Six Flags Entertainment Corp (SIX) 2004 Q1 法說會逐字稿

Good morning.

And welcome to the Six Flags first quarter earnings conference call.

At this time all participants have been placed on a listen-only mode, and the floor will be open for questions following the presentation.

It is now my pleasure to introduce your host for today's call, Erika Levy, ma'am, you may begin.

Thank you.

Good morning.

I'm Erika Levy of KCSA, Six Flags Investor Relations advisor.

Last night the company released its financial and operating results for the first quarter.

A copy of the earnings release is available on the company's website at www.sixflags.com under the heading "About Us" - "Investors".

Before I turn the call over to the company's executives, they've asked me to remind you that in compliance with SEC Regulation FD a webcast of this call is being made available to the media and the general public as well as analysts and investors.

The company cautions you that comments made during the call will include forward-looking statements within the meaning of the Federal Securities Laws.

These statements are subject to risks and uncertainties that could cause actual results to differ materially from those described in such statements you may refer to the company's 2003 annual report on Form 10-K which is also posted on its website for a detailed discussion of these risks.

Because the webcast is open to all constituents and prior notification has been widely and unselectively disseminated, all contents of the call will be considered fully disclosed.

In addition in accordance with SEC Regulation G, non-GAAP financial measures used in the company's oral presentation today are required to be reconciled to the most directly comparable GAAP measure.

The required reconciliations are available to investors in the earnings release on the company's website.

References by management in this call to EBITDA mean EBITDA modified which was formerly known as EBITDA adjusted from consolidated operations but now includes the results of the four parks that were previously unconsolidated.

Now I'd like to introduce Kieran Burke, Chairman and Chief Executive Officer of Six Flags.

Thanks, Erika.

Good morning.

Thank you for joining us for today's call.

Yesterday after the close of the markets we announced our first quarter results.

Those numbers came in where we expected them to be.

Revenues for the period were 2% higher than the prior year reflecting a 7% increase in per capita revenues on relatively flat attendance.

Also in line with plan, our cash operating expenses in the 2004 quarter were about $9.2 million higher than in the first quarter of 2003.

In addition to timing differences, most of the increase in expenses reflects the implementation of our plan to make systemwide improvements to the appearance of our parks and to enhance guest services generally, resulting in expected increases in salary and wage and repair and maintenance expenses as well as accelerated advertising expenses associated with our new advertising campaign.

Therefore, adjusted EBITDA for the quarter was approximately $8.3 million lower than in 2003.

In any event first quarter results are not very meaningful for us since only a limited number of our parks are in operation during that period.

For example the first quarter only accounts for approximately 3.5% of our budgeted attendance for the year.

As a result on this call this morning I will speak to year to date performance and group sales and season pass sales.

It is still quite early for these categories as well but they provide some indicators as to how our season is beginning to unfold.

Following Jim Dannhauser's comments about the quarterly results, we will open the floor to questions.

Before turning to the year to date numbers I would like to first address a very unfortunate event that took place at our Six Flags New England park this past weekend.

As most of you are aware there was a fatality at the park when a 55-year-old male patron riding a roller coaster came free of his restraints near the end of the ride and fell from the coaster.

The safety of our guests is our number one priority at Six Flags.

No incident or accident, large or small, is acceptable.

We constantly review our maintenance and operating procedures and training to provide for the safety of our guests and employees.

We're in the midst of a thorough investigation, working with the proper authorities and outside experts to determine the cause of this incident.

While that investigation is ongoing, the Massachusetts Department of Public Safety today issued a report which identified several contributing factors, including the length of the manufacturer installed seat belts in certain cars.

We are undertaking modifications to the restraint system, including shortening those belts.

This is not a proper forum for me to comment further.

I will say that we will leave no stone unturned in determining exactly what happened and identifying the steps we can take working with the ride manufacturer and the state regulators to prevent this type of incident from happening again.

We are open now almost exclusively in weekend operations in most locations other than Montreal, Lake George, Buffalo, Seattle, and some of our water parks.

It is very early.

At this point in the season we have experienced a very modest portion of the season's total operating calendar, just over 10% of the full year attendance has been budgeted year to date so as always it is a mistake to extrapolate full year performance from the results at this time of the year particularly because the comparative performance of early season weekend operations can be easily distorted by the impact of operating calendar differences, weather and other factors.

At this point in the season we are really looking for early trends particularly on operating days with reasonable weather and in markets where we have been open for more than just a few days.

That being said we're generally pleased with the start of our 2004 operating season.

Year to date through Sunday, May 2, park level revenues systemwide are up approximately $1.74 million, about 1.7% over prior year.

Systemwide per capita revenues are up over 6% and on 18 fewer operating days due to calendar differences.

Attendance systemwide trails prior year by just 158,000 people.

So in the early going people seem to be responding to our new advertising campaign and coming out to the parks in solid numbers and spending well on their visits.

The year to date per capita revenue trends are particularly encouraging since we have not taken many ticket price increases and have generally maintained similar discount levels to prior year.

Nor have we moved our in-park prices materially although we have directed a portion of our 2004 capital expenditure to in-park revenue enhancements including in San Francisco and several other markets.

We are seeing very strong gains in both our ticket per caps and our in-park revenue per caps.

Year to date through May 2, our systemwide ticket per caps are up 58 cents over prior year, about 3.6%.

In-park per caps are up $1.13, about 9.5%.

The per capita revenue gains are across the board with nearly every park experiencing year to date gains over the prior year.

A few of our parks which have been open 20 days or more have shown particular strength in the early going with New Jersey's total per cap up $2.76, San Antonio up $2, and San Francisco up $4.92.

I am also encouraged by the overall performance of our park in the Los Angeles market which has experienced the most operating days of any of our domestic facilities year to date, 75 operating days through this past Sunday.

Other than Orlando, the Los Angeles market is the most competitive theme park market in the country with the presence of Disney, Universal, and Knotts Berry Farm in addition to our own Six Flags Magic Mountain.

While weather has improved over prior year, foreign tourists have not returned in significant numbers and all of our competitors are maintaining significant price incentives or deep ticket price discounts.

Disney, Universal, and Knotts are all introducing new rides this season.

We are not introducing a new ride in 2004, because we installed a major coaster in 2003.

Nonetheless, year to date Six Flags Magic Mountain's revenues are up approximately 6.4% driven by an attendance increase of 3.9% and per capita revenue growth of 2.4%.

In terms of other early season indicators we are in line with last year's pace of season pass sales.

Our group bookings are pacing nicely ahead of last year and continue to improve week over week.

We feel good about the beginning to our season.

We believe that a contributing factor in that performance is our integrated national advertising campaign which launched in early March.

This represents the first significant national campaign for Six Flags.

It is also the first time we have used an iconic character throughout all the commercials, locally and nationally.

It's been well received with ad age rating our commercial as the second best spot for consumer recall in the country in the week of its launch.

We believe the campaign could help to put the brand on a truly national scale.

We also believe that it has helped to drive early season outer market attendance which tends to lead to higher per capita spends.

We will continue to monitor these trends as the season unfolds.

So again it's extremely early but given where we are in the calendar we do not have much visibility yet about full-year performance.

We are making continued progress toward our -- both our season pass and group sales goals.

We have seen a number of positives, particularly the strong per capita revenue growth year to date so we remain comfortable with our full year target for 4 to 5% same park revenue growth and adjusted EBITDA of $310-$315 million including full ownership of Marine World from July 1 on.

With that I'll turn it over to Jim Dannhauser.

Thank you Kieran.

I'll begin by reviewing and providing some greater detail on the quarterly numbers which were released yesterday evening.

In order to keep the performance in perspective it's useful to recognize that the first quarter includes a limited number of parks in operation almost entirely on a weekend basis.

In terms of magnitude the quarter accounts for only about 3.5% of expected full year attendance.

The reported results for the first quarter reflect the consolidation of the results of Six Flags Over Georgia and White Water Atlanta, the nearby water park, Six Flags Over Texas and Six Flags Marine World in accordance with the application of financial interpretation number 46.

The results also reflect the treatment as discontinued operations of our European Division other than Madrid and our Cleveland Park with all of those parks' results excluded from revenue expenses and EBITDA and reflected only in a discontinued operations line.

The information in yesterday's release for the first quarter of 2003 has been presented utilizing the same principles.

We have also provided comparable information on an historical basis for 2002 and 2003 on our website and in an 8-K furnished at the end of last week.

With that having been said, first quarter revenues were $44.8 million, up $1 million or 2.2% from the first quarter last year.

In the 2004 quarter, our domestic operations achieved $37.5 million in revenues, on attendance of 0.9 million versus $36.5 million in revenues and attendance of 0.9 million in the year ago period.

International operations, which now include only Mexico and Montreal, generated $7.3 million in revenues as compared to $7.4 million last year, on attendance of 0.4 million in each year.

Cash expenses, including operating expenses, SG&A, and cost of goods sold, but excluding depreciation and amortization as well as noncash compensation, were $9.2 million higher in the first quarter than in the prior year period.

In addition to timing differences, this primarily reflects expected higher early season advertising expense associated with the launch of our new advertising campaign as well as anticipated increases in early season wage expense and repair and maintenance expenditures reflecting the implementation of our plan to make systemwide guest service improvements for the 2004 season.

These variable expense increases were offset to some extent by a decrease in our insurance expenses for the quarter.

On an overall basis, our cash expenses for the first quarter were below plan.

EBITDA, including 100% of the performance of the partnership parks, was a negative $80.1 million, $8.3 million lower than in the prior year.

And adjusted EBITDA, excluding the third party share of the performance of the partnership park operations, was a negative $74.1 million as compared to a negative $65.8 million in the 2003 quarter.

Park level EBITDA from domestic operations, including the partnership parks, was a negative $72.5 million.

Park-level EBITDA from international operations was a negative $1.8 million.

Depreciation and amortization expense was $37 million as compared to $35.5 million in the 2003 quarter.

Net interest expense was $51.9 million for the quarter, as compared to $54.3 million last year reflecting the full quarter of our lower swap rate put in place last year on our term debt and the replacement of a portion of our previously outstanding 2007 public debt with lower cost bank debt which took place in January of this year.

During the first quarter we reached agreements in principal to sell our European Division, excluding our interest in Madrid as well as our Cleveland park.

Those sales closed in early April.

As a result, beginning with the first quarter of 2004, those assets are considered discontinued operations in our financial statements.

We incurred a loss on discontinued operations net of tax of $284.9 million, including $259.5 million net from the sale and $25.4 million net related to the results of operations for the first quarter.

That loss is consistent with the loss which we had estimated and was announced that the sale agreements had been reached.

As a result net loss applicable to common stock was $410.3 million, or $4.41 per share.

The loss before discontinued operations was $119.9 million, or $1.35 per share.

That includes the loss associated with the retirement of the '07 notes in January.

Absent that loss, and the loss from discontinued operations, the net loss applicable to common stock for the quarter would have been $109.8 million, or $1.18 per share, compared with a loss of $115.6 million or $1.11 per share last year.

As to the balance sheet, gross debt at quarter end was $2.39 billion, excluding the $125 million then drawn against our $300 million working capital revolver and the amounts then drawn on separate revolvers of Six Flags Over Texas and Six Flags Over Georgia but including the capital leases in place associated with our European Division.

Net debt, excluding the amounts outstanding on the revolvers, was $2.29 billion.

These amounts do not reflect the cash received from the asset sales post quarter end nor the debt reduction which has been affected as a part of those sales and otherwise since the quarter end.

Our gross debt excluding revolvers is now $2.26 billion reflecting approximately $128 million of permanent debt reduction affected to date.

Net debt today is $2.04 billion.

We expect to continue to affect debt reduction over the next several months.

While the precise levels will depend upon the timing of those reductions, we currently expect net debt to be at or below $2 billion once the application of sale proceeds has been concluded.

Our blended interest rate excluding revolvers but reflecting the debt reductions to date is approximately 8.28%.

Finally I would note that the annual limited partner tender process concluded for this year we received no unit tenders in Georgia or Texas in 2004.

Kieran.

Thanks, Jim.

I think with that we'll open the floor to questions.

Thank you.

The floor is now open for questions.

If you do have a question, please press star 1 on your touch-tone telephone at this time.

If at any point your question has been answered you may remove yourself from the queue by pressing the pound key.

Questions will be taken in the order that they are received.

And we do ask that while posing your question you please pick up your handset to ensure proper sound quality.

Once again to ask a question at this time please press star 1 on your touch-tone telephone.

Please hold the line while we poll for questions.

Our first question today is coming from Kathy Styponias of Prudential Equity Group.

Please pose your question.

Hi.

Thanks.

Two questions.

One for you, Jim.

At one point you had mentioned that you might be looking to sell some excess land.

I'm wondering how those sales are proceeding?

Can we expect those in the near future?

And then one for you, Kieran.

Looking at your season pass sales, and given that they're roughly even with last year, are you surprised by that given your ad sales campaign, or is not -- is that not part of the advertising campaign focus?

Thanks.

Kathy, in terms of the land sales, we actually did earlier in the second quarter accomplish the sale of the land in the Chicago market which I discussed previously at a price of $11.2 million.

Those funds are available for corporate purposes including capital expenditures or debt reduction at the bank borrowing group level.

We are continuing to examine the potential for disposition of a portion of land in the Washington, D.C., market.

That's going to move at a slower timetable because it will involve the, in all likelihood, a transaction with a residential developer.

Kathy, in answer to your question, I'm not surprised, you know, we only estimated that we'd do about 1% more in season pass sales for this year.

There are calendar differences in terms of some of our expiration dates at certain of the parks which come a little bit later than in prior year and we tend to see strong sales as you get near price point expiration, so -- but in terms of our advertising, we are continuing, obviously, to promote the season pass sales but there's no question that just generally one of our strategies is to increase the mix of other ticket categories, which is why we're very excited about the campaign.

It seems in the early going to be really stimulating out a market visitation but we don't have a significant enough of the season under our belts to really assess that, and the reason for that is that with the national campaign, for the very first time, on a significant basis, have a Six Flags ad that's running throughout the entire country so we blanket a number of outer markets where previously while their drive to the parks we wouldn't have been able to justify advertising directly in those markets.

So it is a combination of our strategy but we're at a good place and I'm comfortable with season pass sales.

I'm particularly excited about how group sales seems to be building.

So we'll watch that as well.

Thank you.

The next question is coming from Anthony DiClemente of Lehman Brothers.

Please pose your question, sir.

Hi, Kieran, hi, Jim.

Just a question on Marine World.

You noted that the $310 to $315 million in guidance incorporates full ownership of Marine World, July 1 forward.

So my question is if you look at a normalized year, maybe not necessarily last year, but a normalized year what would Marine World typically do in EBITDA from July forward?

The Marine World last year, let's look at it this way, the portion of Marine World that we did not own last year for the full year was approximately $8 million.

So one way to think about it is that we're exercising a purchase option picking up that level of incremental trailing EBITDA.

The assets in the Ohio market that we sold were -- delivered approximately (INAUDIBLE) million.

So we sold that Cleveland asset.

Our turning around and picking up an incremental full year $8 million of EBITDA, and we'll emerge with $90 million remaining for effective debt reduction In addition, remember that we are already managing the Marine World facility and we are already fully responsible for the capital expenditures at that park, so that incremental EBITDA is true incremental free cash flow on a dollar for dollar basis.

In terms of the period of time for the back half of the year, on a park level, the EBITDA would expect to be approximately $15 million.

I'd also add that one of the other opportunities we had in connection with our sale of Cleveland is we were able to relocate a substantial number of the animal population there to our San Francisco park and most prominently our killer whale which is stimulating a great deal of interest in that market among our guests and in the media generally.

A number of additional dolphins and other sea mammals.

So that will, in our view, help that park substantially, not only this year but in the future, in terms of its overall performance.

Okay.

But the -- the $8 million that you talk about that's for the full year.

What's the comparable number to the eight for the July going forward?

Did you say that Jim?

Sorry if I missed it.

No, I said that the full performance of the park would be about $15 million.

You have the debt service that needs to be taken away from that, so the incremental pick up for us is approximately $7 million.

Got it.

Okay.

Thank you.

And I just have one other follow-up.

Can you just remind us, just as you allocate -- just from an accounting perspective, when you talk about repair and maintenance expenses throughout the parks and then maintenance capex how do you treat how you account for those and what would be the key differences between park repair and maintenance that would be expense versus capex?

Capital expenditures has to be an expenditure which actually extends the useful life of an asset.

So that if, for example, we are replacing an entire roof on a building that would be a capital expenditure.

If, instead, we are repairing the roof, that would be repair and maintenance.

But we have always spent a significant amount of repair and maintenance expenditures at our park that are expensed up above the operating income line. 3.5 to 4% of revenues every year.

What's different about this year is that we are spending a little bit more in terms of park appearance, in terms of paint and landscaping, in terms of extra cleaning being put in place on some of the ride platforms and in some of the restrooms to address guest service issues.

The repair and maintenance dollars are incremental to an amount of money that was already being spent in very healthy levels to keep the park assets in good operating condition.

Got it.

Thanks.

Then finally do you have an expectation for net interest for '04?

Thanks.

That's my last one.

Sorry.

We, depending, obviously, upon the time of of further debt reduction we would expect that our cash interest expense this year will be approximately $180 to $185 million.

We would expect our net book interest expense to be approximately $190 to $195 million.

Great.

Thank you very much.

Your next question today is coming from Grant Jordan of Wachovia Securities.

Please pose your question.

Good morning.

You said you retired $128 million of debt, $75 was on the term.

What was the remainder of the debt retired?

There was about $10 million -- I'm sorry, $11.5 million of capital leases in Europe that were assumed by the purchaser as part of our transaction.

We retired the indebtedness at New Orleans that we had assumed in connection with our purchase of Jazz Land.

And we have made selected purchases in the open market of senior notes that are outstanding.

We will continue to look at the opportunities to do that as we see attractive prices in the marketplace for us.

Okay.

So should we assume that there will be no further reduction of the term loan?

That is correct.

There will be no further reduction of the term loan since it's the lowest cost debt in the capital structure.

Okay.

And then if you could give us the capex that was spent in the quarter.

Sure.

The capex for the quarter was $22.1 million, plus there was $2.1 million spent on the discontinued operations.

Great.

Thank you.

The next question is coming from Joe Scaldervano of Murray Capital.

Please pose your question.

Yeah.

Good morning.

I just wanted to, well a couple things, first confirm when you mentioned that revenue was up 6.4%, and in 3.9 per cap 2.4 that was the L.A. operation.

Right.

That's correct.

Okay.

Thank you.

Now, can you then tell me if the L.A. for the full year of last year and historically, is that about average for, you know, is that an average facility, or does it come in usually higher than the others or below?

No, that park is one of the three most important parks in our system in terms of their contribution to our enterprise.

But I think, to be careful, I don't -- if you're asking whether it typically grows at a higher rate than the other ones, the answer to that would be no.

There would be years where, a prior year, in fact, where we went backwards on attendance in 2003 from 2002, so that's why we're watching carefully and the reason we identified L.A. in our remarks, is the fact that it's been open for over 75 days now so it's, it gives us a pretty good look, at least in the early season, as to how that park is doing and we're not suggesting that that's going to be a mirror in all markets because all the markets are different in terms of, you know, size of the park and the competitive framework and whether they have new capital, et cetera, et cetera.

But I think in the early going we are encouraged, particularly given how competitive that market is, the fact that some of our very significant competitors are putting in quite impressive capital expenditures and discount levels are quite high among our competitors.

So it certainly is worth noting the strong performance out of the blocks by that park.

Right.

So the 6.4%, then, is certainly favorable relative to the same park revenue growth of 4 to 5% guidance.

Yeah that 4 to 5% is systemwide.

Yes.

We would not be varying that, though, based on this early season.

No, no, I understand.

Absolutely I understand.

Thank you.

The next question is coming from Harold Webber of Smith Barney.

Please pose your question, sir.

Hi.

I just wanted to know from the proceeds after what you've paid down already and the balance which I wasn't sure how much the Marine World is how much is available for you to continue to put towards debt reduction?

At the Marine World, exercised price is approximately $55 million, so we have approximately $150 million remaining for further debt reduction.

Do you plan to use it for that?

Do you plan to use a good part of that towards that purpose this year?

Absolutely.

Okay.

Thank you.

The next question is coming from John Tompkins of The Citadel.

Please pose your question.

Good morning.

Other than the cap lease in the New Orleans debt that you retired and I think you commented earlier that the term loan was pretty low cost in terms of the capital structure, what other options other than open market purchases would you have for debt retirement?

Well, we could choose to proceed with a tender offer to accelerate the process but it is our view that we are better served to continue to watch the price of the debt securities and we don't have any particular maturity pressures since the earliest maturity is 2009 and they extend through 2014 so we have the opportunity to be very selective to maximize the debt reduction from the remaining proceeds.

So essentially it comes down to the bonds?

Correct, so long as we can affect those at appropriate prices, and if we can't then we would look to in fact, further term reduction because we always have the option of deploying the cash there.

Okay.

Then the final thing was, I think you threw a lot of numbers out pretty quickly so I'm not sure whether I got this but I think you said gross debt was $2.26 billion and net was $2.04.

Does that many there's $220 million in cash?

That's correct.

And $55 million is earmarked for the Marine World?

Correct.

Is the revolver undrawn at this time?

We still have amounts outstanding on the revolver, but that will be fully retired next week.

Okay.

Great.

Thank you.

The next question today is coming from David Miller of Sanders Morris Harris.

Please pose your question.

Yeah.

Hi.

Good morning, Kieran, on your comments about group bookings you said they were pacing nicely ahead of last year.

Is there any particular sub category that's driving that, whether that's churches or schools or any particular sub category that stands out in your view?

And then also, Jim, if you can just give us a breakdown on the quarter between admissions, food, and also international and domestic revenues.

Thanks.

Actually, the strength in bookings across markets is in a number of categories, which is very encouraging.

I will say that our school bookings and attendance generally are strong, which is also very encouraging.

So in the early going that is certainly a good statistic that we're looking at but we're getting good bookings in a number of our different categories.

In terms of the revenue break down the admission revenues in the quarter were $21.1 million flat to the prior year.

The other revenue which is food, beverage, other in-park spends as well as sponsorship was $23.7 million versus $22.7 million in the prior year.

The breakdown between domestic revenues and international revenues, the domestic revenues were $37.5 million versus $36.5 in the prior year.

And the international revenues were $7.3 million versus $7.4 million in the prior year.

Okay.

Thank you.

The next question today is coming from Kit Spring of Stifel Nicolaus.

Please pose your question.

Thank you.

Historically have deaths at a park impacted attendance at that park, and at other parks in the region?

And then secondly, you mentioned that group bookings are up, that's positive.

What percentage was group bookings of attendance last year?

And how does that compare to the historical average or -- in other words, how much up side is there from group bookings to get to normal?

Thanks.

You know, I would reiterate what I said earlier about the incident in New England.

It is clearly a very unfortunate thing and our primary focus in connection with that incident is understanding it thoroughly and making sure we take all steps from modifying the ride as well as reviewing our operating procedures to ensure that it never happens again.

In terms of answering your specific question in terms of the business impact, you know, it has varied.

I think that what I would say is you would expect some impact on attendance in the year of an incident.

I don't think it will go beyond the individual market.

The factors that affect what the impact is I think are the reputation of the park in its market, being forthright in identifying what the issues were and clear, and then addressing what the solutions to those will be.

I would not expect any year-over-year impact so that would be the answer to your question on the incident.

Group business in total represents from 30 to 35% of the attendance, that percentage was slightly down last year.

It was about 32%, so sort of a little bit below the midpoint of the range.

That includes not just the hard ticket categories which is what we track at this point in time, but also soft ticket categories like consignment tickets, small business coupon mailers and other forms of soft ticket distribution.

The hard ticket category typically accounts for approximately 15 to 18% of the attendance.

Last year it was about 15%, so you can see what the relative capacity for up-side might be.

Thank you.

Our last question today is coming from Dean Gianoukos of JP Morgan.

Please pose your question, sir.

Hi.

This is actually Rami Abdel-Misih for Dean.

First, you said that season pass sales are roughly flat, I guess with last year, so are you roughly, I guess, around 50% for what you budget for the full year?

And then for, in terms of your group sales, I guess, you said you're pacing ahead, are you, I guess, somewhere around 60% budgeted?

What growth are you looking for there?

Lastly, with cash expenses for the full year you're obviously hinting that they're going to be up sort of as you ramp up on operations.

Would you expect full year to be slightly lower than what you just reported in the quarter?

Thanks.

In terms -- first of the season pass and group sale numbers remember that the call this year is a week earlier than it was last year.

And so the percentages that we are using will be slightly different now because it is a time where there is significant activity in both of those categories ongoing.

That said, we are approximately 45% of our full year target on season pass sales, and that's just where we were at the same time last year.

It is marked on a Sunday to Sunday base.

In terms of group sales we are just under 60%.

We're about 5% ahead of last year in terms of the hard ticket bookings through last week.

The cash expenses, you're correct, in terms certainly of percentage terms as well as absolute numbers, given the strategy, a significant portion of those operating expense increases are actually front-end loaded when we're getting the parks ready to commence their operations.

We would expect that our cash operating expenses would be up by approximately $20 million over last year on a full-year basis from the guest service improvement initiatives that we've undertaken.

Okay.

Thanks.

I think we have one more question.

Yes, we actually do have time for one further question coming from Tom Shandel of Golden Tree Asset Management.

Hi.

Good morning.

I apologize if this might have been asked as I had to jump off the call in the middle.

But, there's slight differences in the balance sheet items between the press release, you know, for the December 31 balance sheet and what was in the 10-K and I'm sure they're reclassifications but I was wondering if you could elaborate on it?

You'd have to help me with identifying which differentials you're talking about.

Oh.

Okay.

I believe that if you add up the current portion and the long-term debt and compare it to the same on the balance sheet, as well as from the 10 K, it's slight.

There's a slight difference, maybe about $12 million.

And also the total footings are slightly different in the two balance sheets.

Different from where?

10-K versus the press release for 12/31/03.

I'll have to answer those questions off line.

I'm not quite sure what it is you're referring to.

That's fine.

Like I said, I'm sure they're reclassification.

I'm sure that's right, there may have been reclassifications of debt, probably the ones associated with the European capital leases but those numbers are pretty close.

Okay.

I'll give you a call later.

Okay.

Listen, thanks everyone for your attention on the call, and we look forward to reporting to you a little bit later as we have more of the season under our belts.

Thank you for your participation.

That does conclude this morning's teleconference.

You may disconnect your lines at this time and have a great day.

Thank you.