Six Flags Entertainment Corp (SIX) 2005 Q4 法說會逐字稿

Good day and welcome, ladies and gentlemen, to the fourth quarter and year-end 2005 Six Flags Incorporated earnings conference call.

My name is Audrey, and I will be your conference coordinator for today.

At this time all participants are in a listen-only mode.

We will be facilitating a question-and-answer session towards the end of this conference.

If at any time during the call you require assistance, press star followed by zero, and an Operator will be happy to assist you.

As a reminder, ladies and gentlemen, this conference is being recorded for replay purposes.

I would now like to turn the call over to Ms. Wendy Goldberg, Senior Vice President of Communications.

Ma'am, you may proceed.

Thank you.

Good morning.

I'm Wendy Goldberg, Six Flags Senior Vice President of Communications.

This morning the Company released its results for the fourth quarter and full year 2005.

A copy of the earnings release is available on the Company's Web site at sixflags.com under the heading "Investors".

Here with me today are our President and CEO, Mark Shapiro, who assumed the leadership of Six Flags in December of 2005, our Chief Financial Officer, Jim Dannhauser, who will be stepping down as of April 1st, and our Executive Vice President, Jeff Speed, who will become CFO effective April 1st.

Before I turn the call over to them, I would like 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 2004 Annual Report on Form 10-K which is also posted on its Web site, 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 content of the call will be considered fully disclosed.

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

Those reconciliations are available to investors in the earnings release and on the Company's Web site.

References by management in this call to EBITDA mean EBITDA modified.

In a moment Mark Shapiro will talk about the new management strategy and our 2006 plan.

First we will hear from Jim Dannhauser who will discuss fourth quarter and full year 2005 results.

Jim?

Thank you, Wendy, and good morning, everyone.

Six Flags finished 2005 on a very strong note with solid revenue and EBITDA gains for the fourth quarter and the full year.

For the full year, adjusted to include the results of the Houston AstroWorld Park, revenues were $1.13 billion, up 9% over the prior year.

Including Houston, and excluding $12.6 million of severance and other expenses incurred in 2005 that were directly associated with the senior management and corporate strategy changes, adjusted EBITDA was $307.2 million in 2005.

That's an increase of 18.8% over 2004 performance.

Before turning to the specifics of the financial results, I would point out that our reported results reflect a treatment of the Houston AstroWorld Park as a discontinued operation with all of its results excluded from revenue, expenses and EBITDA and reflected only in the discontinued operations line.

In terms of the full-year performance, total reported revenues were 1.09 billion, up $91.1 million, or 9.1% from the 2004 performance.

Attendance increased 1.6 million, or 4.9%, and per capita revenues increased $1.25, or 4%.

If Houston AstroWorld's results had been included, attendance for the year would have been up by 4.6% and per capita revenues would have been up 4.2% resulting in a full-year comparable park revenue increase of 9%.

Domestic full-year attendance, excluding AstroWorld, was 30.1 million, up 5% from the 2004 levels.

Domestic revenues were $1 billion, up 8.5%, and domestic per capita revenues were $33.54, up 3.2%.

Total international revenues for the year were 80.4 million, up 18.1% over the prior year's performance.

International attendance was 3.6 million, up 3.7% year-over-year, and international per capita revenues were $22.48, up 13.9%.

EBITDA for the year was 331.5 million, up 34.9 million from the prior year.

Adjusted EBITDA for 2005 on a reported basis was $286.8 million as compared to 253.6 million in 2004, an increase of 13.1%.

Had Houston been included in both years, adjusted EBITDA in 2005 would have been 294.6 million, up from 258.6 million in 2004, a 13.9% increase.

Absent the costs associated with the senior management and corporate strategy changes of 12.6 million incurred in 2005, and including Houston in both years, the adjusted EBITDA in 2005 would have been $307.2 million, an 18.8% increase over the 2004 performance.

Net interest expense for 2005 was $183.5 million, down from 191.6 million in 2004, reflecting the benefit of the application of the proceeds of 4.5% convertible notes issuance of November 2004 to retire higher cost debt.

Depreciation and amortization expense was 145.4 million, up from 143.2 million in 2004.

Loss from continuing operations before taxes for 2005 was $85.2 million versus a loss of 141.8 million in '04.

Income tax expense for 2005 was $3.7 million as opposed to $32 million in 2004.

The income tax expense in both years was increased by non-cash valuation allowances, which we determined to created with respect to our net domestic financial deferred tax asset.

The 2005 loss applicable to common stock was $132.9 million as compared to 486.8 million in 2004.

The loss applicable to common stock from continuing operations was 110.9 million in '05 as compared to 195.7 million in 2004.

For the fourth quarter reported revenues totaled $111.8 million, up 6.4 million, or 6.1% from the fourth quarter of '04.

Attendance was down by 1% in the quarter reflecting expected lower performance at our Mexico City park.

However, per capita revenue was up by 2.08 -- $2.08, or 7.1%.

As reported adjusted EBITDA for the quarter was a loss of 17.3 million as compared to a loss of $6 million in the prior year period.

Had the results of Houston been included in both periods and the $12.6 million of costs associated with the senior management and corporate strategy changes excluded, fourth quarter 2005 adjusted EBITDA would have been a loss of $4.1 million as compared to a loss of $7.3 million in the 2004 quarter.

Net interest expense for the quarter was 48.8 million, up 3.1 million from the 2004 quarter.

This resulted from our agreement reached in the fourth quarter to forgive the accrued interest on the note we had received in connection with the sale of our European division in 2004, against a repayment of the note at face value.

That repayment took place in early 2006.

Depreciation and amortization expense for the quarter was 36.7 million, down 1.6 million from the year-ago quarter.

Net loss applicable to common stock for the quarter was 144.5 million, $1.55 a share.

Net loss applicable to common stock from continuing operations was $1.31 as compared to a net loss applicable to common stock from continuing operations of $1.20 in the '04 quarter.

The 2005 quarter was burdened by a number of non-operating items including the costs associated with the senior management and corporate strategy changes, proxy costs and the tax valuation allowance.

Those non-operating items totaled $71.7 million, or $0.77 a share.

As to the balance sheet gross debt at year-end was 2.24 billion and net debt was 2.16 billion.

We had 81.5 million of unrestricted cash at year-end at our revolver balance was $100 million at that point.

At this time I'll turn things over to Mark Shapiro to talk about the Company's new directions and strategies.

Mark?

Thank you Jim.

I'd be remiss without saying up-front how much Jim has meant to this Company over the years since the acquisition of Six Flags by Premier Parks.

As you heard at the outset, he will be leaving us April 1st and we do want to thank him sincerely for his years of service and certainly his guidance in the transition for Jeff and myself, it's been invaluable.

I'm thrilled that '05 ended on such a strong note.

That's a terrific paving the way for us, if you will.

I'm thrilled that we can put those kind of numbers up and have such a good story to tell.

At the same time, make no mistake about it, we have a great deal of work in front of us, a great deal of work.

And I'm pleased and proud to leave the revitalization of Six Flags and restore confidence in what I believe was once, and what will be again, a family brand.

But make no mistake about it, at the same time while I think the street and certainly a lot of the folks I've met with like to talk about the transition year they believe we have ahead of us, the consumer doesn't see this as a transition year.

At the end of the day, while those numbers in the detail are certainly important for a lot of people on this phone call, the average guest doesn't care about those numbers, they care about the experience, they care about the strength of our brand, and that's what I'm focused on, that's what my team is focused on this summer.

They're not going to give us a pass.

They see the press, they hear the buzz, they know everybody is talking about Six Flags.

They want to see the changes yesterday, not a year and a half from now.

So that's what we're focused on.

In terms of what I've seen, I've been on a road show, if you will, trying to hit 30 parks in 30 days.

As it turns out, many of the parks needed more than just a day.

Let's put that it way.

I've seen about 24 of the 30 parks including Canada and Mexico and what I have found is Six Flags is a brand with great equity.

It has tremendous mass appeal.

There's extraordinary awareness of the brand.

And what was most surprising to me on that road show is that truly we have 30,000 employees, full-time and seasonal, that are absolutely recharged.

The reception has been phenomenal.

Warm, excited.

People that are dedicated, that have spent their lives working at Six Flags, they met their wives and husbands at Six Flags, their best friends work at Six Flags.

Really, the tenure of the employees is astonishing, and these people are dedicated to making Six Flags a leading family entertainment destination, so morale is extremely high.

So part of this call is welcoming every one to a new dawn, a new birth at Six Flags.

On the flip side, on the business end, what I saw at the parks was I saw a lot of great hardware.

We are by far the best thrill ride destination in the entire country.

There is no competitor as it relates to thrill rides.

We have built them up like a nuclear arms race.

We have, for example, 17 roller coasters in Los Angeles, which is known to most folks in those parts as the coaster capital of the world.

You add 14 roller coasters in Chicago.

And so on and so on.

And that has really appealed to teenagers, but at the same time, where we're hurting is the software, where this Company's had to cut back over the years has been at the expense level, the streetmosphere, if you will, the Main Street U.S.A. strategy.

So our mission is we move forward is to upgrade our software, to upgrade the DNA of Six Flags to diversify our entertainment offerings to improve, focus, enhance, specialize, redefine the guest experience.

When we do that we will deliver sustainable growth because we will broaden our audience.

And by broadening our audience our attendance will go north and most importantly, where I think there's the most upside with this Company, the time spent in the park, the length of stay, which will amount to more money being spent with us is on our short list, on that short radar of something we can achieve.

At the same time we'll reduce our debt.

As most folks know we've been very public.

We've hired the Staubach Company to essentially assess our holdings across the board.

When I came in it was, no matter where you turned, you seemed to get a different answer in terms of what we own, what we lease, what needs to be rezoned, what the value of any parcel is worth.

So we hired the Staubach Company to come in and just do a total assessment of all our holdings, soup to nuts.

Not just what the value of the land, but if we rezone it, what's that process, what's the time of that process, what's the expense of that process, and what will it bear once it's done.

And I'll tell that you that that report is due on March 24th.

Jeff and I are actually sitting down with the Staubach Company on March 24th to go through it.

Once we finish going through it, we will immediately start on a process to not only evaluate park by park what should be in our future, what should be in our portfolio, or what might be more valuable to shareholders by letting go, by selling off.

But at the same time, we will focus on those 3500 acres of excess land.

Land that we don't plan to develop at any point in time, and which should be sold off to help restore some health to the balance sheet.

So again, that's going to happen at the end of March.

We'll move on a pretty electric pace to determine what's going to stay and what's going to go, quite simply.

There's -- when you put that together, the entertainment offerings, the guest experience, the increase we plan to see in attendance and time spent, reducing our debt, that's all going to enhance shareholder value, but at the same time, we're taking several vehicles to get there as well.

We're repositioning our brand as a family brand.

The mix of Six Flags is truly about 50/50 as it relates to parents and teenagers.

But if you walk into the park, just anecdotally, I would tell you that it sure doesn't look that way.

And most of that reason is because as we've ramped up with the thrill rides, we've alienated the family.

The thrill rides are aimed solely at teenagers.

Most parents can't or don't want to ride them.

Most parents have children with them and can't abandon their children, and of course, their children are too small to get on there.

So we need more variety, if you will, we need more options, we need a little something for everybody.

We're going to do it all on the backs of our 45th anniversary.

You couldn't ask for a better marketing vehicle.

I'm sure most of you have seen the success of what Disney has done with their 50th anniversary.

Our entire season is going to be predicated on the celebration of the 45th anniversary.

We're also standardizing operation across the board.

Universal training.

There was no training from a universal standpoint whatsoever at Six Flags.

In fact, in many parks, literally some of our seasonal employees would show up, they'd be handed an apron and told to work behind the burger counter.

We're going to have universal training across the board.

We've hired a company out of Houston, [Sassi].

They've been going to each park, training all of our employees in various forms of their craft, and they also leave behind a small team of employees to make sure that the training sticks, it's sustainable, and most importantly, accountability is something that's ushered in.

We've, of course, announced the non-smoking policy across our parks, except for designated areas.

That should appeal to families.

We're looking at pricing across the board.

A lot of people have asked, are you just going to come in and raise prices?

That's not really what this is about.

First of all, we're never going to raise prices unless we're going to significantly commit to investing in the parks.

We can't just raise prices without investing in the parks.

At the same time, I think the daily tickets are pretty much right on.

Maybe there's a dollar or two of elasticity park to park, but the true upside is the season ticket.

And just as an example, Denver is a park that you can go up to the gate today and pay $40 to get in.

At the same time, for a season pass, it only costs you $14 more.

So for $54, you can go to the Denver park every day for six months, spending up to ten hours a day in the park.

That's essential where Six Flags has discounted the brand way too much.

Already given what Six Flags is today, we have more to offer than just the $14 difference between single day and season pass.

But especially after we invest in the park, especially after we reposition the brand to be broader and attract more families, it will be worth that much more.

So I think at the elasticity is truly in the season ticket pricing.

We're going to reshape the image.

Clean, safe, fun, friendly, family.

The restrooms are a great example.

Every Six Flags branded park this year, every hour of every operating day we will have a rest room attendant every single hour.

We can't go into a lot of these parks overnight and just knock down the restrooms, which is something I'd love to do in many of them, but I can promise you at least we can keep them clean every hour, and that will be a noticeable difference, especially considering the feedback we've gotten about our restrooms in the past.

If we have extra money in the future, it's not going to be on roller coasters.

We're not going to continue this arms race.

It's going to be on painting, it's going to be on landscaping, it's going to be on family rides, it's going to be on security, it's going to be on service, it's going to be on streetmosphere and Main Street U.S.A.

That whole attitude, that whole energy underneath the umbrella of [our] 45th anniversary will make a noticeable difference this summer and that's why we're reaffirming the guidance.

We believe the new strategy, the 45th, the family repositioning, the 2005 head start, if you will, will increase our customer base and the per cap spending, and that would be an amazing achievement at the same time.

I feel compelled to point out.

Our guidance of 340 million would be on a comparable park basis a 13.5% increase in year-over-year adjusted EBITDA.

It would make us nearly cash flow positive for the second time since 1998.

Just for perspective, doing 340 can be compared again apples-to-apples with 2004 when we were at 253 million in adjusted EBITDA, and that 253 included New Orleans, which, of course, the 340 won't.

At the same time, '06 is going to be a small dent, if you will. '07, I believe a year of all these changes, that's where we'll really reap the rewards, but I do believe we can put a small dent in this summer.

As it relates to the value proposition and points back to the pricing, if you will, I feel the need to give you some more specifics, if you will, in terms of what the plans are.

Right now, our capital spend this year is going to be anywhere from 140 to $150 million. $90 million approximately will be spent on four roller coasters in four parks, Montreal, New Jersey Los Angeles, Atlanta.

Atlanta, of course, will get Goliath.

Just as an example, the roller coaster in Montreal will cost us $19 million.

Not in a million years, given the status of our parks, would I spend $19 million on one ride.

What's happened in the past to the strategy is these great rides have just been dropped into the parks.

Just dropped in, while the rest of the park has been left to suffer with service, with entertainment, with guest experience, with maintenance.

Totally left to suffer and that's the impression that most people walk away from.

And to compound matters, New Jersey is a great example.

Last year, we put in the infamous Kinga Da, which cost us about $50 million at the end of the day, $40, 50 million, excuse me, depending on how you add it up at the end.

We're still trying to fix the Kinga Da and make sure that it runs a majority of the time last year as opposed to, this year, as opposed to last year.

That one ride might draw people in New Jersey, but I would argue the park needs more than just one ride.

And again, that one ride doesn't attract families, that one ride doesn't attract kids, and at the same time we still have double-digit roller coasters in New Jersey.

So while it's great to have the tallest and fastest roller coaster in any one of our parks, it can't be at the expense of the overall park.

I walked around Magic Mountain Los Angeles, and I found many of the map boxes, those boxes that tell you, you are here.

Underneath those map boxes was a fixed -- a sign that said Six Flags, a Time Warner Entertainment Company.

Of course, Time Warner sold us ten years ago.

So that's the kind of pickup we're going to need and the level of detail we're going to be focusing on as we move forward.

Parades will start, some twice a day in every single Six Flags park.

We'll be doing fireworks.

We'll be bringing in more shows like the Chinese acrobats which will be opening up in Denver and Los Angeles, very popular, great guest satisfaction feedback from our guests, and those parks will be sold out every day.

The characters.

We're bringing back the characters.

Many of our parks last year averaged one character per day in the park, again, as a means to cut expense.

We will have 30 characters every hour of every operating day.

And it won't just be Bugs Bunny and the Loony Toons characters, we'll be introducing the Justice League for the first time, Batman and Superman and Aquaman and Flash and Green Lantern and Wonder Woman.

These characters are very relevant in today's pop culture and very popular with the young children.

Having them around the park will not only up the energy but it will introduce new revenue streams, which I'll talk about in a second.

Character meals, breakfasts and lunches.

Character autograph sessions.

Most of you have been to Disney.

You know what it's like to see your kids lined up buying autographed backs, buying the Mickey Mouse pen, getting pictures with the characters, of course, buying a frame to go with those pictures.

These are all brand-new revenue streams Six Flags has never seen before.

Birthday park celebrations.

As an example, in Atlanta we'll be having every afternoon a story time with Bugs Bunny and the kids, giving out free birthday cake to celebrate our 45th anniversary.

We'll be getting back to theming with the parks.

Theming many of the areas.

We're not an amusement park, we're a theme park, we're an experience, and we want that to show.

More concerts.

We're in discussions right now with Infinity Radio on a sponsorship deal that would have Infinity bringing more concerts to our parks.

More tours, if you will.

Of course, we don't want to lose those teenagers, we want to broaden it to the get the families, but we're not going to abandon our teenagers.

As an example we're in discussions with Matt Hoffman, who's a famous X gamer, if you will, about doing a tour with us over 100 days, a whole bunch of stops in our parks and staying for a weak each.

And obviously just the publicity having an X gamer as popular as Matt Hoffman there will boost attendance.

Even athlete appearances.

This year, of course, is the 20th anniversary of the New York Giants winning the Super Bowl, the New York Mets winning their World Series.

Having weekends to celebrate the Mets and bringing in some Mets and having a weekend to celebrate the Giants, bringing in Harry Carson, who's up for the Hall of Fame.

That's certainly going to draw attention, draw us press, draw us buzz and increase attendance.

And of course, promoting the variety that we already have.

Some of the most popular rides we have aren't even hardware.

In San Francisco, it's the elephant rides.

In New Jersey, it's the dolphins.

Across the board, animals have played an important part.

We're opening up a petting zoo in Mexico City.

We want to be about more than just rides.

We're getting back to the basics.

Streetmosphere, Main Street U.S.A.

In terms of marketing, we're going to do a much better effective job at getting our message out there.

More distribution outlets.

We announced earlier this week a partnership with Regal and their cinema chain to not only have content on the screens but danglers and posters and spots running on the TVs in the lobbies.

People, when you walk up and buy your movie ticket you're handed your ticket stub plus you're handed a coupon for Six Flags.

We need to get our coupons into more people but at the same time we're going to stop discounting so much.

I think we've created a lot of animosity in the marketplace because you can go to six different outlets and get six different discount prices.

I don't mind having $10 off, $15 off.

Even the Coke deal, the buy one get one free, what we need is less of the different levels.

We can have them as many outlets as we want, but let's trim down the number of levels we have.

Of course, we're in discussions, as mentioned on Papa Johns' earnings call last week, we're in advanced discussions on a partnership with them.

And while I'm excited about those kinds of deals where they bring in an exclusive sponsor that typically will pay an exclusive sponsorship fee, I'm just as excited, maybe more excited at the marketing prowess of some of these partners.

You know when Papa Johns is touching 10, 15 million people a month with pizza, having our offer, a coupon offer, a flyer advertising the entertainment at Six Flags affixed to the top of their pizza boxes, that's just going to be invaluable.

We're in final discussions with Ticketmaster about them selling our tickets for the first time in who knows, you know, when we can remember when we were last with Ticketmaster, but they send out an e-mail blast every single week to 19 million people.

They'll be doing that with Six Flags.

Of course, we're renewing our association with Wendy's, the restaurant chain, and we'll be doing happy meals and we'll be doing tray liners, over two million tray liners, over 60 million cups with the Six Flags offer.

Those kind of marketing deals, those co-op marketing deals is where we're going.

We're aligning ourselves with strong brands at the same time, which will enhance our brands.

Of course, most know that we've signed Ogilvy to do our Internet marketing to totally redesign our Internet.

In fact, I think our Internet is ages away from what it could be.

At the same time, even an archaic Web site was bringing in 20% of our ticket sales last year.

So Ogilvy will be doing that and will be heading up a renewed focus on direct marketing.

We recently announced that MindShare will be doing our buying across the board and our creative agency deal with [Doner] is up on May 31st and we're currently under review with a slew of firms to take up that business.

Accountability, though, is no question, something that we're going to spark here.

We've made a number of general manager changes as we've moved out to all the parks, we've let go five general managers and we've put in new folks, but bottom line is the teams are in place.

There aren't going to be any more GM changes from here on out.

The season is opening for a lot of parks and we're on the move.

We've introduced a bonus plan for the GMs, holding them accountable.

In the past, heretofore, their bonus was really tied to EBITDA and how they did, now it's a host of different prongs from cleanliness to diversified entertainment to the celebration of our 45th anniversary.

Of course, the EBITDA to free cash flow to improving the in-park per caps, much more comprehensive that makes them and their staffs more accountable to the overall business and not just some overall EBITDA line that they can of course cut expense at the last minute just to make their numbers.

We're putting in a retention program for the seasonals.

An incentive program for the seasonals that gets our people to up sell when you come to the ticket booth.

Don't just take the quick easy out and get a day, let's get them to buy a year.

Let's put incentive programs in place that allows them to up the ante on the number of tickets and the level of tickets that we're selling.

And of course, leadership is going to be paramount at all levels.

So as you go through all this, I'm sure you're asking yourself, okay, well, what's all this going to cost if you're doing it so quickly?

What I'll tell you it's really not going to cost any more than it has in the past.

It's just a diversion of funds.

We'll be putting in $40 million in expenses, which, if you look at that, is really a 4 to 5% increase on our overall expenses, annual expenses, which is no more than was done last year, 4 to 5%, and when we do that, that will translate to get to the 340, to an 8 to 9% increase in revenue, which is exactly what happened last year as well.

So this isn't a major monster uphill climb.

Repositioning the brand and restoring confidence in our brand, that's the uphill climb.

But on the financials, we're extremely confident in these targets.

The increase in per caps is going to be driven by the better experience and the service.

The family reposition will increase our length of stay and the in-park spending.

We were able to divert some capital, about $5 million into some of these initiatives, but no more than that because these roller coasters were already halfway in the year and by the time I got in in December there was just no way to undue a lot of the capital that was committed.

We will realize new revenue streams with a whole photo program.

Give you an idea.

In photos last year we did $15 million in photos.

That's people coming to the park wanting to take pictures.

We generally staffed just a few people.

I'm talking three to four people at each park taking photos.

This was not the business that it is at Disney.

At the same time, we didn't take any photos with the characters, because, of course, there weren't any characters.

So this is going to open up a whole new revenue stream having 30 characters, front gate, on the rise, in the shows, kids, families getting their picture taken, not going to cost us a lot because it's all digital now, and at the same time, there's huge margins once they buy the photos and, of course, buy the Bugs Bunny frame that goes with it.

The meals, character breakfasts and character lunches.

We're even having a train ride along program where we shut down the train for an hour each day where kids sign up, of course, they pay to sign up, but they then ride around for an afternoon snack, pictures on the train, which goes around the park.

We're taking advantage of some of the assets we have to open up new revenue streams.

Of course, sponsors that we bring in, more exclusivity for the opportunity to sell their park -- excuse me their products in our park, they'll be paying sponsorship fees.

The whole goal here is we have approximately 35 million people spending up to 10 hours a day in our parks, and we are going to leverage that fact.

We're going to leverage that asset.

Nowhere do you have a captive audience like you do at Six Flags.

Go to a baseball game, a movie, a concert, you name it, nobody's spending up to ten hours a day with someone's brand.

And I believe that smart marketers will begin to see Six Flags as a unique way to meaningful, in a meaningful way to reach people.

Our retail, it's tremendous upside, just on the fact that Superman, the Movie, is coming out this year and Warner Brothers is going to spend a boat load on marketing and we're going to have incredible retail along with the rides and shows and the characters that will be in our parks, so there's huge opportunity to see upside in retail.

Of course, the autograph books, as I mentioned before.

We're introducing a fast pass system for many of our rides.

We've had it in some parks but certainly not to the extent you're going to see it this year which allows people for a premium to move to the front of the line.

And we're branding it Flash Pass, under, of course, the super hero Flash, one of my favorites.

We're introducing a VIP program where people pay a premium not only to go to the front of the line, but they get preferred seating at the shows that we have.

But we're leaving no stone unturned.

As an example, we're about to close a deal with a candy company which has them paying us a premium for the kind of placement their candy gets in our stores.

That's the level of detail we're looking to as we look to provide new revenue streams.

And, of course, we have the thrill rides to boost attendance.

We still have those.

Obviously the teenagers, we're not going to abandon our mantel, and that's being the king of thrill rides.

With the four thrill rides we're launching we expect to see increased attendance in those four parks.

Currently to date, I know it's early, folks, but it's two months and one week into the year, if you will, and for the most part of those two months it's really been L.A. and Mexico City that have been open, but we did open a handful of parks last weekend.

And already we're seeing, just from customer and guest feedback, we're seeing our initiatives take hold.

The feedback's been phenomenal with the characters and the parades.

The energy has been terrific.

Our group sales are up single-digit already.

Our per caps in-park are up double-digit already.

Again, the key is 35 million people up to ten hours a day, how do we monetize that?

So that's where we're at.

The road show is over, the team is in place, my senior staff has a background of strong marketing skills and brand building, because that's what this is about.

Our real estate strategy is baking.

We're coming off a strong '05 so we've got a good lead start.

We have tremendous confidence in our strategy and families today are looking for a more convenient Disney.

That's what Six Flags can be.

There's a lot of press, and we believe that the brand is going to shine and get a lot of attention through the marketing vehicle of the 45th anniversary.

I want to take a moment here to pass you on to Jeff Speed, who is going to give you a snapshot of our financial priorities and our long-term outlook.

Thank you.

Thanks, Mark, and good morning, everybody.

Before I start, I'd also like to take a brief moment to acknowledge and extend a personal thanks to Jim Dannhauser for making the transition into my new role here at Six Flags as smooth as possible.

Thanks, Jim.

I'd like to spend a few moments providing some concluding commentary regarding the outlook for the business and touching and echoing some of the comments Mark's made with a little more specifics.

As Mark indicated in his comments, 2006 will indeed be a year of change for the Company.

New management assumed control only a few months ago, and with the 2006 season fast approaching, as a result and understandably, there's been somewhat limited opportunity to influence the 2006 season, particularly in terms of capital expenditures, which had already largely been committed.

Having said that, as you heard from Mark, there were various areas where we have, in fact, made some changes that will be evident in 2006 and I'd like to touch on some of them for you.

Probably the most noticeable of these areas is going to be the substantial increased in-park offering of entertainment and activities including increased character presence and interaction as well as daily parades and fireworks and more.

Not surprisingly, these decisions are going to require increased costs to deliver this improved experience, but we firmly believe these initiatives are critical to the success of our strategy to improve and diversify our offering as we work to stretch the brand and drive incremental attendance and per cap from a broader base of customers, particularly the family market.

We fully expect that our spending will be more than offset by revenue growth from increased per capita spending through new and enhanced in-park revenue opportunities, standardization of pricing across our portfolio of parks for admissions, parking, and concessions, new marketable attractions at 11 of our 19 theme parks, and additional revenue streams from new corporate alliance and sponsorship relationships.

Management's also taken the decision to freeze pension plan benefits as of April 1st and eliminate 2006 discretionary merit increases.

Although these were extremely difficult decisions to be sure, with the same time introduced enhancements to our existing 401(k) plan, launched a new performance-based bonus plan for all full-time employees, and we're putting in place a new employee stock purchase plan.

The pension freeze alone, net of the 401(k) enhancement costs, is expected to results in annual savings of between 6 and $8 million.

As we assessed the situation and factored in various decisions taken, we announced today that we're reaffirming 2006 guidance of $340 million of adjusted EBITDA excluding additional 2006 severance and other costs related to the senior management change.

We're aiming to achieve this growth through an 8 to 9% increase in revenues and a 4 to 5% increase in total costs and expenses.

When we compare this to adjusted EBITDA in 2005, excluding Houston and the management change-related costs, this guidance targets adjusted EBITDA growth of 13.5%.

With respect to capital expenditures, we're forecasting a reduction from the 2005 season spend of approximately $150 million to approximately $140 million in 2006.

And further reductions to a run rate of approximately $100 million as we focus not only on adjusted EBITDA but also on driving free cash flow.

In terms of our cash and liquidity position, as of March 1st we had approximately $65 million of cash, $200 million drawn on a revolving credit facilities, leaving us with approximately $185 million remaining available to be drawn to meet our liquidity needs.

With respect to our overall capital structure, there's no question that our debt level is just too high and must be reduced, and we're committed to doing that.

We're expecting significant reductions over time through improved operating cash flow, reduced capital expenditures and the disposition of non-core assets with particular focus on underutilized real estate.

The real estate efforts will indeed take time but we're currently working with the Staubach Company, as Mark mentioned, to assess our holdings, develop a strategy and determine the realistic timing for execution.

Meanwhile, we're progressing on the sale of our Houston property and recently announced that our Oklahoma City parks will be sold after the conclusion of the 2006 season.

We're confident that non-strategic asset sales, coupled with improved operating performance and reduced Cap Ex, should provide a solid platform to reduce our debt by several hundred million dollars over the next several years, providing us with the operational and financial flexibility that's essential in order to rebuild the Six Flags brand, generate sustained growth and deliver value to our shareholders.

With that, I'll turn the floor back to Mark.

Thanks, Jeff.

I think we're going to open it up to questions here.

Thank you. [OPERATOR INSTRUCTIONS] And our first question will come from the line of Glen Reid with Bear Stearns.

Please proceed.

Hi, thanks.

Just a couple of quick ones.

First, you know, I guess, Jim, you had mentioned at the end of your comments $0.77 in one-time non-operating EPS costs.

Could you just give us what the clean sort of EPS number was for the year that corresponds with the $307.2 million of EBITDA?

Also, another question on sponsorship.

Could you give us a sense maybe, Mark, what kind of sponsorship dollars we might see this year, or maybe just in terms of increases over last year?

And then lastly, you know, any update on the timing of the Houston park sale, and then the Oklahoma City park you said at the end of the season, do you have a specific buyer already that's interested?

Thanks.

Glen, this is Jim.

The loss from continuing operations for the fourth quarter as reported was $1.31 a share.

You back out the $0.77 of items that I described before, you'd have $0.54 as the loss from continuing operations per share in the quarter.

Okay.

So that $0.77 does capture all that.

Okay.

Correct.

Glen, I'll take the second one then I'll pass it to Jeff on the real estate front.

At this time I can't really put a number on the sponsorship.

It's not that I'm trying to be evasive.

We are literally in discussion with tens of advertisers right now.

You name it.

From the pizza to burgers to wireless to telecom, to candy bars, to movie studios, to photo companies, you know, I can't really get into too many brands other than the ones I spoke about earlier.

I think there is huge upside potential here, and when I say huge, of course, it's relative because last year there was no division at Six Flags that was really selling these kinds of sponsorship opportunities.

They had a third-party company that they farmed out, and they would have them sell sponsorships that basically were comprised of very, very little marketing, but for the most part, signage in the parks, and that's not the level of depth that we're going to right now.

All these partnerships are going to be strong sponsorships but also strong marketing, so you can measure it in different ways.

And I believe that there's great potential in just giving the feedback.

People really warm to the fact that television, radio is just not the answer in totality as it once was ten years ago, and people are buying more Internet, they're buying more broadband, and they're buying foot traffic.

They're buying out of home.

And Six Flags is the best out of home you can get.

So we believe we're going to have some more announcements in the next couple of weeks but I think after about 30 days here, we'll really be able to put a good frame on where we're going, or at least in our next call in May.

I should mention we did start up that sales structure is headed by a guy by the name of Lou Koskovolis and Randy Gersten but they both came over from ESPN and ABC Sports.

They've made a career out of advertising sponsorships and relationships, and that's their job right now.

They're building a structure which will pick an individual in every single park selling local ad sponsorships across the board, which again, is not something heretofore that has been at Six Flags.

It was a third-party and we didn't really, other than our Coke deal, we didn't get much done beyond the Coke deal.

So we think there's a lot of Coke's out there.

We've got the structure in place, and it's just the point to pound the pavement right now.

Jeff?

On the real estate?

Any thing else on that, Glen?

Well actually, could you remind us, whatever would you classify a sponsorship, what that dollar amount was in '05?

You know, I don't --

The sponsorship revenue, and we only book in revenue cash that is actually received.

We do not ascribe any value to marketing impressions that we might get on the Coca-Cola can by example historically.

The cash sponsorship revenue was about $25 million.

25?

That's correct.

Okay.

Thanks.

On the real estate, Glen, with respect to Houston, obviously we went through a bidding process, and received several indication of interest, and we have narrowed down to one prospective buyer that we're in definitive negotiations with regarding the contract.

And so we're proceeding along those lines so I don't want to go much further given we're in the midst of negotiations in terms of the key terms, except to note that given the nature of this asset, the sort of due diligence that needs to be done by a buyer in terms of physical due diligence really can't be completed until the park has been demolished, and we are working towards that, we are targeting that the complete demo of the park would occur in early May.

And then the physical due diligence would start with this prospective buyer and then closing there after.

So what we're targeting, under the current construct, is closing that transaction before the end of the summer.

In terms of Oklahoma, we're obviously at the very preliminary stages.

We've announced we're putting them on the block.

We've, again, received several indications of interest, and we're going to be obviously assessing those indications and proceeding as quickly as possible.

Okay.

Thanks.

And our next question will come from the line of Kathy Styponias with Prudential.

Please proceed.

Thanks.

I have a couple of questions as well.

Pardon me.

With respect to your 340 million guidance, in particular your revenue guidance, Mark, given that you're expecting the growth to be similar to 2005, could we also assume that the breakdown between attendance and per cap is also similar?

Second question, I guess for you, Jeff, the 4 to 5% operating expense growth, as we look at it going forward, given that you're changing the mix of how you're going to be investing in the park going from hard assets that are typically amortized over several years to more things like parades and concerts, I would assume that more of that will show up in the operating expenses going forward.

So shouldn't we eventually see an acceleration in operating expense, of course offset by a decrease in Cap Ex?

And then the third and final question is, could you tell us, you said season Cap Ex is going to go from 150 to 140 million.

What do you expect calendar year 2006 Cap Ex to be?

Thanks.

Few first off, just on the per cap and the attendance, I think that proportionally the mix is going to be higher, more per cap than attendance.

As we move forward into the later years, '07, '08, and we begin spending less on Cap Ex we'll also be spending a little more on marketing, which I think then you're going to have the parks cleaned up, so to speak, you're going to have more entertainment offerings, the brand is going to be stronger and we're going to really want to drive that message with a new creative campaign designed by whatever firm we're going to hire, and that's where we're going to see the big impact in attendance.

I think this year the per caps is really where you're going to see the proportionate increase, Kathy.

Yes, Kathy, on the expenses, obvious this year when we said 4 to 5% on total expenses, Cap Ex being relatively fixed and then we've talked about the things we're doing in the park, clearly over time, and Mark just touched on it, as we bring down Cap Ex, yes, we can expect to see some movement in the expense line, some of that money, dollars that otherwise would have been spent on Cap Ex shifting to other things, whether they be maintenance or more parades, more characters, more experience, as well as the marketing spend.

So, yes, you can see some degree of that shift over time.

In terms of the capital spend, we said 140 million of season spend for the calendar year, that would translate into about 125 to 130 in terms of calendar spend Cap Ex.

Can I ask a quick follow-up?

Sure.

With respect to the revenue growth rate then, Mark, is it safe to assume that any sponsorship deals you would announce between now and the rest of the season would basically be incremental to that revenue growth?

It's part of the number to get it to the 340, and that also comes on the heels of Glen's question which I'm not sure I answered before.

Any sponsorship revenue that we bring in will be incremental.

It will fall straight to the bottom line.

But that's included in your 9% growth, though.

That's correct.

But you can't give us a sense of how much you're expecting to come in this year?

It's just too early, to be frank with you.

Three weeks ago was when my sales guy started.

Right now he has a stuff of plus one.

So they're kind of going across the country right now putting out fires, meeting after meeting after meeting, and the structure that we've put in place where we're hiring a local ad sales guy in each park, plus four regional folks to oversee these local folks, it just hasn't taken shape yet, so we really can't get a grasp on where we are.

But when you talk about, I think our exact number actually was 23 million that we did in sponsorships last year.

I think there's great potential just because I don't think the structure was ever set up to pound the pavement, get out there, talk to people, especially in the consumer product business, see what they have to offer.

I think long-term when you look at Six Flags, and I said this last week at one of the panels I was sitting on, I think you look at it as a supermarket of entertainment.

I really do.

I think that people are there, when we ask our guests what's the number one ride they want, parents are telling us they want Internet cafes, not rides.

You know, they're there for a long time, it's hot, they want to go into someplace that's cool, air conditioned, of course, check their e-mail, because nobody goes ten hours without checking their e-mail these days, get a cup of coffee, and if I can bring in a sponsor to build an Internet cafe, if I can bring in a video game maker to put up an interactive village and have not only their products experienced but also move product, I think there's huge upside, great potential.

Thank you.

Our next question will come from the line of David Miller from Sanders Morris Harris.

Please proceed.

Yes, hi, good morning.

A couple questions on land sales.

Mark, you have said in your prepared remarks that you think there's 3500 acres of what you'd consider to be excess land, but you've also admitted to me, personally, that you're not sure of that figure, okay, so, you know, what qualifies as excess, at least to me, is simply a matter of whether or not there are plans to expand park operations on that land, you know, obviously why would you guys sell land on which there are expansion opportunities?

So when you say there's 3500 acres, if you could quantify what's really land that's expandable, that would be helpful.

And also related to that with regard to the Houston sale, we've heard some press reports out there stating that the land underneath the core AstroWorld property could command somewhere in the range of roughly 600,000 to $800,000 per acre.

So it's a 109-acre site, I think I have that correct.

Let's assume 90% that the acreage encompasses 90% park-related access, 10% freeway frontage.

That averages out to proceeds of about $80 million for you guys.

Is that a number that would you be willing to live with, or can you talk about it now since you're still in negotiations?

That would be very helpful.

Thanks very much.

First off, Dave, I'll tackle the personal conversation.

I'm not saying anything different that I haven't said in the past.

The first report that Staubach indicated to Red Zone, which is Dan Snyder and myself as we were on our road show tour in a proxy fight, was that they believed there were 3500 acres of excess land that would be available to sell or, of course to develop.

That's exactly what I'm telling you today.

The difference is, when we met is I said to make sure that's definitive.

Staubach, of course, was working without the cooperation of the Company.

Most of their estimates were drawn up just from public findings.

That's why we've hired them.

We've put them on the payroll, if you will, to go out and over these few months and go park to park, land to land, zone to zone, county to county to determine exactly what that number is, and their estimates are saying that the 3500 is going to come through, and at the same time, put a value on the parks themselves and the land those parks are sitting on.

So we're just as anxious as you are to get that because that's a key component to our reduction in debt strategy, and I'm anxious for that to come through.

Now keep in mind, in terms of development, there's really no need to develop these parks any further.

They're -- half of them are bigger than Disneyland.

So we have the space.

What I would tell you is, if we're going to bring in new rides, we've got a lot of rides that are going untouched.

They're old, they're battered, they're not popular, they're not relevant anymore, and I would pull those out to put in new rides before I would expand our land development.

I guess I just don't understand why there was a second iteration of the Staubach report.

Well, as I said, remember, they were working off public findings.

Now they're working with the Company.

They're inside our data center, they have access to all our information, and when they go out to these parks and they meet with the counties and the zoning commissioners and everybody else they're working on behalf of Six Flags, so they have total access to any information.

Gotcha.

Okay.

And on Houston?

On Houston, David, obviously, again, being in the midst of discussions I don't want to get into definitive comments on price, except to say, you know, obviously you've done some homework and you're in the ballpark.

Okay.

Thanks very much.

Thank you, Dave.

Our next question will come from the line of Z.V.

Ryan with Boone Capital.

Please proceed.

Good morning, guys.

I don't want to labor the top line but embedded in the 8 to 9% revenue growth you had, previously I think management had indicated about 7% top line growth and embedded in that was about 3.5 to 4.5% growth in attendance.

Is it fair to assume that that should be similar going forward or have you changed that at all?

Well, as I said, I think there's going to be a mix of both.

As you know, the way to increase our bottom line other than these new revenue streams is, you know, this business is about marketing.

This business is about brand building.

We need to put shows together, we need to put up rides, we need to do our marketing well so that we attract people.

And, of course, if we do that right, we're going to attract more people.

And that's kind of one silo that's going to improve our fortunes.

The other silos, of course, when those people come, the longer they stay, the more money they're going to spend, which is primarily the reason we're putting in-park initiatives like parades and fireworks, trying to increase the length of stay.

I think, clearly, for an 8 to 9% revenue growth, we're not only anticipating, but our strategy is designed to increase this year both silos.

But we believe that the stronger gain will be in the per caps.

Got you.

And then considering the buzz surrounding the changes occurring at Six Flags, I mean on a, I believe season pass sales are about, previously at least they were 25%, I mean, have season pass sales so far accelerated relative to last year at this point?

You know, I'm glad you brought that up, because I should have mentioned that early on.

Essentially -- here's my position on season passes.

First of all it it's too early to tell and I'll tell you why that's by design.

I think the Company, like the roller coasters, has been a little too punch drunk on the season pass sales.

We're moving away from being so focused on season pass that it's everything too us.

We spend an ungodly sum of marketing just to get those early people on season pass.

Don't get me wrong, we need it.

It's our most loyal, loyal guest, if you will.

So I want to stay north of two million people, there's no question, on season tickets, and I believe we will do that.

However, our media strategy has totally changed.

We spent a lot of money at this time last year in January and February going after the season pass, and instead, we're moving our media strategy to much later.

I don't really believe a lot of people in January and February, unless you're going to Disney or Universal, which is a hot spot for spring break, most of our parks, of course, aren't open over spring break, I don't believe they're making decisions about the summer at that point.

I don't believe that the first thing they're thinking about is, should I get a season ticket to Six Flags because there's a great new show or a great new coaster coming.

I believe they're thinking about where they're going to ski, I believe they're thinking about their natural gas bills, I believe that they're thinking about staying indoors.

They'll make that decision later.

So we're moving our media spend primarily to a much later place.

We'll be doing more at the end of March, really ramping up big in April and May for the payoff in June, July, August, which most of you know is our big season.

So it's too early to tell because we really haven't put our media spend into season tickets right now but we'll again have a much better grasp of that when we talk in May because our media spend will really be taking hold at that point.

Fair enough.

And then my last question regarding the capital structure, have you given any thought to taking the preferred and maybe using that cash flow to retire higher cost debt?

Yes, obviously having just arrived at the company within the last several weeks, one of the major focuses from my perspective is the overall capital structure and where we're going there.

I laid out sort of the key things that we think are going to help us achieve de-leveraging the balance sheet, which hopefully should also enable to us to refinance into lower cost debt, but I really don't want to get into specifics on what aspect of the capital structure is going to be targeted first.

Okay.

Great, guys.

I'll turn it over.

Thanks.

As a reminder, ladies and gentlemen, to ask your question it is star one.

And our next question will come from the line of Grant Jordan with Wachovia Securities.

Please proceed.

Good morning.

Thanks for taking the question.

Can you give us what you say you spent in calendar '05 Cap Ex?

Yes, calendar '05 Cap Ex was 170 million on the cash flow statement, but that's calendar.

Okay.

Does that include sums spent for the '06 operating season?

About 45, 50 million.

Once we get past '06, we should see calendar and operating season about 100?

About 100 is sort of the run rate we're looking towards, yes.

Okay.

Second, you touched on this already, but as you look at this business, you've talked about the capital structure, do you envision kind of an optimal leverage target?

Well, we certainly have in mind where we'd like to take the Company, but again, it's going to be several levers that are going to be pulling that.

Obviously the operations improving, which is probably the best lever, in terms of our ratios, but we believe there's some significant opportunity to deal with the balance sheet with assets that currently are on the balance sheet not returning anything, underutilized real estate, for example.

So we have internal discussions and targets of where we'd like to take it but I don't think, short of getting the analysis from Staubach, seeing how the business performs this year and getting a little more time under our belt, I don't think we want to commit to those publicly at this point.

Okay.

And then final question.

Obviously you are focused on the existing assets and operations and improving those, and you've commented on the Paramount parks before, but is there a scenario where acquisitions would make sense, where there's certain assets that would fit better in the Six Flags portfolio?

At this moment, absolutely not.

I don't want to -- I want to be as clear as I can about that.

We are in, we need to fix the operation here.

We need to focus on the fundamentals, we need to get back to the basics, we need to concentrate on blocking and tackling.

Our experience has to be better.

And until we fix that, until we re-emerge as a brand that is synonymous with family entertainment, a brand that is as attractive to the parents as it is to the teenagers, we can't even think about expanding or acquiring any more assets.

And I do want to mention just on that same note, although I said this earlier, I just want to reiterate, we are not abandoning the teenagers by any respects.

Just because I believe the Company's gone wrong by putting up too many coasters, that doesn't mean we're never going to put up a coaster again, but the bottom line is there is no ROI on a $20 million roller coaster.

It's not the case.

We can put in a thrill ride, a great thrill ride, for single-digit millions instead of double-digit millions for a coaster.

We absolutely can do that.

I don't want to -- and this also ties back to Kathy's question.

I don't want anybody to think, okay, you're going to ramp down your capital to 100 million a year in '07 and that means your expenses will make up for the rest.

No.

We're going to gain in that equation, if you will.

Our capital is going to come down, our expenses will go up a little, but it will not go up 40 million to make up the 140 in capital that we were spending.

We want to get bottom line out of this, focus on the debt, paying back the debt, and obviously the best way to do that beyond the real estate is just improving our margins, improving operation, and especially those per caps.

Thank you.

And our next question will come from the line of Haley Wolf with Sailfish Capital.

Please proceed.

Good morning.

Could you give any comment on what your current, or in 2005, what effective ticket price was versus, say, a face value of tickets so we can understand the spread and then the opportunity to move that number up?

I'm sorry, hit me one more time on that, Haley?

Can you give us a differential, give us face value of ticket systemwide prices versus what your effective yield would be on that face price?

Right now we're totally in that evaluation.

I anticipate that in most branded parks there will be an opportunity to move the daily ticket price up a couple of dollars, but not much more than that.

Any kind of price increase that this Company has on tickets is going to have to be gradual.

As much as I believe it should be a lot overnight, because I think Six Flags is already a great value, its current status, and you think they've really gone wrong by discounting the brand too much.

We just can't do it overnight.

It's very synonymous or parallel to a baseball game.

Now are you talking about raising actual ticket prices or are you talking about better yield management?

I'm talking specifically about ticket prices on the day-to-day.

Where I think there's more elasticity is on the season ticket price, but I do equate this, as I said, with baseball, if you will, or a football game.

You go to a game, you're paying X to sit in the bleachers.

You blink seven years later and your price is four times.

Hopefully, the team's been investing while they've been raising prices.

We will be investing if and when we raise prices.

We'll have to do it on a gradual basis.

And maybe just a follow-up on the point on yield, obviously, we do believe that there's a couple of things we can do there.

Mark mentioned some of the price elasticities, but also yielding better, improving the yield from the '05 levels.

We don't disclose the yield amounts separately from our total per cap spending, but improving the yields.

We're going to have discounts, we're just not going to essentially abuse them or ridiculous discounts, so we should expect to see some yield improvement as well.

I don't know if Mark wants to comment further on that.

Haley, let me just give you one as an example.

Jeff's right, we don't typically break this out historically, we haven't and we're not going to in the future, but I want to give you an example of what I believe there is untapped potential.

Our retail per cap is $2.21, our net retail per cap.

That is what each guest is spending on average, on retail, which I believe is drastically low.

Now, what do I think that can go to?

I don't know yet.

But when I walk around these retail shops, it's pretty simple to see why.

We've got a lot of outdated material, we've got stuff that just isn't selling, and more importantly, we have items that are just not pop culturally relevant.

And we haven't had as much focus on Loony Tunes and Justice League across the board that I would like to have, and I believe when we do that, and I believe when we ramp up the photo business, which will, of course, involve frames, et cetera, when we ramp up the autograph business, I think that is going to push up quickly our retail per cap.

That's just one example.

Thank you.

Our next question will come from the line of Michael Krispadulio with Inwood Capital.

Please proceed.

Good morning, gentlemen.

Back during the proxy fight there was a lot of discussion about the great success that Dan and the Redskins had in the food service area outsourcing the concession to Center Play, bringing in the speed pay system.

And I know there was some discussion that you would consider outsourcing your concessions operation.

Where does that stand, and is that something that you'd have want to have had in place prior to the peak attendance season starting?

Great question, Michael.

Here's where we are in that.

We've got two companies, third-party companies, if will you, outsourcing companies that are currently under review right now.

What that means is, they are going, much like Staubach, they are going park to park right now, assessing our capital, assessing our kitchens, assessing our equipment.

And we're in a due diligence process and hopefully, quickly here, we'll have an idea of a partnerships equation, if will you, that could come to the table, meaning i.e. what they might spend to take the capital off our hands and what the splits would be if they ran our food business going forward.

Having said that, one of the things that I have really dug into, and I think has opened my eyes is, I'm not so sure, unless it's an extraordinary deal, that we want to outsource our food, which has been an eye opener for us, certainly since the proxy fight.

I think the food is very undervalued.

I think we, by standardizing the operation, there's potential for growth there.

And I'll give you an example.

A slice of pizza in Atlanta, the same slice of pizza is far lower than what we're charging in Los Angeles.

And I can't figure out why.

It's not like there's so much price disparity between the Atlanta and L.A. parks in terms of living.

There's just no standard operation.

There's no -- it's not a standardized environment.

That's really across the board.

A lot of these parks that were purchased by Six Flags then went decentralized from a management standpoint.

So you've got a lot of food items, those prices being set by the general manager without any knowledge of what we're getting elsewhere.

That doesn't mean the higher price is the answer, but it doesn't mean the lower price is the answer.

Maybe there's a middle, or maybe the higher price is the answer.

But by standardizing our pricing, I think it will standardize the experience across the board for our guest.

And that's not just in food.

That's retail, you name it.

People should be able to walk into a Six Flags Chicago and feel it's no different in experience than going into Six Flags Great Adventure in New Jersey.

So time will tell really on this summer.

I'm glad that they're still in the process of going through our parks because I want to see what this season bears in terms of food.

Part of the expense cutbacks over the years, as you'll find in a lot of our parks, you won't see the parks lined with carts.

Everywhere you go in Disney there's a soda in your face, there's a water in your face, there's an ice cream in your face.

And we cut back drastically on carts across the board.

Which not only is bad service, but it forces people into these lines that are already long to get food.

We're going to bring back a massive cart operation.

My belief is that, you know, if a person can sell three waters in an hour, three bottled waters in an hour, that employee has paid for themselves.

So you're going to see us running around with shoulder straps selling hot dogs, like at a baseball game.

You're going to see us running around with shoulder straps selling pizzas, like at a baseball game.

And you're going to have our streets within the park lined up with water, lined up with ice cream, lined up with Cokes, lines up with pretzels, lined up with churros, the kind of experience I remember at Six Flags years ago and the experience I believe you get at Disney today.

And I think that's going to lead to an increase in our food per caps.

I can't really decide to sell that business off until I see what that bears at the end of the summer.

So forgive the long answer, but I'm excited about the opportunity in food and beverage.

Thanks for the great color, Mark.

You got it.

Our next question will come from the line of Chad Lu with Chaddon.

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Our next question will come from the line of Seth Wonder with Tracer Capital.

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I think we have one more.

Let's just check the last ones on the line and we'll wrap it up.

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Our next question will come from the line of Jane Fugero with Lehman Brothers.

Please proceed.

Hi.

I just want to thank you for the detailed press release and also the detailed overview that was extremely helpful.

I only have two questions.

On your balance sheet at year-end you have a current portion of debt, and I'm wondering what that comes from, 114 million?

Is that anticipated proceeds from the sale of Houston required to pay off the bank?

And then my second question is, are you considering selling any parks, or are you more interested in trying to kind of fix up the parks first before making any decision on selling any parks?

And this is, you know, in addition to the excess land.

I'll take the debt question.

In terms of the current portion, that's primarily our revolver borrowings under our revolving credit facility, and that's, obviously, higher than the prior year.

We had a significantly increased amount in the calendar year of Cap Ex that you see on our cash flow, and so that's driving that.

There's also a modest amount of our term loan amortization that would be classified as current as well.

Okay.

Thanks.

So just giving effect to the evergreen nature of it.

Sure.

Okay.

And then as far as the second question goes, I'll tell that you, Jane, that the selling parks is presumably definitely in the future.

It's not just going to be about selling excess land.

We're going to look park by park and evaluate.

In some of these parks, it may just be not the right benefit to the shareholder to spend a lot of money upgrading the park when that might be an exorbitant amount of money, and the better return might be just selling it off right now, either for real estate sale and the value there, or as an ongoing operation.

But we're going to evaluate one by one once the Staubach report comes in.

Okay.

Thank you very much, and just want to say best wishes to Jim.

Thanks.

Thanks, Jane.

Thanks, Jane.

For those of you still on the call, most are probably are just our employees, want to thank everybody for coming out today and obviously the attention to detail and the engaging questions.

We're excited about what we're doing here.

We tried to give you a little extra detail today because not only do we want to, should that be a sign of our openness going forward, but we really want people to have the picture where Six Flags is headed and what kind of experience our guests can expect.

In summary, as I mentioned before, we're not just going to be about the rides, we're going to be about the overall experience.

We're going to be about the shows, we're going to be about the parades, we're going to be about the characters.

Even in Chicago, I think that's a great example going forward where you're building a water park inside the theme park.

That's just another alternative to the theme park proposition, and that's where we're headed, an overall experience that's as attractive to families as it is teenagers.

So thank you for coming out today and sharing in the Six Flags plan, and, of course, we'll be available through Wendy, Wendy Goldberg, our Communications head here, for any follow-up anybody has the rest of the day.

Take care.

Ladies and gentlemen, at this time you all may disconnect, and have a wonderful day.