Six Flags Entertainment Corp (SIX) 2008 Q3 法說會逐字稿

Good day ladies and gentlemen, and welcome to the quarter three 2008 Six Flags Inc.

earnings conference call.

My name is Nora and I will be your 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.

(OPERATOR INSTRUCTIONS)

I would like to turn the presentation over to your host for today's call, Ms.

Sandra Daniels, Vice President of Communications.

Please proceed, m'aam.

Thank you and good morning.

This morning the company released its financial and operating results for the third quarter and six months ended September 30, 2008.

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

Here with me today are our President and CEO, Mark Shapiro and Executive Vice President and Chief Financial Officer, Jeff Speed.

Before I turn the call over to them, they have 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 and could cause actual results to differ materially from those described in such statements.

You may refer to the company's 2007 annual report on Form 10k, which is 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 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.

These reconciliations are available to investors in the earnings release.

Now I would like to turn the call over to Mark Shapiro, our President and CEO.

Thank you Sandra, and good morning everyone.

Agenda for today is as follows: I'm going to review some headlines with you, turn it over to Jeff to get into the specifics of our financials, and then I will come back on to discuss the balance sheet in particular.

The front page headline for Six Flags is that through three quarters, as you saw from our release this morning, we are at $270 million of adjusted EBITDA.

That's up from $190 million last year.

And we expect to end the year at approximately $275 million to $280 million, making us free cash flow positive for the first time in the history of this company.

We've grown it every which way.

We've grown it on the top line, we've grown it through efficiency in our expenses, we've grown it through volume and we've grown it in this economic climate.

We've also grown it in park.

If you recall from some of our calls earlier in the year, the discussion or (inaudible), I guess the prognostication was that even if we could grow volume this year, nobody would spend.

Well, we grew volume and our in park spending was up over 4% this year.

On the sponsorship front of corporate alliances, at the beginning of the year, we guided everyone to $51 million in sponsorship and licensing.

In August, we took that guidance up to $56 million and we're now going to end the year at $59 million.

So Six Flags as a solution to advertisers looking to reach people in a increasingly fragmented environment continues to be a winning solution.

Finally, our brand strength has been restored.

Over the last three years, you're all too familiar with expense we put in to the company to fix this company and clean up the parks.

Now, according to our research, delivering on expectations and delivering on the value message in particular is resonating most with our consumers as it relates to the Six Flags brand.

Value and delivering on expectations is now becoming a part of the Six Flags DNA.

Beyond that, further evidence that our brand strength has been restored points to the continued international interest we find for Six Flags parks all over the world.

We've announced Dubai will have another Middle East announcement in December, and we are currently in discussions with several groups in Korea.

On the volume side, we were out in front of this economic climate, there is just no two ways about it.

In February, prior to anyone doing their discounting or discounting their brand, we got out front with a value message in our communications messages and in our advertising , and there is no question that the singular message of everyone pays kids pricing reflected well, not only on our performance, on our business on our brand, but in the future of our business going forward, especially next summer.

Kids pricing and value resonated with the consumers as it relates to Six Flags in particular.

My final note as I transition to the financials with Jeff, is keep in mind, where we are now going to end up is Six Flags will finish the year free cash flow positive.

That is up from a negative $170 million last year.

A swing of 170 to positive.

How we got there, I will talk about at the end of the call.

Thanks, Mark, and good morning.

I'm going to spend a few minutes reviewing results for the quarter and nine months as well as our performance through the Halloween weekend, and then I will wrap up with a few comments regarding our full year guidance and a brief look at our cash and liquidity position.

And after that, some closing comments from Mark and then we will open it up for Q&A.

Let me start with revenues for the quarter.

Our quarterly revenues grew 5% compared to the third quarter of 2007.

The growth reflects per capita increases of less than 1% for tickets and 4% for in park, resulting in a 2% increase in per capita guest spending.

The in park growth was a result of increased spending on rentals, food and beverage, parking and retail.

Our revenue growth for the quarter also reflects continued increases in our sponsorship and licensing business, which grew by $8 million, or 67% to over $19 million for the quarter.

Attendance increased approximately 200,000 for the quarter.

The attendance increase was despite the loss of two full park operating days and a planned reduction of over 200,000 in complimentary and free promotional attendance compared to the prior year quarter.

You may recall that in the prior year, we used free ticket promotions to drive sampling of the new and improved Six Flags which our customers rated at record highs in terms of satisfaction.

This year, we made the decision early on to ratchet back free promotional ticket programs in favor of our value priced ticket program, namely, everyone pays kids prices that Mark referred to.

This proved to be extremely success and was the key driver of our attendance growth.

For the nine month period, our revenues increased 5% to $903 million with a 3% increase in per capita guest spending and a $16 million increase in sponsorship, licensing and other fees, which grew from approximately $29 million in the prior year period to over $45 million in the current year period.

The per capita guest spending growth comprised of 1% ticket and 4% in park.

Our nine month attendance increased by 184,000 to 22.2 million.

Again, this performance is despite a reduction in park operating days and over 400,000 less complimentary and free promotional attendance compared to the first nine months of 2007.

Excluding the planned reductions in free and comp tickets, our paid attendance increased over 600,000 for the nine month period.

This attendance growth was driven by our promotional value price ticket attendance, partially offset by our group business.

The impact of weather on our attendance was somewhat mixed for the period.

For the quarter, we experienced weather that was on par with the prior year in terms of number of bad weather days at our parks.

For the nine month period, we experienced 9%, fewer weather days in 2008, with that improvement concentrated in our three Texas parks.

Excluding our Texas parks, we experienced a 7% increase in bad weather for the first nine months of 2008.

With regard to operating cost and expenses, 2008 has certainly been an important year in terms of validating the key elements of our turnaround strategy.

Namely, to generate solid revenue growth, maintain record customer satisfaction scores while at the same time driving efficiencies throughout our cost base and our capital expense programs.

For the quarter, our cash operating costs and expenses, which excludes cost of sales, depreciation amortization, stock based comp and loss on fixed assets, decreased 3% or $7 million to $194 million.

The reduced costs for the quarter were primarily driven by reduced advertising, as well as lower salaries, benefits and seasonal labor.

These reductions were partially offset by higher than anticipated utilities, general liability expenses and cash based incentive compensation.

For the nine month period, our cash operating costs and expenses decreased 7%, or $37 million to $520 million.

Similar to the quarter, the lower cost for the nine month period were driven by planned reductions in advertising, salaries and benefits from lower full time head count and improved seasonal labor management, as well as reduced third party service costs, repairs and maintenance and travel related expenses.

These planned reductions totaling approximately $54 million, were partially offset by higher than anticipated utilities, general liability expenses, cash based incentive comp and the adverse impact of foreign exchange on the non-US parks.

As we continue down the income statement, interest expense decreased by $4 million for the quarter and $14 million on a year-to-date basis.

This reflects lower interest costs due to the prior year refinancing of senior secured credit facility as well as swapping $600 million of our floating rate bank debt to a 3 year fixed rate of approximately 5.3% earlier this year.

Minority interest and earnings for the quarter declined by $5 million, primarily due to our July 2007 acquisition of the minority interest in our Six Flags Discovery Kingdom Park.

Minority interest was flat for the nine months as the benefit of the Discovery Kingdom acquisition was offset by increased distributions related to minority interests in our partnership parks in Texas and Georgia.

During the third quarter, we went from approximately $13 million of other expense in 2007 to $2 million of other income for the current year period.

This reflects the prior year cost of settling a California labor class action lawsuit that originated in 2005.

The first nine months of 2008 benefited from the third quarter change in other income expense as well as a net gain on debt extinguishment of $108 million from the company's June 2008 exchange of new senior unsecured notes that are due in 2016 for a portion of our then outstanding notes.

Our increased revenues and reduced cost base resulted in adjusted EBITDA growth for the quarter of $37 million, or 19% to $236 million.

For the nine months, our adjusted EBITDA increased by $82 million for 44%, from $188 million, to $270 million.

Importantly, our EBITDA margin, which is our EBITDA before adjustments divided by total revenues, improved by 4 percentage points for the third quarter and by 7 percentage points for the nine months, reaching EBITDA margins of 52%, and 34%, respectively.

Our strong performance for the year continued in to the fourth quarter as our park teams leveraged the strength of our Fright Fest product through the Halloween weekend and saw quarter to date revenues increase 9% over the prior year period.

Revenue growth reflects as 7% increase in attendance and a 2% growth in total revenue per capita.

Our attendance for the period was positively impact by the timing of Halloween which fell on Friday this year instead of last year's Wednesday night allowing our parks to extend the Fright Fest season an additional weekend.

On a year-to-date basis through November 4, our attendance is up approximately 320,000, if we exclude the reduction in free and complimentary tickets of approximately 500,000 through that date, our paid attendance increased approximately 800,000 for the period.

With regard to the balance of the year, thanks to strong performance for the first nine months and continuing thus far in the fourth quarter, we are poised to achieve our financial objectives for the year.

To that end, I would like to take a moment are revisit our full year guidance for a few items.

As Mark touched on at the outset with respect to sponsorship and licensing business, we originally targeted $51 million of revenues this year, and we increased guidance last quarter to $56 million.

We're now expecting to reach approximately $59 million for the 2008 year, which compares to approximately $38 million in 2007.

On the cost side, we originally targeted $50 million in cash cost efficiencies for 2008 through reduced marketing lower full time staffing and better seasonal labor management, removal of inefficient rides and attractions and leveraging the Dick Clark Library in lieu of some of our live stage shows.

The good news is that we delivered over $50 million of efficiencies from those initiatives.

Unfortunately, due to higher than anticipated utility costs, general liability and foreign exchange impacts, as well as having to use more cash based incentive compensation rather than stock based, we are going to come up short of our original target.

Excluding cost of sales, we ended the nine month period at $520 million of cash costs and expenses, a $37 million reduction from the 2007 period, and we're looking for Q4 cash costs and expenses to be relatively flat to the prior year at approximately $105 million, notwithstanding increased operating days in the quarter.

With respect to our capital expenditures, net of proceeds from property insurance recoveries, we expect total spending to approximate $95 million for the full year, consistent with annual run rate of approximately $100 million plus or minus $10 million.

Taking the above changes in to account and subject to weather during our Holiday in the Park season, we remain well positioned to not only reach our ultimate goal of positive free cash flow for the first time in the company's history, but also to achieve the other three financial goals that management set out to achieve by the end of its third year.

Specifically, reaching total revenue per capita of $40 with cumulative growth of 20% from 2005, operating at full year EBITDA margins of at least 30% and creating a high margin, low capital sponsorship and licensing business that generates in excess of $50 million in annual revenues.

Regarding our financial position, we're comfortable that we have sufficient cash and liquidity to fund our 2009 off season.

And although our $275 million revolver was paid down to zero at September 30, in early October 2008, we drew down the entire available amount for approximately $240 million, to ensure the availability of funds for the 2009 off season in light of the state of the global credit markets and potential funding concerns related to certain lenders.

Finally, as we all know, the redemption date for our mandatorily redeemable preferred stock or PEERS is August 2009.

And we have approximately $130 million of senior unsecured notes due in February 2010.

As Mark will discuss further in a moment, we intend to proactively address these upcoming obligations in the context of comprehensively addressing the overall balance sheet challenges that we inherited a few years ago, and would certainly hope that the company's significantly improved financial performance can be the catalyst that enables us to achieve that objective.

I'm now going to turn the call back to Mark to wrap up before we open the call for Q&A

Thanks Jeff.

Bear with me, if you will a minute.

I do want to briefly lay out the goals that we set out for this company -- set forth for this company in early spring 2006, just after Jeff came on board.

First off, to get this company to free cash flow positive, which we talk about at nauseum, but it was prime target number one for us.

At $275 million to $280 million, we will be free cash flow positive.

Obtain EBITDA margins of 30% plus -- and really, how we got to 30%, I mentioned several times in this call before, I think Cedar Fair does a terrific job of operating their business and operating their parks, even though their headquarters are in Sandusky as opposed to New York City or Dallas, so their G&A is a lot lower, their EBITDA margins are in the mid-30s, which is nothing to sneeze at.

So it's our goal to obtain adjusted EBITDA margins of 34%.

Again, by hitting that $275 million to $280 million of adjusted EBITDA, we will be at 34% EBITDA margins.

Our third goal was to increase guest spending by an accumulative 20%.

We wanted to get our total revenue per cap, total revenue per guest from approximately $32, which the regime was doing before we came on, to over $40.

Today, at approximately $40.57 through November 4, we have grown our total rev per cap by that 20%.

Goal number four, create a sponsorship division, corporate alliances with a goal of bringing in $50 million by the end of 2008.

Today, as Jeff mentioned, our corporate alliances and licensing division will bring in approximately $60 million, $59.2 million at the end of 2008.

Finally, probably most important because you cannot accomplish the first four goals without the first goal, the one that's paramount to all others, which is clean up the parks.

The clientele, the paint, the pavement, the guest service, you name it.

A total wash if you will.

With our guest satisfaction scores, which we frequently talk about, at or above all time highs across the board, from cleanliness to overall satisfaction to value for the money, we have cleaned up the parks and hit that fifth goal.

We are five for five on the three year turn around of this company, we have turned it around any way you slice it.

It's the best year ever, it's record performance.

The foundation has now been laid for significant long-term growth.

We've diversified our revenue streams, we are simply not just a theme park company anymore.

We've strengthened our brand with acquisitions like Dick Clark Productions.

We are building an international footprint and we've transformed the culture throughout our entire work force.

And we've proven that you can win in this business through marketing and branding and straight up, good old fashioned customer service.

When I walked into the job in December of '05, all I heard was the theme park business is a cap intentive business, and you need $20 million coasters to survive, much less grow.

What we have proven is that is simply not the case.

Now, I say all this not to gloat or beat ourselves on the chest.

Of course we are proud.

But not to be arrogant about it, but simply to acknowledge the hard work of our 3,000 full time employees and 28,000 part time employees.

They believed in the vision, some reluctantly, but they got on board.

Executed on the mission and they kept battling, and they battled today, even in the doldrums of a $0.30 stock.

All that is left for Six Flags is to clean up the balance sheet.

The debt we inherited, and I intend to clean it up once and for all.

We cannot grow in the rate I know we are capable of growing at carrying this amount of debt.

That's simply not a company I'm interested in running, and our hard working employees shouldn't have to suffer under it anymore.

When you look at the management team we've assembled at corporate and at the parks, when you look at this year's record performance in this particular economic climate, when you look at the turnaround overall, especially in the time period in which it was done, only two full seasons, when you look at all that, this company's potential is extraordinary.

Enough is enough.

The company is ready to fire once the noose of the balance sheet is out cut away, and cutting away that constriction is in the best interests of all of our stake holders.

So we are exploring all of our options.

That's all we will say about that today.

At this time, I would like the open it up for questions and answers.

Thank you, ladies and gentlemen, (OPERATOR INSTRUCTIONS) Your first question comes from David Miller of Caris and Company.

Please proceed.

Hey guys, congratulations on the stellar results.

Just a couple of questions.

Jeff, what was the Dick Clark number in the quarter?

If you pronounced that, I apologize in advance, I was on another earnings call.

You guys have said in past announcements that you intend to do anything and everything at your disposal to remain listed on the New York stock exchange.

Other than a reverse stock split, I'm wondering what other alternatives you're exploring.

Thank you.

David, on Dick Clark -- obviously, since it's not a public company, we don't break out its separate results.

What I can say is, I think we had mentioned before that on a LTM basis, it was doing about $16 million, $17 million of EBITDA and we pick up 40% of that over the course of the year.

The third quarter is one of its lighter quarters, because it doesn't have the sort of one of the core programs.

It has the So You Think You Can Dance program running during that quarter.

Next quarter is the AMAs, then you've got New Year's Rockin' Eve in the next quarter and then Golden Globes the next quarter.

So -- and the Academy of Country Music Awards after that.

So the long and short of it is, third quarter is one of the lighter quarters for the pick up, but on a run rate basis, it's about $7 million for the whole year.

So, it's slightly skewed to the other quarters, though.

Then lastly, on the listing, really, it's going to -- we are clearly focused on retaining our listing.

We believe we will be able to retain our listing.

Obviously, in terms of the dollar requirement, reverse split is certainly a mechanical alternative to resolve that particular listing standard, there is another listing standard having to do with $75 million equity market cap.

And as regards to that one, that's going to be a function of what Mark eluded to, basically, it's something that we will address in the context of addressing comprehensively our balance sheet.

Depending on what we do with the balance sheet, David, the listing will take care of itself.

So that would imply, though, that you have something up your sleeves with regard to some sort of balance sheet mechanics sooner rather than later, because -- correct me if I'm wrong, but the six months is coming up fairly soon, correct?

The six months only applies for the dollar stock price, first of all.

The $75 million threshold is up to 18 months period.

And then Jeff, I take it you're not interested in issuing any sort of pronouncements on 2009 at this time?

No, we are right in the midst of our budget planning.

We touched on CapEx, which obviously, that's locked in, and we are looking for that to continue to be consistent with our run rate of $100 million plus or minus $10 million, and probably on the lower side next year.

All I would say on that with regards to next year, is clearly, while no one is immune to this economic environment, we have demonstrated and I belive we'll further demonstrate, that we are resilient to the economic downturn, not immune, but resilient, and I think that's what we said going into the season.

When you look at next year, our season past sales so far this year for next year are strong, which is a good indicator.

We do believe people will continue to stay close to home, if you will, which is also a good indicator.

But at the same time, there is total uncertainty here.

This is something none of us have ever seen before.

Saying that we are bullish about next year would be grossly untrue.

It's a total uncertain time.

We can't forecast it whatsoever.

We are being conservative in our estimates, but I think conservative is going to win the day.

I think that's more realistic these days.

And then of course, a lot of our business is driven by -- or our new revenue streams are driven by our sponsorship, our corporate alliances.

While I like what I see so far for next year, and Lou has a team off and running, at the same time, advertising budgets are being cut everywhere.

I think some of those budgets will end up floating to us, if you will or being directed to us out of home, nontraditional advertisers.

But at the same time, just a lot of uncertainty.

Thanks very much.

Your next question comes from the line of Joe Stauff of CRT Capital.

Please proceed.

Good morning.

A couple of quick questions, please.

Sponsorship revenue $59 million, clearly very a good number.

How do we think about what percentage of that comes up for renewal next year?

I know you mentioned some Middle East interest and some Korean interest, so how do we think about what portion of that, again, could swing in terms of the delta for next year?

Joe, really, you don't think about it.

When we get back on our call or when we have our next call to discuss year end, we will give you some guidance on that.

It's too early right now, we've got a lot of deals in motion.

You can go back to some of our earlier transcripts and see what fell out from '06 to '07, but most of our deals are long-term.

Nevertheless, each year you have some deals coming in and out.

The good news is we don't see Home Depots on the horizon, meaning everything that is coming up for renewal, we anticipate being renewed.

Okay.

Now, you guys obviously give a lot of data points and so forth, and I don't mean to overly simplify -- you know again, sort of your efforts here in terms of what occurred this year, again this year being a success.

But look, at you look at this year's results, outside of weather, was there a significant -- was there a most important sort of variable whether pricing or whatever that really drove your results this year?

Good question, Joe.

I break it down to two things.

People ask me this all the time, in the face of the retail sector going down the drain, how are you guys surviving, much less succeeding and growing?

I break it down two ways, word of mouth is half of it, there's no question.

You can tell everybody until you're blue in the face, I can get on the front page of USA Today in our opening year and say, we are going to turn this in to a family park, we're going to clean it up, et cetera, et cetera, et cetera.

Until you do it and then until people sample it and tell friends and that word of mouth spreads like a virus, you're not going to grow your business.

And it takes a while to do that.

I was asked last year in fact, on one of these calls how long I thought.

I said word of mouth, I thought, would take three to five years.

I think half of our success this year was driven by strong word of mouth about the product.

The other half was clearly driven by our everyone pays kids pricing.

I think our marking team led by Mike Antinoro and Angie Barakas, they blew it out of the water.

They realized early on value was the strong point.

Value was the keyword.

Before you saw it in every commercial and every newspaper.

So we came out with a everyone pays kids price at the end of February last year, in time for spring break.

So Dallas, our Dallas park, or for Andrea, I'll say our Arlington park in Texas opened up in spring break to record crowds, good weather, but actually one day was a washout completely, but pretty much record crowds, and I would say it was driven by an everyone pays kids price.

That value absolutely resonated.

So those two factors, word of mouth about our product ,which clearly is being driven and improved by the terrific array of park presidents we've assembled at each park and the everyone pays kids price value messaging, those two factors drove our business more than anything else.

Thanks a lot.

Appreciate it.

I'm not touching on weather, because of course, that's a no brainer, and you mentioned that up front.

You got to have good weather, you've got to have the weather to play ball.

But as I have often said before, it's a significant factor, but it's one of the many significant factors to driving your business.

Yes, understood.

Thanks again.

Thank you.

Your next question is from Susan Lee of Credit Suisse.

Please proceed.

Hi, good morning, guys.

Good morning.

You guys mentioned that your supporting options on the balance sheet, probably not going to give too much detail on that now, but I just wanted to confirm, what's the availability under the 12.125 noters?

I think the incurrents was about 6.5 times.

Two other questions that I had was on the credit facility.

Can you provide the number you guys fully drew on, and does that also account for the exposure that you guys had?

Lastly, I might have missed it on the call, but do you guys have any further updates on the New Orleans insurance proceeds?

Triple for you, Jeff.

Counted four actually.

Here we go.

Incurrents, the incurrents through the $400 million 2016 notes, it's 6.5 times and in our press release, we note that the leverage ratio under that note were currently at on a LTM basis 5.23 times.

So we basically have a turn and a quarter of capacity there.

Importantly, though, that's a turn and a quarter of EBITDA at that level, so it would exclude our partnership parks, which generally are a reduction from our consolidated EBITDA of around $10 million to $20 million, depending upon the year.

So that's the capacity we have there.

So, call it another $200 plus million.

And then on the revolver, we drew down $240 million, which was the available amount on the revolver.

We drew that down in early October.

The reason -- the total amount is $275 million under the revolver, but we have about $30 odd million that we generally have outstanding on a recurring basis per LCs.

Let's see, there was New Orleans?

Yes.

The update there, nothing new to report.

We are still in the midst of litigation, we're appealing a summary judgment opinion that was handed down earlier in the year.

And really hard to sort of project when that will ultimately come to an end, given we're subject to the (inaudible)of the judicial process.

That was three.

You had one more.

No, that was actually it.

That was it, okay.

Thanks, guys.

Your next question comes from the line of [ZB Ryan] of Zabra Investments.

Please proceed.

Good morning, guys.

Hey, Z.

First, I would like to comment your team on continuing to deliver on the sponsorship side of the business.

Excuse me.

But --

Thank you.

Given your outperformance in '08, do you believe you will hit that $100 million target on the shorter end of your previous three to five year range that you gave previously?

No, you may have answered the question from Joe earlier probably better than I did.

And that's as I mentioned, you can't answer that question and we will give you further guidance as we get to the early part of next year in our next call.

But that's really what it is.

People should stick to the $100 million we guided to and what did we say, three to five years at the beginning of this year.

I don't think we're going to hit it earlier Z, only because I'm not sure yet how next year is going to play out.

I think I'll have more clarity once we get through next year.

So many deals are in flux right now and in motion right now, and advertising dollars, specifically spot market, are moving all over the place, and we think we are going to be able to capture some good advertising during the television up fronts next year as those dramatically change.

So there's just too much in flux right now to make any kind of predictions about hitting our bogie earlier.

But the answer is really, that we are going to stick to the guidance in three to five years to hit $100 million, and this will be the first year completes on that three to five year calendar.

It seemed as if there was a slight acceleration in per guest spending, excluding sponsorships from the mid August update that you gave through the third quarter now.

Was there a discernible change in your guests behavior as gas prices fell during September and October?

No, not at all.

We were really strong all summer long.

The other thing that benefited us, I don't know if Joe is still on the call or not, but we nailed the stimulus package.

We saw the stimulus package was coming, those checks, as you know, are sent out over really a four week period, maybe longer, probably still some stragglers out there, and we knew it was coming and people would have more money.

We didn't think people were going to go spend it immediately like they had during the last recession.

They might put it in a bank, they might use it to pay off bills.

If they were smart, they put the cash under their mattress for today's climate, but maybe going to spend some of it.

In the hopes they would spend some of it, we doubled our advertising spend for four weeks during the economic stimulus distribution, and that paid off for us.

And then when the people came in to the parks on good weather, they stayed long and they spent, and that really helped us out.

The big brand strategy has clearly paid off for us.

And I would tell you as well, Low Cue, which is the company that does our Flash Pass system, they're unbelievable.

They really drove our business, and their numbers were up significantly year-over-year.

In fact, they've been up significantly year-over-year since the year arrived and began to expand the usage of our Flash Pass system in all of our parks.

We had one million more people use the system this year than last year.

And you remember, Flash Passes will get you -- you pay a premium and you get an electronic device that brings you to the front of the line, so you don't have to wait in line.

Because of the positive response we're seeing, we plan to install it in another two parks next year so that nearly every Six Flags park will have the system.

Flash Pass works because it drives revenue in two ways.

One, the premium they pay for the Flash Pass, so the revenue generates that way, and then of course, by not being trapped in line, the guests spend so much more time moving about the park enjoying other facilities, spending and giving us further revenue in those ways.

So that was a big driver of our guest spending this year as well.

And then last question, we've discussed how the emphasized the value package proposition at Six Flags resonated well this year.

But do you plan to adjust that strategy and message further, given a deteriorating economic environment?

In essence, come February, what message are you going to come out with to get ahead of the environment that were similar to what you did in '08?

Value on steroids, more hours, more days, longer days, longer season in every park than ever before.

Not going to get in to what our specific advertising creative is going to be, but we are going to be creative on our pricing.

We're going to be out early in our advertising, we're going to continue to diversify the way we market really on all platforms and through all vehicles and using all tools, specifically, on the digital platform.

But we're going to be offering more than ever before, and that's the message I want to continue to further cement in the minds of our consumers.

Okay.

Appreciate the time, and congratulations, guys.

Next question from the line of Lance Vitanza of Knighthead Capital.

Please proceed.

Thanks guys for taking the call.

I know you mentioned you're not going to say much, but on the balance sheet, you said you're exploring all options.

Did you also say you've hired advisors, or no?

We've said we intend to clean up the balance sheet once and for all and we're exploring all of our options, that's it.

Okay, thanks.

Thank you.

Your next question comes from the line of Joe Galzerano of Babson Capital.

Please proceed.

Good morning.

I just want a little bit of follow up on that last question.

Trying to -- Jeff, I'm trying to figure out the timing of when you're going to address this balance sheet, because obviously, with fantastic results, you still have stock at $0.30 and bonds trading in the 30s -- or high 20s, 30s.

So I would think the faster the better, so I'm just trying to get your sense of what you think the timing is and whether you've spoken to any of the bond holders yet..

Again, to echo Mark's comment, really not going to get into any degree of specifics around timing or exactly what we are thinking the headline is, that it's the last piece of the turn around that we have to address, and we are going to address it proactively.

Okay.

Operator, next question.

Your next question comes from the line [Praveen Jusani] of Barclays Capital.

Please proceed.

Hi, how are you.

It's actually Praveen Jasinga.

My question was with regard to the balance sheet as well, but it just doesn't seem like you're giving specifics.

But more importantly, I'm trying to figure out here, again, obviously, the economy is bad, there's a lot of stress in the consumer side, and it does probably make sense for you to address it prior to the 2Q '09 results, I would think.

Can you give any indication with regard -- at least from that point of view that you agree?

(inaudible) of EBITDA translates at around 6.5, through the mid core level --

We appreciate the advice and we are exploring all of our options as we speak with alacrity.

Alright, thanks guys.

Your next questions comes from the line of Dan Murphy at Atwater Capital, please proceed.

Hi, guys.

Given your new increased cash flow, what is your off season working capital needs now?

Our working capital generally remains relatively constant given our revised CapEx from what we inherited, that we are running at about $100 million of CapEx.

We generally use around $180 million to $200 million, generally speaking of cash need to the low season, which basically gets us up through Memorial Day, that's when we tend to have the highest use of cash and working capital as we are building up inventories and so forth.

So it's around $180 million to $200 million at the low point.

Obviously, to the extent you generate positive cash from the previous season, that reduces the amount you need on the revolver to fund that.

Great, and then what is your ability to repurchase bonds?

How much is that?

Because it was previously 255, I believe you did 92 last year.

Repurchasing bonds?

What is the amount under the credit agreement and your indentures -- the new indentures that allows you to repurchase bonds?

We don't have capacity at this point to repurchase bonds, we had asset sale proceeds that allowed us to repurchase bonds last year.

And then we have a refinancing exception to refinance bonds, because we are north of six times levered up at the our parent company.

We can't incur any additional -- we can't repurchase bonds other than at maturity or refinancing or indebtedness.

Okay, perfect.

Thanks, guys.

Your next question comes from the line of Howard Bryerman of Evergreen Investments.

Please proceed.

I think the last gentlemen just asked my question.

I was curious to know if there were restrictions on the $250 million that was drawn down -- or $240 million that was drawn down on the revolver.

Can that be used for any purposes?

Like I said, yes, it can't be used to buy back debt.

Because we have restricted payment covenants, it's going to be used for working capital to ensure that we have the funds to go through the off season.

Again, our revolver, we had reason to believe it had been traded and participated out to various hedge funds and wanted to ensure, given the lack of transparency related to certain types of investors, that we were going to be able to have the funds and ensure we had the funds through our low season.

That was the purpose.

I see.

Very good.

Thanks a lot, great performance, guys, congratulations.

What's that?

He said thank you.

Alright everyone, thank you for your time today.

Look forward to speaking end of year results.

Ladies and gentlemen, thank you for your participation in today's conference.

This now concludes your call, you may now disconnect, have a great day