Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2013 |
Accounting Policies [Abstract] | ' |
Basis of Presentation | ' |
Basis of Presentation |
The Consolidated Financial Statements include our accounts and the accounts of our wholly owned subsidiaries. We also consolidate the partnerships that own the Partnership Parks, as we have determined that we have the power to direct the activities of those entities that most significantly impact the entities' economic performance and we have the obligation to absorb losses and receive benefits from the entities that can be potentially significant to these entities. The equity interests owned by non-affiliated parties in the Partnership Parks are reflected in the accompanying consolidated balance sheets as redeemable noncontrolling interests. On September 30, 2013, we acquired the noncontrolling equity interests held by non-affiliated parties in HWP Development, LLC ("HWP"), with the exception of a nominal amount retained by a non-affiliated party that we subsequently acquired on December 31, 2013. Prior to the acquisition, we consolidated HWP as a subsidiary as we had the power to direct the activities that most significantly impacted HWP's economic performance and we had the obligation to absorb losses and receive benefits from HWP that could have been significant to HWP. The equity interests in HWP owned by non-affiliated parties prior to the acquisition were reflected in the accompanying consolidated balance sheet as noncontrolling interest. The portion of earnings or loss from each of the entities attributable to non-affiliated parties is reflected as net income (loss) attributable to noncontrolling interests in the accompanying consolidated statements of operations. See Note 6 for further discussion. |
Intercompany transactions and balances have been eliminated in consolidation. |
Use of Estimates | ' |
Use of Estimates |
The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. 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 those estimates resulting from continuing changes in the economic environment will be reflected in the financial statements in future periods. |
Fair Value Measurement | ' |
Fair Value Measurement |
FASB ASC 820, Fair Value Measurements and Disclosures ("FASB ASC 820"), defines fair value as the exchange prices that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The guidance also specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect our market assumptions. In accordance with FASB ASC 820, these two types of inputs have created the following fair value hierarchy: |
| | | | | | | | | | | | | | | | | |
• | Level 1: quoted prices in active markets for identical assets; | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
• | Level 2: inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the instrument; and | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
• | Level 3: inputs to the valuation methodology are unobservable for the asset or liability. | | | | | | | | | | | | | | | | |
This hierarchy requires the use of observable market data when available. See Note 10 for disclosure of methods and assumptions used to estimate the fair value of financial instruments by classification. |
Cash Equivalents | ' |
Cash Equivalents |
Cash equivalents were not significant as of December 31, 2013. Cash equivalents of $495.0 million as of December 31, 2012, consisted of short-term highly liquid investments with a remaining maturity as of purchase date of three months or less, which are readily convertible into cash. For purposes of the consolidated statements of cash flows, we consider all highly liquid debt instruments with remaining maturities as of their purchase date of three months or less to be cash equivalents. |
Inventories | ' |
Inventories |
Inventories are stated at weighted average cost or market value and primarily consist of products for resale including merchandise and food and miscellaneous supplies. Products are removed from inventory at weighted average cost. We have recorded a valuation allowance for slow moving inventory of $1.2 million and $0.7 million as of December 31, 2013 and 2012, respectively. |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
Prepaid Expenses and Other Current Assets | ' |
Prepaid Expenses and Other Current Assets |
Prepaid expenses and other current assets include $21.5 million and $23.0 million of spare parts inventory for existing rides and attractions as of December 31, 2013 and 2012, respectively. These items are expensed as the repair or maintenance of rides and attractions occur. |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
Advertising Costs | ' |
Advertising Costs |
Production costs of commercials and programming are charged to operations in the year first aired. The costs of other advertising, promotion, and marketing programs are charged to operations when incurred with the exception of direct-response advertising which is charged to the period it will benefit. As of December 31, 2013 and 2012, we had $1.6 million and $1.4 million in prepaid advertising, respectively. The amounts capitalized are included in prepaid expenses. |
Advertising and promotions expense was $61.2 million, $61.5 million and $62.5 million during the years ended December 31, 2013, 2012 and 2011, respectively. |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
Debt Issuance Costs. | ' |
Debt Issuance Costs |
We capitalize costs related to the issuance of debt. In connection with the amendment of our 2011 Credit Facility in December 2013, we capitalized $2.4 million of debt issuance costs directly associated with the issuance of the amendment. The amortization of such costs is recognized as interest expense using the interest method over the term of the respective debt issue. Amortization related to deferred debt issuance costs was $4.3 million, $2.4 million and $7.8 million for the years ended December 31, 2013, 2012 and 2011, respectively. |
Property and Equipment | ' |
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. Maintenance and repairs are charged directly to expense as incurred, while betterments and renewals are generally capitalized as property and equipment. When an item is retired or otherwise disposed of, the cost and applicable accumulated depreciation are removed and the resulting gain or loss is recognized. |
The estimated useful lives of the assets are as follows: |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
Rides and attractions | 5 - 25 years | | | | | | | | | | | | | | | | |
Land improvements | 10 - 15 years | | | | | | | | | | | | | | | | |
Buildings and improvements | Approximately 30 years | | | | | | | | | | | | | | | | |
Furniture and equipment | 5 - 10 years | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
Goodwill and Intangible Assets | ' |
Goodwill and Intangible Assets |
The following table reflects our intangible assets and accumulated amortization: |
| | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| December 31, | | | | | | | | | | |
(Amounts in thousands) | 2013 | | 2012 | | | | | | | | | | |
Indefinite-lived intangible assets: | | | | | | | | | | | | | |
Trade names, trademarks and other | $ | 344,075 | | | $ | 344,000 | | | | | | | | | | | |
| | | | | | | | | |
Accumulated amortization | — | | | — | | | | | | | | | | | |
| | | | | | | | | |
Total indefinite-lived intangible assets | $ | 344,075 | | | $ | 344,000 | | | | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | | | | | |
Finite-lived intangible assets: | | | | | | | | | | | | | |
Third party licensing rights | $ | 24,361 | | | $ | 24,361 | | | | | | | | | | | |
| | | | | | | | | |
Accumulated amortization | (8,809 | ) | | (6,407 | ) | | | | | | | | | | |
Total third party licensing rights | $ | 15,552 | | | $ | 17,954 | | | | | | | | | | | |
| | | | | | | | | |
Sponsorship agreements | $ | — | | | $ | 43,000 | | | | | | | | | | | |
| | | | | | | | | |
Accumulated amortization | — | | | (31,273 | ) | | | | | | | | | | |
| | | | | | | | | |
Total sponsorship agreements | $ | — | | | $ | 11,727 | | | | | | | | | | | |
| | | | | | | | | |
Other identifiable intangibles | $ | 3,346 | | | $ | 3,576 | | | | | | | | | | | |
| | | | | | | | | |
Accumulated amortization | (860 | ) | | (692 | ) | | | | | | | | | | |
Total other identifiable intangibles | $ | 2,486 | | | $ | 2,884 | | | | | | | | | | | |
| | | | | | | | | |
Total finite-lived intangible assets, cost | $ | 27,707 | | | $ | 70,937 | | | | | | | | | | | |
| | | | | | | | | |
Total accumulated amortization | (9,669 | ) | | (38,372 | ) | | | | | | | | | | |
Total finite-lived intangible assets, net | $ | 18,038 | | | $ | 32,565 | | | | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | | | | | |
Total intangible assets, net | $ | 362,113 | | | $ | 376,565 | | | | | | | | | | | |
| | | | | | | | | |
Our intangible assets with identifiable useful lives are amortized on a straight-line basis over their estimated useful lives. We expect that amortization expense on our existing intangible assets subject to amortization will average approximately $2.6 million over each of the next five years. The weighted average useful life of the third party licensing rights is 10 years. |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
Valuation of Long-Lived Assets | ' |
Valuation of Long-Lived Assets |
Long-lived assets totaled $2,224.0 million as of December 31, 2013, consisting of property and equipment ($1,231.7 million), goodwill ($630.2 million) and other intangible assets ($362.1 million). With our adoption of fresh start accounting upon emergence, assets were revalued based on the fair values of long-lived assets. |
Goodwill and intangible assets with indefinite useful lives are tested for impairment annually, or more frequently if indicators are identified that an asset may be impaired. We identify our reporting units and determine the carrying value of each reporting unit by assigning the assets and liabilities, including the existing goodwill and intangible assets, to those reporting units. We then determine the fair value of each reporting unit and compare it to the carrying amount of the reporting unit. We are a single reporting unit. For each year, the fair value of the single reporting unit exceeded our carrying amount (based on a comparison of the market price of our common stock to the carrying amount of our stockholders' equity (deficit)). In September 2012, the FASB amended FASB ASC 350 which permits entities to perform a qualitative analysis on indefinite-lived intangible assets to determine if it is more likely than not that the asset is impaired. We adopted this amendment in September 2012 and have performed a qualitative analysis on our indefinite-lived trade name intangible as of December 31, 2013. Based on the results of our qualitative analysis, we determined that it was more likely than not that our trade name was not impaired. Accordingly, no impairment was required on our goodwill or indefinite-lived intangible assets. |
If the fair value of the reporting unit were to be less than the carrying amount, we would compare the implied fair value of the reporting unit goodwill with the carrying amount of the reporting unit goodwill. The implied fair value of goodwill is determined by allocating the fair value of the reporting unit to all of the assets (recognized and unrecognized) and liabilities of the reporting unit in a manner similar to a purchase price allocation. The residual fair value after this allocation is the implied fair value of the reporting unit goodwill. |
We review long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset or group of assets to future net cash flows expected to be generated by the asset or group of assets. If such assets are not considered to be fully recoverable, any impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell. |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
Revenue Recognition | ' |
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 anytime after the initial term. 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, membership 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. Total sales of multi-use admissions in excess of redemptions are recognized in deferred revenue. As of December 31, 2013, deferred revenue was primarily comprised of (i) advance sales of season pass and other admissions for the 2014 operating season, (ii) the unredeemed portion of the initial term of the membership program that will be recognized in 2014, (iii) sponsorship revenue that will be recognized in 2014 and (iv) a nominal amount for the remaining unredeemed season pass revenue and pre-sold single-day admissions revenue for the 2013 operating season that will be redeemed throughout the completion of the 2013 operating season during the first week of 2014. |
Accounts Receivable, Net | ' |
Accounts Receivable, Net |
Accounts receivable are reported at net realizable value and consist primarily of amounts due from guests for the sale of multi-use admission products, including season passes and the membership program. We are not exposed to a significant concentration of credit risk, however, based on the age of the receivables, our historical experience and other factors and assumptions we believe to be customary and reasonable, we do record an allowance for doubtful accounts. |
Derivative Instruments and Hedging Activities | ' |
Derivative Instruments and Hedging Activities |
We account for derivatives and hedging activities in accordance with FASB ASC Topic 815, Derivatives and Hedging ("FASB ASC 815"). This accounting guidance establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities. It requires an entity to recognize all derivatives as either assets or liabilities in the consolidated balance sheet and measure those instruments at fair value. If certain conditions are met, a derivative may be specifically designated as a hedge for accounting purposes. The accounting for changes in the fair value of a derivative (e.g., gains and losses) depends on the intended use of the derivative and the resulting designation. |
We formally document all relationships between hedging instruments and hedged items, as well as our risk-management objective and our strategy for undertaking various hedge transactions. This process includes linking all derivatives that are designated as cash-flow hedges to forecasted transactions. We also assess, both at the hedge's inception and on an ongoing basis, whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in cash flows of hedged items. |
Changes in the fair value of a derivative that is effective and that is designated and qualifies as a cash-flow hedge are recorded in other comprehensive income (loss), until operations are affected by the variability in cash flows of the designated hedged item. Changes in fair value of a derivative that is not designated as a hedge are recorded in other expense in our consolidated statements of operations on a current basis. |
Commitments and Contingencies | ' |
Commitments and Contingencies |
We are involved in various lawsuits and claims that arise in the normal course of business. Amounts associated with lawsuits or claims are reserved for matters in which it is believed that losses are probable and can be reasonably estimated. In addition to matters in which it is believed that losses are probable, disclosure is also provided for matters in which the likelihood of an unfavorable outcome is at least reasonably possible but for which a reasonable estimate of loss or range of loss is not possible. Legal fees are expensed as incurred. See Note 15 for further discussion. |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
Income Taxes | ' |
Income Taxes |
Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases including net operating loss and other tax carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in operations in the period that includes the enactment date. We recorded a valuation allowance of $190.3 million and $177.4 million and as of December 31, 2013 and 2012, 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 tax carryforwards, before they expire. The valuation allowance was based on our estimates of taxable income by jurisdiction in which we operate and the period over which our deferred tax assets were recoverable. During the fourth quarter of 2012, we determined that the valuation allowance against our federal net operating losses was no longer required because of the significant amount of net income that we generated in 2012. Our 2012 results, coupled with our projected taxable income over the foreseeable future, gave us comfort that we would be able to utilize all of our federal net operating loss carryforwards before they expire. See Note 11. |
Our liability for income taxes is finalized as auditable tax years pass their respective statutes of limitation in the various jurisdictions in which we are subject to tax. However, these jurisdictions may audit prior years for which the statute of limitations is closed for the purpose of making an adjustment to our taxable income in a year for which the statute of limitations has not closed. Accordingly, taxing authorities of these jurisdictions may audit prior years of the group and its predecessors for the purpose of adjusting net operating loss carryforwards to years for which the statute of limitations has not closed. |
We classify interest and penalties attributable to income taxes as part of income tax expense. As of December 31, 2013, we had no accrued interest and penalties liability. |
Beginning in 2006, we no longer permanently reinvested foreign earnings, therefore, United States deferred income taxes have been provided on foreign earnings. |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
Earnings (Loss) Per Common Share | ' |
Earnings (Loss) Per Common Share |
Basic earnings (loss) per common share is computed by dividing net income (loss) applicable to Holdings' common stockholders by the weighted average number of common shares outstanding for the period. Diluted earnings (loss) per common share is computed by dividing net income (loss) applicable to Holdings' common stockholders by the weighted average number of common shares outstanding during the period and the effect of all dilutive common stock equivalents. In periods where there is a net loss, diluted loss per common share is equal to basic loss per common share, since the effect of including any common stock equivalents would be antidilutive. Computations for basic and diluted earnings (loss) per share were retroactively adjusted to reflect the 2011 Stock Split and the 2013 Stock Split described in Note 12. See Note 14 for further discussion of earnings (loss) per common share. |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
Stock Benefit Plans | ' |
Stock Benefit Plans |
Pursuant to the Six Flags Entertainment Corporation Long-Term Incentive Plan (the "Long-Term Incentive Plan"), Holdings may grant stock options, stock appreciation rights, restricted stock, restricted stock units, unrestricted stock, deferred stock units, performance and cash-settled awards and dividend equivalents (collectively, "Awards") to select employees, officers, directors and consultants of Holdings and its affiliates. The Long-Term Incentive Plan originally provided for the issuance of no more than 19,333,332 shares of common stock of Holdings, as adjusted to reflect the 2011 Stock Split and the 2013 Stock Split. In May 2012, our stockholders approved an amended and restated Long-Term Incentive Plan that, among other things, increased the number of shares available for issuance under the Long-Term Incentive Plan to 28,133,332, as adjusted to reflect the 2013 Stock Split. |
During the years ended December 31, 2013, 2012 and 2011, stock-based compensation expense related to the Long-Term Incentive Plan was $26.8 million, $62.6 million and $54.1 million, respectively. |
As of December 31, 2013, options to purchase approximately 7,910,000 shares of common stock of Holdings and approximately 351,000 shares of restricted stock or restricted stock units were outstanding under the Long-Term Incentive Plan and approximately 5,083,000 shares were available for future grant. |
Stock Options |
Options granted under the Long-Term Incentive Plan are designated as either incentive stock options or non-qualified stock options. Options are generally granted with an exercise price equal to the fair market value of the common stock of Holdings on the date of grant. While certain stock options are subject to acceleration in connection with a change in control, options are generally cumulatively exercisable in four equal annual installments commencing one year after the date of grant with a ten-year term. Generally, the unvested portion of stock option awards is forfeited upon termination of employment. Stock option compensation is recognized over the vesting period using the graded vesting terms of the respective grant. |
The estimated fair value of the majority of our options granted was calculated using the Black-Scholes option pricing valuation model. This model takes into account several factors and assumptions. The risk-free interest rate is based on the yield on U.S. Treasury zero-coupon issues with a remaining term equal to the expected term assumption at the time of grant. The simplified method was used to calculate the expected term (estimated period of time outstanding) because our historical data from our pre-confirmation equity grants is not representative or sufficient to be used to develop an expected term assumption. Expected volatility of options granted prior to 2013 was based on the historical volatility of similar companies' common stock for a period equal to the stock option's expected term, calculated on a daily basis. Expected volatility of options granted in 2013 was based two-thirds on the historical volatility of similar companies' common stock and one-third on our historical volatility for a period equal to the stock option's expected term, calculated on a daily basis. The expected dividend yield is based on expected dividends for the expected term of the stock options. The fair value of stock options on the date of grant is expensed on a straight line basis over the requisite service period of the graded vesting term as if the award was, in substance, multiple awards. |
In August 2011, stock option grants were made to the vast majority of full-time employees. Given the then current share limitations of the Long-Term Incentive Plan, certain of the option grants to officers were made contingent upon stockholder approval of an amendment to the plan increasing the number of available shares. This increase in the number of available shares received overwhelming stockholder approval at the May 2012 annual stockholders meeting, satisfying the stockholder approval contingency of such options. The accounting measurement date for these grants was May 2, 2012. At that date, the strike prices of the options were less than the prevailing trading price for the underlying shares, and as such the options were valued as in-the-money options. Due to limitations in the Black-Scholes model related to options treated as in-the-money, we elected to value the options using the Hull-White I lattice model with a simplified assumption for the early settlement to value these options. The inherent advantage of Hull-White I lattice model relative to the Black-Scholes model is that option exercises are modeled as being dependent on the evolution of the stock price and not solely on the amount of time that has passed since the grant date. The Hull-White I lattice model uses all of the same assumptions as the Black-Scholes model and also assumes a post-vesting cancellation rate, which treats a cancelled option as (i) exercised immediately if it is in-the-money or (ii) worthless if it is out-of-the-money. The post-vesting cancellation rate assumption that was used in the valuation of these options was 0%. |
The following weighted-average assumptions were utilized in the Black-Scholes model for the stock options granted during the years ended December 31, 2013, 2012 and 2011: |
|
| | | | | | | | | | | | | | | | | |
| 31-Dec-13 | | 31-Dec-12 | | 31-Dec-11 |
| CEO | | Employees | | CEO | | Employees | | CEO | | Employees |
Risk-free interest rate | 1.2 | % | | 2.03 | % | | 1.08 | % | | 1.08 | % | | — | % | | 1.68 | % |
Expected life (in years) | 6.25 | | | 6.25 | | | 6.25 | | | 6.25 | | | 0 | | | 6.25 | |
|
Expected volatility | 39.21 | % | | 38.98 | % | | 44.23 | % | | 44.14 | % | | — | % | | 43.68 | % |
Expected dividend yield | 5.24 | % | | 5.08 | % | | 4.51 | % | | 3.48 | % | | — | % | | 0.65 | % |
The following table summarizes option activity for the year ended December 31, 2013: |
| | | | | |
| | | | | | | | | | | | | | | | | |
(Amounts in thousands, expect per share data) | Shares | | Weighted Avg. Exercise Price | | Weighted Avg. Remaining Contractual Term | | Aggregate Intrinsic Value | | | | | |
($) | ($) | | | | | |
Balance at December 31, 2012 | 9,436 | | | $ | 15.04 | | | | | | | | | | | |
| | | | |
Granted | 1,244 | | | $ | 34.3 | | | | | | | | | | | |
| | | | |
Exercised | (2,486 | ) | | $ | 11.98 | | | | | | | | | | | |
| | | | |
Canceled or exchanged | — | | | $ | — | | | | | | | | | | | |
| | | | |
Forfeited | (283 | ) | | $ | 18.56 | | | | | | | | | | | |
| | | | |
Expired | (1 | ) | | $ | 15.86 | | | | | | | | | | | |
| | | | |
Balance at December 31, 2013 | 7,910 | | | $ | 18.9 | | | 7.73 | | $ | 141,747 | | | | | | |
| | | | |
Vested and expected to vest at December 31, 2013 | 7,615 | | | $ | 18.86 | | | 7.73 | | $ | 136,727 | | | | | | |
| | | | |
Options exercisable at December 31, 2013 | 1,692 | | | $ | 14.85 | | | 7.26 | | $ | 37,173 | | | | | | |
| | | | |
The weighted average grant date fair value of the options granted during the years ended December 31, 2013, 2012 and 2011 was $7.78, $8.07 and $6.91, respectively. |
The total intrinsic value of options exercised for the years ended December 31, 2013, 2012 and 2011 was $57.1 million, $68.0 million and $6.9 million, respectively. The total fair value of options that vested during the years ended December 31, 2013, 2012 and 2011 was $18.0 million, $15.7 million and $10.3 million, respectively. |
As of December 31, 2013, there was $16.4 million of total unrecognized compensation expense related to option awards, which is expected to be recognized over a weighted-average period of 2.68 years. |
Cash received from the exercise of stock options during the years ended December 31, 2013, 2012 and 2011 was $29.8 million, $40.0 million and $9.1 million, respectively. |
Stock, Restricted Stock and Restricted Stock Units |
Stock, restricted stock and restricted stock units granted under the Long-Term Incentive Plan may be subject to transfer and other restrictions as determined by the compensation committee of Holdings' Board of Directors. Generally, the unvested portion of restricted stock and restricted stock unit awards is forfeited upon termination of employment. The fair value of stock, restricted stock and restricted stock unit awards on the date of grant is expensed on a straight line basis over the requisite service period of the graded vesting term as if the award was, in substance, multiple awards. |
During the year ended December 31, 2011, approximately 10,000 shares of stock were granted to our Chief Executive Officer as part of his 2010 bonus award. In addition to the restricted stock awards granted, during the year ended December 31, 2010 a performance award was established that, based on the EBITDA performance of the Company in 2010 and 2011, resulted in an additional 2,912,000 shares of restricted stock units being granted to certain key employees in February 2012. Such restricted stock units were unvested when granted and originally scheduled to vest upon the completion of the Company's 2012 audit if the EBITDA performance target for 2012 was achieved. Since as of December 2012 it was clear that the Company would exceed the performance target for 2012, Holdings' Board of Directors determined it was in the best interest of the Company to accelerate the vesting of the award by a couple of months to a December 24, 2012 vesting date thereby potentially creating significant tax savings for the individuals that received the award. As of December 31, 2012, all of the compensation expense related to this award had been recognized. In September 2012, our Chief Operating Officer retired and upon his retirement, 82,000 of these shares of restricted stock units were forfeited. |
During the year ended December 31, 2011, an additional performance award was established based on our goal to achieve Modified EBITDA of $500 million by 2015. The aggregate payout under the performance award to key employees if the target is achieved in 2015 would be 2,650,000 shares but could be more or less depending on the level of achievement and the timing thereof. There has been no stock-based compensation expense recorded for this performance award because it was not deemed probable that we would achieve the specified performance targets as of December 31, 2013. Based on the closing market price of Holdings' common stock on the last trading day of the quarter ended December 31, 2013, the total unrecognized compensation expense related to this award at target achievement in 2015 is $97.6 million that will be expensed over the service period if it becomes probable of achieving the performance condition. We will continue to evaluate the probability of achieving the performance condition going forward and record the appropriate expense if necessary. |
The following table summarizes stock, restricted stock and restricted stock unit activity for the year ended December 31, 2013: |
| | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
(Amounts in thousands, except per share amounts) | Shares | | Weighted Average Grant Date Fair Value Per Share | | | | | | | | | | | |
($) | | | | | | | | | | | |
Balance at December 31, 2012 | 694 | | | $ | 9.73 | | | | | | | | | | | | |
| | | | | | | | | | |
Granted | 19 | | | $ | 38.26 | | | | | | | | | | | | |
| | | | | | | | | | |
Vested | (352 | ) | | $ | 10.2 | | | | | | | | | | | | |
| | | | | | | | | | |
Forfeited | (10 | ) | | $ | 8.12 | | | | | | | | | | | | |
| | | | | | | | | | |
Canceled | — | | | $ | — | | | | | | | | | | | | |
| | | | | | | | | | |
Non-vested balance at December 31, 2013 | 351 | | | $ | 10.84 | | | | | | | | | | | | |
| | | | | | | | | | |
The weighted average grant date fair value per share of stock awards granted during the years ended December 31, 2013, 2012 and 2011 was $38.26, $22.92 and $17.57, respectively. |
The total grant date fair value of the stock awards granted during the years ended December 31, 2013, 2012 and 2011 was $0.7 million, $67.3 million and $0.8 million, respectively. The total fair value of stock awards that vested during the years ended December 31, 2013, 2012 and 2011 was $3.6 million, $68.5 million and $4.2 million, respectively. |
As of December 31, 2013, there was $0.8 million of total unrecognized compensation expense related to restricted stock and restricted stock unit awards, which is expected to be recognized over a weighted-average period of 0.58 years. |
Deferred Share Units |
Non-employee directors can elect to receive the value of their annual cash retainer as a deferred share unit award (DSU) under the Long-Term Incentive Plan whereby the non-employee director is granted DSUs in an amount equal to such director's annual cash retainer divided by the closing price of Holdings' common stock on the date of the annual stockholders meeting. Each DSU represents the Company's obligation to issue one share of common stock and the shares are delivered approximately thirty days following the cessation of the non-employee director's service as a director of the Company. |
DSUs vest quarterly consistent with the manner in which non-employee directors' cash retainers are paid. The fair value of the DSUs on the date of grant is expensed on a straight line basis over the requisite service period of the graded vesting term as if the award was, in substance, multiple awards. |
During the years ended December 31, 2013 and 2012, approximately 3,000 and 5,000, respectively, DSUs were granted at a weighted-average grant date fair value of $38.26 and $24.20, respectively, per unit. The total grant date fair value of DSUs granted during the years ended December 31, 2013 and 2012, was $0.1 million. During the year ended December 31, 2011, no DSUs were granted. |
As of December 31, 2013, there was no unrecognized compensation expense related to the outstanding DSUs. |
Dividend Equivalent Rights |
On February 8, 2012, Holdings' Board of Directors granted dividend equivalent rights (DERs) to holders of unvested stock options. As of February 8, 2012, approximately 10.0 million unvested stock options were outstanding. As stockholders are paid cash dividends, the DERs will accrue dividends which will be distributed to stock option holders upon the vesting of their stock option award. Holdings will distribute the accumulated accrued dividends pursuant to the DERs in either cash or shares of common stock. Generally, holders of stock options for fewer than 1,000 shares of stock will receive their accumulated accrued dividends in cash. Generally, holders of stock options for 1,000 shares of stock or greater will receive their accumulated accrued dividends in shares of common stock. In addition, Holdings' Board of Directors granted similar DERs payable in shares of common stock if and when any shares are granted under the stock-based compensation performance award program based on the EBITDA performance of the Company in 2012 - 2015. In August 2012, Holdings' Board of Directors granted approximately 2.0 million additional options to the majority of the full-time employees of the Company as well as DERs in connection with such options. During the twelve months ended December 31, 2013, Holdings' Board of Directors granted approximately 1.2 million additional options to the majority of full-time employees of the Company as well as DERs in connection with such options. |
The DER grants to participants with 1,000 or more unvested stock options and the DER grants related to the performance award were granted contingent upon stockholder approval at the Company's 2012 Annual Meeting of Stockholders of the Company's proposal to amend the Long-Term Incentive Plan to increase the number of shares for issuance under the Long-Term Incentive Plan from 19,333,332 to 28,133,332. On May 2, 2012, our stockholders approved the Long-Term Incentive Plan amendment to increase the number of shares available for issuance. We recorded $7.6 million and $6.1 million of stock-based compensation for the DER grants during the years ended December 31, 2013 and 2012, respectively. |
Employee Stock Purchase Plan |
On September 15, 2010 and subject to stockholder approval, Holdings' Board of Directors adopted the Six Flags Entertainment Corporation Employee Stock Purchase Plan (the "ESPP") under Section 423 of the Internal Revenue Code. On May 4, 2011, our stockholders approved the ESPP and the ESPP became effective. The ESPP allows eligible employees to purchase Holdings' common stock at 90% of the lower of the market value of the common stock at the beginning or end of each successive six-month offering period. Amounts accumulated through participants' payroll deductions ("purchase rights") are used to purchase shares of common stock at the end of each purchase period. Pursuant to the ESPP, no more than 2,000,000 shares of common stock of Holdings may be issued, as adjusted to reflect the 2011 Stock Split and the 2013 Stock Split. Holdings' common stock may be issued by either authorized and unissued shares, treasury shares or shares purchased on the open market. As of December 31, 2013, we had 1,883,000 shares available for purchase pursuant to the ESPP. |
For the ESPP six-month offering periods ended June 30, 2013 and December 31, 2013, stock-based compensation related to the purchase rights was calculated as the difference between the cost to purchase Holdings' common stock at 90% of the market value of the common stock at the beginning of the six-month offering periods and the cost to purchase Holdings' common stock at the market value of the common stock at the end of the six-month offering periods. |
During the years ended December 31, 2013, 2012 and 2011, we recognized $0.2 million, $0.3 million and $0.2 million of stock-based compensation expense relating to the ESPP, respectively. |
As of December 31, 2013 and 2012, no purchase rights were outstanding under the ESPP. The total intrinsic value of purchase rights exercised during the years ended December 31, 2013, 2012 and 2011 was $0.2 million, $0.3 million and $0.2 million, respectively. |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
Comprehensive Income (Loss) | ' |
Comprehensive Income (Loss) |
Comprehensive income (loss) consists of net income (loss), changes in the foreign currency translation adjustment, changes in the fair value of derivatives that are designated as hedges and changes in the net actuarial gains (losses) and amortization of prior service costs on our defined benefit retirement plan. |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
Redeemable Noncontrolling Interest | ' |
Redeemable Noncontrolling Interest |
We record the carrying amount of our redeemable noncontrolling interests at their fair value at the date of issuance. We recognize the changes in their redemption value immediately as they occur and adjust the carrying value of these redeemable noncontrolling interests to equal the redemption value at the end of each reporting period, if greater than the redeemable noncontrolling interest carrying value. This method would view the end of the reporting period as if it were also the redemption date for the redeemable noncontrolling interests. We conduct an annual review to determine if the fair value of the redeemable units is less than the redemption amount. If the fair value of the redeemable units is less than the redemption amount, there would be a charge to earnings per share allocable to common stockholders. The redemption amount at the end of each reporting period did not exceed the fair value of the redeemable units. |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
Recent Accounting Pronouncements | ' |
Recent Accounting Pronouncements |
In January 2013, the FASB issued Accounting Standards Update No. 2013-01, Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities ("ASU 2013-01"). The amendments in ASU 2013-01 clarify that the disclosure requirements of ASU 2011-11 are limited to derivatives, including bifurcated embedded derivatives, repurchase and reverse repurchase agreements, and securities borrowing and lending transactions that are either offset in the statement of financial position or subject to an enforceable master netting arrangement or similar agreement. ASU 2013-01 is effective retrospectively for annual periods beginning on or after January 1, 2013. The adoption of these new accounting rules did not have a material effect on our financial condition, results of operations or cash flows. |
In February 2013, the FASB issued Accounting Standards Update No. 2013-02, Comprehensive Income - Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income ("ASU 2013-02"). The amendments in ASU 2013-02 require that entities report, either on their income statement or in a footnote to their financial statements, the effects on earnings from items that are reclassified out of other comprehensive income. The new accounting rules were effective beginning in the first quarter of 2013. The adoption of these new accounting rules did not have a material effect on our financial condition, results of operations or cash flows. |
In February 2013, the FASB issued Accounting Standards Update No. 2013-04, Obligations Resulting from Joint and Several Liability Arrangements for which the Total Amount of the Obligation Is Fixed at the Reporting Date ("ASU 2013-04"). The amendments in ASU 2013-04 provide guidance for the recognition, measurement, and disclosure of obligations resulting from joint and several liability arrangements from which the total amount of the obligation within the scope of this guidance is fixed at the reporting date. ASU 2013-04 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. We do not anticipate a material impact to our financial position, results of operations or cash flows as a result of this change. |
In March 2013, the FASB issued Accounting Standards Update No. 2013-05, Parent’s Accounting for the Cumulative Translation Adjustment upon Derecognition of Certain Subsidiaries or Groups of Assets within a Foreign Entity or of an Investment in a Foreign Entity ("ASU 2013-05"). The amendments in ASU 2013-05 address the accounting for the cumulative translation adjustment when a parent either sells a part or all of its investment in a foreign entity or no longer holds a controlling financial interest in a foreign subsidiary or group of assets. ASU 2013-05 is effective prospectively for fiscal years, and interim periods within those years, beginning after December 15, 2013. We do not anticipate a material impact to our financial position, results of operations or cash flows as a result of this change. |
In July 2013, the FASB issued Accounting Standards Update No. 013-10, Inclusion of the Fed Funds Effective Swap Rate (or Overnight Index Swap Rate) as a Benchmark Interest Rate for Hedge Accounting Purposes ("ASU 2013-10"). The amendments in ASU 2013-10 permit the Fed Funds Effective Swap Rate to be used as a U.S. benchmark interest rate for hedge accounting purposes under U.S. GAAP. ASU 2013-10 is effective prospectively for qualifying new or redesigned hedging relationships entered into on or after July 17, 2013. We do not anticipate a material impact to our financial position, results of operations or cash flows as a result of this change. |
In July 2013, the FASB issued Accounting Standards Update No. 2013-11, Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists ("ASU 2013-11"). The amendments in ASU 2013-11 provide guidance on the financial statement presentation of unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. ASU 2013-11 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. We will reflect the impact of these amendments beginning with our Quarterly Report on Form 10-Q for the period ending March 31, 2014. We do not anticipate that the adoption of this pronouncement will result in a material impact to our financial position, results of operations or cash flows. |