount

$0 Storage

$60 - Add'l admission charge

$125 Total


All the perceived nickel and diming (while a nuisance) actually subsidizes the cheap admission prices.

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Forgive me for asking a stupid question, But The CEO of SIX Flags just said that I can buy a "play pass" from Kentucky Kingdom for $29.99 and go to any Six Flags park and get in free correct?!


Im asking this potentially stupid question cause I don't want to look like a complete retard when i use all that gas and drive all the way to Gurnee IL, Austell GA, St. Louis, etc... and try to get in with a Kentucky Kingdom pass!


This was going to be the first year that I was not going to get a pass because the "Kingdom" is not worth the time anymore with no Chang OR my babies Lola and Stella. I guess I could marathon on Greezed Lightnin' if its not breaking down every 5 minutes, but i will pick up a play pass ASAP if I can get into the other Six Flags for free!!!

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Forgive me for asking a stupid question, But The CEO of SIX Flags just said that I can buy a "play pass" from Kentucky Kingdom for $29.99 and go to any Six Flags park and get in free correct?


Yes, that is how I read it. It is odd for those of us not in the Magic Mountain area where "Play Pass" has been the norm for years.

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The third issue is what to do with the walking around with purchases, when it comes to merchandise spending. It is in general a great idea for safety and speeding up the line to store loose articles, but the split second a guest buys a souvenir or a on-ride photo (talk about overpriced! bet they would sell more if they listed for 9.99 - it's just a digital photo!), they then are now faced with storage costs. That is customer unfriendly. To encourage in-park spending on merchandise, there has to be a system where guests can purchase items and then be able to store them somewhere for free.


you just echoed my sentiment exactly. The souvenir cup problem is a massive guest service issue. They NEED to come up with a solution for this, because the current situation is just absolutely ridiculous. (This is coming from a former employee who had to explain this absurd rule to guests day-in and day-out). The only reasonable solution I see is to get rid of the cups. Perhaps have them available in the gift shops as an actual souvenir, but the whole free-refills deal has to go. Allowing guests to take the souvenir cups on the ride is obviously not practical and unsafe. Allowing them to leave them in the station causes confusion over whos cup is whose, people taking the wrong cups when there are multiple trains running, etc. A collapsible cup that would fit in a pocket is not realistic since it would most likely leak, etc. As it is now the free and/or 99cent refills encourage guests to carry the cup with them all day. Asking them to pay for a l0cker to store it at every ride is absurd. Get rid of the cups. Problem solved.

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^I have a simple solution.


Just like the park can print out your pass and indicate parking privileges the park should be able to print unlimited drink benefits on your pass.


When you buy your first unlimited drink you have the option to receive the souvenir cup or get your drink in a regular cup. If in a regular cup you get a voucher. You bring your voucher with a receipt to the season pass processing center and get a revised pass.


Oh damn you would need a season pass for this to work, but then again who would take advantage of the unlimited drink option if they didn't have a season pass.

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