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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-Q
/X/ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 for Quarterly Period Ended September 30, 1997
-OR-
/ / Transaction Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transaction period from to
COMMISSION FILE NUMBER 0-9789
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PREMIER PARKS INC.
(Exact name of registrant as specified in its charter)
DELAWARE 73-6137714
(State of other (I.R.S. Employer Identification
jurisdiction of No.)
incorporation or
organization)
11501 NORTHEAST EXPRESSWAY, OKLAHOMA CITY, OK 73131
(Address of principal executive offices, Zip Code)
405-475-2500
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes /X/ No / /
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practicable date:
At November 5, 1997, Premier Parks Inc. had outstanding 18,300,672 shares of
Common Stock, par value $.05 per share.
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ITEM 1. FINANCIAL STATEMENTS
PREMIER PARKS INC.
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, DECEMBER 31,
1997 1996
-------------- --------------
(UNAUDITED)
ASSETS
Current assets:
Cash and cash equivalents...................................................... $ 169,151,000 $ 4,043,000
Accounts receivable............................................................ 15,960,000 1,180,000
Inventories.................................................................... 5,546,000 4,200,000
Prepaid expenses............................................................... 3,652,000 3,416,000
-------------- --------------
Total current assets......................................................... 194,309,000 12,839,000
Other assets:
Deferred charges............................................................... 10,594,000 6,752,000
Deposits and other assets...................................................... 6,036,000 9,087,000
-------------- --------------
Total other assets........................................................... 16,630,000 15,839,000
Property and equipment, at cost.................................................. 390,359,000 263,175,000
Less accumulated depreciation.................................................. 30,342,000 17,845,000
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Total property and equipment................................................. 360,017,000 245,330,000
Intangible assets................................................................ 43,659,000 31,669,000
Less accumulated amortization.................................................. 2,348,000 874,000
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Total intangible assets...................................................... 41,311,000 30,795,000
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TOTAL ASSETS................................................................. $ 612,267,000 $ 304,803,000
-------------- --------------
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LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses.......................................... $ 17,291,000 $ 11,059,000
Accrued interest payable....................................................... 4,054,000 4,304,000
Current portion of capitalized lease obligations............................... 990,000 1,492,000
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Total current liabilities.................................................... 22,335,000 16,855,000
Long-term debt & capitalized lease obligations:
Capitalized lease obligations.................................................. 1,263,000 1,768,000
Credit facility................................................................ -- 57,574,000
Long-term debt--Senior notes................................................... 215,000,000 90,000,000
-------------- --------------
Total long-term debt & capitalized lease obligations......................... 216,263,000 149,342,000
Other long-term liabilities...................................................... 3,967,000 4,846,000
Deferred income taxes............................................................ 42,900,000 20,578,000
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TOTAL LIABILITIES............................................................ 285,465,000 191,621,000
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Stockholders' equity
Common stock................................................................... 917,000 569,000
Paid-in capital in excess of par............................................... 334,721,000 144,642,000
Accumulated deficit............................................................ (8,147,000) (31,340,000)
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327,491,000 113,871,000
Less treasury stock, at cost................................................... 689,000 689,000
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Total stockholders' equity................................................... 326,802,000 113,182,000
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TOTAL LIABILITIES & STOCKHOLDERS' EQUITY..................................... $ 612,267,000 $ 304,803,000
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2
ITEM 1. FINANCIAL STATEMENTS (CONTINUED)
PREMIER PARKS INC.
CONSOLIDATED STATEMENT OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
(UNAUDITED)
1997 1996
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REVENUES:
Theme park admissions............................................................ $ 53,985,000 $ 24,758,000
Theme park food, merchandise, and other.......................................... 66,029,000 35,651,000
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TOTAL REVENUES................................................................. 120,014,000 60,409,000
OPERATING COSTS AND EXPENSES:
Operating expenses............................................................... 36,827,000 15,496,000
Selling, general and administrative.............................................. 11,944,000 6,198,000
Costs of products sold........................................................... 15,540,000 7,392,000
Depreciation and amortization.................................................... 5,717,000 2,206,000
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TOTAL OPERATING COSTS AND EXPENSES............................................. 70,028,000 31,292,000
Income from operations......................................................... 49,986,000 29,117,000
OTHER EXPENSES:
Interest expense, net............................................................ (4,495,000) (2,024,000)
Other income (expense)........................................................... 18,000 (18,000)
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TOTAL OTHER (EXPENSES)......................................................... (4,477,000) (2,042,000)
Income before income taxes..................................................... 45,509,000 27,075,000
Income tax expense................................................................. 18,272,000 10,837,000
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NET INCOME..................................................................... $ 27,237,000 $ 16,238,000
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NET INCOME APPLICABLE TO COMMON STOCK.......................................... $ 27,237,000 $ 16,238,000
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PER SHARE AMOUNTS:
NET INCOME PER SHARE--PRIMARY...................................................... $ 1.49 $ 1.43
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NET INCOME PER SHARE--FULLY DILUTED................................................ $ 1.45 $ 1.39
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Average shares outstanding--primary................................................ 18,300,672 11,357,232
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Average shares outstanding--fully diluted.......................................... 18,833,946 11,684,180
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3
ITEM 1. FINANCIAL STATEMENTS (CONTINUED)
PREMIER PARKS INC.
CONSOLIDATED STATEMENT OF OPERATIONS (CONTINUED)
NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
(UNAUDITED)
1997 1996
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REVENUES:
Theme park admissions............................................................ $ 91,080,000 $ 38,970,000
Theme park food, merchandise, and other.......................................... 95,666,000 50,822,000
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TOTAL REVENUES............................................................... 186,746,000 89,792,000
OPERATING COSTS AND EXPENSES:
Operating expenses............................................................... 69,444,000 32,897,000
Selling, general and administrative.............................................. 29,688,000 15,363,000
Costs of products sold........................................................... 22,072,000 10,685,000
Depreciation and amortization.................................................... 13,974,000 5,599,000
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TOTAL OPERATING COSTS AND EXPENSES........................................... 135,178,000 64,544,000
Income from operations....................................................... 51,568,000 25,248,000
OTHER EXPENSES:
Interest expense, net............................................................ (12,869,000) (7,657,000)
Other income (expense)........................................................... (44,000) (59,000)
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TOTAL OTHER (EXPENSES)....................................................... (12,913,000) (7,716,000)
Income before income taxes................................................... 38,655,000 17,532,000
Income tax expense................................................................. 15,462,000 7,020,000
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NET INCOME................................................................... $ 23,193,000 $ 10,512,000
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NET INCOME APPLICABLE TO COMMON STOCK........................................ $ 23,193,000 $ 9,909,000
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PER SHARE AMOUNTS:
NET INCOME PER SHARE--PRIMARY...................................................... $ 1.32 $ 1.24
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NET INCOME PER SHARE--FULLY DILUTED................................................ $ 1.29 $ 1.11
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Average shares outstanding--primary................................................ 17,512,552 7,979,227
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Average shares outstanding--fully diluted.......................................... 18,045,828 9,438,644
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4
ITEM 1. FINANCIAL STATEMENTS (CONTINUED)
PREMIER PARKS INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
(UNAUDITED)
1997 1996
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CASH FLOW FROM OPERATING ACTIVITIES:
Net income.................................................................... $ 23,193,000 $ 10,512,000
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization................................................. 13,974,000 5,599,000
Amortization of debt issuance costs........................................... 1,443,000 523,000
Increase in accounts receivable............................................... (14,696,000) (7,444,000)
Deferred income taxes......................................................... 15,226,000 6,993,000
Increase in inventories and prepaid expenses.................................. (1,420,000) (110,000)
Decrease (increase) in deposits and other assets.............................. 4,112,000 (2,858,000)
Increase (decrease) in accounts payable, accrued and other liabilities........ 2,339,000 (221,000)
Decrease in accrued interest payable.......................................... (250,000) (2,772,000)
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Total adjustments........................................................... 20,728,000 (290,000)
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Net cash provided by operating activities................................... 43,921,000 10,222,000
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CASH FLOW FROM INVESTING ACTIVITIES:
Additions to property and equipment........................................... (108,166,000) (29,290,000)
Acquisition of theme park, net of cash acquired............................... (21,376,000) --
Other investments............................................................. -- (38,000)
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Net cash used in investing activities....................................... (129,542,000) (29,328,000)
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CASH FLOW FROM FINANCING ACTIVITIES:
Repayment of long-term debt................................................... (66,081,000) (938,000)
Proceeds from borrowings...................................................... 132,500,000 --
Net cash proceeds from issuance of common stock............................... 189,427,000 65,151,000
Payment of debt issuance costs................................................ (5,117,000) (128,000)
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Net cash provided by financing activities................................... 250,729,000 64,085,000
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Increase in cash and cash equivalents....................................... 165,108,000 44,979,000
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...................................... $ 169,151,000 $ 73,766,000
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5
PREMIER PARKS INC.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 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 nine month and three month periods ended
September 30, 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.
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
$65,000,000. 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.
On June 11, 1997, a majority of the Company's common shareholders approved
an increase in the authorized common shares of the Company to 90,000,000 shares.
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. (In April 1997, these assets were transferred to
a wholly-owned subsidiary of 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.
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
6
PREMIER PARKS INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 1997
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. (In 1997, the assets were transferred to
wholly-owned subsidiaries of 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 five-year non-competition
agreement and a related consulting 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
Company's assets and liabilities. Approximately $10,261,000 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 Company
on the basis of estimates of fair value. Of the purchase price, $1,025,000 was
placed in escrow to fund potential indemnification claims by the Company.
The accompanying financial statements for the nine months ended September
30, 1997 reflect 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 September 30, 1997 reflect the results of
these acquisitions for the entire period. The accompanying historical financial
statements for the three month and nine month periods ended September 30, 1996
do not reflect the results of these acquisitions. (The parks included in all of
these acquisitions are referred to herein as the "Acquired Parks".)
The following is the summarized pro forma results of operations for the nine
months ended September 30, 1996. (They include the results of Riverside Park for
a full nine months.)
7
THE COMPANY
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 1996
(IN THOUSANDS, EXCEPT FOR SHARE AND PER SHARE DATA)
COMPANY
HISTORICAL HISTORICAL COMBINED PRO FORMA PRO FORMA
PREMIER ACQUIRED PARKS COMPANY ADJUSTMENTS (UNAUDITED)
--------- --------------- ----------- ------------- -----------
Revenue:
Theme park admissions........................ $ 38,970 $ 34,062 $ 73,032 $ -- $ 73,032
Theme park food, merchandise and other....... 50,822 30,453 81,275 300 81,575
--------- ------- ----------- ------------- -----------
Total...................................... 89,792 64,515 154,307 300 154,607
Operating costs and expenses:
Operating expenses........................... 32,897 23,204 56,101 (350) 54,376
(1,375)
Selling, general and administrative.......... 15,363 17,035 32,398 (4,513) 27,885
Costs of products sold....................... 10,685 9,448 20,133 -- 20,133
Depreciation and amortization................ 5,599 13,028 18,627 (7,832) 10,795
--------- ------- ----------- ------------- -----------
Total...................................... 64,544 62,715 127,259 (14,070) 113,189
Income from operations......................... 25,248 1,800 27,048 14,370 41,418
Other income (expense):
Interest expense, net........................ (7,657) (4,624) (12,281) 1,160 (11,121)
Other income (expense)....................... (59) (284) (343) 125 (218)
--------- ------- ----------- ------------- -----------
Total...................................... (7,716) (4,908) (12,624) 1,285 (11,339)
Income (loss) before income taxes.............. 17,532 (3,108) 14,424 15,655 30,079
Income tax expense (benefit)................... 7,020 1,131 8,151 4,149 12,300
--------- ------- ----------- ------------- -----------
Net income (loss).......................... $ 10,512 $ (4,239) $ 6,273 $ 11,506 $ 17,779
--------- ------- ----------- ------------- -----------
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Net income (loss) applicable to common stock... $ 9,909 $ (4,451) $ 5,458 $ 10,321 $ 15,779
Net income (loss) per common share............. $ 1.24 $ 1.35
Weighted average shares........................ 7,979,000 11,702,000
EBITDA(1)...................................... $ 30,848 $ 14,544 $ 45,392 $ 6,663 $ 52,055
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(1) EBITDA is defined as earnings from continuing operations before interest
expense, net, income tax expense (benefit), depreciation and amortization,
minority interest and equity in loss of partnership. The Company has
included information concerning EBITDA because it is used by certain
investors as a measure of the Company(1)s ability to service and/or incur
debt. EBITDA is not required by GAAP and should not be considered in
isolation or as an alternative to net income, net cash provided by
operating, investing and financing activities or other financial data
prepared in accordance with GAAP or as an indicator of the Company(1)s
operating performance. This information should be read in conjunction with
the Statements of the Cash Flows contained in the financial statements
included elsewhere herein.
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 the 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.
The proceeds of the 1995 Notes were used in the acquisition by the Company
of the 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
8
THE COMPANY
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS (CONTINUED)
NINE MONTHS ENDED SEPTEMBER 30, 1996
(IN THOUSANDS, EXCEPT FOR SHARE AND PER SHARE DATA)
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 %
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. No amounts were outstanding under this Credit Facility as
of September 30, 1997.
(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 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.
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.
9
PART 1 FINANCIAL INFORMATION (CONTINUED)
ITEM 2--MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
Operating revenues:
Operating revenues were $186.7 million in the nine months ended September
30, 1997 compared to $89.8 million actual operating revenues and $154.3 million
actual combined operating revenues (including the revenues of the Acquired
Parks), in the first nine months of 1996. The aggregate $32.4 million (21.0%)
increase in operating revenues over actual combined results for the 1996 period
includes an $18.0 million (24.7%) increase in admissions revenue and a $14.4
million (17.7%) increase in food, merchandise and other revenues. This revenue
increase is primarily attributable to a 17.4% increase (1.2 million) in combined
attendance at the Company's eleven parks in the 1997 period, and a 3.1% increase
in per capita spending over the prior year period, as well as an increase in
sponsorship revenue.
Operating expenses:
Operating expenses increased during the first nine months of 1997 to $69.4
million from $32.9 million actual operating expenses and $56.1 million actual
combined operating expenses (including the expenses of the Acquired Parks) in
the first nine months of 1996. This $13.3 million (23.8%) increase from actual
combined operating expenses for the 1996 period consists of a $5.1 million
increase (15.5%) at the six parks owned by the Company during its 1996 season
and an $8.2 million increase (35.4%) at the Acquired Parks. These increases
primarily reflect increased staffing levels to accommodate the increased
attendance levels, increased wage rates, increased repairs and maintenance,
increased utility expenses for new attractions and other miscellaneous
increases.
Selling, general and administrative:
Selling, general and administrative expenses were $29.7 million for the nine
months ended September 30, 1997, an increase from $15.4 million actual for the
nine months ended September 30, 1996, but a decrease from $32.4 million actual
combined (including the Acquired Parks) for the nine months ended September 30,
1996. Selling, general and administrative expenses at the six parks owned by the
Company for the 1996 period (including corporate) increased by $1.6 million in
the 1997 period, primarily reflecting increased personnel and advertising costs,
offset by a decrease in insurance expense. Selling, general and administrative
expenses at the Acquired Parks decreased by $4.3 million, notwithstanding
increases in marketing expenses, as a result of significant savings in
personnel, insurance, professional services and other areas.
Costs of products sold:
Costs of products sold increased from $10.7 million actual and $20.1 million
actual combined (including the Acquired Parks) for the first nine months of 1996
to $22.1 million for the first nine months of 1997. These increases primarily
relate to increased sales of merchandise, food and related items.
Depreciation and Interest expense:
Depreciation and amortization expense increased from $5.6 million actual in
1996 to $14.0 million actual in 1997, primarily as a result of the recognition
of depreciation and amortization expense from the Acquired Parks and the ongoing
capital program at the Company's theme parks. Interest expense, net
10
PART 1 FINANCIAL INFORMATION (CONTINUED)
ITEM 2--MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
increased from $7.7 million to $12.9 million as a result of interest on the 1997
Notes and amortization of costs incurred in connection with the 1997 Notes and
the Credit Facility.
THREE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
Operating revenues:
Operating revenues were $120.0 million in the three month period ended
September 30, 1997 compared to $60.4 million actual in the three month period
ended September 30, 1996. Of this $59.6 million increase, $53.5 million is
attributable to revenues generated by the Acquired Parks whose results are not
included for 1996, and $6.1 million is attributable to an increase at the
Company's original six parks, due principally to an increase in attendance over
the same prior-year period.
Operating expenses:
Operating expenses increased during the three months ended September 30,
1997 from $15.5 million in 1996 to $36.8 million. Of this $21.3 million
increase, $17.9 million relates directly to expenses incurred by the Acquired
Parks whose results are not included for 1996 and $3.4 million is related to the
Company's original six parks, principally arising from increased salary and wage
expense, increased repair and maintenance and costs associated with new
attractions.
Selling, general and administrative:
Selling, general and administrative expenses increased from $6.2 million in
the three months ended September 30, 1996 to $11.9 million during the three
months ended September 30, 1997. Of this increase, $4.7 million relates to costs
incurred by the Acquired Parks which were not included in 1996 and $1.0 million
relates to costs incurred at the Company's original six parks.
Costs of products sold:
Costs of products sold increased from $7.4 million for the three months
ended September 30, 1996 to $15.5 million for the three months ended September
30, 1997. Of this $8.1 million increase, $7.5 million relates to costs incurred
at the Acquired Parks, and $0.6 million is attributable to the operations of the
Company's original six parks, all as a result of increased volume.
Depreciation and interest expense:
Depreciation and amortization expense increased $3.5 million primarily as a
result of the recognition of depreciation and amortization expense from the
Acquired Parks and to a lesser extent as a result of the ongoing capital program
at the Company's theme parks. Interest expense, net increased $2.5 million as a
result of interest on the 1997 Notes and amortization of costs incurred in
connection with the 1997 Notes and the Credit Facility.
LIQUIDITY, CAPITAL COMMITMENTS AND RESOURCES
At September 30, 1997, the Company's indebtedness (including capitalized
leases) aggregated $217.3 million, of which approximately $1.0 million matures
prior to September 30, 1998. The Company anticipates repaying current
indebtedness from funds generated from operations.
11
PART 1 FINANCIAL INFORMATION (CONTINUED)
ITEM 2--MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
During the nine months ended September 30, 1997, the Company generated net
cash of $43.9 million from operating activities. Net cash used in investing
activities in the first nine months of 1997 increased to $129.5 million, which
consisted of capital expenditures at the Company's parks (including Marine
World, a California marine and wildlife park managed by the Company) and the
February 1997 acquisition of Riverside Park in Massachusetts. The Company
generated $250.7 million of net cash from financing activities in the nine
months ended September 30, 1997, mainly from the proceeds from the issuance of
the 1997 Notes and from the sale of 6,900,000 shares of Company Common Stock,
both of which occurred in January 1997. A total of $65.2 million of these
proceeds was used to pay down in full amounts which had been drawn under the
October 1996 Credit Facility.
On June 2, 1997, a slide collapse occurred at the Company's Concord,
California water park, resulting in the park's closure for a period of twelve
days. The park re-opened with the approval of the City of Concord on June 14,
1997. Although the collapse and the resulting closure had an adverse impact on
that park's operating performance for 1997, the performance of the Company's
other parks have more than compensated for this park's lesser contribution. The
Company also expects to recover under its business interruption insurance for
all or a substantial part of this shortfall. In addition, the Company believes
that its liability insurance coverage should be more than adequate to provide
for any personal injury liability which may ultimately be found to exist in
connection with the collapse.
In September 1997, the Company agreed to purchase all of the ownership
interests in an entity which owned at closing substantially all of the assets
used in the operation of Kentucky Kingdom--The Thrill Park in Louisville,
Kentucky for a purchase price of $64 million, payable in cash and stock. The
acquisition was consummated on November 7, 1997. The Company funded the cash
portion of the purchase price (approximately $59 million) from existing cash and
issued 121,679 shares of its common stock in connection therewith.
The Company expects that its currently available cash and funds available
from borrowing facilities will be adequate to meet currently anticipated working
capital and debt service requirements, to fund any additional acquisitions which
it may make, and to fund planned capital expenditures for the 1998 season at its
existing parks as well as at additional parks it may acquire.
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PART II--OTHER INFORMATION
ITEMS 1-5
Not applicable
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K.
(a) EXHIBITS
10.1 Stock Purchase Agreement, dated September 26, 1997, among the Company,
Kentucky Kingdom, Inc., Hart-Lundsford Enterprises, LLC and Edward J. Hart
(schedules and exhibits intentionally omitted).
10.2 Employment Agreement, dated November 7, 1997, between the Company and
Edward J. Hart.
27. Financial Data Schedule
(b) REPORTS ON FORM 8-K
None
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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.
-----------------------------------------
(Registrant)
/s/ KIERAN E. BURKE
-----------------------------------------
Kieran E. Burke
Chairman/CEO
/s/ JAMES F. DANNHAUSER
November 12, 1997 -----------------------------------------
- ------------------------------ James F. Dannhauser
Date Chief Financial Officer
14