SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
|X| Quarterly Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934 for Quarterly
Period Ended March 31, 1997
-OR-
|_| Transaction Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934 for the
transaction period from _________ to _________
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Commission File Number 0-9789
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Premier Parks Inc.
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(Exact name of registrant as specified in its charter)
Delaware 73-6137714
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
Northeast Expressway, Oklahoma City, OK 73131
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(Address of principal executive offices, Zip Code)
405-475-2500
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(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes |X| No |_|
Indicate the number of shares outstanding of each of the issuer's
classes of common stock as of the latest practicable date:
At May 9, 1997, Premier Parks Inc. had outstanding 18,300,672 shares of
Common Stock, par value $.05 per share.
ITEM 1. FINANCIAL STATEMENTS
PREMIER PARKS INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
March 31, Dec. 31,
1997 1996
(Unaudited)
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ASSETS
Current assets:
Cash and cash equivalents $190,358 $ 4,043
Accounts receivable 4,174 1,180
Inventories 5,489 4,200
Prepaid expenses 5,027 3,416
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Total current assets 205,048 12,839
Other assets:
Deferred charges 11,245 6,752
Deposits and other 6,540 9,087
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Total other assets 17,785 15,839
Property and equipment, at cost 314,751 263,175
Less accumulated depreciation 21,361 17,845
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Total property and equipment 293,390 245,330
Intangible assets 42,354 31,669
Less accumulated amortization 1,288 874
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41,066 30,795
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Total assets $557,289 $304,803
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ITEM 1. FINANCIAL STATEMENTS (CONTINUED)
March 31, December 31,
1997 1996
(Unaudited)
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 15,676 $ 11,059
Accrued interest payable 3,411 4,304
Current portion of capitalized lease obligations 1,494 1,492
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Total current liabilities 20,581 16,855
Long-term debt and capitalized lease obligations:
Capitalized lease obligations 1,762 1,768
Credit facility -- 57,574
Long-term debt - Senior notes 215,000 90,000
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Total long-term debt and capitalized lease
obligations 216,762 149,342
Other long-term liabilities 4,572 4,846
Deferred income taxes 21,039 20,578
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Total liabilities 262,954 191,621
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Stockholders' equity
Common stock 917 569
Capital in excess of par 335,189 144,642
Accumulated deficit (41,082) (31,340)
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295,024 113,871
Less treasury stock, at cost 689 689
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Total stockholders' equity 294,335 113,182
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Total liabilities and stockholders' equity $ 557,289 $ 304,803
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ITEM 1. FINANCIAL STATEMENTS (CONTINUED)
PREMIER PARKS INC.
CONSOLIDATED STATEMENT OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1997 AND 1996
(UNAUDITED)
1997 1996
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Revenue:
Theme park admissions $ 2,387,000 $ 1,688,000
Theme park food, merchandise, and other 1,877,000 742,000
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Total revenue 4,264,000 2,430,000
Costs and expenses:
Operating expenses 8,195,000 4,958,000
Selling, general and administrative 4,399,000 2,027,000
Cost of products sold 52,000 7,000
Depreciation and amortization 3,973,000 1,695,000
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Total cost and expenses 16,619,000 8,687,000
Loss from operations (12,355,000) (6,257,000)
Other income (expense):
Interest expense, net (3,923,000) (2,633,000)
Other income (expense) (19,000) (19,000)
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Total other income (expense) (3,942,000) (2,652,000)
Loss before income taxes (16,297,000) (8,909,000)
Provision for income tax (benefit) (6,555,000) (3,675,000)
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Net loss $ (9,742,000) $(5,234,000)
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Net loss applicable to common stock $ (9,742,000) $(5,584,000)
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Per share amounts:
Net loss per share $ (0.61) $ (1.15)
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Weighted average number of common
shares outstanding 15,910,044 4,857,554
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ITEM 1. FINANCIAL STATEMENTS (CONTINUED)
PREMIER PARKS INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 1997 AND 1996
(UNAUDITED)
1997 1996
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Cash flow from operating activities:
Net loss $ (9,742,000) $ (5,234,000)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization 3,973,000 1,695,000
Amortization of debt issuance costs 475,000 176,000
Increase in accounts receivable (2,910,000) (252,000)
Deferred income taxes (6,645,000) (3,678,000)
Increase in inventories and prepaid expenses (2,738,000) (1,492,000)
Decrease in deposits and other assets 3,608,000 137,000
Increase in accounts payable, accrued expenses, and other liabilities 1,329,000 932,000
Decrease in accrued interest payable (893,000) (2,772,000)
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Total adjustments (3,801,000) (5,254,000)
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Net cash used in operating activities (13,543,000) (10,488,000)
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Cash flow from investing activities:
Additions to property and equipment (31,286,000) (8,148,000)
Acquisition of theme park, net of cash acquired (21,376,000) 0
Other investments -- (18,000)
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Net cash used in investing activities (52,662,000) (8,166,000)
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Cash flow from financing activities:
Repayment of debt (65,078,000) --
Proceeds from borrowings 132,500,000 --
Proceeds from issuance of common stock 189,898,000 --
Payment of debt issuance costs (4,800,000) (83,000)
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Net cash provided by (used in ) financing activities 252,520,000 (83,000)
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Increase (decrease) in cash and cash equivalents 186,315,000 (18,737,000)
Cash and cash equivalents at beginning of period 4,043,000 28,787,000
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Cash and cash equivalents at end of period $ 190,358,000 $ 10,050,000
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PREMIER PARKS INC.
NOTES TO FINANCIAL STATEMENTS
March 31, 1997
1. General.
Management's Discussion and Analysis of Financial Condition and Results
of Operations which follows these notes contains additional information on the
results of operations and the financial position of the Company. Those comments
should be read in conjunction with these notes. The Company's annual report on
Form 10-K for the year ended December 31, 1996 includes additional information
about the Company, its operations and its financial position, and should be read
in conjunction with this quarterly report on Form 10-Q. The information
furnished in this report reflects all adjustments which are, in the opinion of
management, necessary to present a fair statement of the results for the periods
presented.
Results of operations for the three month period ended March 31, 1997
are not indicative of the results expected for the full year. In particular, the
Company's theme park operations contribute most of their annual revenue during
the period from Memorial Day to Labor Day each year, while substantial operating
and other expenses are incurred before those operations commence.
2. Common Stock.
On April 4, 1996, a majority of the Company's common and preferred
shareholders and the Company's board of directors approved a one-for-five
reverse stock split effective May 6, 1996. The par value of the common stock was
increased to $.05 per share from $.01 per share. Additionally, the authorized
common shares of the Company were changed to 30,000,000. The accompanying
consolidated financial statements and notes to the consolidated financial
statements reflect the reverse stock split as if it had occurred as of January
1, 1996.
On June 4, 1996, and June 5, 1996, the Company issued 3,425,000 and
513,750, respectively, of its common shares resulting in net proceeds to the
Company of $65,306,000. Additionally, on June 4, 1996, the Company exchanged
2,560,928 of its common shares for all 200,000 shares of its previously
outstanding preferred stock.
On January 31, 1997, the Company issued 6,900,000 of its common shares
resulting in net proceeds to the Company of approximately $189,000,000.
3. Acquisition of Theme Parks.
On October 31, 1996, the Company acquired all of the interests in a
partnership which owned substantially all of the assets used in the operation of
Elitch Gardens, located in Denver, Colorado, for $62,500,000 in cash. Thereupon,
the partnership dissolved by operation of law. As a result, the assets were
directly owned by the Company. The transaction was accounted for as a purchase.
In addition, the Company has entered into a five-year consulting and
non-competition agreement with the president of the general partner of the
seller, Elitch Gardens Company, providing for annual consulting fees of
$100,000. Based upon the purchase method of accounting, the purchase price was
primarily allocated to property and equipment with $4,506,000 of costs recorded
as intangible assets, primarily goodwill.
PART I - FINANCIAL INFORMATION (Continued)
Item 1 - Financial Statements (Continued)
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On November 19, 1996, the Company acquired all of the interests in two
partnerships which owned substantially all of the assets used in the operation
of the two Waterworld/USA water parks for an aggregate cash purchase price of
approximately $17,250,000, of which $862,500 was placed in escrow to fund
potential indemnification claims by the Company. Thereupon, the partnerships
dissolved by operation of law. As a result, the assets were directly owned by
the Company. The transaction was accounted for as a purchase. Based upon the
purchase method of accounting, the purchase price was primarily allocated to
property and equipment with $5,110,000 of costs recorded as intangible assets,
primarily goodwill.
On December 4, 1996, the Company acquired all of the interests in a
limited liability company which owned substantially all of the assets used in
the operation of The Great Escape and Splash Water Kingdom for a cash purchase
price of $33,000,000. The transaction was accounted for as a purchase. In
connection with the acquisition, the Company entered into a non-competition
agreement and a related agreement with the former owner, providing for an
aggregate consideration of $1,250,000. In addition, as a component of the
transaction, the Company issued 9,091 shares of its common stock ($200,000) to
an affiliate of the former owner. Based upon the purchase method of accounting,
the purchase price was primarily allocated to property and equipment with
$9,221,000 of costs recorded as intangible assets, primarily goodwill.
On February 5, 1997, the Company purchased all of the outstanding
common stock of Stuart Amusement Company, the owner of Riverside Park and an
adjacent multi-use stadium, for a purchase price of approximately $22,200,000
($1,000,000 of which was paid through issuance of 32,129 of the Company's common
shares). The transaction was accounted for as a purchase. As of the acquisition
date and after giving effect to the purchase, $7,096,000 of deferred tax
liabilities were recognized for the tax consequences attributable to the
differences between the financial statement carrying amounts and the tax basis
of Stuart Amusement Co.'s assets and liabilities. Approximately $10,600,000 of
cost in excess of the fair value of the net assets acquired was recorded as
goodwill. The balance of the purchase price was allocated among the assets of
Stuart Amusement Co. on the basis of estimates of fair value. Of the purchase
price, $1,000,000 was placed in escrow to fund potential indemnification claims
by the Company.
The accompanying financial statements for the three months ended March
31, 1997 reflects the results of these acquisitions from January 1, 1997 or, in
the case of Riverside Park, its acquisition date. The accompanying financial
statements for the three months ended March 31, 1996 do not reflect the results
of these acquisitions.
4. Long-Term Indebtedness.
(a) In August 1995, the Company issued $90,000,000 principal amount of
senior notes (the "1995 Notes"). The 1995 Notes are senior unsecured obligations
of the Company, which mature on August 15, 2003. The 1995 Notes bear interest at
12% per annum payable semiannually on August 15 and February 15 of each year.
The 1995 Notes are redeemable, at the Company's option, in whole or part, at any
time on or after August 15, 1999, at varying redemption prices. Additionally, at
any time prior to August 15, 1998, the Company may redeem in the aggregate up to
33 1/3% of the original aggregate principal amount of 1995 Notes with the
proceeds of one or more public equity offerings at a redemption price of 110% of
the principal amount. The 1995 Notes are guaranteed on a senior, unsecured,
joint and several basis by all of the Company's principal operating
subsidiaries.
PART I - FINANCIAL INFORMATION (Continued)
Item 1 - Financial Statements (Continued)
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The proceeds of the 1995 Notes were used in the acquisition by the
Company of Funtime Parks in August 1995 and in the refinancing at that time
of previously existing indebtedness.
The indenture under which the 1995 Notes were issued was amended on
January 21, 1997, in contemplation of the Company's January 1997 senior debt and
equity offerings. The indenture places limitations on operations and sales of
assets by the Company or its subsidiaries, permits incurrence of additional debt
only in compliance with certain financial ratios, and limits the Company's
ability to pay cash dividends or make other distributions to the holders of its
capital stock or to redeem such stock.
The indenture, as amended, permits the Company, subject to certain
limitations, to incur additional indebtedness, including $125,000,000 of
indebtedness issued January 31, 1997 described in note (c) below and secured
senior revolving credit facility indebtedness of up to $75,000,000.
(b) In connection with the acquisitions described in Note 3, in October
1996 the Company entered into a senior secured credit facility (the "Credit
Facility") with a syndicate of lenders. The Credit Facility had an aggregate
availability of $115,000,000. Interest rates per annum under the Credit Facility
were equal to a base rate equal to the higher of the Federal Funds Rate plus
1/2% or the prime rate of Citibank N.A., in each case plus the Applicable Margin
(as defined thereunder) or the London Interbank Offered Rate plus the Applicable
Margin. The Credit Facility contained restrictive covenants that, among other
things, limited the ability of the Company and its subsidiaries to dispose of
assets; incur additional indebtedness or liens; pay dividends; repurchase stock;
make investments; engage in mergers or consolidations and engage in certain
transactions with subsidiaries and affiliates. In addition, the Credit Facility
required that the Company comply with certain specified financial ratios and
tests.
On January 31, 1997, the Company and the lenders agreed to amend the
Credit Facility. Under the amendments, $30,000,000 is available as a revolving
credit facility, which will remain in place through December 31, 2001 (without
reduction prior to that date). The balance of the facility was converted into an
$85,000,000 reducing revolving credit facility. This portion of the facility
will be available to fund acquisitions and make capital improvements. The amount
available under this portion of the facility will reduce to $75,000,000 on
December 31, 1999, to $45,000,000 on December 31, 2000, and will mature on
December 31, 2001. Borrowings under the amended Credit Facility are secured by
substantially all the assets of the Company and its subsidiaries (other than
real estate) and are guaranteed by the Company's operating subsidiaries. The
restrictive covenants are essentially the same as those of the original October
1996 Credit Facility.
(c) On January 31, 1997, the Company issued $125,000,000 of 9 3/4%
senior notes due January 2007 (the "1997 Notes"). The 1997 Notes are senior
unsecured obligations of the Company and equal to the 1995 Notes in priority
upon liquidation. Interest is payable on January 15 and July 15 of each year,
commencing July 15, 1997. The 1997 Notes are redeemable, at the Company's
option, in whole or in part, at any time on or after January 15, 2002, at
varying redemption prices. Additionally, at any time prior to January 15, 2000,
the Company may redeem in the aggregate up to 33 1/3% of the original aggregate
principal amount of 1997 Notes with the proceeds of one or more public equity
offerings at a redemption price of approximately 110% of the principal amount.
The 1997 Notes are guaranteed on a senior, unsecured, joint and several basis by
all of the Company's principal operating subsidiaries.
PART I - FINANCIAL INFORMATION (Continued)
Item 1 - Financial Statements (Continued)
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The indenture under which the 1997 Notes were issued contains covenants
substantially similar to those of the 1995 Notes. A portion of the proceeds were
used to fully pay amounts outstanding under the Company's Credit Facility.
PART I - FINANCIAL INFORMATION (Continued)
Item 2 Management's Discussion and Analysis of
Financial Condition and Results of Operations
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RESULTS OF OPERATIONS
Three months ended March 31, 1997 vs. Three months ended March 31, 1996
Operating revenues were $4.3 million in the first quarter of 1997
compared to $2.4 million in the first quarter of 1996. Of this increase, $1.7
million is attributable to revenues generated by the parks acquired since
October 1996 (the "New Parks"). Operating revenues at the parks owned for the
full 1996 year increased by $0.1 million as a result of increased sponsorship
income and increased season pass sales at certain of those parks. Operating
expenses increased during the first quarter of 1997 from $5.0 million in 1996 to
$8.2 million. Of this increase, $3.0 million relates directly to expenses
incurred by the New Parks and $0.2 million relates to expenses at the six parks
owned in the 1996 quarter, primarily as a result of pre-season expenditures
being incurred earlier than in the prior year. Selling, general and
administrative expenses increased from $2.0 million in the first quarter of 1996
to $4.4 million during the first quarter of 1997. Of this increase, $1.7 million
relates to costs incurred by the New Parks, and $0.7 million is attributable to
costs at the parks owned for the 1996 period, primarily an increase in
advertising expenses, an increase in salary and wage expense, and an earlier
expenditure of certain amounts than in the prior period. Depreciation expense
increased $2.3 million primarily as a result of the recognition of depreciation
and amortization expense from the New Parks and to a lesser extent as a result
of the ongoing capital program at the Company's theme parks. Interest expense
increased $1.3 million related to the borrowings under the Credit Facility which
were outstanding during January 1997 and the 1997 Notes issued on January 31,
1997. The effective tax rate used to calculate the provision for income tax
benefit was approximately 40% in the first quarter of 1997 and 41% in the first
quarter of 1996.
Because of the seasonal nature of the Company's theme park operations,
most of the Company's revenues are generated from Memorial Day to Labor Day.
LIQUIDITY, CAPITAL COMMITMENTS AND RESOURCES
At March 31, 1997, the Company's indebtedness (including capitalized
leases) aggregated $218.3 million, of which approximately $1.5 million matures
prior to March 31, 1998. The Company anticipates repaying current indebtedness
from funds generated from operations.
During the three months ended March 31, 1997, the Company used net cash
of $13.5 million in operating activities. Included in the net cash flows used in
operating activities for this period was the $5.4 million semi-annual interest
payment on the Company's $90.0 million 1995 Notes made on February 15. The
remainder of the net cash used in operating activities related to the Company's
annual maintenance and park pre-opening operating expenses. Net cash used in
investing activities in the first quarter of 1997 increased to $52.7 million,
which consisted of capital expenditures and the acquisition of Riverside Park in
Massachusetts. The Company expects to fund the balance of its planned capital
expenditures for the season from existing cash.
PART II - OTHER INFORMATION
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Items 1 - 5
Not applicable
Item 6 Exhibits and Reports on Form 8-K.
Exhibits
27. Financial Data Schedule
Reports on Form 8-K
The Company's Current Report on Form 8-K, dated February 13, 1997.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Premier Parks Inc.
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(Registrant)
/s/ Kieran E. Burke
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Kieran E. Burke
Chairman/CEO
May 14, 1997 /s/ James F. Dannhauser
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Date James F. Dannhauser
Chief Financial Officer