AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 3, 1995
REGISTRATION NO. 33-62225
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- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
-------------------
AMENDMENT NO. 2
TO
FORM S-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
-------------------
PREMIER PARKS INC.
TIERCO MARYLAND, INC.
TIERCO WATER PARK, INC.
FRONTIER CITY PROPERTIES, INC.
FRONTIER CITY PARTNERS LIMITED PARTNERSHIP
FUNTIME PARKS, INC.
FUNTIME, INC.
WYANDOT LAKE, INC.
DARIEN LAKE THEME PARK AND CAMPING RESORT, INC.
D.L. HOLDINGS, INC.
(See Footnote (1) Below)
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 7996 73-613374
(State or Other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer
Incorporation or Organization) Classification Code Number) Identification No.)
----------------------------
</TABLE>
<TABLE>
<S> <C>
KIERAN E. BURKE
11501 NORTHEAST EXPRESSWAY 11501 NORTHEAST EXPRESSWAY
OKLAHOMA CITY, OKLAHOMA 73131 OKLAHOMA CITY, OKLAHOMA 73131
(405) 478-2414 (405) 478-2414
(Address, Including Zip Code, and Telephone Number, (Name, Address, Including Zip Code, and
including Area Code of Co-Registrants' Principal Executive Telephone Number,
Offices) including Area Code, of Agent For Service)
</TABLE>
COPY TO:
JAMES M. COUGHLIN, ESQ.
BAER MARKS & UPHAM
805 THIRD AVENUE
NEW YORK, NEW YORK 10022
(212) 702-5700
-------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. X
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / / _________
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
_________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
-------------------
CALCULATION OF REGISTRATION FEE
[CAPTION]
<TABLE>
=============================================================================================================================
TITLE OF EACH PROPOSED MAXIMUM PROPOSED MAXIMUM
CLASS OF SECURITIES AMOUNT TO BE OFFERING PRICE PER AGGREGATE OFFERING AMOUNT OF
TO BE REGISTERED REGISTERED UNIT PRICE REGISTRATION FEE
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<S> <C> <C> <C> <C>
12% Senior Notes due 2003.............. $90,000,000 100% $90,000,000 $31,034.48(2)
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Guarantee of Senior Notes.............. $90,000,000 -- -- --
=============================================================================================================================
</TABLE>
(1)The following direct and indirect subsidiaries of Premier Parks Inc. are
Co-registrants, each of which is incorporated in the state and has the I.R.S.
Employer Identification Number indicated: Tierco Maryland, Inc., a Delaware
corporation (52-1757356); Tierco Water Park, Inc., an Oklahoma corporation
(73-1376642); Frontier City Properties, Inc., an Oklahoma corporation
(73-1244309); Frontier City Partners Limited Partnership, an Oklahoma limited
partnership (73-1350965); Funtime Parks, Inc., an Ohio corporation (34-1570042);
Funtime, Inc., an Ohio corporation (34-0077495); Wyandot Lake, Inc., an Ohio
corporation (31-1083244); Darien Lake Theme Park and Camping Resort, Inc., a New
York corporation (16-0921892); and D.L. Holdings, Inc., an Ohio corporation
(34-1491790).
(2)Previously Paid
-------------------
The Co-Registrants hereby amend this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Co-Registrants
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
this Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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<PAGE>
PROSPECTUS
SUBJECT TO COMPLETION, DATED NOVEMBER 3, 1995
N06933BE.G01,1200,480,H
OFFER FOR ALL OUTSTANDING
12% SENIOR NOTES DUE 2003
IN EXCHANGE FOR
12% SENIOR NOTES DUE 2003
OF
Premier Parks Inc.
Guaranteed By
Tierco Maryland, Inc.
Tierco Water Park, Inc.
Frontier City Properties, Inc.
Frontier City Partners Limited Partnership
Funtime Parks, Inc.
Funtime, Inc.
Wyandot Lake, Inc.
Darien Lake Theme Park and Camping Resort, Inc.
D.L. Holdings, Inc.
Premier Parks Inc. (the "Company") and the Note Guarantors (as hereinafter
defined) hereby offer, upon the terms and subject to the conditions set forth in
this Prospectus and the accompanying Letter of Transmittal (which together
constitute the "Exchange Offer"), to exchange $1,000 principal amount of
registered 12% Senior Notes Due 2003 (the "New Notes") issued by the Company for
each $1,000 principal amount of unregistered 12% Senior Notes Due 2003 (the "Old
Notes") issued by the Company, of which an aggregate principal amount of
$90,000,000 is outstanding. The form and terms of the New Notes are identical to
the form and terms of the Old Notes except that the New Notes have been
registered under the Securities Act of 1933, as amended (the "Securities Act"),
and will not bear any legends restricting their transfer. The New Notes will
evidence the same debt as the Old Notes and will be issued pursuant to, and
entitled to the benefits of, the Indenture governing the Old Notes. The Exchange
Offer is being made in order to satisfy certain contractual obligations of the
Company and the Note Guarantors. See "The Exchange Offer" and "Description of
the New Notes." The New Notes and the Old Notes are sometimes collectively
referred to herein as the "Notes".
---------------------------------------------
SEE "RISK FACTORS" STARTING ON PAGE 16 FOR A DISCUSSION OF CERTAIN RISKS
ASSOCIATED WITH AN INVESTMENT IN THE NEW NOTES.
---------------------------------------------
Interest on the New Notes will be payable semi-annually on August 15 and
February 15 of each year, commencing on February 15, 1996. The New Notes will
mature on August 15, 2003. Except as described below, the Company may not redeem
the New Notes prior to August 15, 1999. On or after such date, the Company may
redeem the New Notes, in whole or in part, at the redemption prices set forth
herein, together with accrued and unpaid interest, if any, to the date of
redemption. In addition, at any time on or prior to August 15, 1998, the Company
may, subject to certain requirements, redeem up to 33 1/3% of the original
aggregate principal amount of the New Notes with the Net Cash Proceeds of one or
more Public Equity Offerings by the Company following which there is a Public
Market, at a price equal to 110% of the principal amount to be redeemed,
together with accrued and unpaid interest, if any, provided that at least 66
2/3% of the original aggregate principal amount of the New Notes remain
outstanding immediately after each such redemption. The New Notes will not be
subject to any sinking fund requirement. Upon the occurrence of a Change of
Control, the Company will be required to make an offer to repurchase the New
Notes at a price equal to 101% of the principal amount thereof, together with
accrued and unpaid interest, if any, to the date of repurchase. See
"Summary--The Offering--Change of Control" and "Description of the New
Notes--Change of Control."
The New Notes will be unsecured obligations of the Company and will be
effectively subordinated to all existing and future secured indebtedness of the
Company and its subsidiaries to the extent of the value of the assets securing
such indebtedness. The New Notes will rank pari passu in right of payment with
all other Senior Indebtedness of the Company and will rank senior in right of
payment to any Subordinated Obligations of the Company. The New Notes will be
guaranteed on a senior, unsecured basis by the Company's principal operating
subsidiaries. The Indenture permits the Company to incur additional
indebtedness, including secured Senior Indebtedness under its $20.0 million
Senior Credit Facility, subject to certain limitations. See "Description of the
New Notes." The net proceeds from the sale of the Old Notes were used to acquire
all of the capital stock (the "Merger") of Funtime Parks, Inc. ("Funtime"). See
"The Merger". At June 30, 1995, on a pro forma basis after giving effect to the
issuance of the Old Notes and the consummation of transactions described herein,
the aggregate amount of Senior Indebtedness of the Company and its subsidiaries
would have been approximately $91.8 million, of which $1.8 million would have
been secured indebtedness, and the Company would have had unused commitments of
$20.0 million under the Senior Credit Facility.
---------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
---------------------------------------------
The Company and the Note Guarantors will accept for exchange any and all Old
Notes validly tendered and not withdrawn prior to 5:00 p.m., New York City time,
on , 1995, unless extended (as so extended, the "Expiration Date").
Tenders of Old Notes may be withdrawn at any time prior to the Expiration Date.
The Exchange Offer is subject to certain customary conditions. See "The Exchange
Offer."
Each broker-dealer that receives New Notes for its own account pursuant to the
Exchange Offer must acknowledge that it will deliver a prospectus in connection
with any resale of those New Notes. The letter of transmittal accompanying this
Prospectus (the "Letter of Transmittal") states that by so acknowledging and by
delivering a prospectus, a broker-dealer will not be deemed to admit that it is
an "underwriter" within the meaning of the Securities Act. This Prospectus, as
it may be amended or supplemented from time to time, may be used by a
broker-dealer in connection with resales of New Notes received in exchange for
Old Notes where such Old Notes were acquired by such broker-dealer as a result
of market-making activities or other trading activities. The Company and the
Note Guarantors have agreed, for a period of 90 days after the Expiration Date,
to make this Prospectus available to any broker-dealer for use in connection
with any such resale. See "Plan of Distribution."
No public market has existed for the Old Notes before the Exchange Offer. The
Company and the Note Guarantors currently do not intend to list the New Notes on
any securities exchange or to seek approval for quotation through any automated
quotation system, and no active public market for the New Notes is currently
anticipated. The Company and the Note Guarantors will pay all the expenses
incident to the Exchange Offer.
The Exchange Offer is not conditioned upon any minimum principal amount of Old
Notes being tendered for exchange pursuant to the Exchange Offer.
THE DATE OF THIS PROSPECTUS IS , 1995
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY STATE.
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational reporting requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in
accordance therewith, files reports and other information with the Securities
and Exchange Commission (the "Commission"). Such reports and other information
can be inspected and copied at the principal office of the Commission at
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and the
following Regional Offices of the Commission: Chicago regional Office,
Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60611 and New York Regional Office, 7 World Trade Center, 13th Floor,
New York, New York 10048. Copies of such material may also be obtained at
prescribed rates from the Public Reference Section of the Commission at its
principal office at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C.
20549.
-------------------
The Company and the Note Guarantors have filed with the Commission a
Registration Statement (which term shall encompass any amendments thereto) on
Form S-1 under the Securities Act with respect to the securities offered hereby.
This Prospectus does not contain all information set forth in the Registration
Statement and the exhibits thereto, to which reference is hereby made.
Statements made in this Prospectus as to the contents of any contract, agreement
or other document are not necessarily complete. With respect to each such
contract, agreement or other document filed as an exhibit to the Registration
Statement, reference is hereby made to such exhibit for a more complete
description of the matter involved, and each such statement shall be deemed
qualified in its entirety by such reference.
-------------------
The Company will furnish holders of the securities offered hereby with
annual reports containing, among other information, audited financial statements
certified by an independent public accounting firm and quarterly reports
containing unaudited financial information for the first three quarters of each
fiscal year. The Company will also furnish such other reports as it may
determine or as may be required by law or by the Indenture.
-------------------
Except as provided below, the New Notes will be available initially only in
book-entry form. The Company expects that, except as provided below, the New
Notes sold pursuant hereto will be issued in the form of one fully registered
global note (the "Global Note"). The Global Note will be deposited with, or on
behalf of, The Depositary Trust Company (the "Depositary" or "DTC") and
registered in its name or in the name of Cede & Co., its nominee. Beneficial
interests in the Global Note representing the New Notes will be shown on, and
transfers thereof will be effected only through, records maintained by the
Depositary and its participants. After the initial issuance of the Global Note,
New Notes in certificated form will be issued in exchange for the Global Note
only as set forth in the Indenture.
2
<PAGE>
SUMMARY
The following summary information is qualified in its entirety by and should
be read in conjunction with the more detailed information and financial
statements (including the notes thereto) appearing elsewhere in this Prospectus.
As used in this Prospectus, unless the context requires otherwise, all
references to (i) "Premier" mean Premier Parks Inc. and its subsidiaries prior
to the acquisition of Funtime by Premier (the "Merger") on August 15, 1995; (ii)
"Funtime" mean Funtime Parks, Inc. and its subsidiaries; and (iii) the "Company"
mean the combined businesses of Premier and Funtime giving effect to the
consummation of the Merger.
THE COMPANY
The Company is a leading theme park operator which operates six parks with
an aggregate 1994 attendance of approximately four million. The Company's parks
are regional parks, drawing on average approximately 88% of their patrons from
within a 100-mile radius. The parks are located in five geographically diverse
markets: Washington, D.C./Baltimore; Buffalo/Rochester; Cleveland; Columbus; and
Oklahoma City. The parks are designed to provide a complete family-oriented
entertainment experience, and feature a broad selection of state-of-the-art and
traditional thrill rides, water attractions, themed areas, concerts and shows,
restaurants, game venues and merchandise outlets. For the twelve months ended
June 30, 1995, the Company's total revenue on a pro forma basis was
approximately $77.6 million.
Each of the Company's parks is located in a highly populated market where
there is limited direct competition. The Company believes that the combination
of the limited supply of real estate appropriate for theme park development,
high initial capital investment, long developmental lead-time, and zoning
restrictions provides each of its parks a significant degree of protection from
new competitive theme park openings. Based on its knowledge of the development
of other theme parks in the United States, the Company's management estimates
that it would cost at least $100 million and would take a minimum of two years
to construct a new regional theme park.
The Company believes that the geographic diversity of its parks limits its
exposure to local economic downturns and unfavorable weather conditions. In
addition, the Company believes that as a multi-park operator it benefits from
numerous competitive advantages over single-park operators, including the
ability to (i) exercise group purchasing power (for both operating and capital
assets); (ii) achieve administrative economies of scale; (iii) attract greater
sponsorship revenue and support from sponsors with nationally recognized brands;
(iv) recruit and retain superior management personnel; and (v) optimize the use
of its capital assets by rotating rides among its parks to provide fresh
attractions at each park.
The Company operates six parks: Adventure World, a combination theme and
water park located three miles off the Beltway, between Washington, D.C. (15
miles away) and Baltimore, Maryland (30 miles away); Frontier City, a western
themed park in Oklahoma City, Oklahoma; White Water Bay, a tropical themed water
park also located in Oklahoma City; Geauga Lake, a combination theme and water
park near Cleveland, Ohio; Darien Lake & Camping Resort, a combination theme and
water park with an adjacent camping resort, located between Buffalo and
Rochester, New York; and Wyandot Lake, a water park which also includes "dry"
rides and other attractions, located adjacent to the Columbus Zoo in Columbus,
Ohio.
BUSINESS STRATEGY
The Company's senior management team has extensive experience in the theme
park industry and believes it has a proven track record in acquiring and
re-positioning regional parks and in operating its parks efficiently. Since
senior management assumed control in 1989, Premier has
3
<PAGE>
followed a strategy of selectively acquiring undermanaged parks which had lacked
capital investment and marketing expertise. The Company's operating strategy is
to increase revenue through attendance and per capita spending gains, while
maintaining strict control of operating expenses in order to benefit from the
substantial operating leverage inherent in the theme park business. The primary
elements of this strategy include (i) adding rides and attractions and improving
overall park quality; (ii) enhancing marketing, sponsorship and group sales
programs; and (iii) generating higher ticket revenues and in-park spending.
Management believes it has successfully demonstrated the effectiveness of its
strategy at the Premier parks and plans to implement this strategy at the
Funtime parks. Management believes that while the Funtime parks have generated
strong and stable cash flows over the last five years, they lacked the sustained
capital investment and creative marketing required to realize their full
potential. In addition, the Company will continue to evaluate potential
acquisitions of additional regional theme parks.
ADD RIDES AND ATTRACTIONS AND IMPROVE PARK QUALITY. Over the past several
years, the Company has made significant investments in Frontier City and
Adventure World which, together with enhanced marketing, sales and sponsorship
programs, have resulted in significant improvements in attendance, revenue and
earnings before interest, taxes, depreciation and amortization ("EBITDA") at
these parks.
Frontier City--In 1990 and 1991, an aggregate of approximately $7.0 million
was invested in Frontier City to add several major rides, expand and improve the
children's area, significantly increase the size of and theme the group picnic
facilities and construct a 12,000 square foot air-conditioned mall and main
events center. These additions, combined with an aggressive marketing strategy,
resulted in Frontier City's attendance, revenue and EBITDA increasing
approximately 54%, 83%, and 124%, respectively, from 1989 to 1991.
Adventure World--Since acquiring Adventure World in January 1992, the
Company invested over $15.0 million in the park through 1994 to add numerous
rides and attractions and to improve theming. These additions and improvements,
combined with an aggressive and creative marketing strategy, enabled the Company
to increase Adventure World's attendance by 72%, from approximately 363,000 in
1992 to over 625,000 in 1994, to more than double park revenue from $6.1 million
in 1992 to $12.7 million in 1994, and to increase EBITDA from a deficit of
($410,000) to $2.1 million during the same period. As a result of these
improvements, Adventure World has been voted the "Most Improved Park" in the
country in each of the last three years, according to Inside Track Magazine, a
recognized industry periodical. In 1995, the Company added the Mind Eraser, a
$6.6 million state-of-the-art suspended steel looping roller coaster. Based on
information provided by the ride's manufacturer and obtained from other theme
park companies, management believes that the addition of this type of ride at
other regional parks with similar demographic characteristics has resulted in
annual attendance gains in the range of 100,000 to 200,000. The Company expects
to recognize similar gains at Adventure World in 1995. Moreover, the addition of
this ride has allowed the Company to increase ticket prices at Adventure World
for the 1995 season and to realize in-park spending gains.
The Company expects to spend approximately $21.5 million from the proceeds
of the Transactions described below to add rides and attractions and make other
improvements at its parks for the 1996 season. Approximately $4.0 million of
this capital is expected to be invested in Adventure World to continue
penetrating the densely populated Washington, D.C./Baltimore market
(approximately 6.5 million and 10.9 million people within 50 and 100 miles,
respectively). Given the size of this market, standard levels of market
penetration in the industry, the performance of similarly situated parks and
attendance gains achieved at the park to date, management believes that
Adventure World has the potential to reach annual attendance levels in excess of
1.5 million within the next five years. The balance of the capital will
primarily be used to add rides and attractions at the Funtime parks. Based on
industry experience and the Company's experience at the Premier parks, the
Company believes that these efforts, together with aggressive and creative
marketing programs, will increase attendance and per capita spending at each of
the Funtime parks.
4
<PAGE>
ENHANCE MARKETING, SPONSORSHIP AND GROUP SALES PROGRAMS. Premier's parks
have benefitted from professional, creative marketing programs which emphasize
the marketable rides and attractions, breadth of available entertainment and
value provided by each park. The Company's marketing programs have a local
orientation, which the Company believes is a key ingredient to successful
marketing for regional theme parks. For example, Cal Ripken, Jr., the all-star
shortstop for the Baltimore Orioles, serves as official spokesperson for
Adventure World, making numerous appearances in radio and television
commercials, and Olympic gymnast Shannon Miller, an Oklahoma City resident, has
opened rides at White Water Bay. Management intends to implement similar
marketing programs to promote the planned capital improvements at the Funtime
parks.
The Company has also successfully attracted well known sponsorship and
promotional partners, such as Pepsi, McDonald's, Taco Bell, Blockbuster, 7
Eleven, Wendy's and various supermarket chains. The Company believes that its
increased number of parks and annual attendance resulting from the Merger will
enable it to expand and enhance its sponsorship and promotional programs. In
addition, group sales and pre-sold tickets provide the Company with a consistent
and stable base of attendance, representing over 40% of aggregate attendance in
1994. Premier has increased its group sales and pre-sold ticket business by
approximately 65.3% from 1992 to 1994. The Company believes that it has the
opportunity to continue to expand its group sales and pre-sold ticket business.
GENERATE HIGHER TICKET REVENUES AND IN-PARK SPENDING. Management regularly
reviews its ticket price levels and ticket category mix in order to capitalize
on opportunities to implement selective price increases, both through main gate
price increases and the reduction in the number and types of discounts.
Management believes that opportunities exist to implement marginal ticket price
increases without significant reductions in attendance levels. Such increases
have successfully been implemented on a park-by-park basis in connection with
the introduction of major new attractions or rides. In addition, discounts are
typically offered on weekdays and evenings to encourage attendance at less
popular times. As a result of these measures, the average ticket price per paid
visitor at the Premier parks increased 10.2% from 1992 to 1994. The Company
believes that through similar measures it will be able to increase the average
ticket price per paid visitor at the Funtime parks.
The Company also seeks to increase in-park spending by adding well-themed
restaurants, remodeling and updating existing restaurants and adding new
merchandise outlets. The Company has successfully increased spending on food and
beverage by introducing well-recognized local and national brands, such as
Domino's, Friendly's, TCBY and KFC. Finally, the Company has taken steps to
decrease the waiting time for its most popular restaurants and merchandise
outlets. As a result of these measures, average in-park spending per visitor at
the Premier parks increased 14.3% from 1992 to 1994. The Company believes that
through similar measures it will be able to increase average in-park spending
per visitor at the Funtime parks.
The Company has also developed a variety of off-season special events
designed to increase attendance and revenue prior to Memorial Day and after
Labor Day. Examples include Hallowscream, a Halloween event in which parks are
transformed with supernatural theming, scary rides and haunting shows, and
Octoberfest, the presentation of traditional German food, theming, music and
entertainment. Over the last several years, Frontier City has drawn over 25,000
visitors to each of its Octoberfest and Hallowscream events. In 1994, over
50,000 visitors attended Hallowscream at Adventure World. Management intends to
introduce these types of events to the Funtime parks and believes they will have
a similar impact on attendance.
5
<PAGE>
EVALUATE POTENTIAL ACQUISITIONS. The theme park industry is highly
fragmented and comprised of a large number of single-park operators. Management
believes that potential acquisition opportunities will arise and intends to
evaluate selective acquisitions that complement its existing operations and fit
within its targeted level of attendance of up to two million annually. The
Company believes that its increased size resulting from the Merger will enhance
its ability to make park acquisitions for stock. The Company expects to
generally be able to eliminate duplicative overhead expenses and recognize other
economies of scale in connection with such acquisitions. For example, the
Funtime acquisition was achieved at a purchase price multiple of approximately
4.1x Funtime's 1994 EBITDA, adjusted by approximately $2.5 million for the
elimination of corporate overhead, non-recurring park operating expense savings
and increases in revenue it expects to achieve after the Merger as well as
$261,000 of non-recurring corporate expenses.
THE MERGER
Pursuant to an Agreement and Plan of Merger dated as of June 30, 1995 (the
"Merger Agreement"), on August 15, 1995, Premier acquired by merger (the
"Merger") all of the capital stock of Funtime from its current shareholders (the
"Selling Shareholders") for approximately $60.0 million (subject to post-closing
adjustment), which amount includes the repayment in full of all principal and
accrued interest of Funtime's indebtedness ($37.1 million). The Merger Agreement
provides that the Selling Shareholders will receive substantially all of
Funtime's net operating cash flow for the 1995 season through September 30,
1995. See "The Merger."
On August 15, 1995, the Company also consummated a series of related
transactions (collectively, with the Merger, the "Transactions"):
1. The Company issued $90.0 million principal amount of Old Notes.
2. The Company issued to certain of Premier's stockholders, their affiliates
and others in a private placement (the "Convertible Preferred Stock Offering"),
200,000 shares of its Series A 7% Cumulative Convertible Preferred Stock (the
"Convertible Preferred Stock") for an aggregate purchase price of $20.0 million.
See "Capital Structure--Convertible Preferred Stock."
3. Premier's $7.0 million aggregate principal amount of 9.5% Convertible
Subordinated Notes (the "Convertible Notes") and $2.1 million aggregate
principal amount of 8% Junior Subordinated Notes (the "Junior Notes") were
converted (the "Existing Note Conversion") into its common stock (the "Common
Stock").
4. The Company repaid in full all of Premier's indebtedness ($16.1 million)
under its then existing bank facilities and mortgage loans (the "Existing Bank
Debt").
5. The Company entered into a three-year, $20.0 million senior revolving
credit facility (the "Senior Credit Facility"). Borrowings under the Senior
Credit Facility will be secured by substantially all of the Company's assets
(other than real estate) and will be required to be repaid in full for at least
45 consecutive days during the period from July 1 to November 1 of each year.
6
<PAGE>
The following table sets forth a summary of the sources and uses of funds
associated with the Transactions.
<TABLE>
<CAPTION>
SOURCES AMOUNT
------- ------
(DOLLARS IN THOUSANDS)
<S> <C>
Old Notes Offering(1)................................. $ 90,000
Convertible Preferred Stock Offering(1)............... 20,000
Issuance of Common Stock in Existing Note Conversion.. 9,100
----------
Total........................................... $119,100
----------
----------
</TABLE>
<TABLE>
<CAPTION>
USES
----
<S> <C>
Acquisition of Funtime................................ $ 52,700(2)
Repayment of Premier's Existing Bank Debt............. 16,100
Extinguishment of debt in Existing Note Conversion.... 9,100
Prefunding of capital expenditures(3)................. 21,500
Other cash(4)......................................... 13,700
Transaction expenses.................................. 6,000
----------
Total........................................... $119,100
----------
----------
</TABLE>
- ------------
(1) Reflects gross proceeds.
(2) Reflects the net cash amount to be paid by Premier in the Merger, excluding
(i) the aggregate of $5.3 million described in note 4 below which was
deposited into escrow or paid or retained by the Company, and (ii) an
estimated $2.0 million of post-closing adjustments described under the
caption "The Merger."
(3) See "Management's Discussion and Analysis of Financial Condition and Results
of Operations--Liquidity, Capital Commitments and Resources" and
"Business--Capital Improvements."
(4) Consists of (i) $8.4 million to be utilized for general corporate purposes,
(ii) $2.5 million deposited into an escrow account to cover indemnification
claims which may arise after the closing of the Merger, and (iii) $2.8
million paid or retained by the Company out of the Merger consideration to
fund specified liabilities of Funtime. See "The Merger."
7
<PAGE>
THE EXCHANGE OFFER
The Exchange Offer applies to $90.0 million aggregate principal amount of
the Old Notes. The form and terms of the New Notes are the same as the form and
terms of the Old Notes except that the New Notes have been registered under the
Securities Act and, therefore, will not bear legends restricting their transfer.
The New Notes will evidence the same debt as the Old Notes and will be entitled
to the benefits of the Indenture pursuant to which the Old Notes were issued.
The Old Notes and the New Notes are sometimes referred to collectively herein as
the "Notes." See "Description of The New Notes."
<TABLE>
<S> <C>
The Exchange Offer........... $1,000 principal amount of New Notes in exchange for each
$1,000 principal amount of Old Notes. As of the date hereof,
Old Notes representing $90.0 million aggregate principal
amount are outstanding. The terms of the New Notes and the
Old Notes are identical except that the New Notes have been
registered under the Securities Act and will not bear any
legends restricting their transfer.
Based on an interpretation by the Commission's staff set
forth in no-action letters issued to third parties unrelated
to the Company and the Note Guarantors, the Company and the
Note Guarantors believe that New Notes issued pursuant to
the Exchange Offer in exchange for Old Notes may be offered
for resale, resold and otherwise transferred by any person
receiving the New Notes, whether or not that person is the
holder of the Old Notes (other than any such holder or such
other person that is an "affiliate" of the Company or any
Note Guarantor within the meaning of Rule 405 under the
Securities Act), without compliance with the registration
and prospectus delivery provisions of the Securities Act,
provided that (i) the New Notes are acquired in the ordinary
course of business of that holder or such other person, (ii)
neither the holder nor such other person is engaging in or
intends to engage in a distribution of the New Notes, and
(iii) neither the holder nor such other person has an
arrangement or understanding with any person to participate
in the distribution of the New Notes. See "The Exchange
Offer--Purpose and Effect." Each broker-dealer that receives
New Notes for its own account in exchange for Old Notes,
where those Old Notes were acquired by the broker-dealer as
a result of its market-making activities or other trading
activities, must acknowledge that it will deliver a
prospectus in connection with any resale of those New Notes.
See "Plan of Distribution."
Registration Rights.......... The Old Notes were sold by the Company on August 15, 1995,
Agreement in a private placement. In connection with the sale, the
Company and the Note Guarantors entered into an Exchange and
Registration Rights Agreement with the purchasers (the
"Registration Rights Agreement") providing for the Exchange
Offer. See "The Exchange Offer--Purpose and Effect."
Expiration Date.............. The Exchange Offer will expire at 5:00 p.m., New York City
time, on , 1995, or such later date and time to
which it is extended (the "Expiration Date"). See "The
Exchange Offer-- Expiration Date; Extensions; Amendments."
Withdrawal................... The tender of Old Notes pursuant to the Exchange Offer may
be withdrawn at any time prior to 5:00 p.m., New York City
time, on the Expiration Date. Any Old Notes not accepted for
exchange for any reason will be returned without expense to
the tendering holder thereof as promptly as practicable
after the expiration or termination of the Exchange Offer.
See "The Exchange Offer-- Withdrawal Rights."
</TABLE>
8
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<S> <C>
Interest on the New Notes.... Interest on each New Note will accrue from the date of
and Old Notes issuance of the Old Note for which the New Note is exchanged
or from the date of the last periodic payment of interest on
such Old Note, whichever is later.
Conditions to the Exchange... The Exchange Offer is subject to certain customary
Offer conditions, certain of which may be waived by the Company.
See "The Exchange Offer--Conditions to the Exchange Offer."
Procedures for Tendering..... Each holder of Old Notes wishing to accept the Exchange
Old Notes Offer must complete, sign (together with any required
signature guarantees) and date the Letter of Transmittal, or
a copy thereof, in accordance with the instructions
contained herein and therein, and mail or otherwise deliver
the Letter of Transmittal, or the copy, together with the
Old Notes and any other required documentation, to the
Exchange Agent at the address set forth herein. Persons
holding Old Notes through DTC and wishing to accept the
Exchange Offer must do so pursuant to the DTC's Automated
Tender Offer Program, by which each tendering participant
will agree to be bound by the Letter of Transmittal. By
executing or agreeing to be bound by the Letter of
Transmittal, each holder will represent to the Company and
the Note Guarantors that, among other things, (i) the New
Notes acquired pursuant to the Exchange Offer are being
obtained in the ordinary course of business of the person
receiving such New Notes, whether or not such person is the
holder of the Old Notes, (ii) neither the holder nor any
such other person is engaging in or intends to engage in a
distribution of such New Notes, (iii) neither the holder nor
any such other person has an arrangement or understanding
with any person to participate in the distribution of such
New Notes, and (iv) neither the holder nor any such other
person is an "affiliate," as defined under Rule 405
promulgated under the Securities Act, of the Company or any
Note Guarantors. Pursuant to the Registration Rights
Agreement, the Company and the Note Guarantors are required
to file a "shelf" registration statement for a continuous
offering pursuant to Rule 415 under the Securities Act in
respect of the Old Notes if (i) existing Commission
interpretations are changed such that the New Notes received
by holders in the Exchange Offer are not or would not be,
upon receipt, transferable by each such holder (other than
an affiliate of the Company or any Note Guarantor) without
restriction under the Securities Act, or (ii) any holder of
Old Notes either (a) is not eligible to participate in the
Exchange Offer, or (b) participates in the Exchange Offer
and does not receive freely transferrable New Notes in
exchange for Old Notes (in each case under this clause (ii)
other than as a result of applicable Commission
interpretations or laws in effect on the original issue date
of the Old Notes). See "The Exchange Offer--Purpose and
Effect."
Acceptance of Old Note....... The Company and the Note Guarantors will accept for exchange
and Delivery of New Notes any and all Old Notes which are properly tendered in the
Exchange Offer prior to 5:00 p.m., New York City time, on
the Expiration Date. The New Notes issued pursuant to the
Exchange Offer will be delivered promptly following the
Expiration Date. See "The Exchange Offer--Terms of the
Exchange Offer."
Special Procedures for....... Any beneficial holder whose Old Notes are registered in the
Beneficial Holders name of his broker, dealer, commercial bank, trust company
or other nominee and who wishes to tender in the Exchange
Offer should contact such registered holder promptly and
instruct such registered holder to tender on his behalf. For
this purpose, a registered holder shall be deemed to include
DTC participants listed on a DTC security position listing.
If such beneficial holder
</TABLE>
9
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<TABLE>
<S> <C>
wishes to tender on his own behalf, such beneficial holder
must, prior to completing and executing the Letter of
Transmittal and delivering his Old Notes, either make
appropriate arrangements to register ownership of the Old
Notes in such holder's name or obtain a properly completed
bond power from the registered holder. The transfer of
record ownership may take considerable time. See "The
Exchange Offer--Procedures for Tendering."
Guaranteed Delivery.......... Holders of Old Notes who wish to tender their Old Notes and
Procedures whose Old Notes are not immediately available or who cannot
deliver their Old Notes and a properly completed Letter of
Transmittal or any other documents required by the Letter of
Transmittal to the Exchange Agent prior to the Expiration
Date may tender their Old Notes according to the guaranteed
delivery procedures set forth in "The Exchange
Offer--Guaranteed Delivery Procedures."
Exchange Agent............... United States Trust Company of New York is serving as
Exchange Agent in connection with the Exchange Offer. The
mailing address of the Exchange Agent is P.O. Box 844 Peter
Cooper Station, New York, N.Y. 10276-0843. Attention:
Corporate Trust Operations. Deliveries by overnight courier
should be sent to 770 Broadway, New York, N.Y. 10003 Attn:
Corporate Trust Operations. By-hand deliveries should be
addressed to 65 Beaver Street, New York, NY 10005 Attn:
Ground Level, Corporate Trust Operations. For information
with respect to the Exchange Offer, call Customer Service of
the Exchange Agent at (800) 548 6565; Fax (212) 420 6152.
Federal Income Tax........... The exchange pursuant to the Exchange Offer should not be a
Consideration taxable event for federal income tax purposes. See "Federal
Income Tax Considerations."
Effect of Not Tendering...... Old Notes that are not tendered or that are tendered but not
accepted will, following the completion of the Exchange
Offer, continue to be subject to the existing restrictions
upon transfer thereof. Except in limited circumstances, the
Company and the Note Guarantors will have no further
obligations to provide for the registration under the
Securities Act of such Old Notes.
</TABLE>
THE OFFERING
<TABLE>
<S> <C>
Issuer....................... Premier Parks Inc.
Holding Company Structure.... Premier Parks Inc. is a holding company which derives
substantially all of its operating income from its principal
subsidiaries (the "Note Guarantors").
Securities Offered........... $90,000,000 aggregate principal amount of 12% Senior Notes
due 2003 (the "New Notes").
Maturity..................... August 15, 2003.
Interest Payment Dates....... August 15 and February 15 of each year, commencing on
February 15, 1996.
Optional Redemption.......... Except as described below, the Company may not redeem the
New Notes prior to August 15, 1999. On or after such date,
the Company may redeem the New Notes, in whole or in part,
at the redemption prices set forth herein, together with
accrued and unpaid interest, if any, to the date of
redemption. In addition, at any time on or prior to August
15, 1998, the Company may redeem up to 33 1/3% of the
original aggregate principal amount of the New Notes with
the Net Cash Proceeds of one or more Public Equity Offerings
by the Company following which there is a Public Market, at
a price equal to 110% of the principal amount to be
redeemed, together with accrued and unpaid interest, if any,
</TABLE>
10
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<TABLE>
<S> <C>
provided that at least 66 2/3% of the original aggregate
principal amount of the Notes remain outstanding immediately
after each such redemption.
Change of Control............ Upon a Change of Control, the Company will be required to
make an offer to repurchase the New Notes at a price equal
to 101% of the principal amount thereof, together with
accrued and unpaid interest, if any, to the date of
repurchase. See "Description of the New Notes--Change of
Control."
Note Guarantees.............. The New Notes will be guaranteed on a senior, unsecured
basis (each such guarantee being a "Note Guarantee") by the
Note Guarantors. See "Description of the New Notes--Note
Guarantees" and "--Certain Covenants--Future Note
Guarantors."
Ranking...................... The New Notes will be unsecured obligations of the Company
and will be effectively subordinated to all existing and
future secured indebtedness of the Company and its
subsidiaries to the extent of the value of the assets
securing such indebtedness. The New Notes will rank pari
passu in right of payment with all other Senior Indebtedness
of the Company (including the Old Notes) and will rank
senior in right of payment to all existing and future
Subordinated Obligations of the Company. At June 30, 1995,
on a pro forma basis after giving effect to the
Transactions, the aggregate amount of Senior Indebtedness of
the Company and its subsidiaries would have been
approximately $91.8 million, of which $1.8 million would
have been secured indebtedness, and the Company would have
had unused commitments of $20.0 million under the Senior
Credit Facility. See "Description of the New
Notes--Ranking."
Restrictive Covenants........ The Indenture under which the New Notes will be issued (the
"Indenture") limits (i) the incurrence of additional
indebtedness by the Company and its subsidiaries, (ii) the
payment of dividends on, and redemption of, capital stock of
the Company and the redemption of certain Subordinated
Obligations of the Company, (iii) other restricted payments,
(iv) sales of assets and subsidiary stock, (v) transactions
with affiliates, (vi) the creation of liens, (vii) the sale
or issuance of capital stock of certain subsidiaries and
(viii) consolidations, mergers and transfers of all or
substantially all of the assets of the Company. The
Indenture also prohibits certain restrictions on
distributions from subsidiaries. However, all of these
limitations and prohibitions are subject to a number of
important qualifications and exceptions. See "Description of
the New Notes--Certain Covenants."
Use of Proceeds.............. There will be no cash proceeds to the Company from the
issuance of the New Notes pursuant to the Exchange Offer.
See "Use of Proceeds" for a description of the use of the
proceeds of the Old Notes.
</TABLE>
RISK FACTORS
Prospective investors should carefully consider all of the information set
forth in this Prospectus and, in particular, should evaluate the specific
factors set forth under "Risk Factors" for risks involved in an investment in
the Notes.
11
<PAGE>
SUMMARY PRO FORMA FINANCIAL DATA
The pro forma operating data of the Company for the year ended December 31,
1994 and the six months ended June 30, 1995 shown below give effect to the
Transactions as if they had occurred on January 1, 1994 and January 1, 1995,
respectively. The pro forma balance sheet data at June 30, 1995 give effect to
the Transactions as if they had occurred on such date. The pro forma financial
data is not necessarily indicative of either the future results of operations or
the results of operations that would have occurred if the Transactions had been
consummated on the indicated dates. The following information should be read in
conjunction with the consolidated financial statements, and the related notes,
of both Premier and Funtime and "Management's Discussion and Analysis of
Financial Condition and Results of Operations" included elsewhere in this
Prospectus. The Company's operations are highly seasonal, with the bulk of the
operating season occurring during the period from Memorial Day through Labor
Day. Substantially all revenue is generated in the second and third quarters.
<TABLE>
<CAPTION>
PRO FORMA PRO FORMA
YEAR ENDED SIX MONTHS
DECEMBER 31, ENDED JUNE 30,
------------ --------------
1994 1995
---- ----
(DOLLARS AND ATTENDANCE IN
THOUSANDS)
<S> <C> <C>
STATEMENT OF OPERATIONS DATA:
Total revenue............................................... $ 75,594 $ 24,608
Gross profit(1)............................................. 21,954 363
Income (loss) from operations(1)............................ 9,574 (5,586)
Interest expense, net....................................... 11,385 5,719
Net (loss).................................................. (1,714) (6,951)
OTHER DATA:
Depreciation and amortization............................... $ 9,620 $ 5,260
Capital expenditures........................................ 14,319 5,753
Cash interest expense(2).................................... 10,947 5,500
Ratio of earnings to fixed charges.......................... 0.8x(7) (7)
Attendance.................................................. 3,876 1,186
BALANCE SHEET DATA (END OF PERIOD):
Cash and cash equivalents................................... -- $ 32,422
Total assets................................................ -- 169,589
Total debt.................................................. -- 91,848
Stockholders' equity........................................ -- 44,975
</TABLE>
See Notes to Summary Pro Forma and Historical Financial Data.
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<PAGE>
SUMMARY HISTORICAL FINANCIAL DATA
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
------------------------------------------------ -------------------------
1990(3) 1991(4) 1992(5) 1993 1994 1994 1995
------- -------- ------- ---- ---- ---- ----
(DOLLARS AND ATTENDANCE IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
PREMIER
STATEMENT OF OPERATIONS DATA:
Total revenue................... $ -- $ 10,547 $17,392 $21,860 $24,899 $ 7,309 $ 9,368
Gross profit (loss)(1).......... -- 4,096 4,921 7,787 7,990 (298) 1,547
Income (loss) from
operations(1)................. (1,034) 970 487 3,019 2,543 (2,741) (1,693)
Interest expense, net........... 59 (858) (1,413) (1,438) (2,299) (1,081) (1,383)
Income (loss) from continuing
operations(6)................. (937) (118) (1,735) 1,354 102 (2,315) (1,871)
OTHER DATA:
Depreciation and amortization... $ -- $ 1,107 $ 1,442 $ 1,537 $ 1,997 $ 859 $ 1,111
Capital expenditures............ 503 4,508 3,956 7,674 10,108 7,923 4,798
Ratio of earnings to fixed
charges....................... (7) 1.3x (7) 2.1x 1.1x (7) (7)
Attendance...................... 398 828 1,116 1,322 1,408 412 444
BALANCE SHEET DATA (END OF
PERIOD):
Cash and cash equivalents....... $ 595 $ 853 $ 5,919 $ 3,026 $ 1,366 $ 2,518 $ 1,863
Total assets.................... 65,204 74,555 30,615 36,708 45,539 44,957 50,646
Total debt...................... 63,982 74,913 15,627 20,821 24,108 29,717 27,495
Stockholders' equity
(deficit)..................... (6,132) (15,558) 11,838 13,192 18,134 10,877 16,263
</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, -------------------------
------------------------------------------------ JULY 3, JULY 2,
1990 1991 1992 1993 1994 1994 1995
---- ---- ---- ---- ---- ------- -------
(DOLLARS AND ATTENDANCE IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
FUNTIME
STATEMENT OF OPERATIONS DATA:
Total revenue................... $47,034 $ 48,777 $46,852 $51,253 $50,435 $15,258 $15,153
Gross profit (loss)(1).......... 15,359 14,979 13,764 16,863 14,636 (473) (783)
Income (loss) from
operations(1)................. 7,095 6,713 5,100 8,645 6,203 (3,812) (4,242)
Interest expense, net........... (5,155) (4,150) (3,001) (2,783) (4,792) (2,397) (2,741)
Income (loss) before cumulative
effect of accounting
change(6)..................... 720 1,003 384 3,540 263 (3,889) (4,257)
OTHER DATA:
Depreciation and amortization... $ 5,729 $ 5,681 $ 6,182 $ 5,632 $ 5,956 $ 2,978 $ 3,316
Capital expenditures............ 5,239 2,531 2,971 4,394 4,211 2,927 955
Ratio of earnings to fixed
charges....................... 1.3x 1.6x 1.6x 2.9x 1.2x (7) (7)
Attendance...................... 2,532 2,593 2,406 2,575 2,468 809 742
BALANCE SHEET DATA (END OF
PERIOD):
Cash and cash equivalents....... $ 447 $ 503 $ 350 $ 186 $ 171 $ 229 $ 107
Total assets.................... 54,706 51,704 47,372 47,863 47,366 46,583 48,223
Total debt...................... 36,250 31,588 28,095 39,030 36,810 43,769 38,877
Common stockholders' equity
(deficit)..................... 231 (487) (1,668) (3,880) (3,699) (7,741) (7,937)
</TABLE>
See Notes to Summary Pro Forma and Historical Financial Data.
13
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NOTES TO SUMMARY PRO FORMA AND HISTORICAL FINANCIAL DATA
(1) Gross profit (loss) is revenue less operating expenses, costs of products
sold and depreciation and amortization. Income (loss) from operations is
gross profit less selling, general and administrative.
(2) Cash interest expense excludes amortization of deferred financing costs,
and cash interest expense, net is cash interest expense reduced by interest
income.
(3) During 1990, Premier's theme park operations were limited to its 50%
interest in Frontier City. The investment was accounted for using the
equity method of accounting. Total revenue for Frontier City in 1990 was
$5,571. Premier's share of net earnings was $198, which is included in
income. The financial information for the years ended December 31, 1990 and
1991 reflects the elimination of discontinued operations and include only
the results of Premier's theme park operations. See Note 2 to Premier's
consolidated financial statements.
(4) During 1991, Premier purchased White Water Bay. In addition, in 1991
Premier increased its ownership in Frontier City to in excess of 50%, and
therefore the entire operations of Frontier City are included in Premier's
financial results commencing in 1991. The financial information for the
years ended December 31, 1990 and 1991 reflects the elimination of
discontinued operations and include only the results of Premier's theme
park operations. See Note 2 to Premier's consolidated financial statements.
(5) During 1992, Premier purchased Adventure World, as well as the remaining
minority interest in Frontier City. Additionally during 1992, Premier
discontinued substantially all of its non-theme park operations through a
disposition transaction which significantly reduced Premier's assets and
indebtedness, as well as resulted in an extraordinary gain of $18,400.
(6) During 1992, Premier adopted Financial Accounting Standards Board Statement
No. 109, resulting in a decrease in net income of $2,300. During 1993,
Funtime adopted the Statement, resulting in a decrease in net income of
$3,200. Such adjustments are not included in income (loss) from continuing
operations.
(7) For the purpose of determining the ratio of earnings to fixed charges,
earnings consist of income before income taxes and fixed charges. Fixed
charges consist of interest expense, amortization of deferred financing
costs and the portion (approximately 1/3) of rental expense that management
believes represents the interest component of rent expense. For the year
ended December 31, 1994 and the six months ended June 30, 1995 (in each
case, on a pro forma basis), earnings were insufficient to cover fixed
charges by $1,800 and $11,300, respectively. For the years ended December
31, 1990 and 1992 and for the six months ended June 30, 1994 and 1995,
Premier's earnings were insufficient to cover fixed charges by $670, $917,
$3,800, and $3,100, respectively. For the six months ended July 3, 1994 and
July 2, 1995, Funtime's earnings were insufficient to cover fixed charges
by $6,400 and $7,000, respectively.
14
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RISK FACTORS
Prospective investors in the New Notes should evaluate the following
factors, which may affect a decision to acquire the New Notes.
RISKS ASSOCIATED WITH SUBSTANTIAL INDEBTEDNESS
The Company is highly leveraged. After giving effect to the Transactions, on
a pro forma basis as of June 30, 1995, the Company would have had total
outstanding indebtedness of approximately $91.8 million, of which $90.0 million
would have been outstanding under the Notes, and the Company would have had
total stockholders' equity of $45.0 million. In addition, the Company has the
ability to borrow an additional $20.0 million under the Senior Credit Facility.
This high level of indebtedness will result in significant interest expense and
eventual principal repayment obligations. Under the Senior Credit Facility, all
borrowings are required to be repaid in full for at least 45 consecutive days
during the period from July 1 to November 1 of each year. Under the Senior
Credit Facility, substantially all of the Company's assets (other than real
estate), including the capital stock of its subsidiaries, are pledged to secure
borrowings thereunder. By virtue of these security interests, in the event of a
default under the Senior Credit Facility or bankruptcy proceedings involving the
Company, the lenders thereunder will have a claim upon the assets so pledged
prior in right to the Noteholders. See "Capital Structure--Senior Credit
Facility."
The Company believes that its cash flow, together with the proceeds from the
Transactions and the borrowings under the Senior Credit Facility, will be
adequate to fund its currently anticipated requirements for working capital,
capital expenditures and scheduled principal and interest payments. If the
Company is unable to generate sufficient cash flow from operations in the future
to service its debt, it may be required to refinance all or a portion of its
existing debt, sell certain of its assets or obtain additional financing. There
can be no assurance that any such refinancing would be possible or that any
additional financing could be obtained. The financial covenants and other
restrictions contained in the Senior Credit Facility require the Company to
satisfy certain financial tests, and the financial covenants and other
restrictions contained in the Senior Credit Facility and in the Indenture limit
the Company's ability to borrow additional funds and to dispose of certain
assets. See "Capital Structure--Senior Credit Facility" and "Description of the
New Notes."
The Company's high degree of leverage could significantly limit its ability
to withstand competitive pressures and adverse economic conditions or to take
advantage of significant business opportunities that may arise or to meet its
obligations.
RISKS OF ACCIDENTS AND DISTURBANCES AT PARKS
Because all the Company's parks feature "thrill rides," attendance at the
parks and, consequently, revenues may be adversely affected by any serious
accident or similar occurrence with respect to a ride. The Company liability
insurance policies provide coverage of up to $15 million per loss occurrence and
require the Company to pay the first $25,000 of loss per occurrence. In
addition, in view of the proximity of certain of the Company's parks to major
urban areas and the appeal of the parks to teenagers and young adults, the
Company's parks could experience disturbances that could adversely affect the
image of and attendance levels at its parks. Working together with local police
authorities, the Company has taken certain security-related precautions designed
to prevent disturbances in its parks.
15
<PAGE>
EFFECTS OF INCLEMENT WEATHER
Because the great majority of a theme park's attractions are outdoor
activities, attendance at parks and, accordingly, the Company's revenues are
significantly affected by the weather. Unfavorable weekend weather and unusual
weather of any kind can adversely affect park attendance.
NEW NOTES EFFECTIVELY SUBORDINATED TO SECURED INDEBTEDNESS
The New Notes are not secured and therefore will be effectively subordinated
to borrowings under the Senior Credit Facility and other secured indebtedness
permitted under the terms of the Indenture, to the extent of the value of the
assets securing such indebtedness. The indebtedness under the Senior Credit
Facility is secured by liens on substantially all of the Company's assets (other
than real estate). On the date of this Prospectus, the Company had $20.0 million
of revolving credit available under the Senior Credit Facility. Subject to
certain conditions specified therein, the Indenture permits the Company and its
subsidiaries to incur additional indebtedness, including capital lease
obligations and secured purchase money indebtedness, which obligations and
secured indebtedness will effectively rank senior to the New Notes. See "Capital
Structure-- Senior Credit Facility" and "Description of the New Notes--Certain
Covenants."
ABILITY TO PAY NEW NOTES DEPENDENT ON FUNDS FROM SUBSIDIARIES
The Company is a holding company that derives all of its operating income
from its subsidiaries. The Company must rely upon dividends and other payments
from its subsidiaries to generate the funds necessary to meet its obligations,
including the payment of principal of, premium, if any, and interest on the New
Notes. The ability of the Company's subsidiaries to make such payments may be
restricted by, among other things, applicable corporate laws and other laws and
regulations.
POTENTIAL SUBORDINATION OR VOIDING OF NEW NOTES BASED ON FRAUDULENT CONVEYANCE
The incurrence of indebtedness (such as the Notes) in connection with the
Merger is subject to review under relevant federal and state fraudulent
conveyance and similar statutes in a bankruptcy or reorganization case or a
lawsuit by or on behalf of creditors of the Company. Under these statutes, if a
court were to find that obligations (such as the Notes) were incurred with the
intent of hindering, delaying or defrauding present or future creditors, that
the Company received less than a reasonably equivalent value or fair
consideration for those obligations, or that the Company contemplated insolvency
with a design to prefer one or more creditors to the exclusion, in whole or in
part, of other creditors and, at the time of the incurrence of the obligations,
the obligor either (i) was insolvent or rendered insolvent by reason thereof,
(ii) was engaged or was about to engage in a business or transaction for which
its remaining unencumbered assets constituted unreasonably small capital, or
(iii) intended to incur or believed that it was incurring debts beyond its
ability to pay such debts as they matured or became due, such court could void
the Company's obligations under the Notes, subordinate the Notes to other
indebtedness of the Company or take other action detrimental to the holders of
the Notes.
The measure of insolvency for purposes of a fraudulent conveyance or other
similar claim will vary depending upon the law of the jurisdiction being
applied. Generally, however, a company will be considered insolvent at a
particular time if the sum of its debts at that time is greater than the then
fair value of its assets or if the fair salable value of its assets at that time
is less than the amount that would be required to pay its probable liability on
its existing debts as they become absolute and mature. The Company believes
that, after giving effect to the Transactions, the Company was (i) neither
insolvent nor rendered insolvent by the incurrence of indebtedness in
16
<PAGE>
connection with the Merger, (ii) in possession of sufficient capital to run its
business effectively, and (iii) incurring debts within its ability to pay as the
same mature or become due.
In addition, the Note Guarantees may be subject to review under relevant
federal and state fraudulent conveyance and similar statutes in a bankruptcy or
reorganization case or a lawsuit by or on behalf of creditors of any of the Note
Guarantors. In such a case, the analysis set forth above would generally apply,
except that the Note Guarantees could also be subject to the claim that, since
the Note Guarantees were incurred for the benefit of the Company (and only
indirectly for the benefit of the Note Guarantors), the obligations of the Note
Guarantors thereunder were incurred for less than reasonably equivalent value or
fair consideration. A court could void a Note Guarantor's obligation under the
Note Guarantees, subordinate the Note Guarantees to other indebtedness of a Note
Guarantor or take other action detrimental to the holders of the New Notes.
HIGHLY COMPETITIVE BUSINESS
The Company's theme parks compete directly with other theme parks and
amusement parks and indirectly with all other types of recreational facilities
and forms of entertainment within their market areas, including movies, sports
attractions and vacation travel. Accordingly, the Company's business is and will
continue to be subject to factors affecting the recreation and leisure time
industries generally, such as general economic conditions and changes in
discretionary consumer spending habits. Within each park's regional market area,
the principal factors affecting competition include location, price, the
uniqueness and perceived quality of the rides and attractions in a particular
park, the atmosphere and cleanliness of a park and the quality of its food and
entertainment. Certain of the Company's direct competitors have substantially
greater financial resources than the Company.
CONTROL BY PRINCIPAL STOCKHOLDERS; CHANGE OF CONTROL
After consummation of the Transactions, approximately 87% of the aggregate
voting power of the Company's Common Stock and Convertible Preferred Stock was
held by a small number of stockholders. Accordingly, such stockholders
collectively have the ability to elect the entire Board of Directors and
generally to direct the business and affairs of the Company. See "Stock
Ownership of Management and Certain Beneficial Holders."
A Change of Control could require the Company to refinance substantial
amounts of indebtedness, including indebtedness under the Senior Credit
Facility. In addition, upon the occurrence of a Change of Control, the holders
of the New Notes would be entitled to require the Company to repurchase the New
Notes at a purchase price equal to 101% of the principal amount of such New
Notes, plus accrued and unpaid interest, if any, to the date of repurchase. The
Company's failure to repurchase the New Notes would result in a default under
the Indenture and the Senior Credit Facility. In the event of a Change of
Control, there can be no assurance that the Company would have sufficient assets
to satisfy its obligations under the New Notes. In addition, a Change of Control
permits acceleration of the indebtedness outstanding under the Senior Credit
Facility. See "Capital Structure--Senior Credit Facility" and "Description of
the Notes--Change of Control."
ABSENCE OF PUBLIC MARKET
There is currently no public market for the Notes. The Company does not
intend to list the Notes on any national securities exchange or to seek the
admission thereof to trading in the National Association of Securities Dealers
Automated Quotation System. Chemical Securities Inc., the initial purchaser of
the Old Notes (the "Initial Purchaser") has advised the Company that it
currently intends to make a market in the Notes, but it is not obligated to do
so and, if commenced, may discontinue such market making at any time. Although
it is expected that the Notes will be
17
<PAGE>
eligible for trading in the Private Offerings, Resales and Trading through
Automatic Linkages ("PORTAL") market, there can be no assurance as to the
development of any market or the liquidity of any market that may develop for
the Notes. The PORTAL market is the National Association of Securities Dealers'
screenbased, automated market for trading securities, such as the Notes, which
are eligible for resale under Rule 144A of the Commission. Generally, only
"qualified institutional buyers" under Rule 144A and certain brokers and dealers
have access to the computer and communications facilities that comprise the
PORTAL market. Because the Old Notes were sold pursuant to any exemption from
registration under the Securities Act and applicable state securities laws, they
may not be publicly offered, sold or otherwise transferred in any jurisdiction
where such registration may be required unless the applicable Old Notes are
registered or are sold in a transaction exempt from registration in such
jurisdiction. There can be no assurance that an active trading market for any of
the Notes will develop, or if one does develop, that it will be sustained.
Accordingly, no assurance can be made as to the liquidity of the trading market
for the Notes. If any of the Notes are traded after their initial issuance, they
may trade at a discount, depending on prevailing interest rates, the market for
similar securities and other factors, including general economic conditions and
the financial condition and performance of the Company. Prospective investors in
the New Notes should be aware that they may be required to bear the financial
risks of such investment for an indefinite period of time. See The "Exchange
Offer" and "Description of the New Notes."
CONSEQUENCES OF FAILURE TO EXCHANGE
Holders of Old Notes who do not exchange their Old Notes for New Notes
pursuant to the Exchange Offer will continue to be subject to the restrictions
on transfer of Old Notes set forth in the legend thereon as a consequence of the
issuance of the Old Notes pursuant to an exemption from, or in a transaction not
subject to, the registration requirements of the Securities Act. In general, the
Old Notes may not be offered or sold, unless registered under the Securities
Act, except pursuant to an exemption from, or in a transaction not subject to,
the Securities Act and applicable state securities laws. The Company does not
currently anticipate that it will register the Old Notes under the Securities
Act.
18
<PAGE>
THE COMPANY
The Company is a leading theme park operator which operates six parks with
an aggregate 1994 attendance of approximately four million. The Company's parks
are regional parks, drawing on average approximately 88% of their patrons from
within a 100-mile radius. The parks are located in five geographically diverse
markets: Washington, D.C./Baltimore; Buffalo/Rochester; Cleveland; Columbus; and
Oklahoma City. The parks are designed to provide a complete family-oriented
entertainment experience, and feature a broad selection of state-of-the-art and
traditional thrill rides, water attractions, themed areas, concerts and shows,
restaurants, game venues and merchandise outlets. For the twelve months ended
June 30, 1995, the Company's total revenue on a pro forma basis was
approximately $77.6 million.
The Company currently operates six parks: Adventure World, a combination
theme and water park located three miles off the Beltway, between Washington,
D.C. (15 miles away) and Baltimore, Maryland (30 miles away); Frontier City, a
western themed park in Oklahoma City, Oklahoma; White Water Bay, a tropical
themed water park also located in Oklahoma City; Geauga Lake, a combination
theme and water park near Cleveland, Ohio; Darien Lake & Camping Resort, a
combination theme and water park with an adjacent camping resort, located
between Buffalo and Rochester, New York; and Wyandot Lake, a water park which
also includes "dry" rides and other attractions, located adjacent to the
Columbus Zoo in Columbus, Ohio.
The Company was incorporated in 1981 as The Tierco Group, Inc. ("Tierco"),
and through 1989 was primarily engaged in the ownership and management of real
estate and mortgage loans. In October 1989, the Company's current senior
management assumed control of Premier, and during 1989 management determined to
focus Premier's business on its theme park operations. In January 1991 and
January 1992, Premier acquired White Water Bay and Adventure World,
respectively, and in 1991 Premier also increased its ownership in Frontier City
to in excess of 50%. Thereafter, in 1992, Premier acquired the remaining
minority interest in Frontier City and disposed of substantially all of its real
estate operations. The Company's sole remaining real estate investment is a 40%
non-managing general partnership interest in a limited partnership formed to own
and convert a residential building in New York City to cooperative ownership
(see Note 4 to Premier's consolidated financial statements). In 1994, Tierco
changed its name to Premier Parks Inc. On August 15, 1995, the Company acquired
Funtime in the Merger.
The Company is a closely-held public company, whose shares of Common Stock
are intermittently traded in the over-the-counter market. As of August 28, 1995,
there were 24,287,772 million shares of Common Stock issued and outstanding, of
which 21,113,549 were held by the Company's officers, directors and principal
stockholders (and their affiliates) with the remaining shares held of record by
approximately 860 stockholders.
The Company, a Delaware corporation, has its principal executive offices at
11501 Northeast Expressway, Oklahoma City, Oklahoma 73131, and its telephone
number is (405) 478-2414.
19
<PAGE>
USE OF PROCEEDS
There will be no cash proceeds to the Company from the issuance of the New
Notes pursuant to the Exchange Offer. The proceeds of the offering of the Old
Notes, together with $20.0 million raised from the Convertible Preferred Stock
Offering, were and will be utilized as follows: (i) approximately $52.7 million
was used to purchase from the Selling Shareholders all of the outstanding
capital stock of Funtime pursuant to the Merger Agreement (which amount includes
the repayment in full of all principal and accrued interest of Funtime's
indebtedness), (ii) approximately $16.1 million was used to repay all
outstanding amounts under Premier's Existing Bank Debt, (iii) approximately
$21.5 million will be used to prefund capital improvements at the Company's
parks, (iv) an aggregate of approximately $13.7 million will be (a) utilized for
general corporate purposes ($8.4 million), (b) deposited into an escrow account
to cover indemnification claims which may arise after the closing of the Merger
($2.5 million), and (c) paid or retained by the Company out of the Merger
consideration to fund specified liabilities of Funtime ($2.8 million), and (v)
an estimated $6.0 million will be applied to costs and expenses relating to the
Transactions.
The Existing Bank Debt was comprised of a revolving credit facility (the
"Revolving Loan"), a term loan (the "Term Loan") and other mortgage
indebtedness. At August 15, 1995, $12.5 million and $3.0 million were
outstanding under the Revolving Loan and Term Loan, respectively, and $600,000
was outstanding under such other mortgage indebtedness. Indebtedness under the
Revolving Loan and Term Loan bore interest at a per annum rate equal to 1% above
the lender's prime rate (9.75% at July 31, 1995). The Revolving Loan was
required to be paid down in full by no later than November of each year during
its term. The Term Loan required minimum annual principal payments of
approximately $1.1 million and would have matured on December 31, 1998.
20
<PAGE>
CAPITALIZATION
The following table sets forth the historical capitalization of Premier as
of June 30, 1995, and the capitalization of the Company on a pro forma basis
after giving effect to the Transactions, assuming the Transactions were
consummated on such date. This table should be read in conjunction with the
"Selected Historical Financial and Operating Data," "Unaudited Pro Forma
Combined Financial Statements," "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and the consolidated financial
statements of Premier and Funtime included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
COMPANY
PREMIER PRO
HISTORICAL FORMA(1)
---------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Cash and cash equivalents............................................. $ 1,863 $ 32,422(2)
---------- ---------
---------- ---------
Short-term debt....................................................... $ 5,415 $ 545
Long-term debt (excluding current maturities):
Senior Credit Facility(3)........................................... -- --
Existing Bank Debt.................................................. 11,882 --
12% Senior Notes.................................................... -- 90,000
Capitalized leases.................................................. 1,303 1,303
9.5% Convertible Subordinated Notes(4).............................. 7,000 --
8.0% Junior Subordinated Notes(4)................................... 1,895 --
---------- ---------
Total debt...................................................... 27,495 91,848
Stockholders' equity(5)............................................... 16,263 44,975
---------- ---------
Total capitalization.................................................. $ 43,758 $ 136,823
---------- ---------
---------- ---------
</TABLE>
- ------------
(1) The Company pro forma information includes June 30, 1995 data for Premier
and July 2, 1995 data for Funtime.
(2) The Company will utilize $800 of this amount to fund specified liabilities
of Funtime. See "The Merger."
(3) The Company has the ability under the Senior Credit Facility to borrow up to
$20,000 for working capital and other general corporate purposes. Borrowings
under the Senior Credit Facility will be secured by substantially all of the
Company's assets (other than real estate) and will be required to be repaid
in full for at least 45 consecutive days during the period from July 1 to
November 1 of each year. See "Capital Structure--Senior Credit Facility."
(4) In connection with the Existing Note Conversion, holders of the Convertible
Notes and Junior Notes converted all of such Notes into Common Stock.
(5) The increase in stockholders' equity is the result of the effect of the
issuance of Common Stock in the Existing Note Conversion and the issuance of
Convertible Preferred Stock in the Convertible Preferred Stock Offering. See
"Capital Structure."
21
<PAGE>
SELECTED HISTORICAL FINANCIAL AND OPERATING DATA
The following tables set forth selected historical financial and operating
data of each of Premier and Funtime for the five years ended December 31, 1994
and the six month periods ended June 30, 1994 and June 30, 1995 for Premier, and
July 3, 1994 and July 2, 1995 for Funtime. The historical financial data set
forth below for fiscal years 1992, 1993 and 1994 have been derived from, and
should be read in conjunction with, the audited consolidated financial
statements of Premier and Funtime included elsewhere herein. The historical
financial data set forth below for fiscal years 1990 and 1991 have been derived
from audited financial statements which are not included herein. The historical
financial data for the six month periods ended June 30, 1994 and 1995 for
Premier, and July 3, 1994 and July 2, 1995 for Funtime have been derived from
the unaudited consolidated financial statements of Premier and Funtime included
elsewhere herein, which, in the opinion of management, include all adjustments
(consisting of only normal recurring adjustments) necessary for a fair
presentation.
The Company's operations are highly seasonal, with the bulk of the operating
season occurring during the period from Memorial Day through Labor Day.
Substantially all revenue is generated in the second and third quarters.
22
<PAGE>
SELECTED HISTORICAL FINANCIAL AND OPERATING DATA
PREMIER PARKS INC.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
------------------------------------------------------ -----------------
1990(1) 1991(2) 1992(3) 1993 1994 1994 1995
------- -------- ------- ---- ---- ---- ----
(DOLLARS AND ATTENDANCE IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Theme park admissions.................. $ -- $ 6,849 $10,186 $12,874 $13,936 $ 3,997 $ 5,676
Theme park food, merchandise,
and other............................ -- 3,698 7,206 8,986 10,963 3,312 3,692
------- -------- ------- ------- ------- ------- -------
Total revenue........................ -- 10,547 17,392 21,860 24,899 7,309 9,368
------- -------- ------- ------- ------- ------- -------
Operating expenses..................... -- 4,327 9,293 10,401 12,359 5,948 5,883
Selling, general and administrative.... 1,034 3,126 4,434 4,768 5,447 2,443 3,240
Costs of products sold................. -- 1,017 1,736 2,135 2,553 800 827
Depreciation and amortization.......... -- 1,107 1,442 1,537 1,997 859 1,111
------- -------- ------- ------- ------- ------- -------
Total costs and expenses............. 1,034 9,577 16,905 18,841 22,356 10,050 11,061
------- -------- ------- ------- ------- ------- -------
Income (loss) from operations.......... (1,034) 970 487 3,019 2,543 (2,741) (1,693)
------- -------- ------- ------- ------- ------- -------
Interest expense, net.................. 59 (858) (1,413) (1,438) (2,299) (1,081) (1,383)
Minority interest in income............ -- (223) (270) -- -- -- --
Equity in loss of partnerships......... (128) (176) (122) (142) (83) (37) (39)
Other income (expense)................. 166 169 9 6 9 -- --
------- -------- ------- ------- ------- ------- -------
Total other income (expense)......... 97 (1,088) (1,796) (1,574) (2,373) (1,118) (1,422)
------- -------- ------- ------- ------- ------- -------
Income (loss) from continuing
operations before income tax......... (937) (118) (1,309) 1,445 170 (3,859) (3,115)
Income tax expense (benefit)........... -- -- 426 91 68 (1,544) (1,244)
------- -------- ------- ------- ------- ------- -------
Income (loss) from continuing
operations(4)........................... $ (937) $ (118) $(1,735) $ 1,354 $ 102 $(2,315) $(1,871)
------- -------- ------- ------- ------- ------- -------
------- -------- ------- ------- ------- ------- -------
Income (loss) from continuing
operations per common share.......... $ (.41) $ (.05) $ (.42) $ .10 $ .01 $ (.17) $ (.11)
------- -------- ------- ------- ------- ------- -------
------- -------- ------- ------- ------- ------- -------
OTHER DATA:
Capital expenditures................... $ 503 $ 4,508 $ 3,956 $ 7,674 $10,108 $ 7,923 $ 4,798
Total attendance....................... 398 828 1,116 1,322 1,408 412 444
Ratio of earnings to fixed changes..... (5) 1.3x (5) 2.1x 1.1x (5) (5)
BALANCE SHEET DATA (END OF PERIOD):
Cash and cash equivalents.............. $ 595 $ 853 $ 5,919 $ 3,026 $ 1,366 $ 2,518 $ 1,863
Total assets........................... 65,204 74,555 30,615 36,708 45,539 44,957 50,646
Total debt............................. 63,982 74,913 15,627 20,821 24,108 29,717 27,495
Stockholders' equity (deficit)......... (6,132) (15,558) 11,838 13,192 18,134 10,877 16,263
</TABLE>
- ------------
(1) During 1990, Premier's theme park operations were limited to its 50%
interest in Frontier City. The investment was accounted for using the equity
method of accounting. Total revenue for Frontier City in 1990 was $5,571.
Premier's share of net earnings was $198, which is included in income. The
financial information for the years ended December 31, 1990 and 1991
reflects the elimination of discontinued operations and include only the
results of Premier's theme park operations. See Note 2 to Premier's
consolidated financial statements.
(2) During 1991, Premier purchased White Water Bay. In addition, in 1991 Premier
increased its ownership interest in Frontier City to in excess of 50%, and
therefore the entire operations of Frontier City are included in Premier's
financial results commencing in 1991. The financial information for the
years ended December 31, 1990 and 1991 reflects the elimination of
discontinued operations and include only the results of Premier's theme park
operations. See Note 2 to Premier's consolidated financial statements.
(3) During 1992, Premier purchased Adventure World, as well as the remaining
minority interest in Frontier City. Additionally during 1992, Premier
discontinued substantially all of its non-theme park operations through a
disposition transaction which significantly reduced Premier's assets and
indebtedness, as well as resulted in an extraordinary gain of $18,350.
(4) During 1992, Premier adopted Financial Accounting Standards Board Statement
No. 109, resulting in a decrease in net income of $2,298. Such adjustment is
not included in income (loss) from continuing operations.
(5) For the purpose of determining the ratio of earnings to fixed charges,
earnings consist of income before income taxes and fixed charges. Fixed
charges consist of interest expense, amortization of deferred financing
costs and the portion (approximately 1/3) of rental expense that management
believes represents the interest component of rent expense. For the year
ended December 31, 1990 and 1992 and for the six months ended June 30, 1994
and 1995, earnings were insufficient to cover fixed charges by $670, $917,
$3,800, and $3,100, respectively.
23
<PAGE>
SELECTED HISTORICAL FINANCIAL AND OPERATING DATA
FUNTIME PARKS, INC.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, -----------------------
----------------------------------------------------- JULY 3, JULY 2,
1990 1991 1992 1993 1994 1994 1995
---- ---- ---- ---- ---- ------- -------
(DOLLARS AND ATTENDANCE IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Theme park admissions... $19,088 $20,438 $19,352 $ 20,820 $20,339 $ 5,851 $ 6,195
Theme park food,
merchandise, and other. 27,946 28,339 27,500 30,433 30,096 9,407 8,958
------- ------- ------- --------- ------- ---------- ----------
Total revenue......... 47,034 48,777 46,852 51,253 50,435 15,258 15,153
------- ------- ------- --------- ------- ---------- ----------
Operating expenses...... 20,113 22,229 21,166 22,203 23,208 10,700 10,537
Selling, general and
administrative........ 8,264 8,266 8,664 8,218 8,433 3,339 3,459
Costs of products
sold.................. 5,833 5,888 5,740 6,555 6,635 2,053 2,083
Depreciation and
amortization.......... 5,729 5,681 6,182 5,632 5,956 2,978 3,316
------- ------- ------- --------- ------- ---------- ----------
Total costs and
expenses.............. 39,939 42,064 41,752 42,608 44,232 19,070 19,395
------- ------- ------- --------- ------- ---------- ----------
Income (loss) from
operations............ 7,095 6,713 5,100 8,645 6,203 (3,812) (4,242)
------- ------- ------- --------- ------- ---------- ----------
Interest expense, net... (5,155) (4,150) (3,001) (2,783) (4,792) (2,397) (2,741)
Other income
(expense)............. (114) (20) (103) (277) (297) (166) 4
------- ------- ------- --------- ------- ---------- ----------
Total other income
(expense)............. (5,269) (4,170) (3,104) (3,060) (5,089) (2,563) (2,737)
Income (loss) before
income tax............ 1,826 2,543 1,996 5,585 1,114 (6,375) (6,979)
Income tax expense
(benefit)............. 1,106 1,540 1,612 2,045 851 (2,486) (2,722)
------- ------- ------- --------- ------- ---------- ----------
Income (loss) before
cumulative effect of
accounting change(1).. $ 720 $ 1,003 $ 384 $ 3,540 $ 263 $ (3,889) $ (4,257)
------- ------- ------- --------- ------- ---------- ----------
------- ------- ------- --------- ------- ---------- ----------
Income (loss) before
cumulative effect of
accounting change per
common share (net of
preferred stock
dividend
requirements)......... $188.42 $353.43 $(201.52) $1,842.49 $102.93 $(1,416.83) $(1,498.03)
------- ------- ------- --------- ------- ---------- ----------
------- ------- ------- --------- ------- ---------- ----------
OTHER DATA:
Capital expenditures.... $ 5,239 $ 2,531 $ 2,971 $ 4,394 $ 4,211 $ 2,927 $ 955
Total attendance........ 2,532 2,593 2,406 2,575 2,468 809 742
Ratio of earnings to
fixed charges......... 1.3x 1.6x 1.6x 2.9x 1.2x (2) (2)
BALANCE SHEET DATA (END
OF PERIOD):
Cash and cash
equivalents........... $ 447 $ 503 $ 350 $ 186 $ 171 $ 229 $ 107
Total assets............ 54,706 51,704 47,372 47,863 47,366 46,583 48,223
Total debt.............. 36,250 31,588 28,095 39,030 36,810 43,769 38,877
Redeemable preferred
stock................. 11,815 12,741 13,667 -- -- -- --
Common stockholders'
equity (deficit)...... 231 (487) (1,668) (3,880) (3,699) (7,741) (7,937)
</TABLE>
- ------------
(1) During 1993, Funtime adopted Financial Accounting Standards Board Statement
No. 109, resulting in a decrease in net income of $3,209. Such adjustment is
not included in income (loss) before cumulative effect of accounting change.
(2) For the purpose of determining the ratio of earnings to fixed charges,
earnings consist of income before income taxes and fixed charges. Fixed
charges consist of interest expense, amortization of deferred financing
costs and the portion (approximately 1/3) of rental expense that management
believes represents the interest component of rent expense. For the six
months ended June 30, 1994 and 1995, earnings were insufficient to cover
fixed charges by $6,375 and $6,979, respectively.
24
<PAGE>
UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
The following unaudited pro forma combined financial statements (the "Pro
Forma Financial Statements") of the Company are based upon and should be read in
conjunction with the consolidated financial statements of Premier and Funtime,
both of which are included elsewhere in this Prospectus, and have been adjusted
to illustrate the effects of the Transactions.
The unaudited pro forma combined balance sheet is presented as if the
Transactions occurred on June 30, 1995. The unaudited pro forma combined
statements of operations are presented as if the Transactions occurred on the
first day of the respective periods, January 1, 1994 and 1995. The Merger will
be accounted for using the purchase method of accounting. Allocations of the
purchase price have been determined based upon estimates of fair value as
determined by independent appraisal. Under the Merger Agreement, the Company is
obligated to pay to the Selling Shareholders substantially all of Funtime's net
operating cash flow for the period August 15, 1995 (the date of the Merger)
through September 30, 1995 subject to a minimum working capital adjustment. See
"The Merger". The post-closing adjustment will be accounted for as an adjustment
to the purchase price. The Pro Forma Financial Statements include an estimate of
the post-closing adjustment. The difference, if any, between the actual
consideration paid to the Selling Shareholders related to the post-closing
adjustment and the amount estimated in the accompanying Pro Forma Financial
Statements will affect the amount of goodwill recorded in the Company's
financial statements. Such an adjustment to the amount of goodwill would also
change the amortization of the goodwill in the Pro Forma statements of
operations. The Pro Forma Financial Statements do not specifically reflect a
cash escrow account established out of the Merger consideration for the payment
of 1995 income tax liabilities of Funtime (such cash is assumed to have been
paid to the Selling Shareholders). Any changes or adjustments relating to the
foregoing matters are not anticipated to be material.
The Pro Forma Financial Statements have been prepared based on estimates and
assumptions deemed by the Company to be appropriate and do not purport to be
indicative of the financial position or results of operations which would
actually have been attained if the Merger had occurred as presented in such
statements or which may be obtained in the future.
25
<PAGE>
THE COMPANY
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
AS OF JUNE 30, 1995(1)
<TABLE>
<CAPTION>
COMPANY
HISTORICAL HISTORICAL PRO FORMA PRO FORMA
PREMIER FUNTIME ADJUSTMENTS (UNAUDITED)
---------- ---------- ----------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
ASSETS:
Cash and cash equivalents............................. $ 1,863 $ 107 $86,500(2) $ 32,422
20,000(3)
(59,349)(4)
(16,699)(5)
Accounts receivable................................... 1,201 2,548 -- 3,749
Inventories........................................... 1,723 2,850 -- 4,573
Prepaid expenses...................................... 917 583 -- 1,500
---------- ---------- ----------- ---------
Total current assets................................. 5,704 6,088 30,452 42,244
Investment in partnership............................. 1,123 -- -- 1,123
Deferred charges...................................... 382 276 3,500(2) 3,499
(276])(4)
(247)(5)
(136)(6)
Deposits and other.................................... 362 -- 2,500(4) 2,862
---------- ---------- ----------- ---------
Total other assets................................... 1,867 276 5,341 7,484
Property and equipment, net........................... 43,075 41,859 26,987(4) 111,921
Intangible assets..................................... -- -- 7,940(4) 7,940
---------- ---------- ----------- ---------
Total assets......................................... $ 50,646 $ 48,223 $70,720 $ 169,589
---------- ---------- ----------- ---------
---------- ---------- ----------- ---------
LIABILITIES AND STOCKHOLDERS' EQUITY:
Accounts payable and accrued expenses................. $ 6,073 $ 9,492 $(1,000)(4) $ 12,625
(1,940)(4)
Accrued interest payable.............................. 147 1,820 (1,820)(4) --
(147)(5)
Revolving lines of credit............................. 3,500 8,076 (8,076)(4) --
(3,500)(5)
Current maturities of long-term debt and capital lease
obligations.......................................... 1,915 20,158 (20,158)(4) 545
(1,370)(5)
---------- ---------- ----------- ---------
Total current liabilities............................ 11,635 39,546 (38,011) 13,170
Long-term debt and capital lease obligations.......... 22,080 10,643 90,000(2) 91,303
(10,643)(4)
(11,682)(5)
(9,095)(6)
Other long-term liabilities........................... -- 1,488 2,500(4) 4,465
(983)(4)
1,460(4)
Deferred income taxes................................. 668 4,483 10,525(4) 15,676
---------- ---------- ----------- ---------
Total liabilities.................................... 34,383 56,160 34,071 124,614
Preferred stock....................................... -- -- 20,000(3) 20,000
Common stock.......................................... 170 3,013 (3,013)(4) 244
74(6)
Capital in excess of par value........................ 50,573 -- 9,021(6) 59,458
(136)(6)
Accumulated deficit................................... (33,791) (10,547) 10,547(4) (34,038)
(247)(5)
Treasury stock and warrant put option................. (689) (403) 403(4) (689)
---------- ---------- ----------- ---------
Total stockholders' equity........................... 16,263 (7,937) 36,649 44,975
Total liabilities and stockholders' equity........... $ 50,646 $ 48,223 $70,720 $ 169,589
---------- ---------- ----------- ---------
---------- ---------- ----------- ---------
</TABLE>
- ------------
(1) The pro forma combined balance sheet includes June 30, 1995 data for Premier
and July 2, 1995 data for Funtime.
(2) Adjustment reflects the net proceeds from the $90,000 Offering after
deducting the estimated issuance costs of $3,500.
(3) Adjustment reflects the proceeds of the $20,000 Convertible Preferred Stock
Offering.
(4) Adjustment reflects the use of cash to purchase the stock of Funtime, pay
Funtime's indebtedness of $38,877 and accrued interest of $1,820, create the
$2,500 escrow account pursuant to the Merger, and pay $1,983 ($1,000 current
and $983 noncurrent) of certain other Funtime liabilities.
The Acquisition is being accounted for using the purchase method. The
purchase price of the Acquisition for financial accounting purposes includes
$60 million of cash, $15 million of Funtime deferred income tax liabilities
and an obligation to pay to the Selling Shareholders the operating cash flow
from the acquisition date through September 30, 1995, which is estimated to
be $4 million. The purchase price was allocated principally to property and
equipment ($69 million) and to goodwill ($8 million). The following further
details the purchase price and the allocation of the purchase price by
balance sheet caption and by type of adjustment.
The increase ($26,987) of Funtime's property and equipment to estimated
fair values;
26
<PAGE>
The recognition of the estimated contingent consideration ($4,223) related to
Funtime's 1995 post-closing net operating cash flow as limited ($6,163) by
the minimum working capital requirements as provided for in the Merger
Agreement (net, $1,940);
The decrease ($276) of other assets to their estimated fair value;
The assumption ($1,460) of liabilities resulting from the transaction;
The accounting for the deferred tax liabilities ($10,525) arising from the
transaction; and
The recognition of goodwill ($7,940).
(5) Adjustment reflects the payment of $16,552 of Premier's Existing Bank Debt
and related accrued interest of $147 along with the expensing of $247 of
unamortized costs associated with Premier's Existing Bank Debt.
(6) Adjustment reflects the conversion of $7,000 of Convertible Notes and $2,095
of Junior Notes into common stock, less $136 of unamortized issuance costs
associated with the issuance of the Convertible Notes.
27
<PAGE>
THE COMPANY
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1994
<TABLE>
<CAPTION>
HISTORICAL HISTORICAL PRO FORMA COMPANY
PREMIER FUNTIME ADJUSTMENTS PRO FORMA
---------- ---------- ----------- -----------
(DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
Theme park admissions................... $ 13,936 $ 20,339 $ -- $34,275
Theme park food, merchandise, and
other................................... 10,963 30,096 260(1) 41,319
---------- ---------- ----------- -----------
Total revenue.......................... 24,899 50,435 260 75,594
---------- ---------- ----------- -----------
Operating expenses...................... 12,359 23,208 (735)(1) 34,832
Selling, general and administrative..... 5,447 8,433 (1,500)(1) 12,380
Costs of products sold.................. 2,553 6,635 -- 9,188
Depreciation and amortization........... 1,997 5,956 1,667(2) 9,620
---------- ---------- ----------- -----------
Total costs and expenses............... 22,356 44,232 (568) 66,020
---------- ---------- ----------- -----------
Income (loss) from operations........... 2,543 6,203 828 9,574
---------- ---------- ----------- -----------
Interest expense, net................... (2,299) (4,792) (4,294)(3) (11,385)
Equity in loss of partnership........... (83) -- -- (83)
Other income (expense).................. 9 (297) 261(4) (27)
---------- ---------- ----------- -----------
Total other income (expense)........... (2,373) (5,089) (4,033) (11,495)
---------- ---------- ----------- -----------
Income (loss) before income taxes....... 170 1,114 (3,205) (1,921)
Income tax expense (benefit)............ 68 851 (1,126)(5) (207)
---------- ---------- ----------- -----------
Net income (loss)....................... $ 102 $ 263 $(2,079) $(1,714)
---------- ---------- ----------- -----------
---------- ---------- ----------- -----------
Income (loss) per common share(6)....... $ .01 $ 102.93 $ (.08)
---------- ---------- -----------
---------- ---------- -----------
Weighted average shares(6).............. 14,051,922 2,557 21,479,087
OTHER DATA:
Ratio of earnings to fixed charges(8)... 1.1x 1.2x 0.8x
---------- ---------- -----------
---------- ---------- -----------
</TABLE>
- ------------
(1) Adjustment reflects the elimination of duplicate personnel costs and certain
non-recurring corporate overhead and park operating expenses. The increase
in theme park food, merchandise, and other revenue results from planned
changes in concessionaire arrangements at the Funtime parks which will have
a continuing impact on the Company.
(2) Adjustment reflects the elimination of Funtime's historical depreciation of
$5,956, the recognition of pro forma depreciation of $7,305 and the pro
forma amortization of $318 of goodwill related to the acquisition of
Funtime. Based upon Premier's experience with similar rides and equipment
and review of estimated useful lives used in the theme park industry, an
estimated remaining composite useful life of 20 years was utilized in
computing pro forma depreciation for the Funtime property and equipment and
an estimated amortization period of 25 years was utilized for the goodwill.
Previously, Funtime's property and equipment was depreciated using an
estimated useful life range of 15 to 20 years. Premier utilizes useful life
estimates of 20 to 25 years for the majority of its property and equipment.
(3) Adjustment reflects the increase in interest expense, net of interest
income, from the issuance of the Notes as if the Transactions had been
consummated as of the beginning of the period. Approximately $2,280 of
secured indebtedness of Premier is not being refinanced with the proceeds of
the Notes. An interest rate of 12% for the Notes has been used to determine
interest expense, net in the Pro Forma Financial Statements. No interest
income from the approximate $30,000 of net proceeds from the Transactions
not used in the Acquisition has been reflected in interest income, net.
Additionally, issuance costs associated with the Notes are being amortized
over the term of the Notes.
<TABLE>
<S> <C>
Senior Notes.................................................... $10,800
Amortization of costs associated with issuance of the Notes..... 438
Elimination of historical interest expense...................... (6,944)
-------
Net adjustments................................................. $ 4,294
-------
-------
</TABLE>
(4) Adjustment reflects the elimination of $261 of non-recurring expenses
associated with the settlement of certain Funtime litigation.
(5) Adjustment reflects the tax effects of the pro forma adjustments described
above at a blended Federal and state rate of 39% after consideration of
permanent differences.
(6) Income (loss) per common share is computed based on the weighted average
number of common shares outstanding during the period. Warrants and options
have been excluded from the historical per share calculations of Premier and
28
<PAGE>
Funtime as well as from the pro forma calculation as no active trading
market existed for Premier or Funtime common stock during 1994.
Pro forma income (loss) per common share has been calculated based upon the
following pro forma weighted average number of shares outstanding for the
year ended December 31, 1994:
<TABLE>
<S> <C>
Actual Premier weighted average common shares outstanding....... 14,051,922
Conversion of $7,000 of Convertible Notes, at conversion price
of $1.25 per share plus conversion premium of 275,310 common
shares.......................................................... 5,875,313
Conversion of $2,095 of Junior Notes, at conversion price of
$1.35 per share................................................. 1,551,852
----------
21,479,087
----------
----------
</TABLE>
Income (loss) per common share--assuming full dilution is not presented in
the pro forma statement of operations for the year ended December 31, 1994
since the result would be anti-dilutive. The Convertible Preferred Stock
issued in connection with the Merger is not a common stock equivalent.
(7) The Unaudited Pro Forma Combined Statement of Operations for the year ended
December 31, 1994 does not include the extraordinary loss of approximately
$327 from early extinguishment of debt. The extraordinary loss is expected
to occur in the three-month period ended September 30, 1995.
(8) For the purpose of determining the ratio of earnings to fixed charges,
earnings consist of income before income taxes and fixed charges. Fixed
charges consist of interest expense, amortization of deferred financing
costs and the portion (approximately 1/3) of rental expense that management
believes represents the interest component of rent expense. For the year
ended December 31, 1994, on a pro forma basis, earnings were insufficient to
cover fixed charges by $1,800.
29
<PAGE>
THE COMPANY
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1995(1)
<TABLE><CAPTION>
COMPANY
HISTORICAL HISTORICAL PRO FORMA PRO FORMA
PREMIER FUNTIME ADJUSTMENT (UNAUDITED)
---------- ---------- ---------- -----------
(DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
Theme park admissions.................. $ 5,676 $ 6,195 $ -- $ 11,871
Theme park food, merchandise, and
other............................... 3,692 8,958 87(2) 12,737
---------- ---------- ---------- -----------
Total revenue....................... 9,368 15,153 87 24,608
---------- ---------- ---------- -----------
Operating expenses..................... 5,883 10,537 (345)(2) 16,075
Selling, general and administrative.... 3,240 3,459 (750)(2) 5,949
Costs of products sold................. 827 2,083 -- 2,910
Depreciation and amortization.......... 1,111 3,316 833(3) 5,260
---------- ---------- ---------- -----------
Total costs and expenses............ 11,061 19,395 (262) 30,194
---------- ---------- ---------- -----------
Income (loss) from operations.......... (1,693) (4,242) 349 (5,586)
Interest expense, net.................. (1,383) (2,741) (1,595)(4) (5,719)
Equity in loss of partnership.......... (39) -- -- (39)
Other income (expense)................. -- 4 -- 4
---------- ---------- ---------- -----------
Total other income (expense)........ (1,422) (2,737) (1,595) (5,754)
---------- ---------- ---------- -----------
Income (loss) before income taxes...... (3,115) (6,979) (1,246) (11,340)
Income tax expense (benefit)........... (1,244) (2,722) (423)(5) (4,389)
---------- ---------- ---------- -----------
Net loss............................... $ (1,871) $ (4,257) $ (823)(7) $ (6,951)
---------- ---------- ---------- -----------
---------- ---------- ---------- -----------
Income (loss) per common share(6)...... $ (.11) (1,498.03) (.29)
---------- ---------- -----------
---------- ---------- -----------
Weighted average shares(6)............. 16,860,607 2,842 24,287,772
OTHER DATA:
Ratio of earnings to fixed charges..... (8) (8) (8)
---------- ---------- -----------
---------- ---------- -----------
</TABLE>
- ------------
(1) The pro forma combined statement of operations includes results for the six
month periods ended June 30, 1995 and July 2, 1995 for Premier and Funtime,
respectively.
(2) Adjustment reflects the elimination of duplicate personnel and certain
non-recurring corporate overhead and park operating expenses. The increase
in theme park food, merchandise, and other revenue results from planned
changes in concessionaire arrangements at the Funtime parks which will have
a continuing impact on the Company.
(3) Adjustment reflects the elimination of Funtime's historical depreciation of
$3,316, the recognition of pro forma depreciation of $3,990 and the pro
forma amortization of $159 of goodwill related to the acquisition of
Funtime. Based upon Premier's experience with similar rides and equipment
and review of estimated useful lives used in the theme park industry, an
estimated remaining composite useful life of 20 years was used in computing
pro forma depreciation for the Funtime property and equipment and an
estimated amortization period of 25 years was utilized for the goodwill.
Previously, Funtime's property and equipment was depreciated using an
estimated useful life range of 15 to 20 years. Premier utilized useful life
estimates of 20 to 25 years for the majority of its property and equipment.
(4) Adjustment reflects the increase in interest expense, net of interest
income, from the issuance of the Notes as if the Transactions had been
consummated as of the beginning of the period. Approximately $1,942 of
secured indebtedness of Premier is not being refinanced with the proceeds of
the Notes. An interest rate of 12% for the Notes has been used to determine
interest expense, net in the Pro Forma Financial Statements. No interest
income from the approximate $30,000 of net proceeds of the Transactions not
used in the Acquisition has been reflected in interest income, net.
Additionally, issuance costs associated with the Notes are being amortized
over the term of the Notes.
<TABLE>
<S> <C>
Senior Notes....................................................... $ 5,400
Amortization of costs associated with issuance of the Notes........ 219
Elimination of historical interest expense......................... (4,024)
-------
Net adjustments.................................................... $ 1,595
-------
-------
</TABLE>
(5) Adjustment reflects the tax effects of the pro forma adjustments described
above at a blended Federal and state rate of 39% after consideration of
permanent differences.
(6) Income (loss) per common share is computed based on the weighted average
number of common shares outstanding during the period. Warrants and options
have been excluded from the historical per share calculations of Premier and
30
<PAGE>
Funtime as well as from the pro forma calculation as no active trading
market existed for Premier or Funtime common stock during the six months
ended June 30, 1995 and the effect of any warrants or options would be
anti-dilutive. Pro forma income (loss) per common share has been calculated
based upon the following pro forma weighted average number of common shares
outstanding for the six months ended June 30, 1994:
<TABLE>
<S> <C>
Actual Premier weighted average common shares outstanding....... 16,860,607
Conversion of $7,000 of Convertible Notes, at conversion price
of $1.25 per share plus conversion premium of 275,310 common
shares.......................................................... 5,875,313
Conversion of $2,095 of Junior Notes, at conversion price of
$1.35 per share................................................. 1,551,852
----------
24,287,772
----------
</TABLE>
Income (loss) per common share--assuming full dilution is not presented
in the pro forma statement of operations for the six months ended June 30,
1995 since the result would be anti-dilutive. The Convertible Preferred
Stock issued in connection with the Merger is not considered a common stock
equivalent.
(7) The Unaudited Pro Forma Combined Statement of Operations for the six months
ended June 30, 1995 does not include the extraordinary loss of approximately
$279 from early extinguishment of debt. The extraordinary loss in expected
to occur in the three-month period ended September 30, 1995.
(8) For the purpose of determining the ratio of earnings to fixed charges,
earnings consist of income before income taxes and fixed charges. Fixed
charges consist of interest expense, amortization of deferred financing
costs and the portion (approximately 1/3) of rental expense that management
believes represents the interest component of rent expense. For the six
months ended June 30, 1995 for Premier and Funtime and on a pro forma basis,
earnings were insufficient to cover fixed charges by $3,100, $7,000, and
$11,300, respectively.
31
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
Premier's revenue is derived principally from the sale of tickets for
entrance to its parks (approximately 56%) and the sale of food, merchandise,
games and attractions inside its parks (approximately 44%). The Company's
principal costs of operations include salaries and wages, fringe benefits,
advertising, outside services, maintenance, utilities and insurance. The
Company's expenses are relatively fixed. Costs for maintenance, utilities,
advertising and insurance do not vary significantly with attendance, thereby
providing the Company with a significant degree of operating leverage as
attendance increases.
An important element of the Company's business strategy is the ongoing
expansion of its rides and attractions and overall improvement of its parks,
which management believes has contributed to increased attendance. The Company
intends to continue to make significant capital expenditures in order to
maintain and enhance the appeal of its parks, which it expects will, in turn,
increase attendance and profitability.
RESULTS OF OPERATIONS
Six Months Ended June 30, 1995 and 1994
Revenue. Premier's revenue increased 28.2% from $7.3 million in the first
six months of 1994 to $9.4 million in the first six months of 1995. This
increase in revenues was primarily attributable to a substantial increase
(approximately, $1.8 million) in season pass sales at Frontier City and White
Water Bay due to a new combined season pass program and the effect of these
season pass revenues, and an approximate 32,000 or 7.8% increase in attendance
at Premier's three theme parks.
Operating Expenses. Operating expenses were effectively flat in the two
periods, decreasing 1.1 % from $5.95 million in the first six months of 1994 to
$5.88 million in the first six months of 1995.
Selling, General and Administrative. Selling, general and administrative
increased 32.6% from $2.4 million in the first six months of 1994 to $3.2
million in the comparable period of 1995 primarily due to a 30.6% increase in
marketing and advertising expenses. Most of such increase (96%) was incurred at
Adventure World as part of the advertising campaign designed to promote public
awareness of the new Mind Eraser roller coaster, and the balance (4%) of such
increase was incurred in connection with the promotion of the new combined
season pass program at Frontier City and White Water Bay.
Costs of Products Sold. Costs of products sold increased 3.4% from $800,000
in the first six months of 1994 to $827,000 in the first six months of 1995.
This increase was a result of an 11% increase in in-park sales at Premier's
parks.
Depreciation and Amortization. Depreciation and amortization increased 29.3%
from $859,000 in the first six months of 1994 to $1.1 million in the comparable
period of 1995 as a result of Premier's capital improvement program.
32
<PAGE>
Years Ended December 31, 1994 and 1993
Revenue. Revenue aggregated $24.9 million in 1994, a 13.9% increase over
1993 revenue of $21.9 million, resulting from a 30.1% increase in revenue at
Adventure World and a 3.8% increase in revenue at Frontier City, offset in part
by a 7.0% decrease in revenue at White Water Bay.
Attendance at Premier's three parks in 1994 increased approximately 6.5%
compared to 1993 levels primarily as a result of a 19.2% increase at Adventure
World based on Premier's substantial investment in new rides and attractions and
increased marketing (including the engagement of Cal Ripken, Jr. as the park's
official spokesperson). The increase in attendance in 1994 was augmented by a
1.8% increase in ticket revenue per customer and a 8.4% increase in per-customer
in-park spending in that year. The increased ticket revenue resulted from
increased prices and a reduction in discount levels. The increased in-park
spending in 1994 was primarily attributable to higher price levels, additional
food and other retail outlets at the parks in that year and longer in-park
stays. Of the 1994 revenues, $417,000 represents the excess of insurance
proceeds received by Premier over the net book value of assets destroyed, and
repair costs of assets damaged, by high winds at one of Premier parks. See Note
11 to Notes to Premier's Consolidated Financial Statements. The Company believes
that the storm and the resulting damage caused a substantial loss of attendance
and revenue at the affected park. The Company estimates that the storm resulted
in an attendance loss of at least 20,000 persons at the park. During 1994,
revenue per visitor at the affected park was approximately $20.30.
Operating Expenses. Operating expenses increased approximately $2.0 million,
or 18.8%, in 1994 over 1993 levels. As a percentage of revenues, operating
expenses constituted approximately 49.6% in 1994 and 47.6% in 1993. The increase
in operating expenses during 1994 was primarily attributable to an approximate
$805,000 increase (representing a 12% increase over 1993 levels) in salaries and
other compensation benefits during that year, an approximate $406,000 (65%)
increase in repair and maintenance expense and a $511,000 (42%) increase in
operating supplies, equipment rentals and other expense. The increase in
personnel cost reflected an increase primarily at Adventure World in the number
of seasonal employees (11%) required to operate additional attractions as well
as longer operating hours and, to a lesser extent, changes in hourly rates paid
to lifeguards and other skilled employees (6%). Salary and other compensation
benefits increased $613,000 at Adventure World in 1994. Repairs and maintenance
increased due largely to a $288,000 increase at Adventure World arising out of
the significant expansion of that park with the addition of 14 new rides and
numerous other improvements during the two years preceding the 1994 season.
Operating supplies, equipment rentals and other expenses increased due to
additional "live" shows presented at the parks, additional equipment rentals,
particularly at Adventure World, increases in utility costs due to the
additional rides and attractions at the parks, and costs associated with the
preparation of group sales brochures.
Selling, General and Administrative. Selling, general and administrative
expenses increased from $4.8 million in 1993 to $5.4 million in 1994. Selling,
general and administrative expenses (as a percentage of revenues) constituted
21.8% in each of 1994 and 1993. The increase in these expenses in 1994 was
almost exclusively the result of a 37% increase in sales and advertising
expense. Of this increase $578,000 represented additional marketing and
advertising expense at Adventure World, which was designed to increase public
awareness of the significant capital improvements made at the parks.
Costs of Products Sold. Costs of products sold aggregated approximately $2.6
million in 1994, as compared to the 1993 level of $2.1 million. Cost of products
sold (as a percentage of in-park revenue) constituted approximately 23.3% and
23.8%, during 1994 and 1993, respectively.
33
<PAGE>
Depreciation and Amortization. Depreciation and amortization expense
aggregated $2.0 million in 1994 and $1.5 million in 1993. This 33.3% increase
reflected the effect of Premier's additional capital improvements.
Income Taxes. Premier's provision for income taxes represented approximately
40% of 1994 earnings before income taxes compared to 6.3% of 1993 earnings
before income taxes. State and local taxes were the principal reason that
Premier's effective tax rate was higher than the 34% federal corporate rate. See
Note 7 to Notes to Premier's Consolidated Financial Statements.
Equity in Loss of Partnership. The Company holds a 40% non-managing general
partnership interest in 229 East 79th Street Associates L.P. (the
"Partnership"), the Company's only non-theme park asset. During 1994, the
Partnership incurred a net loss of $612,000, compared to a net loss of $727,000
in 1993. Premier's share of the Partnership's losses (after giving effect to
interest income to Premier from its advances to the Partnership) was $83,000 in
1994 and $142,000 in 1993. In each year the Partnership sold three units in the
apartment building that it converted to cooperative ownership. The decrease in
the net loss in 1994 primarily reflected reduced interest expense of
approximately $61,000 arising out of principal repayments on its mortgage loan.
During 1993 and 1994, $470,000 and $494,000 of such repayments were made from
the proceeds of sales of apartment units. The balance of the decrease in the net
loss in 1994 arose out of lower co-op maintenance fees and depreciation expense
caused by sales of apartment units.
Years Ended December 31, 1993 and 1992
Revenue. Revenue aggregated $21.9 million in 1993, a 25.7% increase over
1992 revenue of $17.4 million, resulting from a 60.3% increase in revenue at
Adventure World, a 4.5% increase in revenue at Frontier City and a 13.9%
increase in revenue at White Water Bay.
Attendance at the three Premier parks in 1993 increased approximately 18.5%
compared to 1992 levels. This increase primarily arose out of a 44.3% attendance
increase at Adventure World, primarily attributable to a substantial investment
in new rides and attractions and an aggressive marketing campaign, and a 14.7%
increase at White Water Bay, primarily the result of the return of normal
weather in the 1993 season as compared with unusually difficult weather in 1992.
The increase in attendance in 1993 was augmented by a 6.7% increase in ticket
revenue per customer and a 5.1% increase in per-customer in-park spending in
that year. Ticket revenue per customer increased 13.2% at Adventure World and
3.8% at Frontier City, offset in part by a 2.6% decline at White Water Bay
primarily caused by increased season pass usage in 1993. The increased in-park
spending in 1993 was primarily attributable to higher price levels, additional
food and other retail outlets at the parks in that year and longer in-park
stays.
Operating Expenses. Operating expenses increased approximately $1.1 million,
or 11.9%, in 1993 over 1992 levels and (as a percentage of revenues) constituted
approximately 47.6% in 1993 and 53.4% in 1992. Substantially all of the increase
in operating expenses during 1993 was attributable to a $1.1 million (21%)
increase in salaries and other compensation benefits during that year. Wages to
seasonal employees increased $436,000 (30.1%), while compensation to maintenance
staff and marketing staff increased $389,000 and $283,000, respectively.
Operating expenses were also affected by a 19% increase in utility charges. Of
the increased compensation expense during 1993, approximately $947,000 was
incurred at Adventure World and was attributable to an increase in the group
sales force, additional seasonal positions added for new rides and attractions,
and longer operating hours and operating season at that park.
Selling, General and Administrative. Selling, general and administrative
expenses increased from $4.4 million in 1992 to $4.8 million in 1993. Selling,
general and administrative expenses (as a percentage of revenues) decreased to
21.8% in 1993 from 25.4% in 1992. Substantially all of the
34
<PAGE>
1994 increase was attributable to increased advertising expenses ($145,000),
taxes ($145,000) and professional fees ($95,000) at Adventure World in
connection with Premier's redevelopment of that park.
Cost of Products Sold. Costs of products sold aggregated approximately $2.1
million in 1993, as compared to the 1992 level of $1.7 million. Cost of products
sold (as a percentage of in-park revenues) constituted approximately 23.8% in
1993 and 24.1% in 1992.
Depreciation and Amortization. Depreciation and amortization expense
aggregated $1.5 million in 1993 and $1.4 million in 1992. The increase in 1993
reflected the effect of additional capital improvements.
Income Taxes. Premier's provision for income taxes was 6.3% of its 1993
earnings before income taxes. Based upon projections of future taxable income,
Premier determined that it was more likely than not that Premier's available net
operating loss carryforwards would be utilized to reduce future taxable income
before the expiration of the carryforwards. Accordingly, the valuation allowance
against Premier's deferred tax assets was reduced in 1993 resulting in an
effective tax rate much lower than the statutory rate. See Note 7 to Notes to
Premier's Consolidated Financial Statements.
Equity in Loss of Partnership. During 1993, the Partnership incurred a net
loss of $727,000, compared to a net loss of $639,000 in 1992. Premier's share of
the Partnership's losses (after giving effect to interest income to Premier from
its advances to the Partnership) was $142,000 in 1993 and $122,000 in 1992. In
1993 and 1992, the Partnership sold three and four units, respectively, in the
apartment building that it converted to cooperative ownership. The increase in
the net loss in 1993 primarily reflected a decrease in rental income during
1993, as compared to 1992, and the presence in 1992 of approximately $45,000 of
tax abatement revenue and a $55,000 gain on sale of units. During 1993 and 1992,
the Partnership made principal payments on its mortgage loan aggregating
$470,000 and $738,000, respectively.
LIQUIDITY, CAPITAL COMMITMENTS AND RESOURCES
The operations of the Company are highly seasonal, with the majority of the
operating season occurring between Memorial Day and Labor Day. Most of the
Company's revenue is collected in the second and third quarters of each year
while most expenditures for capital improvements and major maintenance are
incurred when the parks are closed. The Company employs a substantial number of
seasonal employees who are compensated on an hourly basis. An increase in the
federal or any applicable state minimum wage rate would result in increased
compensation expense for the Company.
Prior to the 1993 season, Premier began implementing a long-range capital
improvement program for its then three parks, spending approximately $7.7
million in 1993 and $10.1 million in 1994. In addition, Premier expended
approximately $4.8 million in the first six months of 1995 on improvements at
its parks. Also, Premier purchased certain rides and attractions through capital
leases and borrowings of $2.7 million and $570,000 in 1993 and 1994,
respectively.
During 1994, Premier generated $1.0 million in net cash from operating
activities. Additionally, financing activities provided approximately $7.6
million in net cash during that year, of which approximately $4.2 million
represented the proceeds of Premier's 1994 private placement of common stock and
approximately $3.4 million represented net borrowings under the Existing Bank
Debt. During that year, Premier used $10.1 million in net cash in connection
with investing activities, substantially all of which represented additions to
buildings, rides and attractions at Premier's parks made in connection with its
capital improvement program. The 1994 capital improvements were funded from cash
generated from operations in 1993, and the proceeds of borrowings,
35
<PAGE>
primarily under the Existing Bank Debt. As a result of these activities,
Premier's property and equipment (after depreciation) at December 31, 1994
increased approximately $8.7 million over the amount at December 31, 1993, and
cash and cash equivalents at 1994 year-end decreased $1.7 million as compared to
the December 31, 1993 level. Liabilities at December 31, 1994 aggregated $27.4
million, representing a $3.9 million increase over December 31, 1993,
substantially all of which represented increased borrowings in 1994 under the
Existing Bank Debt.
During 1993, Premier generated $2.3 million in net cash from operating
activities. Financing activities, including the issuance of $7 million in
Convertible Notes and borrowings under the Existing Bank Debt, provided an
additional $2.5 million in net cash. During that year, Premier used $7.7 million
of net cash in investing activities, substantially all of which constituted
additions to buildings, rides and attractions at Premier's parks. The 1993
capital improvements were funded from 1992 operating cash flow, proceeds of
Premier's 1992 placement of common stock and proceeds of borrowings, primarily
from the Convertible Note issuance. As a result of these activities, Premier's
property and equipment (after depreciation) at December 31, 1993 increased
approximately $8.5 million over the 1992 year-end amount and cash and cash
equivalents at 1993 year-end decreased $2.9 million as compared to the December
31, 1992 level. Total Liabilities increased during 1993 by approximately $4.7
million to $23.5 million as a result of the Convertible Note issuance, offset in
part by repayment in 1993 of other indebtedness.
On August 15, 1995, the Company acquired Funtime in the Merger for
approximately $60.0 million and repaid $16.1 million of Existing Bank Debt. The
Company funded these amounts from a portion of its $90 million Old Note offering
and its $20 million Convertible Preferred Stock offering. In addition, on that
date, Existing Notes in the principal amount of $9.1 million were converted into
common stock of the Company. See "Summary--The Merger". After giving effect to
the Transactions substantially all of the Company's indebtedness at that date
was represented by the Notes, which require annual interest payments of $10.8
million. Except in the event of a Change of Control of the Company and certain
other circumstances described under the caption "Description of New Notes," no
principal payment on the Notes is due and payable until maturity, August 15,
2003. The annual dividend requirements on the Convertible Preferred Stock is
$1.4 million, payable at the election of the Company in cash or additional
shares of such stock. The Senior Credit Facility prohibits payment of cash
dividends by the Company.
The Transactions generated approximately $29.9 million of excess net
proceeds (excluding amounts deposited in escrow or retained by the Company to
fund specified Funtime liabilities under the Merger Agreement). The Company
expects to use approximately $21.5 million of this amount on capital
expenditures prior to the 1996 season, primarily at Adventure World and the
Funtime parks.
The Company expects that the approximate $8.4 million in remaining excess
net proceeds from the Transactions, internally generated funds and borrowings
under its $20.0 million Senior Credit Facility will be the Company's primary
sources of liquidity. Pursuant to the terms of the Merger Agreement, all except
approximately $2.0 million of the net cash provided by the operations of
Funtime's parks from the closing date of the Merger (August 15, 1995) through
September 30, 1995 will be payable to the Selling Shareholders. The Company
believes that the funds available from its sources of liquidity will be adequate
to cover its currently anticipated working capital and debt service
requirements.
In connection with the issuance of the Old Notes, the Company agreed in the
Registration Rights Agreement to effect the Exchange Offer and agreed that, if
the Registration Statement of which this Prospectus is a part was not declared
effective by the Commission on or prior to October 14, 1995 or if the Exchange
Offer is not consummated on or prior to November 13, 1995, the Company would pay
to the holders of Old Notes liquidated damages. During the first sixty days
after such dates during which the Registration Statement has not been declared
effective or the
36
<PAGE>
Exchange Offer not consummated, as the case may be, the amount of liquidated
damages equals $0.10 per week for each $1,000 principal amount of Old Notes
($9,000). The amount of the liquidated damages increases by $0.05 per week per
$1,000 principal amount of Old Notes during each subsequent 60-day period, up to
a maximum of $0.35 per $1,000 principal amount. The Registration Statement was
declared effective on November , 1995, and, unless extended, the Exchange
Offer will be consummated on December , 1995. Accordingly, the Company expects
the amount of liquidated damages payable by it to Old Noteholders will aggregate
approximately $70,000. See "The Exchange Offer--Purpose and Effect."
37
<PAGE>
BUSINESS
GENERAL
The Company is a leading theme park operator which operates six parks with
an aggregate 1994 attendance of approximately four million. The Company's parks
are regional parks, drawing on average approximately 88% of their patrons from
within a 100-mile radius. The parks are located in five geographically diverse
markets: Washington, D.C./Baltimore; Buffalo/Rochester; Cleveland; Columbus; and
Oklahoma City. The parks are designed to provide a complete family-oriented
entertainment experience, and feature a broad selection of state-of-the-art and
traditional thrill rides, water attractions, themed areas, concerts and shows,
restaurants, game venues and merchandise outlets. For the twelve months ended
June 30, 1995, the Company's total revenue on a pro forma basis was
approximately $77.6 million.
Each of the Company's parks is located in a highly populated market where
there is limited direct competition. The Company believes that the combination
of the limited supply of real estate appropriate for theme park development,
high initial capital investment, long developmental lead-time, and zoning
restrictions provides each of its parks a significant degree of protection from
new competitive theme park openings. Based on its knowledge of the development
of other theme parks in the United States, the Company's management estimates
that it would cost at least $100 million and would take a minimum of two years
to construct a new regional theme park.
The Company believes that the geographic diversity its of its parks limits
its exposure to local economic downturns and unfavorable weather conditions. In
addition, the Company believes that as a multi-park operator it benefits from
numerous competitive advantages over single-park operators, including the
ability to (i) exercise group purchasing power (for both operating and capital
assets); (ii) achieve administrative economies of scale; (iii) attract greater
sponsorship revenue and support from sponsors with nationally recognized brands;
(iv) recruit and retain superior management personnel; and (v) optimize the use
of its capital assets by rotating rides among its parks to provide fresh
attractions at each park.
The Company operates six parks: Adventure World, a combination theme and
water park located three miles off the Beltway, between Washington, D.C. (15
miles away) and Baltimore, Maryland (30 miles away); Frontier City, a western
themed park in Oklahoma City, Oklahoma; White Water Bay, a tropical themed water
park also located in Oklahoma City; Geauga Lake, a combination theme and water
park near Cleveland, Ohio; Darien Lake & Camping Resort, a combination theme and
water park with an adjacent camping resort, located between Buffalo and
Rochester, New York; and Wyandot Lake, a water park which also includes "dry"
rides and other attractions, located adjacent to the Columbus Zoo in Columbus,
Ohio.
BUSINESS STRATEGY
The Company's senior management team has extensive experience in the theme
park industry and believes it has a proven track record in acquiring and
re-positioning regional parks and in operating its parks efficiently. Since
senior management assumed control in 1989, the Company has followed a strategy
of selectively acquiring undermanaged parks which had lacked capital investment
and marketing expertise. The Company's operating strategy is to increase revenue
through attendance and per capita spending gains, while maintaining strict
control of operating expenses in order to benefit from the substantial operating
leverage inherent in the theme park business. The primary elements of this
strategy include (i) adding rides and attractions and improving overall park
quality; (ii) enhancing marketing, sponsorship and group sales programs; and
(iii) generating higher ticket revenues and in-park spending. Management
believes it has successfully demonstrated the effectiveness of its strategy at
the Premier parks and plans to implement this strategy at the Funtime parks.
Management believes that while the Funtime parks
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have generated strong and stable cash flows over the last five years, they
lacked the sustained capital investment and creative marketing required to
realize their full potential. In addition, the Company will continue to evaluate
potential acquisitions of additional regional theme parks.
ADD RIDES AND ATTRACTIONS AND IMPROVE PARK QUALITY. Over the past several
years, the Company has made significant investments in Frontier City and
Adventure World which, together with enhanced marketing, sales and sponsorship
programs, have resulted in significant improvements in attendance, revenue and
EBITDA at these parks.
Frontier City--In 1990 and 1991, an aggregate of approximately $7.0 million
was invested in Frontier City to add several major rides, expand and improve the
children's area, significantly increase the size of and theme the group picnic
facilities and construct a 12,000 square foot air-conditioned mall and main
events center. These additions, combined with an aggressive marketing strategy,
resulted in Frontier City's attendance, revenue and EBITDA increasing
approximately 54%, 83%, and 124%, respectively, from 1989 to 1991.
Adventure World--Since acquiring Adventure World in January 1992, the
Company invested over $15.0 million in the park through 1994 to add numerous
rides and attractions and to improve theming. These additions and improvements,
combined with an aggressive and creative marketing strategy, enabled the Company
to increase Adventure World's attendance by 72%, from approximately 363,000 in
1992 to over 625,000 in 1994, to more than double park revenue from $6.1 million
in 1992 to $12.7 million in 1994, and to increase EBITDA from a deficit of
($410,000) to $2.1 million during the same period. As a result of these
improvements, Adventure World has been voted the "Most Improved Park" in the
country in each of the last three years, according to Inside Track Magazine, a
recognized industry periodical. In 1995, the Company added the Mind Eraser, a
$6.6 million state-of-the-art suspended steel looping roller coaster. Based on
information provided by the ride's manufacturer and obtained from other theme
park companies, management believes that the addition of this type of ride at
other regional parks with similar demographic characteristics has resulted in
annual attendance gains in the range of 100,000 to 200,000. The Company expects
to recognize similar gains at Adventure World in 1995. Moreover, the addition of
this ride has allowed the Company to increase ticket prices at Adventure World
for the 1995 season and to realize in-park spending gains.
The Company expects to spend approximately $21.5 million from the proceeds
of the Transactions to add rides and attractions and make other improvements at
its parks for the 1996 season. Approximately $4.0 million of this capital is
expected to be invested in Adventure World to continue penetrating the densely
populated Washington, D.C./Baltimore market (approximately 6.5 million and 10.9
million people within 50 and 100 miles, respectively). Given the size of this
market, standard levels of market penetration in the industry, the performance
of similarly situated parks and attendance gains achieved at the park to date,
management believes that Adventure World has the potential to reach annual
attendance levels in excess of 1.5 million within the next five years. The
balance of the capital will primarily be used to add rides and attractions at
the Funtime parks. Based on industry experience and the Company's experience at
the Premier parks, the Company believes that these efforts, together with
aggressive and creative marketing programs, will increase attendance and per
capita spending at each of the Funtime parks.
ENHANCE MARKETING, SPONSORSHIP AND GROUP SALES PROGRAMS. Premier's parks
have benefitted from professional, creative marketing programs which emphasize
the marketable rides and attractions, breadth of available entertainment and
value provided by each park. The Company's marketing programs have a local
orientation, which the Company believes is a key ingredient to successful
marketing for regional theme parks. For example, Cal Ripken, Jr., the all-star
shortstop for the Baltimore Orioles, serves as official spokesperson for
Adventure World, making numerous appearances in radio and television
commercials, and Olympic gymnast Shannon
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Miller, an Oklahoma City resident, has opened rides at White Water Bay.
Management intends to implement similar marketing programs to promote the
planned capital improvements at the Funtime parks.
The Company has also successfully attracted well known sponsorship and
promotional partners, such as Pepsi, McDonald's, Taco Bell, Blockbuster, 7
Eleven, Wendy's and various supermarket chains. The Company believes that its
increased number of parks and annual attendance resulting from the Merger will
enable it to expand and enhance its sponsorship and promotional programs. In
addition, group sales and pre-sold tickets provide the Company with a consistent
and stable base of attendance, representing over 40% of aggregate attendance in
1994. Premier increased its group sales and pre-sold ticket business by
approximately 65.3% from 1992 to 1994. The Company believes that it has the
opportunity to continue to expand its group sales and pre-sold ticket business.
GENERATE HIGHER TICKET REVENUES AND IN-PARK SPENDING. Management regularly
reviews its ticket price levels and ticket category mix in order to capitalize
on opportunities to implement selective price increases, both through main gate
price increases and the reduction in the number and types of discounts.
Management believes that opportunities exist to implement marginal ticket price
increases without significant reductions in attendance levels. Such increases
have successfully been implemented on a park-by-park basis in connection with
the introduction of major new attractions or rides. In addition, discounts are
typically offered on weekdays and evenings to encourage attendance at less
popular times. As a result of these measures, the average ticket price per paid
visitor at the Premier parks increased 10.2% from 1992 to 1994. The Company
believes that through similar measures it will be able to increase the average
ticket price per paid visitor at the Funtime parks.
The Company also seeks to increase in-park spending by adding well-themed
restaurants, remodeling and updating existing restaurants and adding new
merchandise outlets. The Company has successfully increased spending on food and
beverage by introducing well-recognized local and national brands, such as
Domino's, Friendly's, TCBY and KFC. Finally, the Company has taken steps to
decrease the waiting time for its most popular restaurants and merchandise
outlets. As a result of these measures, average in-park spending per visitor at
the Premier parks increased 14.3% from 1992 to in 1994. The Company believes
that through similar measures it will be able to increase average in-park
spending per visitor at the Funtime parks.
The Company has also developed a variety of off-season special events
designed to increase attendance and revenue prior to Memorial Day and after
Labor Day. Examples include Hallowscream, a Halloween event in which parks are
transformed with supernatural theming, scary rides and haunting shows, and
Octoberfest, the presentation of traditional German food, theming, music and
entertainment. Over the last several years, Frontier City has drawn over 25,000
visitors to each of its Octoberfest and Hallowscream events. In 1994, over
50,000 visitors attended Hallowscream at Adventure World. Management intends to
introduce these types of events to the Funtime parks and believes they will have
a similar impact on attendance.
EVALUATE POTENTIAL ACQUISITIONS. The theme park industry is highly
fragmented and comprised of a large number of single-park operators. Management
believes that potential acquisition opportunities will arise and intends to
evaluate selective acquisitions that complement its existing operations and fit
within its targeted level of attendance of up to two million annually. The
Company believes that its increased size resulting from the Merger will enhance
its ability to make park acquisitions for stock. The Company expects to
generally be able to eliminate duplicative overhead expenses and recognize other
economies of scale in connection with such acquisitions. For example, the
Funtime acquisition was achieved at a purchase price multiple of approximately
4.1x Funtime's 1994 EBITDA, adjusted by approximately $2.5 million for the
elimination of corporate
40
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overhead, non-recurring park operating expense savings and increases in revenue
it expects to achieve after the Merger as well as $261,000 of non-recurring
corporate expenses.
THE THEME PARK INDUSTRY
The U.S. theme park industry consists of two major segments: destination and
regional theme parks. According to Amusement Business, a recognized industry
publication, total North American amusement/theme park attendance in 1994 was
approximately 255 million. Total attendance for the 40 largest parks, which
includes both destination and regional parks, was 134.3 million in 1994 compared
to 123.4 million in 1991, representing a compound annual growth rate of 2.9%
over this period. Management believes that this growth in the industry reflects
demographic growth in the 5-17 and 18-24 year old age groups and increasing
emphasis on family-oriented leisure and recreation activities.
Destination parks are those designed primarily to attract visitors willing
to travel long distances and pay significant expense to visit the parks'
attractions as part of an extended stay. To accommodate vacationers, many
destination parks also include on-site lodging. Walt Disney World and Universal
Studios are well known examples of this type of park.
Regional theme parks, such as those operated by the Company, are designed to
attract visitors for a full day or a significant number of hours. Management
views regional theme parks as those that draw the majority of their patrons from
within a 50-mile radius of the park and the great majority of their visitors
from within a 100-mile radius of the park. Visiting a regional theme park is
significantly less expensive than visiting a destination park because of lower
transportation expenses, lower ticket prices and the lack of extended lodging
expenses.
The regional theme park industry is highly fragmented with over 150 parks
owned by over 100 operators. The Company believes that the geographic diversity
of its parks limits its exposure to local economic downturns and unfavorable
weather conditions. In addition, the Company believes that as a multi-park
operator it benefits from numerous competitive advantages over single-park
operators, including the ability to (i) exercise group purchasing power (for
both operating and capital assets); (ii) achieve administrative economies of
scale; (iii) attract greater sponsorship revenue and support from sponsors with
nationally recognized brands; (iv) recruit and retain superior management
personnel; and (v) optimize the use of its capital assets by rotating rides
among its parks to provide fresh attractions at each park.
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DESCRIPTION OF PARKS
The following table summarizes certain operating statistics of each of the
Company's parks.
<TABLE><CAPTION>
PREMIER FUNTIME
------------------------------------------------- ----------------------------------------
ADVENTURE FRONTIER WHITE GEAUGA DARIEN WYANDOT
WORLD CITY WATER BAY LAKE LAKE LAKE
---------------- -------------- ------------- ---------------- ---------- --------
Cleveland/Akron/ Buffalo/
Washington, D.C/ Oklahoma City/ Youngstown/ Rochester/
Market............. Baltimore Tulsa Oklahoma City Pittsburgh Syracuse Columbus
<S> <C> <C> <C> <C> <C> <C>
Population (000)(1)
within 50 miles.. 6,500 1,200 1,200 4,000 2,200 2,000
within 100 miles. 10,800 2,400 2,400 7,400 3,100 6,400
Percentage of patrons
within 50 miles.. 89% 74% 85% 72% 74% 83%
within 100 miles. 95% 90% 98% 85% 80% 95%
1994 total attendance 625,000 506,000 277,000 1,068,000 1,038,000 361,000
1994 operating days 124 137 102 116 106 111
Year opened........ 1980 1958 1981 1895 1964 1981
Year acquired...... 1992 1982 1991 1969 1985 1983
Park acres (public) 115(2) 60(3) 22 116(4) 144(5) 18(6)
Total rides and
attractions...... 46 30 18 60 54 30
Food outlets....... 29 26 7 44 59 10
Merchandise outlets 15 21 3 25 19 2
Game venues........ 38 33 1 38 40 9
Theatre capacity... 1,376 4,500 -- 500 20,000 100
</TABLE>
- ------------
(1) Population figures have been obtained from CACI Marketing Systems, a
marketing firm specializing in demographics, which derived such information
from U.S. Census data.
(2) Does not include approximately 400 acres adjacent to Adventure World owned
by the Company and zoned for entertainment and recreational uses.
(3) Does not include approximately 30 acres owned by the Company which are
available for complementary uses.
(4) Does not include an approximate 55-acre spring-fed lake and 87 acres of
undeveloped land owned by the Company, approximately 30 acres of which are
suitable for further development.
(5) Does not include approximately 242 acres of campgrounds and 593 acres of
agricultural, undeveloped and water areas.
(6) Does not include approximately 30 acres of parking which Wyandot Lake shares
with the Columbus Zoo. The Company subleases the Wyandot Lake site from the
Columbus Zoo, and the Company is currently negotiating with the Columbus Zoo
to lease an additional five to ten acres of land for the expansion of
Wyandot Lake.
Adventure World
Overview. Adventure World is a combination theme and water park located in
Largo, Maryland, approximately 15 miles east of Washington, D.C. and 30 miles
southwest of Baltimore, Maryland. The park's primary market includes Maryland,
northern Virginia, Washington, D.C. and parts of Pennsylvania and Delaware. This
market provides the park with a permanent resident population base of
approximately 6.5 million people within 50 miles and 10.8 million people within
100 miles. According to a copyrighted 1994 study published by A.C. Nielsen Media
Research (the "Nielsen Report"), which measures the number of persons in
television households within a given geographic area or so-called designated
market area ("DMA"), the Washington, D.C. and Baltimore markets are the number 7
and number 23 DMAs in the United States, respectively. This market also has a
substantial base of businesses, associations, schools and churches for group
sales and outings, as well as a large tourist market. Based upon in-park
surveys, approximately 89% of the visitors to Adventure World in 1994 resided
within a 50-mile radius of the park, and 95% resided within a 100-mile radius.
The Company owns a site of 515 acres, with 115 acres currently used for park
operations. The remaining 400 acres, which are fully zoned for entertainment and
recreational uses, provide the Company with ample expansion opportunity, as well
as the potential to develop complementary operations, such as an amphitheater or
family entertainment center. Adventure World currently has
42
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32 adult and 14 children's rides, 29 food outlets, 15 merchandise outlets, 38
game venues and 3 theaters. In addition, picnic grounds are available for family
and group outings. Adventure World also offers a complete water park, including
a large wave pool, water slides, a large activity pool, a "lazy river" ride and
a children's play area. The following is a list of certain of the major
attractions currently at Adventure World.
<TABLE><CAPTION>
ATTRACTION DESCRIPTION
---------- -----------
<S> <C>
Mind Eraser........................... Inverted suspended steel looping roller coaster
Python................................ Return loop steel roller coaster
Wild One.............................. Wooden roller coaster
Renegade Rapids....................... 1,350-foot long rapids ride
Iron Eagle............................ 83-foot spinning ride
Shipwreck Falls....................... Splash water ride
Wild West Stunt Show.................. Western stunt show
Antique Cars.......................... Gasoline powered cars on guided track
Falling Star.......................... 65-foot rotating platform ride
Carousel.............................. 64-piece major carousel
Balloon Ferris Wheel.................. 12-balloon rotating wheel
A Day at the Circus................... Themed children's area with 14 rides and attractions
Paradise Island Water Park............ Water park with 11 rides and attractions
</TABLE>
Adventure World's principal competitors are King's Dominion Park, located in
Doswell, Virginia; Hershey Park, located in Hershey, Pennsylvania; and Busch
Gardens, located in Williamsburg, Virginia. These parks are located
approximately 120, 125 and 175 miles, respectively, from Adventure World.
History and Recent Operating Results. Adventure World was originally
developed in the 1970s as a drive-through wild life preserve. After 1980, the
park was converted by prior ownership into a combination theme and water park,
with an emphasis on the water park component. Prior to the Company's acquisition
of Adventure World in early 1992, the theme park component lacked sufficient
rides and attractions, as well as appropriate theming.
Employing its strategy of acquiring undermanaged parks and significantly
improving operations and marketable attractions, the Company implemented new
marketing, sales and promotional programs and aggressively expanded the
attractions at the park, adding ten major new rides, an elaborately themed new
children's area with 14 new rides and attractions and a major new western themed
area, and also upgraded and expanded the picnic/festival grounds. This capital
program, entailing a capital investment of approximately $15.5 million through
1994, together with creative marketing and promotional programs, has enabled the
Company to increase Adventure World's attendance by 72%, from approximately
363,000 in 1992 to over 625,000 in 1994, to more than double park revenue from
$6.1 million in 1992 to $12.7 million in 1994, and to increase EBITDA from a
deficit of ($410,000) to $2.1 million during the same period. As a result of
these achievements, the park was voted the "Most Improved Park" in the United
States according to Inside Track Magazine for each of the last three years. In
addition, in 1994, the park was one of the only two facilities to receive the
Platinum Award from Ellis & Associates, leading international water safety
consultants, for achieving a perfect score on safety tests administered by Ellis
& Associates.
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The following table sets forth certain information with respect to the
operations of Adventure World since its acquisition by the Company in January
1992.
<TABLE><CAPTION>
1992 1993 1994
------ ------ -------
<S> <C> <C> <C>
Total revenue (000)............................................. $6,103 $9,785 $12,733
Total attendance (000).......................................... 363 524 625
Revenue per visitor............................................. $16.80 $18.67 $ 20.36
In-park spending per visitor.................................... $ 7.01 $ 7.50 $ 8.36
Number of operating days........................................ 120 122 124
Capital expenditures (000)...................................... $ 931 $6,159 $ 8,475
</TABLE>
Strategy. The Company's strategy is to continue its capital investment and
marketing programs at Adventure World in order to further penetrate the densely
populated Washington, D.C./Baltimore market and to achieve further growth in
attendance and per capita spending. Prior to the 1995 season, the Company
installed the Mind Eraser, a $6.6 million state-of-the-art suspended steel
looping roller coaster. The Company believes that the addition of this type of
ride at other regional parks with similar demographic characteristics has
resulted in annual attendance gains in the range of 100,000 to 200,000, and that
the Company will recognize similar gains at Adventure World. Moreover, the
addition of this ride has allowed the Company to increase ticket prices at
Adventure World for the 1995 season and to realize in-park spending gains.
Further capital expenditures, which the Company anticipates will be
approximately $4.0 million prior to the 1996 season, are expected to fund the
development of additional rides, attractions and revenue locations, as well as
general park improvements.
The Company intends to add sales representatives and increase direct mail
programs in order to expand its group sales and pre-sold ticket business,
increase its season pass sales and capitalize on the substantial tourist market
in the Washington, D.C. area, with a particular emphasis on visiting student
groups and families. The Company is also considering adding complementary
entertainment attractions at the park, such as an amphitheater, either alone or
in conjunction with joint venture partners. Management also intends to extend
weekend operations before and after the current operating season, to add a
variety of special events (such as its Octoberfest and Halloween events) and to
increase its night business through evening discount programs. Lastly,
commencing for the 1996 season, the Company intends to open the operating season
in April. Given the size of the Washington, D.C./Baltimore market, management
believes that Adventure World has the potential to reach annual attendance in
excess of 1.5 million within the next five years.
Frontier City
Overview. Frontier City is a western theme park located along Interstate 35
in northeast Oklahoma City, Oklahoma, approximately 100 miles from Tulsa. The
park's market includes nearly all of Oklahoma and certain parts of Texas and
Kansas, with its primary market being in Oklahoma City and Tulsa. This market
provides the park with a permanent resident population base of approximately 1.2
million people within 50 miles of the park and 2.4 million people within 100
miles. According to the Nielsen Report, the Oklahoma City and Tulsa markets are
the number 43 and number 59 DMAs in the United States, respectively. This market
also has a substantial base of businesses, associations, schools and churches
for group sales and outings. Based upon in-park surveys, approximately 74% of
the visitors to Frontier City in 1994 resided within a 50-mile radius of the
park, and 90% resided within a 100-mile radius.
The Company owns a site of approximately 90 acres, with 60 acres currently
used for park operations. The remaining 30 acres provide the Company with the
potential to develop complementary operations, such as campgrounds. Frontier
City currently has 20 adult and 10 children's rides, 26 food outlets, 21
merchandise outlets, 33 game venues and four theaters. In addition, the Company
professionally produces eight live shows daily, such as country music shows, a
50's
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<PAGE>
musical revue and a magic show, and holds a concert series each summer. In
addition, Fort Frontier, a 12,000 square foot air-conditioned mall and main
event center, contains numerous food and retail locations, an entertainment
center and a 500-seat western opera house. In the off-season, the center serves
as a banquet facility, accommodating groups of up to 1,500 people. Picnic
grounds are also available for family picnics and group outings. The following
is a list of certain of the major attractions currently at Frontier City.
<TABLE><CAPTION>
ATTRACTION DESCRIPTION
---------- -----------
<S> <C>
Silver Bullet......................... Looping steel roller coaster
Wildcat............................... Wooden roller coaster
Nightmare............................. Indoor steel roller coaster
Diamond Back.......................... Backwards looping steel roller coaster
Time Warp............................. Double looping gondolas
Renegade Rapids....................... River rapids ride
Red River Logging Co.................. Log flume
Prairie Schooner...................... Swinging ship
Grand Centennial Wheel................ Giant ferris wheel
Swingin' Six Guns..................... Flying swings
O.K. Kiddie Corral.................... Themed children's area with 10 rides and attractions
</TABLE>
Frontier City's only significant competitor is Six Flags Over Texas located
in Arlington, Texas, approximately 225 miles from Frontier City.
History and Recent Operating Results. Frontier City opened in 1958 as a
replica of an 1880s western town and was acquired by the Company in 1982. The
Company began redeveloping the park after the 1989 season with a two-year, $7.0
million capital program to reposition and revitalize the park. In addition to
extensive western theming and landscaping and general upgrading of the physical
plant, capital improvements included the addition of three major rides, the
expansion and improvement of the O.K. Kiddie Corral children's area (including
the addition of three children's rides), the expansion and theming of the group
picnic facilities and the addition of Fort Frontier. The effect of these capital
improvements, combined with an aggressive marketing program, was to increase the
park's attendance, revenue and EBITDA by approximately 54%, 83% and 124%,
respectively, from 1989 to 1991. Since 1991, the park has achieved steady growth
in annual revenue to $9.0 million in 1994 and has maintained annual attendance
in the range of approximately 500,000. As a result of these efforts, Frontier
City has received numerous community and industry awards and was named the 1991
Tourist Attraction of the Year by the State of Oklahoma Department of Tourism
and Recreation.
The following table sets forth certain information with respect to the
operations of Frontier City since 1989.
<TABLE><CAPTION>
1989(1) 1990 1991 1992 1993 1994
------- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Total revenue (000)..................... $4,140 $5,571 $7,579 $8,289 $8,658 $8,990
Total attendance (000).................. 331 398 508 496 503 506
Revenue per visitor..................... $12.53 $14.02 $14.91 $16.73 $17.20 $17.76
In-park spending per visitor............ $ 5.01 $ 5.44 $ 5.66 $ 6.70 $ 6.92 $ 7.09
Number of operating days................ 96 117 117 136 136 137
Capital expenditures (000).............. $ 558 $1,588 $5,459 $ 904 $1,824 $2,161
</TABLE>
- ------------
(1) Reflects results prior to the Company's implementation of a $7.0 million
capital improvement program.
Strategy. Management believes that as a result of its capital improvement
program to date, Frontier City has reached an appropriate level of attractions
for its market size. As a result, with maintenance-level capital expenditures in
the range of $300,000 to $400,000 per year and additions of new marketable
attractions every two or three years, the Company believes that the park should
be able to build upon its proven performance to achieve moderate attendance
growth,
45
<PAGE>
to gradually increase ticket prices and to increase in-park spending, as well as
to improve operating margins as revenue increases.
The Company conducts weekend activities in the off-season at Frontier City,
including special events such as Hallowscream and Octoberfest. Management will
consider expanding these activities in the future (for example, by adding
Christmas events), and may also add certain attractions for which additional
charges can be imposed (e.g., go-cart tracks). The Company may also consider
adding a campground and a concert venue at the park.
The Company seeks to take advantage of operational efficiencies and other
tie-in benefits at Frontier City and White Water Bay. For example, the Company
enhanced its joint marketing program for Frontier City and White Water Bay with
a revised season pass program for 1995 which offers unlimited use of both
facilities for a single price. As a result of this simplified joint program,
season pass sales for 1995 for Frontier City and White Water Bay exceeded
36,500, as compared to 17,800 in 1994.
White Water Bay
Overview. White Water Bay is a tropical themed water park located along
Interstate 40 in southwest Oklahoma City, Oklahoma. The park is among the top
twenty water parks in the country based on 1994 attendance. The park's primary
market includes the greater Oklahoma City metropolitan area. According to the
Nielsen Report, Oklahoma City is the number 43 DMA in the United States. This
market provides the park with a permanent resident population base of
approximately 1.2 million people within 50 miles of the park and 2.4 million
people within 100 miles. White Water Bay also attracts group sales from groups
such as churches and other civic organizations. Based upon in-park surveys,
approximately 85% of the visitors to White Water Bay resided within a 50-mile
radius of the park, and 98% resided within a 100-mile radius.
The Company owns a site of 22 acres, all of which are currently used for
park operations. White Water Bay features a 500,000 gallon wave pool, an eight
story multiple slide ride, a 450,000 gallon activity pool, nine slides, a "lazy
river" ride, a children's activity pool and four volleyball courts. White Water
Bay also has a full service restaurant and two snack stands. Raft and locker
rentals are also available. In addition, the park has picnic grounds for family
and group outings. The following is a list of certain of the major attractions
currently at White Water Bay.
ATTRACTION DESCRIPTION
---------- -----------
White Water Bay....................... Wave pool
Castaway Creek........................ Lazy river ride
Acapulco Cliff Dive................... Speed slide
Bermuda Triangle...................... Multiple slide complex
Shipwreck Island...................... Activity pool
Kid's Cove............................ Kiddie pool
Tad Pool.............................. Kiddie pool
Black Beard's Revenge................. Water slide
The Rapids............................ Splash pool ride
Big Kahuna............................ White water rafting ride
Swashbuckler Flumes................... Slide complex
There are no other water parks located in Oklahoma City and, therefore, the
Company's primary competition is from other outdoor water activities, such as
local swimming pools.
History and Recent Operating Results. White Water Bay was originally opened
in 1981 and was acquired by the Company in 1991. While the park was fairly
well-developed and maintained under its prior ownership, the Company has
expanded the park with the addition of a major white water raft ride, two speed
slides, a full service restaurant and a picnic pavilion. Since the Company's
acquisition of the park in 1991, the park has achieved average annual attendance
of
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<PAGE>
approximately 290,000, average annual revenues of approximately $3.2 million and
average EBITDA of approximately $900,000.
The following table sets forth certain information with respect to the
operations of White Water Bay since 1990.
<TABLE><CAPTION>
1990(1) 1991 1992 1993 1994
------- ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Total revenue (000).............................. $2,501 $3,335 $3,001 $3,417 $3,176
Total attendance (000)........................... 294 320 257 295 277
Revenue per visitor.............................. $ 8.51 $10.43 $11.68 $11.60 $11.47
In-park spending per visitor..................... $ 2.53 $ 3.02 $ 3.33 $ 3.35 $ 3.15
Number of operating days......................... 94 103 110 102 102
Capital expenditures (000)....................... $ -- $ 423 $ 202 $ 202 $ 596(2)
</TABLE>
- ------------
(1) Reflects results of White Water Bay under prior ownership.
(2) Of such amount, $150,000 was funded by Pepsi in connection with a
sponsorship arrangement.
Strategy. Stand-alone water parks are by their nature less capital intensive
than theme parks. As a result of the capital expenditures made in recent years,
management expects that White Water Bay will require minimal ongoing capital
expenditures of approximately $75,000 per year and additions of new attractions
every three or four years. In addition, the Company plans to continue to develop
special events at the park, such as youth dances. Through this strategy, the
Company believes that the park should generate a consistent annual attendance in
the range of 280,000 to 320,000. In addition, White Water Bay expects to
continue to benefit from the joint marketing initiatives with Frontier City
described above.
Geauga Lake
Overview. Geauga Lake is a combination theme and water park, and is the 44th
largest theme park in the United States based on 1994 attendance of 1.1 million.
Geauga Lake is located in Aurora, Ohio, 20 miles southeast of Cleveland and
approximately 30, 60 and 120 miles, respectively, from Akron and Youngstown,
Ohio and Pittsburgh, Pennsylvania. This market provides the park with a
permanent resident population base of approximately 4.0 million people within 50
miles of the park and 7.4 million within 100 miles. According to the Nielsen
Report, the Cleveland/Akron, Youngstown and Pittsburgh markets are the number
13, number 94 and number 17 DMAs in the United States, respectively. Based upon
in-park surveys, approximately 72% of the visitors to Geauga Lake in 1994
resided within a 50-mile radius of the park, and 85% resided within a 100-mile
radius.
The 257-acre property on which Geauga Lake is situated includes a 55-acre
spring-fed lake. The theme park itself presently occupies approximately 116
acres. There are approximately 87 acres of undeveloped land (of which
approximately 30 acres have the potential for further development). Geauga Lake
features over 60 "wet" and "dry" attractions, a tidal wave pool, 38 game venues,
13 restaurants, 16 picnic pavilions, 25 merchandise outlets, three theatres and
two arcades. Rainbow Island, the park's "dry" area for young children, features
16 children's rides. Turtle Beach, a 1.4-acre water activity area designed
exclusively for children ages two through twelve, is located adjacent to Rainbow
Island. The following is a list of certain of the major attractions currently at
Geauga Lake.
47
<PAGE>
<TABLE><CAPTION>
ATTRACTION DESCRIPTION
---------- -----------
<S> <C>
The Corkscrew......................... Steel roller coaster
The Double Loop....................... Steel roller coaster
The Big Dipper........................ Wooden roller coaster
Texas Twister......................... Top spin ride
The Raging Wolf Bobs.................. 85-foot high wooden roller coaster
Stingray Slides....................... 70-foot tall water slides
Euro Racers........................... Grand prix raceway
The Wave.............................. Tsunami tidal wave pool
Neptune Falls......................... 1,600-foot, four-flumed water slide complex
The Rampage........................... Two high-speed water slides
Turtle Beach.......................... Children's water park
Rainbow Island........................ Children's ride area
</TABLE>
Geauga Lake's principal competitors are Cedar Point located in Sandusky,
Ohio and Kennywood, located in Pittsburgh, Pennsylvania. These parks are located
approximately 90 miles and 120 miles, respectively, from Geauga Lake. There are
also three small water parks within a 50-mile radius of Geauga Lake and Sea
World, a marine park, is on the other side of Geauga Lake. While Sea World does,
to some extent, compete with Geauga Lake for patrons, it is a complementary
attraction, and many patrons visit both facilities.
History and Recent Operating Results. Geauga Lake has been in continuous
operation for over 100 years. The park was one of the first theme parks in the
United States to introduce a complete water entertainment complex within a
traditional theme park at no additional charge to visitors. From 1990 to 1994
revenue and EBITDA at the park averaged approximately $22.4 million and $7.3
million, respectively. The Company believes that this park, like the other
Funtime parks, suffered under prior ownership from a lack of capital investment
in marketable rides and attractions and creative marketing, which provides a
significant opportunity for improved performance under the Company's management.
The following table sets forth certain information with respect to the
operations of Geauga Lake since 1990.
<TABLE><CAPTION>
1990 1991 1992 1993 1994
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Total revenue (000)........................ $20,257 $22,341 $22,298 $24,097 $23,106
Total attendance (000)..................... 1,121 1,140 1,107 1,177 1,068
Revenue per visitor........................ $ 18.07 $ 19.60 $ 20.14 $ 20.47 $ 21.63
In-park spending per visitor............... $ 9.96 $ 10.68 $ 11.08 $ 11.26 $ 11.88
Number of operating days................... 115 115 115 111 116
Capital expenditures (000)................. $ 1,682 $ 1,650 $ 1,050 $ 3,050 $ 913
</TABLE>
Strategy. The Company believes Geauga Lake has significant growth potential.
To achieve this potential, the Company plans to add marketable new rides and
attractions, improve the quality of the park's daily live shows, upgrade the
quality of the merchandise outlets and restaurants, improve the park's theming,
signage and landscaping, and implement more professional and creative marketing
programs, with an emphasis on the park's improved product offerings. Of its
capital expenditure budget for 1996, the Company anticipates spending
approximately $7.65 million on Geauga Lake. In anticipation of these
improvements, the Company intends to increase its marketing and sales activities
for the 1996 season to corporate sponsors as well as to the public. To increase
attendance and revenue prior to Memorial Day and after Labor Day, the Company is
planning to add off-season special events such as Octoberfest and Hallowscream.
The Company also expects to take greater advantage of its location next to Sea
World of Ohio. As a unique destination park, Sea World, which is located
directly across Geauga Lake, is able to attract
48
<PAGE>
visitors from a much wider geographical area than Geauga Lake. Historically, the
two parks have not participated in any co-marketing programs, and the Company
intends to approach Sea World to pursue such programs. The Company is also
considering the possibility of developing Geauga Lake's 30 acres of unutilized
land into a campground. Finally, as is the case with all of the Funtime parks,
many of Geauga Lake's food and game concessions are currently operated by third
parties with whom Funtime divides revenues, and the Company will seek to buy-out
certain of these arrangements in order to secure all of the revenues from such
concessions.
Darien Lake & Camping Resort
Overview. Darien Lake is a combination theme and water park, and is the
largest theme park in the State of New York and the 45th largest theme park in
the United States based on 1994 attendance of 1.0 million. Darien Lake is
located on Interstate 90 in Darien Center, New York approximately 30, 120 and 40
miles, from Buffalo, Syracuse and Rochester, New York, respectively. The park's
primary market includes upstate New York, western and northern Pennsylvania and
southern Ontario, Canada. This market provides the park with a permanent
resident population base of approximately 2.2 million people within 50 miles of
the park and 3.1 million with 100 miles. According to the Nielsen Report, the
Buffalo, Syracuse and Rochester markets are the number 41, number 66 and number
71 DMAs in the United States, respectively. Based upon in-park surveys,
approximately 74% of the visitors to Darien Lake in 1994 resided within a
50-mile radius of the park, and 80% resided within a 100-mile radius.
The Darien Lake property consists of approximately 1,000 acres, including
144 acres for the theme park, 242 acres of campgrounds, and 593 acres of
agricultural, undeveloped and water areas. Darien Lake currently has 25 "wet"
rides, 18 "dry" rides, 11 children's rides, 40 game venues, three restaurants,
eight picnic pavilions, 19 merchandise outlets and five arcades. For the 1994
season, a total of 19 concerts were booked in Darien Lake's 20,000-person
capacity Performing Arts Center, including the Eagles, the Spin Doctors, Michael
Bolton, Reba McEntire, Melissa Etheridge, Billy Ray Cyrus, Steve Miller and Hank
Williams, Jr. Among others, Van Halen, Aerosmith, Tina Turner and Santana are
scheduled for the 1995 season.
Adjacent to the Darien Lake theme park is a camping resort owned and
operated by the Company with 1,180 developed campsites, including 280 trailer
lodges available for daily and weekly rental. In addition, there are 500 other
campsites available for tenting. Darien Lake is one of the few theme parks in
the United States which offers a first class campground adjacent to the park.
The campground is the fifth largest in the United States and was rated four
stars by Woodalls 1993 North American Edition of The Campground Director. In
1994, over 255,000 people used the Darien Lake campgrounds. Since admission to
the campgrounds requires visitors to also purchase admission tickets to the
theme and water park, the Company believes that substantially all of the camping
visitors use the theme park. The following is a list of certain of the major
attractions currently at Darien Lake.
49
<PAGE>
<TABLE><CAPTION>
ATTRACTION DESCRIPTION
---------- -----------
<S> <C>
The Giant Wheel....................... Largest North American ferris wheel
The Predator.......................... Wooden roller coaster with 100-foot hill
The Viper............................. Steel looping roller coaster
Cuda Falls............................ 4-tube slide complex
Performing Arts Center................ 20,000-person capacity outdoor amphitheater
Chance Train.......................... Train ride around lake
Grizzly Run........................... White-water raft ride
Grand Prix............................ Formula K race cars
Thunder Rapids........................ Half-mile long flume ride
Barracuda Bay......................... Water park with 15 rides
Campground............................ Four-star camping facility
Adventureland......................... Children's area with 11 "dry" rides
</TABLE>
Darien Lake's principal competitor is Wonderland Park located in Toronto,
Canada, approximately 125 miles from Darien Lake. In addition, Darien Lake
competes to a lesser degree with three smaller amusement parks located within 50
miles of the park. Darien Lake is significantly larger with a more diverse
complement of entertainment than any of these three smaller facilities. Unlike
Darien Lake, none of these parks have camping facilities or large concert
venues.
History and Recent Operating Results. Darien Lake was opened in 1964. From
1990 to 1994, revenue and EBITDA at the park averaged approximately $21.6
million and $5.7 million, respectively. The Company believes that under prior
ownership the park suffered from a lack of capital investment in marketable
rides and attractions and creative marketing, which provides a significant
opportunity for improved performance under the Company's management.
The following table sets forth certain information with respect to the
operations of Darien Lake since 1990.
<TABLE><CAPTION>
1990 1991 1992 1993 1994
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Total revenue (000)........................ $22,485 $21,602 $20,005 $21,682 $22,202
Total attendance (000)..................... 1,144 1,103 974 1,010 1,038
Revenue per visitor........................ $ 19.65 $ 19.58 $ 20.54 $ 21.47 $ 21.39
In-park spending per visitor(1)............ $ 11.92 $ 11.81 $ 12.66 $ 13.45 $ 13.62
Number of operating days................... 115 120 118 109 106
Capital expenditures (000)................. $ 4,355 $ 700 $ 1,050 $ 1,157 $ 3,002
</TABLE>
- ------------
(1) Includes campground revenue.
Strategy. The Company believes Darien Lake has significant growth potential.
To achieve this potential, the Company plans to add marketable new rides and
attractions (with particular emphasis on increasing the children's component of
the park and upgrading the water park facilities), improve the quality of the
park's daily live shows, upgrade the quality of the merchandise outlets and
restaurants, improve the park's theming, signage and landscaping, and implement
more professional and creative marketing, sales and promotional programs which
emphasize the park's improved product offerings. The Company also plans to
better target potential patrons from Canada, who the Company believes represent
a significant untapped market. Of its capital expenditure budget for 1996, the
Company anticipates spending approximately $7.5 million on Darien Lake. Further,
the Company believes there is significant potential to increase revenue by
taking further advantage of the Performing Arts Center. To this end, the Company
is considering engaging a national promoter for Darien Lake's concert facility
in order to both increase the number of concerts and attract additional well
known talent. In conjunction with this effort, the Company may make capital
improvements to the Performing Arts Center, including improving the restroom
facilities and potentially covering the permanent seating area. With regard to
increasing revenue at
50
<PAGE>
the Darien Lake campgrounds, the Company is considering, among other things,
adding new trailer lodges for rental. Lastly, as with the other Funtime parks,
the Company will seek to add special events (both during the season and before
and after the season) as well as to buy-out third-party food and game
concessionaires.
Wyandot Lake
Overview. Wyandot Lake, which has 12 water rides, is the 12th largest water
park in the United States based on 1994 attendance of approximately 362,000. The
park also has 18 "dry" rides. Wyandot Lake is located just outside of Columbus,
Ohio, adjacent to the Columbus Zoo on property sub-leased from the Columbus Zoo.
The park's primary market includes the Columbus metropolitan area and other
central Ohio towns. This market provides the park with a permanent resident
population base of approximately 2.0 million people within 50 miles of the park
and approximately 6.4 million people within 100 miles. The Columbus market,
according to the Nielsen Report, is the number 35 DMA in the United States.
Based on in-park surveys, approximately 83% of the visitors to Wyandot Lake in
1994 resided within a 50-mile radius of the park, and 95% resided within
100-mile radius.
The Company leases from the Columbus Zoo the land, the buildings and several
rides which existed on the property at the time the lease was entered into in
1983. The current lease expires in 1998 and the Company has two five-year
renewal options. The land leased by Wyandot Lake consists of approximately 18
acres. The park shares parking facilities with the Columbus Zoo. Wyandot Lake
features a variety of "wet" and "dry" attractions, including a "wet" and "dry"
area for young children which includes mini-boats, a Tadpool kids area, geysers,
Gismo's aquatic play unit for kids, a children's ferris wheel and Uncle Al's
Treehouse playground. The following is a list of certain of the major
attractions currently at Wyandot Lake.
ATTRACTION DESCRIPTION
---------- -----------
Sea Dragon............................ Small wooden roller coaster
Zuma Falls............................ Twin passenger tube slide
Geysers & Gismos...................... Children's water attraction
Jet Stream............................ Twin passenger tube slide
Canoochee Creek....................... Adult water attraction
Buccaneer Bay......................... Children's water attraction
Phantom Tunnel Hydro Tube............. 300-foot enclosed water slide
Wild Rage............................. 70-foot water slide
Star Fish Ferris Wheel................ 52-foot high ferris wheel
Wild Tide Wave Pool................... 30,000 square foot tidal wave pool
Water Coil............................ Two-flumed water slide
Uncle Al's Treehouse.................. Children's playground
Wyandot Lake's direct competitors are King's Island and The Beach, each
located in Cincinnati, Ohio, and Cedar Point, located in Sandusky, Ohio. These
three parks are each located approximately 100 miles from Wyandot Lake. Although
the Columbus Zoo is located adjacent to the park, it is a complementary
attraction, and many patrons visit both facilities.
History and Recent Operating Results. Wyandot Lake has been in operation
since 1981. From 1990 to 1994, revenue and EBITDA at the park averaged
approximately $4.1 million and $0.9 million, respectively. The Company believes
that under prior ownership the park suffered from a lack of capital investment
in marketable rides and attractions and creative marketing, which provides a
significant opportunity for improved performance under the Company's management.
51
<PAGE>
The following table sets forth certain information with respect to
operations of Wyandot Lake since 1990.
<TABLE><CAPTION>
1990 1991 1992 1993 1994
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Total revenue (000).............................. $3,388 $4,000 $3,830 $4,755 $4,597
Total attendance (000)........................... 267 350 324 388 361
Revenue per visitor.............................. $12.64 $11.43 $11.82 $12.26 $12.73
In-park spending per visitor..................... $ 5.45 $ 5.02 $ 5.20 $ 5.17 $ 5.27
Number of operating days......................... 110 101 116 111 111
Capital expenditures (000)....................... $ 288 $ 450 $ 610 $ 276 $ 556
</TABLE>
Strategy. The Company believes that Wyandot Lake has significant growth
potential. Of its capital expenditure budget for 1996, the Company anticipates
spending approximately $2.0 million on Wyandot Lake, primarily to expand the
children's water park and introduce additional "dry" rides and attractions. The
Company believes that the expansion of the "dry" ride section will significantly
broaden the appeal of Wyandot Lake, allowing the park both to better penetrate
its market and to achieve higher per capita spending levels. The Company will
implement aggressive marketing and sales activities for the 1996 season to
corporate sponsors as well as to the public to highlight these park upgrades.
The Company also expects Wyandot Lake to benefit from the $75 million planned
expansion of the Columbus Zoo located adjacent to the park. The Company is
currently negotiating with the Zoo to make an additional five to ten acres
available to Wyandot Lake which, if obtained, will facilitate the expansion of
the existing park. In an effort to attract visitors going to the Columbus Zoo,
Wyandot Lake has participated in joint local advertising programs with the
Columbus Zoo and is implementing other marketing programs to capitalize on the
close proximity of the Zoo. As with the other Funtime parks, the Company will
seek to add special events (both during the season and before and after the
season) as well as buy-out third-party food and game concessionaires.
MARKETING AND PROMOTION
The Company attracts visitors through multi-media marketing and promotional
programs for each of its parks. These programs are tailored to address the
different characteristics of their respective markets and to maximize the impact
of specific park attractions and introductions. All marketing and promotional
programs are updated or completely revamped each year to address new
developments. During the three years ended December 31, 1994, Premier incurred
approximately $2.5 million, $2.8 million and $3.7 million, respectively, in
advertising expense and Funtime incurred approximately $5.8 million, $5.1
million and $5.2 million, respectively, in each of those years.
The Company believes that the local orientation of its marketing programs is
a key ingredient to successfully promoting its parks. For example, Cal Ripken,
Jr., the all-star shortstop for the Baltimore Orioles, serves as official
spokesperson for Adventure World, making numerous appearances in radio and
television commercials, and Olympic gymnast Shannon Miller, an Oklahoma City
resident, has opened rides at White Water Bay. The Company also develops
partnership relationships with well-known national and regional sponsors to
supplement its advertising efforts and to provide attendance incentives in the
form of discounts and/or premiums. Such arrangements have been made with Pepsi,
McDonald's, Taco Bell, Blockbuster, 7-Eleven, Wendy's and various supermarket
chains.
The Company has also arranged for popular local radio and television
programs to be filmed or broadcast live from its parks. The Company's Friday
evening teen dances at Frontier City are broadcast as thirty-minute shows with
an MTV-style format by a Fox Television affiliate on Saturday evenings. These
strategies have been well received in local markets, and have been an integral
element of Premier's growth.
52
<PAGE>
Group sales and pre-sold tickets provide the Company with a consistent and
stable base of attendance, representing over 40% of aggregate attendance in
1994. Each park has a group sales and pre-sold ticket manager and a well-trained
sales staff dedicated to selling multiple group sales and pre-sold ticket
programs through a variety of methods, including direct mail, telemarketing and
personal sales calls. Premier has increased its group sales and pre-sold ticket
business by approximately 65.3% from 1992 to 1994. The Company believes that it
has the opportunity to continue to expand and develop its group sales and
pre-sold ticket business.
The Company has also developed effective programs for marketing season pass
tickets. Since its acquisition of Adventure World in 1992, the Company has
increased season pass sales at the park from approximately 2,000 in 1991 to over
12,000 in 1994. In 1995, the Company revised its joint marketing program for
Frontier City and White Water Bay, and season pass sales at these parks
increased from approximately 17,800 in 1994 to over 36,500 in 1995.
A significant portion of the Company's attendance is attributable to the
sale of discount admission tickets. The Company offers discounts on season and
multi-visit tickets, tickets for specific dates and tickets to affiliated groups
such as businesses, schools and religious, fraternal and similar organizations.
Management believes that incremental attendance from discount sales activities
has a positive effect on operating results. The increased in-park spending which
results from such attendance is not offset by incremental operating expenses,
since such expenses are relatively fixed during the operating season. In 1994,
approximately 91.0% of park patrons were admitted at a discount rate and
approximately 52.0% of the Company's revenue was attributable to in-park
spending.
The Company also implements promotional programs as a means of targeting
specific market segments not reached through its group or retail sales efforts.
The promotional programs utilize coupons, sweepstakes, reward incentives and
rebates to attract additional visitors. These programs are implemented through
direct mail, telemarketing, direct response media and sponsorship marketing. The
special promotional offers are usually for a very limited period of time and
offer a reduced admission price or provide some additional incentive to purchase
a ticket.
PARK OPERATIONS
The Company is headquartered in Oklahoma City, Oklahoma and operates in five
geographically diverse markets: Washington, D.C./Baltimore, Maryland;
Buffalo/Rochester, New York; Cleveland, Ohio; Columbus, Ohio; and Oklahoma City,
Oklahoma. Each park is managed by a general manager who reports to the Company's
Chief Operating Officer and is responsible for all operations and management of
the park. Advertising, ticket sales, community relations and hiring and training
of personnel are the responsibility of individual park management in
coordination with corporate support teams. The Company has systems and controls
in place for the daily tracking and monitoring of revenues and expenses
associated with ticket sales and in-park spending.
Each of the Company's parks is managed by a full-time, on-site management
team under the direction of the general manager. Each such management team
includes senior personnel responsible for operations and maintenance, marketing
and promotion, human resources and merchandising. Park management compensation
structures are designed to provide incentives for individual park managers to
execute the Company's strategy and to maximize revenues and profits at each
park.
Each of the Company's parks is operated, to the extent practicable, as a
separate operating division of the Company in order to maximize local marketing
opportunities and to provide flexibility in meeting local needs. For example,
local park management recommends local advertising focus, annual operating
schedules and application of available capital.
The Company maintains a trained security force to administer the parks'
crowd control policies and guest screening procedures and to enforce the parks'
rules relating to behavior of guests in the
53
<PAGE>
parks. The specific policies and practices of the security forces are dictated
on a park-by-park basis by crowd composition and operating experience.
The Company's parks are generally open daily from Memorial Day through Labor
Day. In addition, five of the parks are open during weekends both prior to and
following their daily seasons, primarily as a site for special events, such as
concerts, live entertainment and theme events (such as Hallowscream and
Octoberfest). Typically, the parks charge a basic daily admission price, which
allows unlimited use of all rides and attractions, although in certain cases
special rides and attractions require the payment of an additional fee.
COMPETITION
The Company's theme parks compete directly with other theme parks and
amusement parks and indirectly with all other types of recreational facilities
and forms of entertainment within their market areas, including movies, sports
attractions and vacation travel. Accordingly, the Company's business is and will
continue to be subject to factors affecting the recreation and leisure time
industries generally, such as general economic conditions and changes in
discretionary consumer spending habits. Within each park's regional market area,
the principal factors affecting competition include location, price, the
uniqueness and perceived quality of the rides and attractions in a particular
park, the atmosphere and cleanliness of a park and the quality of its food and
entertainment. The Company believes its parks feature a sufficient variety of
rides and attractions, restaurants, merchandise outlets and family orientation
to enable it to compete effectively. Certain of the Company's direct competitors
have substantially greater financial resources than the Company.
CAPITAL IMPROVEMENTS
The Company makes capital investments each year in the development and
implementation of new rides and attractions. The Company believes that the
introduction of new rides is an important factor in promoting each of the parks
and in encouraging longer visits, which lead to increased sales of food and
merchandise. Capital expenditures are planned on a seasonal basis with most
expenditures made during the off-season. The following table sets forth the
Company's capital expenditures by classification for project years 1992 through
1995.
<TABLE><CAPTION>
CAPITAL EXPENDITURES BY PROJECT YEAR(1)
------------------------------------------------------
1992 1993 1994 1995
---------- ----------- ----------- ----------
(DOLLARS IN THOUSANDS)
CAPITAL EXPENDITURE CATEGORY
- ----------------------------
Marketable attractions
<S> <C> <C> <C> <C>
Premier............................... $ 635 $ 5,072 $ 6,861 $ 5,681
Funtime............................... 710 2,633 3,575 --
---------- ----------- ----------- ----------
Total marketable attractions........ 1,345 7,705 10,436 5,681
---------- ----------- ----------- ----------
Retail projects
Premier............................... 576 920 2,931 244
Funtime............................... 575 558 406 205
---------- ----------- ----------- ----------
Total retail projects............... 1,151 1,478 3,337 449
---------- ----------- ----------- ----------
Asset upgrades and other
Premier............................... 825 2,194 1,440 320
Funtime............................... 1,426 1,297 490 909
---------- ----------- ----------- ----------
Total asset upgrades and other...... 2,251 3,491 1,930 1,229
---------- ----------- ----------- ----------
Total................................... $ 4,747 $ 12,674 $ 15,703 $ 7,359
========== =========== =========== ==========
</TABLE>
- ------------
(1) Capital expenditures for a project year represent expenditures incurred
during and prior to a park's operating season for that year. For example,
included in the figures for 1994 marketable attractions are all amounts
expended to install rides that were new during the 1994 season. This
spending may have occurred in calendar 1993 or 1994, but was all invested in
facilities which were new during the 1994 operating season. The figures are
presented in this manner to assist with understanding the nature of the
Company's capital programs. This treatment differs from that reflected in
Premier's and Funtime's consolidated financial statements, in which
expenditures are capitalized as incurred during each fiscal year.
54
<PAGE>
Capital expenditures for marketable attractions are primarily for new rides
and attractions. Retail projects capital expenditures are associated with
increasing or maintaining in-park spending. Asset upgrades are capital
expenditures made to significantly improve, as opposed to maintain, an existing
asset. Expenditures for materials and services associated with maintaining
assets, including rides and retail outlets are expensed as incurred and
therefore are not included in capital expenditures.
The Company expects to spend approximately $18.1 million from the proceeds
of the Transactions for park improvements for the 1996 season, including the
expansion of rides and attractions. The Company intends to invest these funds as
follows:
PARK AMOUNT
---- ----------------------
(DOLLARS IN THOUSANDS)
Adventure World....................................... $ 4,000
Frontier City......................................... 250
White Water Bay....................................... 125
Geauga Lake........................................... 7,650
Darien Lake........................................... 7,500
Wyandot Lake.......................................... 2,000
--------
Total............................................... $ 21,525
========
MAINTENANCE AND INSPECTION
The Company's rides are inspected daily by maintenance personnel during the
operating seasons. These inspections include safety checks as well as regular
maintenance and are made through both visual inspection of the ride and test
operation. Senior management of the Company and the individual parks evaluate
the risk aspects of each park's operation. Potential risks to employees and
staff as well as to the public are evaluated. Contingency plans for potential
emergency situations have been developed for each facility. During the
off-season, maintenance personnel examine the rides and repair, refurbish and
rebuild them where necessary. This process includes x-raying and magnafluxing (a
further examination for minute cracks and defects) steel portions of certain
rides at high-stress points. The Company has approximately 130 full-time
employees who devote substantially all of their time to maintaining the theme
parks and their rides and attractions.
In addition to the Company's maintenance and inspection procedures, the
Company's liability insurance carrier performs an annual inspection of each park
and all attractions and related maintenance procedures. The result of insurance
inspections are written evaluation and inspection reports, as well as written
suggestions on various aspects of park operations. State inspectors conduct
annual ride inspections before the beginning of each season. Other portions of
each park are also subject to inspections by local fire marshals and health and
building department officials.
SEASONALITY
The operations of the Company are highly seasonal, with at least 80-85% of
park attendance occurring in the second and third calendar quarters and the most
active period falling between Memorial Day and Labor Day. The great majority of
the Company's revenues are collected in the second and third quarters of each
year while most expenditures for capital improvements and significant
maintenance are incurred when the parks are closed in the first and fourth
quarters of each year. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations."
55
<PAGE>
GOVERNMENT REGULATION
Operations at the parks are subject to certain local, state and federal
governmental regulations including, without limitation, labor, health, safety
and minimum wage regulations applicable to theme park operations, and local and
state regulations applicable to restaurant operations at the park. The Company
believes that it is in substantial compliance with applicable regulatory
standards and, although no assurance can be given, it does not foresee the need
for any significant expenditures in this area in the near future.
ENVIRONMENTAL REGULATION
The Company's operations are subject to increasingly stringent federal,
state and local environmental laws and regulations governing water discharges,
air emissions, soil contamination, the maintenance of underground storage tanks
and the disposal of waste and hazardous materials. The Company believes that it
is in substantial compliance with all such laws and regulations. At Geauga Lake,
the Company is conducting groundwater monitoring around a former on-site
landfill under the supervision of the Ohio Environmental Protection Agency. The
Company is awaiting administrative action on its request for curtailment of the
scope and duration of this monitoring, based on the sampling results to date.
The Company does not currently anticipate that it will be required to expend any
material amounts in connection with the monitoring program or any other
post-closure activities.
EMPLOYEES
The Company employs approximately 220 full-time employees and approximately
4,600 seasonal employees during the operating season. In this regard, the
Company competes with other local employers for qualified student and other
candidates on a season-by-season basis. As part of the seasonal employment
program, the Company employs a significant number of teenagers, which subjects
the Company to child labor laws.
None of the employees of the Company are represented by a union or other
collective bargaining unit. The Company has not experienced any strikes or work
stoppages by its employees, and the Company considers its employee relations to
be good.
INSURANCE
The Company maintains insurance of the type and in amounts that it believes
are commercially reasonable and available to businesses in its industry. The
Company maintains multi-layered general liability policies that provide for
excess liability coverage of up to $15 million per occurrence. By virtue of
self-insured retention limits ($25,000 per occurrence), the Company is required
to pay the first $25,000 of loss per occurrence. The Company also maintains fire
and extended coverage, workers' compensation, and other forms of insurance
typical to businesses in its industry. The fire and extended coverage policies
insure the Company's real and personal properties (other than land) against
physical damage resulting from a variety of hazards. The Company's cost of
insurance and self-insured claims for 1994 was approximately $2.5 million
compared to $2.5 million and $2.2 million in 1993 and 1992, respectively.
LEGAL PROCEEDINGS
The nature of the industry in which the Company operates tends to expose it
to claims by visitors for injuries. Historically, the great majority of these
claims have been minor. While the Company believes that it is adequately insured
against the claims currently pending against it and any potential liability, if
the number of such events resulting in liability significantly increased, or if
the Company becomes subject to damages that cannot by law be insured against,
such as punitive damages, there may be a material adverse effect on its
operations.
56
<PAGE>
In November 1994, Metropolitan Entertainment Co., Inc. ("Metropolitan")
commenced an action in the United States District Court for the Western District
of New York entitled Metropolitan Entertainment Co., Inc. v. Darien Lake Theme
Park & Company Resort Inc. and Funtime, Inc. alleging that a long-term joint
venture agreement exists among Metropolitan, Darien Lake and Funtime relating to
the Performing Arts Center at Darien Lake. Metropolitan is a promoter of live
concerts and, from 1987 through 1994, had presented concerts at Darien Lake.
Metropolitan seeks in excess of $20 million in damages based upon breach of the
alleged joint venture agreement as well as fraudulent inducement and unjust
enrichment claims. The Company believes that no long-term agreement was ever
entered into between Metropolitan and Funtime, that it has meritorious defenses
to this action and that resolution of this action will not have a material
adverse effect on the Company. In the event that damages are payable to
Metropolitan, the Company can seek indemnification from the Selling Shareholders
under the Merger Agreement for up to $2.5 million of such damages.
57
<PAGE>
MANAGEMENT
EXECUTIVE OFFICERS, DIRECTORS AND SIGNIFICANT EMPLOYEES
The names, ages and years of service of the persons who are executive
officers and directors of the Company or significant employees of the Company or
its subsidiaries are as follows:
<TABLE><CAPTION>
YEARS WITH YEARS IN
NAME AGE POSITION THE COMPANY INDUSTRY
---- --- -------- ----------- ---------
<S> <C> <C> <C> <C>
Kieran E. Burke................ 38 Chairman and Chief Executive
Officer; Director 6 6
Gary Story..................... 39 President and Chief Operating
Officer; Director 11 24
James F. Dannhauser............ 42 Chief Financial Officer; Director 3 --
Hue W. Eichelberger............ 37 Vice President, General Manager,
Adventure World 4 21
Richard A. McCurley............ 36 Vice President, General Manager,
Frontier City/White Water Bay 3 20
Thomas H. Hall................. 55 Vice President of Marketing,
Adventure World 12 24
Traci E. Blanks................ 34 Vice President of Marketing,
Frontier City/White Water Bay 9 10
Jeffrey A. Lococo.............. 39 Vice President, General Manager,
Wyandot Lake 13 15
Bradley Y. Paul................ 48 Vice President, General Manager,
Darien Lake 11 11
James C. Bouy.................. 53 Vice President, General Manager,
Geauga Lake 7 34
David Thomas................... 37 Vice President of Entertainment 8 15
Richard R. Webb................ 38 Vice President of Accounting 4 5
Richard A. Kipf................ 60 Vice President of Administration,
Corporate Secretary 24 13
Paul A. Biddelman.............. 49 Director 3 --
Michael E. Gellert............. 63 Director 6 --
Jack Tyrrell................... 48 Director 3 --
</TABLE>
Kieran E. Burke has served as Chief Executive Officer and a Director of
Premier since October 1989 and Chairman of the Board since June 1994. From 1989
through June 1994, he was President of Premier. Mr. Burke also serves as a
director of Blue Ridge Real Estate Company and Big Boulder Corporation. Mr.
Burke, who is a graduate of Harvard Law School, was an investment banker prior
to becoming President of Premier.
Gary Story has served as President, Chief Operating Officer and a Director
of Premier since June 1994. From January 1992 through June 1994, he had been
Premier's Executive Vice President. Prior to that time, he had been General
Manager of Premier's Frontier City theme park for more than five years. From
1983 through 1984, Mr. Story served as General Manager of Luna Park, an
amusement park in Sydney, Australia, during its redevelopment as a theme park
and from 1981 through 1983 he served as General Manager of Diversiones del
Reino, an amusement park in Mexico City. From 1972 through 1981, Mr. Story
served in various capacities with Six Flags Corporation.
James F. Dannhauser became Chief Financial Officer of the Company on October
1, 1995 and has served as a Director of Premier since December 1992. He is also
managing director of Lepercq, de Neuflize & Co. Incorporated, an investment
banking firm ("Lepercq").
58
<PAGE>
Hue W. Eichelberger has served as Vice President and General Manager of
Adventure World since 1992. From 1991 through 1992, he served as Park Manager of
White Water Bay. From 1988 through 1991, he was Associate Director of Corporate
Development at Silver Dollar City, Inc. Previously, Mr. Eichelberger had served
as General Manager of White Water (a water park in Grand Prairie, Texas) and
FantaSea (a water park in Wichita, Kansas).
Richard A. McCurley has served as Vice President and General Manager of
Frontier City and White Water Bay since 1994. He joined Premier in 1992 as
Director of Revenue for Frontier City and White Water Bay and, during that year,
transferred to become Director of Revenue for Adventure World. From 1985 through
1992, Mr. McCurley was Food Service Manager and later Food Service Director at
Knotts Berry Farms. Prior to that period, he spent six years with Worlds of Fun,
a major theme park in Kansas City, Missouri, ultimately serving as Director of
Food Services.
Thomas H. Hall has served as Vice President of Marketing at Adventure World
since 1992. From 1983 through 1992, he served as Vice President of Marketing for
Frontier City. Prior to 1983, he spent nine year with Six Flags Corporation,
serving in several marketing positions, including Director of Development and
Marketing.
Traci E. Blanks has served as Vice President of Marketing for Frontier City
and White Water Bay since 1992. From 1986 through 1987, she served as Director
of Marketing, and as such was responsible for all marketing and group sales
programs. From 1986 through 1987, she served as Premier's Manager of Advertising
and Promotions for Frontier City.
Jeffrey A. Lococo has served as Vice President and General Manager of
Wyandot Lake since 1989. From 1982 through 1989 he served as Director of
Marketing and Sales of Geauga Lake. From 1980 through 1982, Mr. Lococo served as
Regional Sales Manager with Mariott's Great America Theme Park.
Bradley Y. Paul has served as Vice President and General Manager of Darien
Lake since 1991. From 1984 through 1991 he served as Marketing Director of
Darien Lake.
James C. Bouy has served as Vice President and General Manager of Geauga
Lake since 1994. Prior thereto, from 1992 through 1994, he served as Vice
President and General Manager of Kennywood Park in Pittsburgh, Pennsylvania.
From 1985 through 1992, Mr. Bouy was employed by Funtime as the Vice President
and General Manager of Darien Lake. Prior thereto, from 1975 through 1981, he
was employed by the Marriott Corporation, where his responsibilities included
serving as Chief Operating Officer for the Great American Theme Park in Gurnee,
Illinois and the Great American Theme Park in Santa Clara, California.
David Thomas has served as Premier's Vice President of Entertainment since
1993. From 1987 through 1993, he was responsible for all show productions
including national touring acts as well as the staging of numerous festivals
including Octoberfest and Hallowscream. Prior to 1987, he served as President of
Silvertree Productions, producing over forty stage shows, musicals, stunt
spectaculars and magic illusion presentations.
Richard R. Webb has served as Premier's Vice President of Accounting since
1991. From 1988 through 1991, he was Controller of a subsidiary of the DeBartolo
Corporation which operated a race track in Oklahoma City. Prior to that time,
Mr. Webb spent nine years with Landmark Land Company, Inc. ultimately serving as
Controller.
Richard A. Kipf has served as Corporate Secretary of Premier (or its
predecessors) since 1975 and has served as Vice President of Administration
since 1994.
Paul A. Biddelman has served as a Director of Premier since December 1992.
Since April 1992, Mr. Biddelman has been treasurer of Hanseatic Corporation, a
private investment
59
<PAGE>
company. From January 1991 through March 1992, Mr. Biddelman was managing
director of Clements Taee Biddelman Incorporated, a financial advisory firm.
From March 1982 to December 1990, he served as a managing director of Drexel
Burnham Lambert Incorporated, an investment banking firm. Mr. Biddelman also
serves as a director of Electronic Retailing Systems International, Inc.,
Insituform Technologies, Inc., Celadon Group, Inc., Petroleum Heat and Power
Co., Inc., TLC Beatrice International Holdings, Inc. and Oppenheimer Group, Inc.
Michael E. Gellert has served as a Director of Premier since March 1989. He
previously served as a Director of Premier and as a Trustee of Tierco from 1979
until 1986. From June 1989 through June 1994, he also served as the Chairman of
the Board of Premier. Mr. Gellert is a General Partner of Windcrest Partners, a
New York limited partnership. Windcrest Partners, the principal business of
which is private investing, is an affiliate of Premier. Mr. Gellert also serves
as a director of Devon Energy Corp., The Harvey Group, Inc., Humana Inc., Seacor
Holdings, Inc., Regal Cinemas, Inc. and The Putnam Trust Company of Greenwich.
Jack Tyrrell has served as a Director of Premier since December 1992. For
more than five years, Mr. Tyrrell has been a general partner of Lawrence Venture
Partners, a New York general partnership, the principal business of which is
that of acting as general partner of Lawrence, Tyrrell, Ortale & Smith, a New
York private investment limited partnership. Mr. Tyrrell is also a general
partner of LTOS II Partners, a Delaware limited partnership, the principal
business of which is that of acting as general partner of Lawrence, Tyrrell,
Ortale & Smith II, L.P., a Delaware private investment limited partnership. Mr.
Tyrrell also serves as a director of MedAlliance Inc., National Health
Investors, Inc. and Regal Cinemas, Inc.
The Company's directors and officers are elected to serve one-year terms.
None of the Company's officers have employment agreements. The Company's
directors are not compensated for serving as such, but are reimbursed for
expenses incurred in connection with their activities as directors.
EXECUTIVE COMPENSATION
The following table discloses compensation received by the Company's Chief
Executive Officer and Chief Operating Officer for the three years ended December
31, 1994, for the only executive officers of Premier whose annual salary and
bonus exceeded $100,000.
PREMIER COMPENSATION TABLE
<TABLE><CAPTION>
ANNUAL COMPENSATION RESTRICTED SECURITIES
PRINCIPAL --------------------------- OTHER ANNUAL STOCK UNDERLYING ALL OTHER
POSITION YEAR SALARY($) BONUS($) COMPENSATION AWARD(S)($) OPTIONS(#) COMPENSATION
--------- ---- --------- -------- ------------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Kieran E. Burke........................ 1994 $ 290,000 $ -- -- -- 50,000 (1)
Chairman of the Board, 1993 265,000 40,000 -- -- 381,002 (1)
Chief Executive Officer and Director 1992 265,000 -- -- -- -- (1)
Gary Story............................. 1994 200,000 -- -- -- 100,000 (1)
President, 1993 140,000 70,000 -- -- 200,000 (1)
Chief Operating Officer and Director 1992 125,000 67,000 -- -- -- (1)
</TABLE>
- ------------
(1) The Company has concluded that, as to each named executive officer for each
year shown, all personal benefits paid or provided did not exceed the lesser
of $50,000 or 10% of the salary and bonus reported for such officer above.
During 1994, the Company did not have any defined contribution plans or
pension or other defined benefit or retirement plans, other than a
qualified, contributory 401(k) plan. All regular employees are eligible to
participate in the Plan if they have completed one full year of service and
are at least 21 years old. The Company currently does not match
contributions made by employees. The accounts of all participating employees
are fully vested.
60
<PAGE>
OPTIONS/SAR GRANTS IN LAST FISCAL YEAR
The Company's 1993 Stock Option and Incentive Plan (the "Stock Incentive
Plan") provides for the grant of options ("Options") to purchase Common Stock
intended to qualify as incentive stock options ("Incentive Options") under
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"),
options that do not so qualify ("Non-Qualified Options"), and for the grant of
stock appreciation rights ("SARs") that are granted in tandem with Options. An
SAR granted in tandem with an Option (a "tandem SAR") permits an optionee to
surrender his Option to the Company for cancellation and receive an amount (in
cash or shares of Common Stock) equal to the excess, if any, of (i) the then
fair market value of the shares of Common Stock subject to the Option over (ii)
the exercise price of the Option.
The following table shows information regarding grants of Options made to
the named executive officers under the Stock Incentive Plan during the year
ended December 31, 1994. The amounts shown for each of named executive officers
as potential realizable values are based on arbitrarily assumed annualized rates
of stock price appreciation of five percent and ten percent over the full
seven-year term of the Options. During 1994, a limited trading market developed
for the Common Stock. On August 1, 1994 (the date of grant of the Options), the
average of the bid and asked quotations relating to the Common Stock (as
reported on the Pink Sheets and the OTC Bulletin Board) was $1.125. The
Compensation Committee of the Board of Directors determined $1.50 to be the fair
market value on the date such Options were granted. Accordingly, $1.50 per share
was used below for purposes of calculating potential appreciation. No gain to
the optionees is possible without an increase in stock price which will benefit
all shareholders proportionately. These potential realizable values are based
solely on arbitrarily assumed rates of appreciation required by applicable SEC
regulations. Actual gains, if any, on Option exercises and Common Stock holdings
are dependent on the future performance of Common Stock and overall market
conditions. There can be no assurance that an established trading market will
develop in respect of the Common Stock or, if such a market develops, that the
potential realizable values shown in this table will be achieved.
61
<PAGE>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE><CAPTION>
POTENTIAL
REALIZABLE
INDIVIDUAL GRANTS VALUE AT ASSUMED
------------------------------------------------------------------ ANNUAL RATES OF
SECURITIES % OF TOTAL OPTIONS STOCK
UNDERYLING GRANTED TO EXERCISE ------------------
NAME OPTIONS (#) EMPLOYEES IN 1994 PRICE ($/SH) EXPIRATION DATE 5% 10%
---- ----------- ------------------ ------------ ---------------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Kieran E. Burke........... 50,000 27.8% $ 1.50 August 1, 2001 $30,500 $ 71,000
Gary Story................ 100,000 55.6% $ 1.50 August 1, 2001 $61,000 $142,000
</TABLE>
AGGREGATED OPTION/SAR EXERCISES AND OPTION/SAR VALUES
The following table provides information on Option/SAR exercises in 1994 by
the named executive officers and the value of such officers' unexercised
Options/SARs at December 31, 1994.
<TABLE><CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED IN-THE-
OPTIONS/SARS AT MONEY OPTIONS/SARS AT
SHARES VALUE DECEMBER 31, 1994($) DECEMBER 31, 1994($)(1)
ACQUIRED ON REALIZED --------------------------- ----------------------------
NAME EXERCISE (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISEABLE
---- ------------ -------- ----------- ------------- ----------- --------------
<S> <C> <C> <C> <C> <C> <C>
Kieran E. Burke ............. -- -- 387,594 268,602 $ 251,898 $ 43,434
Gary Story................... -- -- 100,000 200,000 15,200 22,800
</TABLE>
- ------------
(1) During 1994, a limited trading market developed for the Common Stock. Amount
shown is based on $1.19 per share, the average of the high and low bid and
asked prices of the Common Stock (as reported on the Pink Sheets and the OTC
Bulletin Board) on December 30, 1994.
In 1994, the Company's Board Compensation Committee authorized the granting
of Options to purchase 180,000 shares of Common Stock, including Options to
purchase 50,000 shares and 100,000 shares granted to Kieran E. Burke, Chairman
and Chief Executive Officer, and Gary Story, President and Chief Operating
Officer, respectively. All Options granted in 1994 have a term of seven years,
vest 20% on the date of grant and each twelve-month period thereafter so that
they are fully-vested and exercisable four years after such date and have an
exercise price of $1.50 per share for 1994 Options, representing the Committee's
determination of the fair market value of the Company's Common Stock on the date
of grant. During 1994, a limited trading market developed for the Common Stock.
As of the date the Compensation Committee authorized the 1994 Options and as of
the date they were granted, the average of the bid and asked prices of the
Common Stock as reported on the Pink Sheets and the OTC Bulletin Board were less
than the $1.50 Option price.
62
<PAGE>
STOCK OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL HOLDERS
The following table sets forth certain information as of the date of this
Prospectus (except as noted below) as to Common Stock of the Company owned by
(a) each of Premier's current directors, (b) all current directors and officers
of the Company as a group, and (c) each person who, to the best of Premier's
knowledge, beneficially owned on that date more than 5% of the outstanding
Common Stock. The table gives effect to the Convertible Preferred Stock Offering
and the Existing Note Conversion. Holders of the Convertible Preferred Stock are
entitled to 60.6 votes per share on all matters submitted to stockholders.
<TABLE><CAPTION>
SHARES OF
NAME AND ADDRESS OF COMMON STOCK PERCENT
BENEFICIAL OWNER BENEFICIALLY OWNED OF CLASS
------------------- ------------------ --------
<S> <C> <C>
Kieran E. Burke.................................................. 710,304(1) 2.9%
Paul A. Biddelman................................................ 14,647,883(2) 45.3
James F. Dannhauser.............................................. 110,000(3) 0.5
Michael E. Gellert............................................... 6,943,138(4)(5) 27.8
Gary Story....................................................... 160,000(6) 0.7
Jack Tyrrell..................................................... 4,521,821(7) 17.7
Robert J. Gellert................................................ 6,308,230(5)(8) 26.0
Windcrest Partners............................................... 5,680,124(5)(9) 23.3
122 East 42nd Street
New York, New York 10168
Lawrence, Tyrrell, Ortale & Smith II, L.P. (10)
Lawrence, Tyrrell, Ortale & Smith................................ 3,309,700 13.6
3100 West End Avenue, Suite 500
Nashville, TN 37203
Hanseatic Corporation (11)
Wolfgang Traber.................................................. 14,647,883 45.3
450 Park Avenue
New York, New York 10152
David A. Jones................................................... 2,386,236(12) 9.6
500 West Main Street
Louisville, KY 40201
The Travelers Inc................................................ 1,928,615(13) 7.9
65 East 55th Street
New York, New York 10022
Smith Barney Holdings Inc.
Smith Barney Advisers, Inc.
1345 Avenue of the Americas
New York, New York 10105
All directors and officers as a group (8 persons)(14)............ 27,096,146 77.8%
</TABLE>
- ------------
(1) Includes 236,510 shares of Common Stock and warrants and options to
purchase 473,794 shares of Common Stock for his own account as to which Mr.
Burke has sole voting and investment power.
(2) Includes 6,623,641 shares of Common Stock beneficially owned by Hanseatic
Corporation ("Hanseatic") and 8,024,242 shares issuable upon conversion of
132,400 shares of Convertible Preferred Stock beneficially owned by
Hanseatic. of which Mr. Biddelman, is treasurer.
(3) Includes 55,000 shares of Common Stock for his own account and 55,000
shares beneficially owned by Lepercq, de Neuflize & Co. Incorporated
("Lepercq"), of which Mr. Dannhauser is a managing director. Mr. Dannhauser
disclaims beneficial ownership of the shares held by Lepercq.
(4) Includes 478,716 shares of Common Stock for his own account and 642,424
shares issuable upon conversion of 10,600 shares of Convertible Preferred
Stock held by him, as to which Mr. Gellert has sole voting and investment
power, and includes 5,680,124 shares of Common Stock beneficially owned by
Windcrest Partners, a New York limited partnership ("WP") which shares
voting and investment power with its general partners, Michael E. Gellert
(Footnotes continued on following page)
63
<PAGE>
(Footnotes continued from preceding page)
and Robert J. Gellert. Also includes 141,874 shares beneficially held by
Michael E. Gellert's daughter who resides in his household, of which 30,303
represent shares issuable upon conversion of 500 shares of the Convertible
Preferred Stock beneficially owned by such daughter. Mr. Gellert disclaims
beneficial ownership of all shares beneficially owned by his daughter.
(5) Members of the Gellert family and entities controlled by them beneficially
own in the aggregate 7,949,149 shares of Common Stock. Such shares
represent 31.8% of the Company's outstanding Common Stock. See footnotes
(4), (8) and (9).
(6) Includes 100,000 shares of Common Stock issuable upon exercise of stock
options held by Mr. Story, as to which he has sole voting and investment
power.
(7) Includes 1,000,000 shares of Common Stock beneficially owned by Lawrence,
Tyrrell, Ortale & Smith ("LTOS") and 2,309,700 shares of Common Stock
beneficially owned by Lawrence, Tyrrell, Ortale & Smith II, L.P. ("LTOS
II") and 1,212,121 shares issuable upon conversion of 20,000 shares of
Convertible Preferred Stock beneficially owned Richland Ventures, L.P.
("Richland") II. Mr. Tyrrell, who is a general partner of the respective
general partners of LTOS and LTOS II and a general partner of Richland,
disclaims beneficial ownership of all such shares.
(8) Includes 11,070 shares of Common Stock for his own account, as to which he
has sole voting and investment power; 247,985 shares as agent for 30 other
persons and entities with whom he shares voting and investment power;
10,838 shares as trustee for Michael E. Gellert's sister with respect to
which he shares voting and investment power with Peter J. Gellert (who
holds these shares as agent); 27,794 shares as trustee of irrevocable
trusts for the benefit of Michael E. Gellert's children as to which he has
sole voting and investment power; 5,419 shares as trustee of an irrevocable
trust for the benefit of his brother as to which he has sole voting and
investment power; 5,680,124 shares owned by WP which shares voting and
investment power with its general partners, Michael E. Gellert and Robert
J. Gellert; and 325,000 shares beneficially owned by Lexfor Corporation of
which he is President and a director, as to which he shares voting and
investment power with the other officers and directors. Michael E. Gellert
disclaims beneficial ownership of the shares owned by the trusts for the
benefit of his children.
(9) WP shares voting and investment power with its general partners, Michael E.
Gellert and Robert J. Gellert.
(10) Includes 1,000,000 shares of Common Stock beneficially owned by LTOS,
2,309,700 shares beneficially owned by LTOS II. LTOS and LTOS II may be
deemed to constitute a "group" within the meaning of Section 13(d)(3) of
the Securities Exchange Act of 1934, as amended. Information has been
derived from Amendment No. 2 to Schedule 13D dated November 2, 1994.
(11) Includes 6,623,641 shares of Common Stock beneficially owned by Hanseatic
and 8,024,242 shares issuable upon conversion of 132,400 shares of
Convertible Preferred Stock beneficially owned by Hanseatic. Mr. Traber
holds in excess of a majority of the shares of capital stock of Hanseatic
and thus may be deemed to beneficially own such shares.
(12) Includes 1,780,176 shares of Common Stock beneficially owned by Mr. Jones
and 606,060 shares issuable upon conversion of 10,000 shares of Convertible
Preferred Stock beneficially owned by Mr. Jones. Information has been
derived from Amendment No. 2 to Schedule 13D dated October 12, 1994.
(13) Includes 750,000 shares as to which Smith Barney Mutual Funds Management
Inc. ("SBMF"), Smith Barney Holdings Inc. ("SBH") and The Travelers Inc.
("Travelers") have shared voting and dispositive power and 1,027,100 as to
which SBH and Travelers have shared voting and dispositive power. SBMF is a
wholly-owned subsidiary of SBH, which is a wholly-owned subsidiary of
Travelers. Also includes 151,515 shares issuable upon conversion of 2,500
shares of Convertible Preferred Stock beneficially owned by such entities.
Information has been derived from Amendment No. 5 to Schedule 13G dated
February 13, 1995.
(14) The share amounts listed include shares of Common Stock that the following
persons have the right to acquire within 60 days from June 1, 1995: Kieran
E. Burke, 473,794 shares (see footnote (1)); Paul A. Biddelman, 8,024,242
shares (see footnote (2)); Jack Tyrrell, 1,212,121 (see footnote (7));
Michael E. Gellert, 672,727 (see footnote (4)); Gary Story, 160,000 shares
(see footnote (6)); and all directors and officers as a group, 10,545,884
shares.
The Company believes that the trading market for its Common Stock is highly
illiquid. Trading in the Company's Common Stock has been reported on The Pink
Sheets and the OTC Bulletin Board under the symbol "PARK" since the second
quarter of 1994. Prior thereto, the Company was unable to obtain any reliable
price quotations for its Common Stock.
As of August 28, 1995, there were 24,287,772 million shares of Common Stock
issued and outstanding, of which 21,113,549 were held by the Company's officers,
directors and principal stockholders (and their affiliates) with the remaining
shares held of record by approximately 860 stockholders.
64
<PAGE>
CERTAIN TRANSACTIONS
In connection with the Transactions, the Company paid investment banking and
financial advisory fees in the amount of $800,000 and $475,000 to Lepercq, de
Neuflize & Co. Incorporated ("Lepercq") and Hanseatic Corporation ("Hanseatic"),
respectively. James F. Dannhauser and Paul A. Biddelman, both directors of the
Company, are managing director and treasurer, respectively, of Lepercq and
Hanseatic. In addition, Hanseatic purchased 132,400 shares of Convertible
Preferred Stock in the offering thereof consumated on August 15, 1995.
Subsequent to the Transactions, Mr. Dannhauser became Chief Financial Officer of
the Company.
THE MERGER
On August 15, 1995, Premier by merger acquired all of the outstanding shares
of capital stock of Funtime pursuant to the Merger Agreement with Funtime and
the Selling Shareholders, By virtue of this transaction, Funtime became a
wholly-owned subsidiary of the Company.
The Merger Agreement provided for a merger consideration (the "Merger
Consideration") payable on August 15, 1995 (the "Closing") equal to $60.0
million, subject to adjustment, which amount included the repayment in full of
all outstanding principal and accrued interest as of the effective date of the
Merger (the "Closing") on all of Funtime's indebtedness (approximately $37.1
million at August 15, 1995). At the Closing, $2.5 million (the "Indemnification
Fund") and $700,000 (the "Tax Funds") were deposited into an escrow account.
Approximately $2.8 million of the Merger Consideration was paid or retained by
the Company to fund certain Funtime liabilities. The balance of the Merger
Consideration payable at Closing to the Selling Shareholders (approximately
$14.7 million after deduction of $2.2 million of certain expenses of the
shareholders and Funtime paid by the Company) was paid in cash.
Subsequent to September 30, 1995, the Merger Consideration will be adjusted.
If the Shareholders Adjustment (described below) exceeds the Surviving
Corporation Adjustment (as so described), the Merger Consideration will be
increased by such excess, together with interest thereon from the Closing at
Chemical Bank's prime rate. Alternatively, if the Surviving Corporation
Adjustment exceeds the Shareholders Adjustment, the Merger Consideration will be
decreased by such excess, together with such interest payment. The Shareholders
Adjustment equals the Operating Cash Flow (as defined in the Merger Agreement)
of Funtime for the period from the Closing through September 30, 1995 less the
excess of the income tax liability of Funtime for the period commencing January
1, 1995 and ending on September 30, 1995 over the Tax Funds. The Surviving
Corporation Adjustment equals the sum of (a) consolidated noncurrent liabilities
(other than deferred tax liabilities) of Funtime at September 30, 1995
(excluding liabilities incurred by Funtime subsequent to the Merger), (b)
$1,500,000, (c) consolidated current liabilities of Funtime at September 30,
1995 and (d) an amount (estimated to be approximately $530,000) equal to the
accrued interest (calculated as provided in the Merger Agreement) on the Funtime
indebtedness being paid at Closing for the period from Closing through September
30, 1995 (assuming such indebtedness had not been so repaid) minus (e) the sum
of cash and accounts receivable of Funtime at September 30, 1995. The adjustment
to the Merger Consideration will be payable in cash by the Selling Shareholders
or the Company, as the case may be.
The Merger Agreement provides that, except with respect to certain tax
liabilities of Funtime, its subsidiaries and the Selling Shareholders or certain
litigation arising out of the Merger, the Indemnification Fund of $2.5 million
represents the Company's sole source of funds for indemnification claims under
the Merger Agreement. To the extent of any funds remaining therein, the
Indemnification Fund (together with interest thereon) will be paid to the
Selling Shareholders (except to the extent of then pending indemnification
claims) eighteen months following the
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Closing. In addition, with respect to certain types of indemnification claims by
the Company, the Company's losses in connection therewith must exceed $200,000
before it can proceed against the Indemnification Fund, provided that once this
threshold amount is exceeded, all losses in respect of indemnification claims
are covered.
Following the Merger, the current Chief Executive Officer and the current
Chief Operating Officer of Funtime became consultants to the Company for two
years following the Closing, with annual consulting fees of $179,500 payable to
each. During the term of the consulting agreements (and for three years
thereafter), such consultants may not provide services or have ownership
interests in any amusement or theme park located within a 150-mile radius of any
of the Company's then existing parks.
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CAPITAL STRUCTURE
SENIOR CREDIT FACILITY
Concurrently with the consummation of the Merger, the Company entered into
the Senior Credit Facility with Chemical Bank and The Merchant Bank of New York,
providing for a revolving credit line for use in the Company's operations. The
description set forth below does not purport to be complete and is qualified in
its entirety by reference to the definitive documentation for the Senior Credit
Facility which has been filed as an exhibit to the Registration Statement of
which this Prospectus is a part.
Borrowings under the Senior Credit Facility will be secured by substantially
all of the Company's assets (other than real estate), including the capital
stock of its subsidiaries. The Senior Credit Facility has an aggregate
availability of $20.0 million, none of which has been borrowed on the date of
this Prospectus. Interest rates per annum are equal to Chemical Bank's
Alternative Base Rate plus 0.25% or the London Interbank Offering Rate plus
3.00%. The Senior Credit Facility matures August 15, 1998. Under the Senior
Credit Facility, the Company is required to repay in full the principal balance
for at least 45 consecutive days during the period from July 1 to November 1 of
each year. Borrowings under the Senior Credit Facility will constitute Senior
Indebtedness under the Indenture.
The Senior Credit Facility contains restrictive covenants that, among other
things, limit the ability of the Company and the Company's subsidiaries to
dispose of assets; incur additional indebtedness or liens; pay dividends;
repurchase stock; make investments; engage in mergers or consolidations; engage
in certain transactions with subsidiaries and affiliates; and redeem or purchase
Notes. In addition, the Senior Credit Facility requires that the Company comply
with certain specified financial ratios and tests, including cash interest
expense coverage, a minimum net worth requirement and a maximum capital
expenditure requirement.
Defaults under the Senior Credit Facility include failure to pay interest or
fees due under any Senior Credit Facility document within five days when such
payments are due; failure to repay principal due under any Senior Credit
Facility document when due, including in accordance with its annual requirement
to repay the entire loan for a period of at least 45 days during the period from
July 1 to November 1 each year; a breach of certain affirmative covenants,
conditions or agreements contained in any Senior Credit Facility documentation
which is unremedied for a period of 30 days or a breach of any negative covenant
or certain other affirmative covenants; the default by the Company or any of its
principal subsidiaries in respect of any other indebtedness above specified
levels, including indebtedness under the Notes; certain events of bankruptcy;
certain judgments against the Company or any of its principal subsidiaries;
security interests created under the Senior Credit Facility ceasing to be valid
and perfected; Senior Credit Facility documentation not being in full force and
effect; and a change in control.
COMMON STOCK
The Company's authorized capital stock includes 45,000,000 shares of Common
Stock, par value $0.01 per share. Each share of Common Stock entitles the holder
thereof to one vote. Holders of the Common Stock have equal ratable rights to
dividends from funds legally available therefor, when, as and if declared by the
Board of Directors and are entitled to share ratably, as a single class, in all
of the assets of the Company available for distribution to holders of shares of
Common Stock upon the liquidation, dissolution or winding up of the affairs of
the Company. Holders of Common Stock do not have preemptive, subscription or
conversion rights. There are no redemption or sinking fund provisions for the
benefit of the Common Stock in the Company's Certificate of Incorporation. As of
August 28, 1995, 24,287,772 shares of Common Stock were
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outstanding. The Company has granted certain registration rights to holders of
approximately 22.1 million shares.
PREFERRED STOCK
The Company's authorized capital stock includes 500,000 shares of preferred
stock, par value $1.00 per share (the "Preferred Stock"). The Preferred Stock
may be issued in series, and shares of each series will have such rights and
preferences as are fixed by the Board of Directors in resolutions authorizing
the issuance of that particular series. In designating any series of Preferred
Stock, the Board of Directors may, without further action by the holders of
Common Stock, fix the number of shares constituting that series and fix the
dividend rights, dividend rate, conversion rights, voting rights (which may be
greater or lesser than the voting rights of the Common Stock), rights and terms
of redemption (including any sinking fund provisions), and the liquidation
preferences of the series of Preferred Stock. Holders of any series of Preferred
Stock, when and if issued, may have priority claims to dividends and to any
distributions upon liquidation of the Company, and other preferences over the
holders of the Common Stock. The Board of Directors may issue a series of
Preferred Stock without action by the shareholders of the Company.
CONVERTIBLE PREFERRED STOCK
In connection with the Transactions, the Company issued to certain of
Premier's current stockholders, their affiliates and others 200,000 shares of
Convertible Preferred Stock for an aggregate purchase price of $20.0 million.
The following is a summary of the terms of the Convertible Preferred Stock.
Dividends. Subject to the terms of the Notes and the Senior Credit Facility,
holders of shares of the Convertible Preferred Stock are entitled to receive
annually, at the Company's option, either (i) cash dividends out of funds of the
Company legally available for payment, or (ii) additional shares of Convertible
Preferred Stock (valued at $100 per share), in each case at an annual rate of 7%
per share. Dividends are cumulative from the date of original issuance of the
Convertible Preferred Stock. The Convertible Preferred Stock will be junior as
to dividends to any series or class of the Company's stock hereafter issued
which ranks senior as to dividends to the Convertible Preferred Stock and has
priority as to dividends over the Common Stock and any other series or class of
the Company's stock hereafter issued which ranks junior as to dividends to the
Convertible Preferred Stock.
Liquidation Rights. In case of the voluntary or involuntary liquidation,
dissolution or winding up of the Company, holders of shares of Convertible
Preferred Stock are entitled to receive the liquidation price of $100 per share,
plus an amount equal to any accrued and unpaid dividends to the payment date,
before any payment or distribution is made to the holders of Common Stock or any
other series or class of the Company's stock hereafter issued which ranks junior
as to liquidation rights to the Convertible Preferred Stock, but the holders of
the shares of the Convertible Preferred Stock will not be entitled to receive
the liquidation price of such shares until the liquidation price of any other
series or class of the Company's stock hereafter issued which ranks senior as to
liquidation rights to the Convertible Preferred Stock has been paid in full.
Voting Rights. Each share of the Convertible Preferred Stock entitles the
holder thereof to 60.6 votes on all matters submitted to the vote of holders of
the Common Stock. The Convertible Preferred Stock votes together with the Common
Stock as one class, except as required by Delaware law and except in certain
circumstances involving the merger or consolidation of the Company.
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Conversion Rights. The holders of Convertible Preferred Stock are entitled
at any time to convert their shares of Convertible Preferred Stock into Common
Stock at an initial conversion rate of approximately 60.6 shares of Common Stock
per share of Convertible Preferred Stock (representing a conversion price of
$1.65 per share of Common Stock), subject to adjustment in certain
circumstances, including the payment of a stock dividend on shares of the Common
Stock, combinations and subdivisions of the Common Stock, certain
reclassifications of the Common Stock, the issuance to the Company's
stockholders of rights or warrants to subscribe for or purchase shares of Common
Stock at a price per share less than the then-current market price (determined
as provided in the Certificate of Designation of the Convertible Preferred
Stock) of the Common Stock and certain cash dividends and distributions of
evidences of indebtedness or assets to holders of certain of the Company's
capital stock.
Redemption by Company. The Convertible Preferred Stock is redeemable at any
time in whole, or from time to time in part, at the option of the Company at a
redemption price of $100 per share plus accrued and unpaid dividends thereon to
the date of redemption provided that (a) the current price of Common Stock for a
period of twenty trading days prior to the redemption date is at least 150% of
the then applicable conversion price (initially $1.65 per share) and the average
daily trading volume of the Common Stock for such twenty-trading-day period
exceeds 1,000 shares, or (b) the Company shall have consummated prior to
redemption an underwritten public offering of Common Stock with gross proceeds
of at least $15.0 million and the current market price of the Common Stock for
such twenty-trading-day period averages at least 100% of the then applicable
conversion price.
Registration Rights. The holders of the Convertible Preferred Stock have the
right to require the Company to register the Common Stock into which the
Convertible Preferred Stock is convertible on two occasions subsequent to
December 31, 1996. In addition, such holders have the right to have such shares
of Common Stock included in a registration statement relating to Common Stock,
subject to customary provisions relating to the right of the underwriters of any
such offering to exclude such shares if their inclusion would impair the success
of such offering. In the event the holders of Convertible Preferred Stock
exercise their registration rights, the Company will be required to bear all
registration expenses other than underwriting discounts or other selling
expenses and fees and expenses of counsel to such holders.
The holders of the shares of the Convertible Preferred Stock have no
preemptive rights with respect to any shares of capital stock of the Company or
any other securities of the Company convertible into or carrying rights or
options to purchase any such shares.
THE EXCHANGE OFFER
PURPOSE AND EFFECT
The Old Notes were sold by the Company on August 15, 1995, in a private
placement. In connection with that placement, the Company and the Note
Guarantors entered into the Registration Rights Agreement, which requires that
the Company and the Note Guarantors file a registration statement under the
Securities Act with respect to the New Notes and, upon the effectiveness of that
registration statement, offer to the holders of the Old Notes the opportunity to
exchange their Old Notes for a like principal amount of New Notes, which will be
issued without a restrictive legend and may be reoffered and resold by the
holder without registration under the Securities Act. The Registration Rights
Agreement further provides that the Company and the Note Guarantors (i) were
required to file the registration statement with respect to the Exchange Offer
by September 14, 1995, (ii) must use all reasonable efforts to cause such
registration statement to be declared effective on or before October 14, 1995,
and (iii) shall consummate the Exchange Offer by keeping it effective for not
less than thirty (30 days) by November 13, 1995. Since the effective date of the
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Registration Statement was November , 1995 and the consummation date of the
Exchange Offer is anticipated to occur on or about December , 1995, liquidated
damages provided for in the Registration Rights Agreement in an estimated
aggregate amount of $70,000 will be payable by the Company and the Note
Guarantors. Except as provided below, upon the completion of the Exchange Offer,
the Company's and the Note Guarantor's obligations with respect to the
registration of the Old Notes and the New Notes will terminate. A copy of the
Registration Rights Agreement has been filed as an exhibit to the Registration
Statement of which this Prospectus is a part and the summary herein of certain
provisions thereof does not purport to be complete and is subject to, and is
qualified in its entirety by, reference thereto. Following the completion of the
Exchange Offer (except as set forth in the paragraph immediately below), holders
of Old Notes not tendered will not have any further registration rights and
those Old Notes will continue to be subject to certain restrictions on transfer.
Accordingly, the liquidity of the market for the Old Notes could be adversely
affected upon completion of the Exchange Offer.
In order to participate in the Exchange Offer, a holder must represent to
the Company and the Note Guarantors, among other things, that (i) the New Notes
acquired pursuant to the Exchange Offer are being obtained in the ordinary
course of business of the person receiving the New Notes, whether or not such
person is the holder of the Old Notes, (ii) neither the holder nor any such
other person is engaging in or intends to engage in a distribution of the New
Notes, (iii) neither the holder nor any such other person has an arrangement or
understanding with any person to participate in the distribution of the New
Notes, and (iv) neither the holder nor any such other person is an "affiliate",
as defined under Rule 405 promulgated under the Securities Act, of the Company
or any Note Guarantor. In the event that (i) existing Commission interpretations
are changed such that the New Notes received by holders in the Exchange Offer
are not or would not be, upon receipt, transferable by each such holder (other
than an affiliate of the Company or any Note Guarantor) without restriction
under the Securities Act, or (ii) any holder of Old Notes either (a) is not
eligible to participate in the Exchange Offer, or (b) participates in the
Exchange Offer and does not receive freely transferable New Notes in exchange
for Old Notes (in each case under this clause (ii) other than as a result of
applicable Commission interpretations or laws in effect on the original issue
date of the Old Notes) such holders can elect, by so indicating on the Letter of
Transmittal and providing certain additional necessary information, to have such
holder's Old Notes registered in a "shelf" registration statement on an
appropriate form pursuant to Rule 415 under the Securities Act. In the event
that the Company and the Note Guarantors are obligated to file a "shelf"
registration statement, it will be required to keep such "shelf" registration
statement effective for at least three years. Other than as set forth in this
paragraph, no holder will have the right to participate in the "shelf"
registration statement nor otherwise to require that the Company and the Note
Guarantors register such holder's Old Notes under the Securities Act. See
"--Procedures for Tendering."
Based on an interpretation by the Commission's staff set forth in no-action
letters issued to third parties unrelated to the Company and the Note
Guarantors, the Company and the Note Guarantors believe that, with the
exceptions set forth below, New Notes issued pursuant to the Exchange Offer in
exchange for Old Notes may be offered for resale, resold and otherwise
transferred by any person receiving such New Notes, whether or not such person
is the holder of Old Notes (other than any such holder or such other person
which is an "affiliate" of the Company or any Note Guarantor within the meaning
of Rule 405 under the Securities Act) without compliance with the registration
and prospectus delivery provisions of the Securities Act, provided that the New
Notes are acquired in the ordinary course of business of the holder or such
other person and neither the holder nor such other person has an arrangement or
understanding with any person to participate in the distribution of such New
Notes. Any holder who tenders in the Exchange Offer for the purpose of
participating in a distribution of the New Notes cannot rely on this
interpretation by the Commission's staff and must comply with the registration
and prospectus delivery requirements of the Securities Act in connection with a
secondary resale transaction. Each broker-dealer that
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receives New Notes for its own account in exchange for Old Notes, where the Old
Notes were acquired by that broker-dealer as a result of market-making
activities or other trading activities, must acknowledge that it will deliver a
prospectus in connection with any resale of such New Notes. See "Plan of
Distribution."
CONSEQUENCES OF FAILURE TO EXCHANGE
Following the completion of the Exchange Offer (except as set forth in the
second paragraph under "--Purpose and Effect" above), holders of Old Notes not
tendered will not have any further registration rights and those Old Notes will
continue to be subject to certain restrictions on transfer. Accordingly, the
liquidity of the market for a holder's Old Notes could be adversely affected
upon completion of the Exchange Offer if the holder does not participate in the
Exchange Offer.
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions set forth in this Prospectus
and in the Letter of Transmittal, the Company and the Note Guarantors will
accept any and all Old Notes validly tendered and not withdrawn prior to 5:00
p.m., New York City time, on the Expiration Date. The Company will issue $1,000
principal amount of New Notes in exchange for $1,000 principal amount of
outstanding Old Notes accepted in the Exchange Offer. Holders may tender some or
all of their Old Notes pursuant to the Exchange Offer. However, Old Notes may be
tendered only in integral multiples of $1,000 principal amount.
The form and terms of the New Notes are the same as the form and terms of
the Old Notes, except that the New Notes have been registered under the
Securities Act and will not bear legends restricting their transfer. The New
Notes will evidence the same debt as the Old Notes and will be issued pursuant
to, and entitled to the benefits of, the Indenture pursuant to which the Old
Notes were issued.
As of , 1995, Old Notes representing $90.0 million aggregate
principal amount were outstanding and there was one registered holder, a nominee
of DTC. This Prospectus, together with the Letter of Transmittal, is being sent
to such registered Holder and to others believed to have beneficial interests in
the Old Notes. Holders of Old Notes do not have any appraisal or dissenters'
rights under the General Corporation Law of the State of Delaware or the
Indenture in connection with the Exchange Offer. The Company and the Note
Guarantors intend to conduct the Exchange Offer in accordance with the
applicable requirements of the Exchange Act and the rules and regulations of the
Commission promulgated thereunder.
The Company and the Note Guarantors shall be deemed to have accepted validly
tendered Old Notes when, as, and if the Company has given written notice thereof
to the Exchange Agent. The Exchange Agent will act as agent for the tendering
holders for the purpose of receiving the New Notes from the Company and the Note
Guarantors. If any tendered Old Notes are not accepted for exchange because of
an invalid tender, the occurrence of certain other events set forth herein or
otherwise, certificates for any such unaccepted Old Notes will be returned
without expense to the tendering holder thereof as promptly as practicable after
the Expiration Date.
Holders who tender Old Notes in the Exchange Offer will not be required to
pay brokerage commissions or fees or, subject to the instructions in the Letter
of Transmittal, transfer taxes with respect to the exchange of Old Notes
pursuant to the Exchange Offer. The Company and the Note Guarantors will pay all
charges and expenses, other than certain applicable taxes, in connection with
the Exchange Offer. See "The Exchange Offer--Fees and Expenses."
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EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The term "Expiration Date" shall mean 5:00 p.m., New York City time, on
, 1995, unless the Company, in its sole discretion, extends the
Exchange Offer, in which case the term "Expiration Date" shall mean the latest
date and time to which the Exchange Offer is extended. The Company will not
extend the Expiration Date beyond January 31, 1996. In order to extend the
Exchange Offer, the Company will notify the Exchange Agent and each registered
holder of any extension by oral or written notice prior to 9:00 a.m., New York
City time, on the next business day after the previously scheduled Expiration
Date. The Company reserves the right, in its sole discretion (i) to delay
accepting any Old Notes, to extend the Exchange Offer or, if any of the
conditions set forth under "--Conditions to the Exchange Offer" shall not have
been satisfied, to terminate the Exchange Offer, by giving written notice of
such delay, extension or termination to the Exchange Agent, or (ii) to amend the
terms of the Exchange Offer in any manner.
PROCEDURES FOR TENDERING
Only a holder of Old Notes may tender Old Notes in the Exchange Offer.
Except as set forth under "--Book Entry Transfer," to tender in the Exchange
Offer a holder must complete, sign and date the Letter of Transmittal, or a copy
thereof, have the signatures thereon guaranteed if required by the Letter of
Transmittal, and mail or otherwise deliver the Letter of Transmittal or copy to
the Exchange Agent prior to the Expiration Date. In addition, either (i)
certificates for such Old Notes must be received by the Exchange Agent along
with the Letter of Transmittal, or (ii) a timely confirmation of a book-entry
transfer (a "Book-Entry Confirmation") of such Old Notes, if that procedure is
available, into the Exchange Agent's account at DTC (the "Book-Entry Transfer
Facility") pursuant to the procedure for book-entry transfer described below
must be received by the Exchange Agent prior to the Expiration Date, or (iii)
the Holder must comply with the guaranteed delivery procedures described below.
To be tendered effectively, the Letter of Transmittal and other required
documents must be received by the Exchange Agent at one of the addresses set
forth under "--Exchange Agent" prior to the Expiration Date.
The tender by a holder that is not withdrawn before 5:00 p.m. on the
Expiration Date will constitute an agreement between that holder and the Company
in accordance with the terms and subject to the conditions set forth herein and
in the Letter of Transmittal.
THE METHOD OF DELIVERY OF OLD NOTES AND THE LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND RISK OF
THE HOLDER. INSTEAD OF DELIVERY BY MAIL, IT IS RECOMMENDED THAT HOLDERS USE AN
OVERNIGHT OR HAND DELIVERY SERVICE. IN ALL CASES, SUFFICIENT TIME SHOULD BE
ALLOWED TO ASSURE DELIVERY TO THE EXCHANGE AGENT BEFORE THE EXPIRATION DATE. NO
LETTER OF TRANSMITTAL OR OLD NOTES SHOULD BE SENT TO THE COMPANY OR ANY
GUARANTOR. HOLDERS MAY REQUEST THEIR RESPECTIVE BROKERS, DEALERS, COMMERCIAL
BANKS, TRUST COMPANIES OR NOMINEES TO EFFECT THESE TRANSACTIONS FOR SUCH HOLDER.
Any beneficial owner whose Old Notes are registered in the name of a broker,
dealer, commercial bank, trust company or other nominee and who wishes to tender
should contact the registered holder promptly and instruct the registered holder
to tender on the beneficial owner's behalf. If the beneficial owner wishes to
tender on such owner's own behalf, the registered holder must, prior to
completing and executing the Letter of Transmittal and delivering the owner's
Old Notes, either make appropriate arrangements to register ownership of the Old
Notes in the beneficial owner's name or provide a properly completed bond power
to the beneficial owner. The transfer of registered ownership may take
considerable time.
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Signatures on a Letter of Transmittal or a notice of withdrawal, as the case
may be, must be guaranteed by an Eligible Institution (as defined below) unless
Old Notes tendered pursuant thereto are tendered (i) by a registered holder who
has not completed the box entitled "Special Registration Instructions" or
"Special Delivery Instructions" on the Letter of Transmittal, or (ii) for the
account of an Eligible Institution. If signatures on a Letter of Transmittal or
a notice of withdrawal, as the case may be, are required to be guaranteed, the
guarantee must be by any eligible guarantor institution that is a member of or
participant in the Securities Transfer Agents Medallion Program, the New York
Stock Exchange Medallion Signature Program, the Stock Exchange Medallion Program
or an "eligible guarantor institution" within the meaning of Rule 17Ad-15 under
the Exchange Act (an "Eligible Institution").
If the Letter of Transmittal is signed by a person other than the registered
holder of any Old Notes listed therein, the Old Notes must be endorsed or
accompanied by a properly completed bond power, signed by the registered holder
as that registered holder's name appears on the Old Notes.
If the Letter of Transmittal or any Old Notes or bond powers are signed by
trustees, executors, administrators, guardians, attorneys-in-fact, officers of
corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and evidence satisfactory to the
Company of their authority to so act must be submitted with the Letter of
Transmittal unless waived by the Company.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance and withdrawal of tendered Old Notes will be determined by
the Company in its sole discretion, which determination will be final and
binding. The Company reserves the absolute right to reject any and all Old Notes
not properly tendered or any Old Notes the Company's acceptance of which would,
in the opinion of counsel for the Company, be unlawful. The Company also
reserves the right to waive any defects, irregularities or conditions of tender
as to particular Old Notes. The Company's interpretation of the terms and
conditions of the Exchange Offer (including the instructions in the Letter of
Transmittal) will be final and binding on all parties. Unless waived, any
defects or irregularities in connection with tenders of Old Notes must be cured
within such time as the Company shall determine. Although the Company intends to
notify holders of defects or irregularities with respect to tenders of Old
Notes, neither the Company, the Exchange Agent nor any other person shall incur
any liability for failure to give such notification. Tenders of Old Notes will
not be deemed to have been made until such defects or irregularities have been
cured or waived. Any Old Notes received by the Exchange Agent that are not
properly tendered and as to which the defects or irregularities have not been
cured or waived will be returned by the Exchange Agent to the tendering holders,
unless otherwise provided in the Letter of Transmittal, as soon as practicable
following the Expiration Date.
In addition, the Company reserves the right in its sole discretion to
purchase or make offers for any Old Notes that remain outstanding after the
Expiration Date or, as set forth under "--Conditions to the Exchange Offer," to
terminate the Exchange Offer and, to the extent permitted by applicable law,
purchase Old Notes in the open market, in privately negotiated transactions or
otherwise. The terms of any such purchases or offers could differ from the terms
of the Exchange Offer.
By tendering, each holder will represent to the Company that, among other
things (i) the New Notes acquired pursuant to the Exchange Offer are being
obtained in the ordinary course of business of the person receiving such New
Notes, whether or not such person is the holder of the Old Notes, (ii) neither
the holder nor any such other person is engaging in or intends to engage in a
distribution of such New Notes, (iii) neither the holder nor any such other
person has an arrangement or understanding with any person to participate in the
distribution of such New Notes, and (iv)
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neither the holder nor any such other person is an "affiliate", as defined under
Rule 405 of the Securities Act, of the Company or any Note Guarantor.
In the event that (i) existing Commission interpretations are changed such
that the New Notes received by holders in the Exchange Offer are not or would
not be, upon receipt, transferable by each such holder (other than an affiliate
of the Company or a Note Guarantor) without restriction under the Securities
Act, or (ii) any holder of Old Notes either (a) is not eligible to participate
in the Exchange Offer, or (b) participates in the Exchange Offer and does not
receive freely transferable New Notes in exchange for Old Notes (in each case
under this clause (ii) other than as a result of applicable Commission
interpretations or laws in effect on the original issue date of the Old Notes)
such holders can elect, by so indicating on the Letter of Transmittal and
providing certain additional necessary information, to have such holder's Old
Notes registered in a "shelf" registration statement on an appropriate form
pursuant to Rule 415 under the Securities Act. Such election must be made by the
Expiration Date in order for such holder to participate in the "shelf"
registration.
In all cases, issuance of New Notes for Old Notes that are accepted for
exchange pursuant to the Exchange Offer will be made only after timely receipt
by the Exchange Agent of certificates for such Old Notes or a timely Book-Entry
Confirmation of such Old Notes into the Exchange Agent's account at the
Book-Entry Transfer Facility, a properly completed and duly executed Letter of
Transmittal (or, with respect to DTC and its participants, electronic
instructions in which the tendering holder acknowledges its receipt of an
agreement to be bound by the Letter of Transmittal), and all other required
documents. If any tendered Old Notes are not accepted for any reason set forth
in the terms and conditions of the Exchange Offer or if Old Notes are submitted
for a greater principal amount than the holder desires to exchange, such
unaccepted or non-exchanged Old Notes will be returned without expense to the
tendering Holder thereof (or, in the case of Old Notes tendered by book-entry
transfer into the Exchange Agent's account at the Book-Entry Transfer Facility
pursuant to the book-entry transfer procedures described below, such non-
exchanged Old Notes will be credited to an account maintained with such
Book-Entry Transfer Facility) as promptly as practicable after the expiration or
termination of the Exchange Offer.
BOOK-ENTRY TRANSFER
The Exchange Agent will make a request to establish an account with respect
to the Old Notes at the Book-Entry Transfer Facility for purposes of the
Exchange Offer within two business days after the date the Exchange Agent
receives this Prospectus, and any financial institution that is a participant in
the Book-Entry Transfer Facility's systems may make book-entry delivery of Old
Notes being tendered by causing the Book-Entry Transfer Facility to transfer
such Old Notes into the Exchange Agent's account at the Book-Entry Transfer
Facility in accordance with such Book-Entry Transfer Facility's procedures for
transfer. However, although delivery of Old Notes may be effected through
book-entry transfer at the Book-Entry Transfer Facility, the Letter of
Transmittal or copy thereof, with any required signature guarantees and any
other required documents, must, in any case other than as set forth in the
following paragraph, be transmitted to and received by the Exchange Agent at one
of the addresses set forth under "--Exchange Agent" on or prior to the
Expiration Date or the guaranteed delivery procedures described below must be
complied with.
DTC's Automated Tender Offer Program ("ATOP") is the only method of
processing exchange offers through DTC. To accept the Exchange Offer through
ATOP, participants in DTC must send electronic instructions to DTC through DTC's
communication system in place of sending a signed, hard copy Letter of
Transmittal. DTC is obligated to communicate electronic instructions to the
Exchange Agent. To tender Old Notes through ATOP, the electronic instructions
sent to DTC and transmitted by DTC to the Exchange Agent must contain an
application by which the participant acknowledges its receipt of and agrees to
be bound by the Letter of Transmittal.
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GUARANTEED DELIVERY PROCEDURES
If a registered holder of the Old Notes desires to tender such Old Notes and
the Old Notes are not immediately available, or time will not permit such
holder's Old Notes or other required documents to reach the Exchange Agent
before the Expiration Date, or the procedure for book-entry transfer cannot be
completed on a timely basis, a tender may be effected if (i) the tender is made
through an Eligible Institution, (ii) prior to the Expiration Date, the Exchange
Agent receives from such Eligible Institution a properly completed and duly
executed Letter of Transmittal and a notice of guaranteed delivery (by telegram,
telex, facsimile transmission, mail or hand delivery), setting forth the name
and address of the holder of Old Notes and the amount of Old Notes tendered,
stating that the tender is being made thereby and guaranteeing that within three
New York Stock Exchange ("NYSE") trading days after the date of execution of the
Notice of Guaranteed Delivery, the certificates for all physically tendered Old
Notes, in proper form for transfer, or a Book-Entry Confirmation, as the case
may be, and any other documents required by the Letter of Transmittal will be
deposited by the Eligible Institution with the Exchange Agent, and (iii) the
certificates for all physically tendered Old Notes, in proper form for transfer,
or a Book-Entry Confirmation, as the case may be, and all other documents
required by the Letter of Transmittal, are received by the Exchange Agent within
three NYSE trading days after the date of execution of the Notice of Guaranteed
Delivery.
WITHDRAWAL RIGHTS
Tenders of Old Notes may be withdrawn at any time prior to 5:00 p.m., New
York City time, on the Expiration Date.
For a withdrawal of a tender of Old Notes to be effective, a written or (for
DTC participants) electronic ATOP transmission notice of withdrawal must be
received by the Exchange Agent at one of its addresses set forth under
"--Exchange Agent" prior to 5:00 p.m., New York City time, on the Expiration
Date. Any such notice of withdrawal must (i) specify the name of the person
having deposited the Old Notes to be withdrawn (the "Depositor"), (ii) identify
the Old Notes to be withdrawn (including the certificate number or numbers and
principal amount of such Old Notes), (iii) be signed by the holder in the same
manner as the original signature of the Letter of Transmittal by which such Old
Notes were tendered (including any required signature guarantees) (or with
respect to DTC and participants, by electronic instructions through ATOP) or be
accompanied by documents of transfer sufficient to have the Trustee register the
transfer of such Old Notes into the name of the person withdrawing the tender,
and (iv) specify the name in which any such Old Notes are to be registered, if
different from that of the Depositor. All questions as to the validity, form,
and eligibility (including time of receipt) of such notices will be determined
by the Company, whose determination shall be final and binding on all parties.
Any Old Notes so withdrawn will be deemed not to have been validly tendered for
exchange for purposes of the Exchange Offer. Any Old Notes which have been
tendered for exchange but which are not exchanged for any reason will be
returned to the holder thereof without cost to such holder as soon as
practicable after withdrawal, rejection of tender, termination or expiration of
the Exchange Offer. Properly withdrawn Old Notes may be re-tendered by following
one of the procedures under "--Procedures for Tendering" at any time on or prior
to the Expiration Date.
CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other provision of the Exchange Offer, the Company and
the Note Guarantors shall not be required to accept for exchange, or to issue
New Notes in exchange for, any Old Notes and may terminate or amend the Exchange
Offer if at any time before the acceptance of such Old Notes for exchange or the
exchange of the New Notes for such Old Notes, the Company and the Note
Guarantors determine that the Exchange Offer violates applicable law,
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any applicable interpretation of the staff of the Commission or any order of any
governmental agency or court of competent jurisdiction.
The foregoing conditions are for the sole benefit of the Company and the
Note Guarantors and may be asserted by the Company and the Note Guarantors
regardless of the circumstances giving rise to any such condition or may be
waived by the Company and the Note Guarantors in whole or in part at any time
and from time to time in their sole discretion. The failure by the Company or
any Note Guarantors at any time to exercise any of the foregoing rights shall
not be deemed a waiver of any such right and each such right shall be deemed an
ongoing right which may be asserted at any time and form time to time.
In addition, the Company and the Note Guarantors will not accept for
exchange any Old Notes tendered, and no New Notes will be issued in exchange for
any such Old Notes, if at such time any stop order shall be threatened or in
effect with respect to the Registration Statement of which this Prospectus
constitutes a part or the qualification of the indenture under the Trust
Indenture Act of 1939, as amended (the "TIA"). In any such event the Company and
the Note Guarantors are required to use every reasonable effort to obtain the
withdrawal of any stop order at the earliest possible time.
EXCHANGE AGENT
All executed Letters of Transmittal should be directed to the Exchange
Agent. United States Trust Company of New York has been appointed as Exchange
Agent for the Exchange Offer. Questions, requests for assistance and requests
for additional copies of this Prospectus or of the Letter of Transmittal should
be directed to the Exchange Agent addressed as follows:
<TABLE><CAPTION>
<S> <C> <C>
By Hand Delivery: By Registered or By Overnight Delivery:
Certified Mail:
United States Trust Company United States Trust Company United States Trust Company
of New York of New York of New York
65 Beaver Street P.O. Box 844--Peter Cooper 770 Broadway
New York, New York 10005 Station New York, New York 10003
Attention: Ground Level New York, NY 10276-0843 Attention: Corporate Trust
Corporate Trust Operations Operations
Confirm by Telephone:
(800) 548-6565
</TABLE>
FEES AND EXPENSES
The Company will not make any payments to brokers, dealers, or others
soliciting acceptances of the Exchange Offer. The principal solicitation is
being made by mail; however, additional solicitations may be made in person or
by telephone by officers and employees of the Company.
The estimated cash expenses to be incurred in connection with the Exchange
Offer will be paid by the Company and are estimated in the aggregate to be
$170,000 , which includes fees and expenses of the Exchange Agent, accounting,
legal, printing, and related fees and expenses.
TRANSFER TAXES
Holders who tender their Old Notes for exchange will not be obligated to pay
any transfer taxes in connection therewith, except that holders who instruct the
Company to register New Notes in the name of, or request that Old Notes not
tendered or not accepted in the Exchange Offer be returned to, a person other
than the registered tendering holder will be responsible for the payment of any
applicable transfer tax thereon.
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FEDERAL INCOME TAX CONSIDERATIONS
The following discussion is a summary of federal income tax considerations
relevant to the exchange of Old Notes for New Notes, but does not purport to be
a complete analysis of all potential tax effects. The discussion is based on the
Internal Revenue Code of 1986, as amended, Treasury regulations, Internal
Revenue Service rulings and pronouncements, and judicial decisions not in
effect, all of which are subject to change at any time by legislative, judicial
or administrative action. Any such changes may be applied retroactively in a
manner that could adversely affect a holder of the New Notes. The description
does not consider the effect of any applicable foreign, state, local or other
tax laws or estate or gift tax considerations.
EACH HOLDER SHOULD CONSULT HIS OWN TAX ADVISOR AS TO THE PARTICULAR TAX
CONSEQUENCES TO IT OF EXCHANGING OLD NOTES FOR NEW NOTES, INCLUDING THE
APPLICABILITY AND EFFECT OF ANY STATE, LOCAL OR FOREIGN TAX LAWS.
EXCHANGE OF OLD NOTES FOR NEW NOTES
The Company has received an opinion from Baer Marks & Upham LLP, counsel to
the Company, to the effect that the exchange of Old Notes for New Notes pursuant
to Exchange Offer should not constitute a material modification of the terms of
the Old Notes and, therefore such exchange should not constitute an exchange for
federal income tax purposes. Accordingly, such exchange should have no federal
income tax consequences to holders of Old Notes.
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DESCRIPTION OF THE NEW NOTES
GENERAL
The New Notes are to be issued under an Indenture, dated as of August 15,
1995 (the "Indenture"), between the Company and United States Trust Company of
New York, as Trustee (the "Trustee"), a copy of which is available upon request
to the Company.
The following summary of certain provisions of the Indenture does not
purport to be complete and is subject to, and is qualified in its entirety by
reference to, all the provisions of the Indenture, including the definitions of
certain terms therein and those terms made a part thereof by the Trust Indenture
Act of 1939, as amended. Capitalized terms used herein and not otherwise defined
have the meanings set forth in the section "Certain Definitions."
Principal of, premium, if any, and interest on the New Notes will be
payable, and the New Notes may be exchanged or transferred, at the office or
agency of the Company in the Borough of Manhattan, The City of New York (which
initially shall be the corporate trust office of the Trustee, at 114 West 47th
Street, New York, New York 10036 ), except that, at the option of the Company,
payment of interest may be made by check mailed to the address of the Holders as
such address appears in the Note Register.
The New Notes will be issued only in fully registered form, without coupons,
in denominations of $1,000 and any integral multiple of $1,000. No service
charge will be made for any registration of transfer or exchange of New Notes,
but the Company may require payment of a sum sufficient to cover any transfer
tax or other similar governmental charge payable in connection therewith.
TERMS OF THE NOTES
The New Notes will be senior, unsecured obligations of the Company, limited
to $90.0 million aggregate principal amount, and will mature on August 15, 2003.
Each New Note will bear interest at a rate of 12% per annum from the date of
issuance of the Old Note for which such New Note is exchanged, or from the most
recent date to which interest has been paid or provided for, payable
semiannually to Holders of record at the close of business on the August 1 or
February 1 immediately preceding the interest payment date on August 15 and
February 15 of each year, commencing February 15, 1996.
OPTIONAL REDEMPTION
The New Notes will be redeemable, at the Company's option, in whole or in
part, at any time on or after August 15, 1999, and prior to maturity, upon not
less than 30 nor more than 60 days prior notice mailed by first-class mail to
each Holder's registered address, at the following redemption prices (expressed
as percentages of principal amount), plus accrued interest, if any, to the
redemption date (subject to the right of Holders of record on the relevant
record date to receive interest due on the relevant interest payment date), if
redeemed during the 12-month period commencing on August 15 of the years set
forth below:
REDEMPTION
PERIOD PRICE
------ ----------
1999........................................................... 106%
2000........................................................... 104%
2001........................................................... 102%
2002 and thereafter............................................ 100%
In addition, at any time and from time to time prior to August 15, 1998, the
Company may redeem in the aggregate up to 33 1/3% of the original aggregate
principal amount of New Notes with the proceeds of one or more Public Equity
Offerings following which there is a Public Market, at a
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redemption price (expressed as a percentage of principal amount) of 110% plus
accrued interest, if any, to the redemption date; provided, however, that at
least 66 2/3% of the original aggregate principal amount of the Notes must
remain outstanding after each such redemption.
SELECTION
In the case of any partial redemption, selection of the New Notes for
redemption will be made by the Trustee on a pro rata basis, by lot or by such
other method as the Trustee shall deem to be fair and appropriate. New Notes
selected for redemption shall be in principal amounts of $1,000 or a whole
multiple thereof. If any New Note is to be redeemed in part only, the notice of
redemption relating to such New Note shall state the portion of the principal
amount thereof to be redeemed. A new New Note in principal amount equal to the
unredeemed portion thereof will be issued in the name of the Holder thereof upon
cancellation of the original New Note.
RANKING
The indebtedness evidenced by the New Notes will be senior, unsecured
obligations of the Company, will rank pari passu in right of payment with all
existing and future Senior Indebtedness of the Company and will be senior in
right of payments to all Subordinated Obligations of the Company. The New Notes
will be effectively subordinated to any secured Indebtedness of the Company and
its subsidiaries to the extent of the value of the assets securing such
Indebtedness. As of June 30, 1995, after giving effect to the Transactions and
the use of the proceeds therefrom, the Company would have had outstanding $91.8
million of Senior Indebtedness (including the Notes), of which $1.8 million
would have been secured Indebtedness. In addition, as of such date, and after
giving such effect, the Company would have had undrawn commitments under the
Senior Credit Facility of $20.0 million.
NOTE GUARANTEES
Each of the Company's existing principal operating Subsidiaries, Funtime
Parks, Inc., Funtime, Inc., Wyandot Lake, Inc., Darien Lake Theme Park and
Camping Resort, Inc., D.L. Holdings, Inc., Tierco Maryland, Inc., Tierco Water
Park, Inc., Frontier City Properties, Inc. and Frontier City Partners Limited
Partnership, and certain future subsidiaries of the Company (as described
below), as primary obligor and not merely as surety, will irrevocably and
unconditionally Guarantee on a senior unsecured basis the performance and
payment when due, whether at Stated Maturity, by acceleration or otherwise, of
all obligations of the Company under the Indenture and the New Notes, whether
for principal of or interest on the New Notes, expenses, indemnification or
otherwise (all such obligations guaranteed by such Note Guarantors being herein
called the "Guaranteed Obligations"). Such Note Guarantors will agree to pay, in
addition to the amount stated above, any and all expenses (including reasonable
counsel fees and expenses) incurred by the Trustee or the Holders in enforcing
any rights under the Note Guarantee. Each Note Guarantor has jointly and
severally guaranteed the full amount of the Guaranteed Obligations, provided
that each Note Guarantee will be limited to an amount not to exceed the maximum
amount that can be Guaranteed by the applicable Note Guarantor without rendering
the Note Guarantee, as it relates to such Note Guarantor, voidable under
applicable law relating to fraudulent conveyance or fraudulent transfer or
similar laws affecting the rights of creditors generally. Generally, under such
laws, a Note Guarantee may be held voidable to the extent claims thereunder
exceed the benefit received by the Note Guarantor in connection with the
issuance of the Notes. After the Issue Date, the Company will cause each
Restricted Subsidiary which Incurs Indebtedness, including each Restricted
Subsidiary which is a guarantor of Indebtedness Incurred pursuant to clause
(b)(1) of the covenant described under "Certain Covenants--Limitation on
Indebtedness," to execute and deliver to the Trustee a supplemental indenture
pursuant to which such Restricted Subsidiary will Guarantee payment of the
Notes. See "Certain Covenants--Future Note Guarantors" below.
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Each Note Guarantee is a continuing guarantee and shall (a) remain in full
force and effect until payment in full of all the Guaranteed Obligations, (b) be
binding upon such Note Guarantors and (c) inure to the benefit of and be
enforceable by the Trustee and the Holders.
The Company is a holding company with no operations or assets other than its
investment in its subsidiaries, all of which are wholly-owned by the Company.
All of the Company's direct and indirect existing subsidiaries, other than
Funtime-Famous Recipe, Inc. ("Famous Recipe"), are Note Guarantors. The assets
and the operations of Famous Recipe are inconsequential to the Company and its
consolidated financial condition and results of operations. Separate financial
statements of the individual Note Guarantors are not presented in this
Prospectus because the Company does not believe such information would be
material to holders of the Old Notes.
CHANGE OF CONTROL
Upon the occurrence of any of the following events (each a "Change of
Control"), each Holder will have the right to require the Company to repurchase
all or any part of such Holder's New Notes at a purchase price in cash equal to
101% of the principal amount thereof plus accrued and unpaid interest, if any,
to the date of purchase (subject to the right of Holders of record on the
relevant record date to receive interest due on the relevant interest payment
date):
(i) any "person" (as such term is used in Sections 13(d) and 14(d) of
the Exchange Act), other than one or more Permitted Holders, is or becomes
the beneficial owner (as defined in Rules 13d-3 and 13d-5 under the Exchange
Act, except that a person shall be deemed to have "beneficial ownership" of
all shares that any such person has the right to acquire, whether such right
is exercisable immediately or only after the passage of time), directly or
indirectly, of more than 35% of the Voting Stock of the Company; provided
that the Permitted Holders beneficially own (as so defined), directly or
indirectly, in the aggregate a lesser percentage of the Voting Stock of the
Company than such other Person and do not have the right or ability by
voting power, contract or otherwise to elect or designate for election a
majority of the board of directors of the Company;
(ii) during any period of two consecutive years, individuals who at the
beginning of such period constituted the Board of Directors (together with
any new directors whose election by such Board of Directors or whose
nomination for election by shareholders of the Company was approved by a
vote of a majority of the directors of the Company then still in office who
were either directors at the beginning of such period or whose election or
nomination for election was previously so approved) cease for any reason to
constitute a majority of the Board of Directors then in office; or
(iii) the merger or consolidation of the Company with or into another
Person or the merger of another Person with or into the Company, or the sale
of all or substantially all the assets of the Company to another Person (in
each case, other than a Person that is controlled by the Permitted Holders),
and, in the case of any such merger or consolidation, the securities of the
Company that are outstanding immediately prior to such transaction and which
represent 100% of the aggregate voting power of the Voting Stock of the
Company are changed into or exchanged for cash, securities or property,
unless pursuant to such transaction such securities are changed into or
exchanged for, in addition to any other consideration, securities of the
surviving corporation that represent immediately after such transaction, at
least a majority of the aggregate voting power of the Voting Stock of the
surviving corporation.
Within 30 days following any Change of Control, the Company shall mail a
notice to each Holder with a copy to the Trustee stating: (1) that a Change of
Control has occurred and that such Holder has the right to require the Company
to purchase such Holder's New Notes at a purchase price in cash equal to 101% of
the principal amount thereof plus accrued and unpaid interest, if any, to the
date of purchase (subject to the right of Holders of record on a record date to
receive
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interest on the relevant interest payment date); (2) the circumstances and
relevant facts and financial information regarding such Change of Control,
including information with respect to pro forma historical income, cash flow and
capitalization after giving effect to such Change of Control; (3) the repurchase
date (which shall be no earlier than 30 days nor later than 60 days from the
date such notice is mailed); and (4) the instructions determined by the Company,
consistent with this covenant, that a Holder must follow in order to have its
New Notes purchased.
The Company will comply, to the extent applicable, with the requirements of
Section 14(e) of the Exchange Act and any other securities laws or regulations
in connection with the repurchase of New Notes pursuant to this covenant. To the
extent that the provisions of any securities laws or regulations conflict with
provisions of this covenant, the Company will comply with the applicable
securities laws and regulations and will not be deemed to have breached its
obligations under this paragraph by virtue thereof.
The Change of Control purchase feature is a result of negotiations between
the Company and the Initial Purchaser. Management has no present intention to
engage in a transaction involving a Change of Control, although it is possible
that the Company would decide to do so in the future. Subject to the limitations
discussed below, the Company could, in the future, enter into certain
transactions, including acquisitions, refinancings or other recapitalizations,
that would not constitute a Change in Control under the Indenture, but that
could increase the amount of indebtedness outstanding at such time or otherwise
affect the Company's capital structure or credit ratings.
The occurrence of certain of the events which would constitute a Change of
Control would constitute a default under the Senior Credit Facility. Future
Senior Indebtedness of the Company may contain prohibitions of certain events
which would constitute a Change of Control or require such Senior Indebtedness
to be repurchased upon a Change of Control. Moreover, the exercise by the
Holders of their right to require the Company to repurchase the New Notes could
cause a default under such Senior Indebtedness, even if the Change of Control
itself does not, due to the financial effect of such repurchase on the Company.
Finally, the Company's ability to pay cash to the Holders upon a repurchase may
be limited by the Company's then existing financial resources. There can be no
assurance that sufficient funds will be available when necessary to make any
required repurchases.
CERTAIN COVENANTS
The Indenture contains covenants including, among others, the following:
Limitation on Indebtedness. (a) The Company will not, and will not permit
any Restricted Subsidiary to, Incur, directly or indirectly, any Indebtedness
(and will not permit any Restricted Subsidiary to Incur Preferred Stock);
provided, however, that the Company may Incur Indebtedness if on the date of the
Incurrence of such Indebtedness the Consolidated Coverage Ratio exceeds 2.00:1
if such Indebtedness is Incurred on or prior to September 30, 1997; 2.25:1 if
such Indebtedness is Incurred after September 30, 1997 and on or prior to
September 30, 1999; and 2.50:1 if such Indebtedness is Incurred after September
30, 1999.
(b) Notwithstanding the foregoing paragraph (a), the Company and its
Restricted Subsidiaries may Incur the following Indebtedness: (1) Indebtedness
Incurred pursuant to the Senior Credit Facility or under any other revolving
credit facility in an aggregate principal amount on the date of Incurrence
which, when added to all other Indebtedness Incurred pursuant to this clause (1)
and then outstanding shall not exceed $30 million, provided that the Company
must repay all loans outstanding under any such facility at least once during
each fiscal year and may not make drawings thereunder for 30 consecutive days
following the date of such repayment; (2) Indebtedness (A) of the Company owed
to and held by a Wholly Owned Subsidiary or (B) of any Restricted Subsidiary
owed to and held by the Company or any other Wholly Owned Subsidiary; provided,
however, that any subsequent issuance or transfer of any Capital Stock which
results in any such
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Wholly Owned Subsidiary ceasing to be a Wholly Owned Subsidiary or any
subsequent transfer of such Indebtedness (other than to another Wholly Owned
Subsidiary) will be deemed, in each case, to constitute the Incurrence of such
Indebtedness by the issuer thereof; (3) the Notes; (4) Indebtedness outstanding
on the Issue Date (other than Indebtedness described in clause (1) or (3) of
this covenant); (5) Refinancing Indebtedness in respect of Indebtedness Incurred
pursuant to paragraph (a) or pursuant to clause (2), (3), (4), or this clause
(5); (6) Hedging Obligations consisting of interest rate swaps with respect to
Indebtedness permitted to be Incurred by the Company pursuant to the Indenture;
(7) Purchase Money Indebtedness and Capital Lease Obligations Incurred after the
Issue Date which do not exceed at any time outstanding $15 million; (8)
Indebtedness represented by the Note Guarantees and Guarantees of Indebtedness
Incurred pursuant to clause (1) or (3) above; (9) Indebtedness in respect of
performance bonds, letters of credit, surety or appeal bonds, prior to any
drawing thereunder, for or in connection with pledges, deposits or payments made
or given in the ordinary course of business, and which do not secure any
Indebtedness; and (10) Indebtedness in an aggregate principal amount which,
together with all other Indebtedness of the Company then outstanding (other than
Indebtedness permitted by clauses (1) through (9) above or paragraph (a)), does
not exceed $5 million.
(c) Notwithstanding the foregoing, the Company will not Incur any
Indebtedness pursuant to the foregoing paragraph (b) if the proceeds thereof are
used, directly or indirectly, to Refinance any Subordinated Obligations unless
such Indebtedness will be subordinated to the New Notes to at least the same
extent as such Subordinated Obligations.
Limitation on Restricted Payments. (a) The Company will not, and will not
permit any Restricted Subsidiary, directly or indirectly, to make a Restricted
Payment if at the time the Company or such Restricted Subsidiary makes such
Restricted Payment: (1) a Default will have occurred and be continuing (or would
result therefrom); or (2) the Company is not able to Incur an additional $1.00
of Indebtedness pursuant to paragraph (a) of the covenant described under
"--Limitation on Indebtedness"; or (3) the aggregate amount of such Restricted
Payment and all other Restricted Payments since the Issue Date would exceed the
sum of: (A) 50% of the Consolidated Net Income accrued during the period
(treated as one accounting period) from the Issue Date to the end of the most
recent fiscal quarter ending at least 45 days prior to the date of such
Restricted Payment (or, in case such Consolidated Net Income shall be a deficit,
minus 100% of such deficit); (B) the aggregate Net Cash Proceeds received by the
Company from the issuance or sale of its Capital Stock (other than Disqualified
Stock) subsequent to the Issue Date (other than an issuance or sale to a
Subsidiary of the Company and other than an issuance or sale to an employee
stock ownership plan or other trust established by the Company or any of its
Subsidiaries for the benefit of their employees to the extent the purchase by
such plan or trust is financed by Indebtedness of such plan or trust and for
which the Company is liable as Guarantor or otherwise); (C) the amount by which
Indebtedness of the Company is reduced on the Company's balance sheet upon the
conversion or exchange (other than by a Subsidiary of the Company) subsequent to
the Issue Date, of any Indebtedness of the Company convertible or exchangeable
for Capital Stock (other than Disqualified Stock) of the Company (less the
amount of any cash, or other property (other than Capital Stock), distributed by
the Company upon such conversion or exchange); and (D) an amount equal to the
sum of (i) the net reduction in Investments in Unrestricted Subsidiaries
resulting from dividends, repayments of loans or advances, or other transfers of
assets, in each case to the Company or any Restricted Subsidiary from
Unrestricted Subsidiaries, and (ii) the portion (proportionate to the Company's
equity interest in such Subsidiary) of the fair market value of the net assets
of an Unrestricted Subsidiary at the time such Unrestricted Subsidiary is
designated a Restricted Subsidiary; provided, however, that the foregoing sum
shall not exceed, in the case of any Unrestricted Subsidiary, the amount of
Investments previously made by the Company or any Restricted Subsidiary in such
Unrestricted Subsidiary, which amount was treated as a Restricted Payment.
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(b) The provisions of the foregoing paragraph (a) will not prohibit: (i) any
purchase or redemption of Capital Stock or Subordinated Obligations of the
Company made by exchange for, or out of the proceeds of the substantially
concurrent sale of, Capital Stock of the Company (other than Disqualified Stock
and other than Capital Stock issued or sold to a Subsidiary of the Company or an
employee stock ownership plan or similar trust); provided, however, that (A)
such purchase or redemption will be excluded in the calculation of the amount of
Restricted Payments and (B) the Net Cash Proceeds from such sale will be
excluded from the calculation of amounts under clause (3)(B) of paragraph (a)
above; (ii) any purchase, repurchase, redemption, defeasance or other
acquisition or retirement for value of Subordinated Obligations made by exchange
for, or out of the proceeds of the substantially concurrent sale of,
Indebtedness of the Company which is permitted to be Incurred pursuant to the
covenant described under "--Limitation on Indebtedness"; provided, however, that
such purchase or redemption will be excluded in the calculation of the amount of
Restricted Payments; (iii) dividends paid within 60 days after the date of
declaration thereof if at such date of declaration such dividend would have
complied with this covenant; provided, however, that at the time of payment of
such dividend, no other Default shall have occurred and be continuing (or result
therefrom); provided further, however, that such dividend will be included in
the calculation of the amount of Restricted Payments; or (iv) the repurchase of
shares of, or options to purchase shares of, common stock of the Company or any
of its Subsidiaries from employees, former employees, directors or former
directors of the Company or any of its Subsidiaries (or permitted transferees of
such employees, former employees, directors or former directors), pursuant to
the terms of the agreements (including employment agreements) or plans (or
amendments thereto) approved by the Board of Directors under which such persons
purchase or sell or are granted the option to purchase or sell, shares of such
common stock; provided, however, that the aggregate amount of such repurchases
shall not exceed $2.5 million; provided further, however, that such repurchases
will be included in the calculation of the amount of Restricted Payments.
Limitation on Restrictions on Distributions from Restricted
Subsidiaries. The Company will not, and will not permit any Restricted
Subsidiary to, create or otherwise cause or permit to exist or become effective
any consensual encumbrance or restriction on the ability of any Restricted
Subsidiary (i) to pay dividends or make any other distributions on its Capital
Stock or pay any Indebtedness owed to the Company, (ii) to make any loans or
advances to the Company or (iii) transfer any of its property or assets to the
Company, except: (1) any encumbrance or restriction pursuant to an agreement in
effect at or entered into on the Issue Date, including under the Senior Credit
Facility; (2) any encumbrance or restriction with respect to a Restricted
Subsidiary pursuant to an agreement relating to any Indebtedness Incurred by
such Restricted Subsidiary on or prior to the date on which such Restricted
Subsidiary was acquired by the Company (other than Indebtedness Incurred as
consideration in, or to provide all or any portion of the funds or credit
support utilized to consummate, the transaction or series of related
transactions pursuant to which such Restricted Subsidiary became a Restricted
Subsidiary or was acquired by the Company) and outstanding on such date; (3) any
encumbrance or restriction pursuant to an agreement effecting a Refinancing of
Indebtedness Incurred pursuant to an agreement referred to in clause (1) or (2)
of this covenant or contained in any amendment to an agreement referred to in
clause (1) or (2) of this covenant; provided, however, that the encumbrances and
restrictions with respect to such Restricted Subsidiary contained in any such
refinancing agreement or amendment are no less favorable to the New Noteholders
than encumbrances and restrictions with respect to such Restricted Subsidiary
contained in such agreements; (4) any such encumbrance or restriction consisting
of customary nonsubletting, nontransfer and nonassignment provisions in leases,
licenses or contracts arising or entered into in the ordinary course of
business; (5) in the case of clause (iii) above, restrictions contained in
security agreements or mortgages securing Indebtedness of a Restricted
Subsidiary to the extent such restrictions restrict the transfer of the property
subject to such security agreements or mortgages; (6) any restriction with
respect to a Restricted Subsidiary imposed pursuant to an agreement entered into
for the sale or disposition of all or
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substantially all the Capital Stock or assets of such Restricted Subsidiary
pending the closing of such sale or disposition; and (7) encumbrances or
restrictions arising or existing by reason of applicable law.
Limitation on Sales of Assets and Subsidiary Stock. (a) The Company will
not, and will not permit any Restricted Subsidiary to, make any Asset
Disposition unless (i) the Company or such Restricted Subsidiary receives
consideration (including by way of relief from, or by any other Person assuming
sole responsibility for, any liabilities, contingent or otherwise) at the time
of such Asset Disposition at least equal to the fair market value, as determined
in good faith by the Board of Directors (including as to the value of all
non-cash consideration), of the shares and assets subject to such Asset
Disposition, (ii) at least 75% of the consideration thereof received by the
Company or such Restricted Subsidiary is in the form of cash; provided, however,
that a portion of such cash consideration requirement may be in the form of a
promissory note secured by a lien on the asset subject to such Asset
Disposition, provided that the aggregate amount of all such promissory notes at
any one time outstanding does not exceed $1 million and (iii) an amount equal to
100% of the Net Available Cash from such Asset Disposition is applied by the
Company (or such Restricted Subsidiary, as the case may be) (A) first, to the
extent the Company elects (or is required by the terms of any Senior
Indebtedness or Indebtedness (other than Preferred Stock) of a Wholly Owned
Subsidiary), to prepay, repay or purchase Senior Indebtedness or such
Indebtedness (in each case other than Indebtedness owed to the Company or an
Affiliate of the Company) within 180 days after the later of the date of such
Asset Disposition or the receipt of such Net Available Cash; (B) second, to the
extent of the balance of Net Available Cash after application in accordance with
clause (A), to the extent the Company or such Restricted Subsidiary elects, to
reinvest in Additional Assets (including by means of an Investment in Additional
Assets by a Restricted Subsidiary with Net Available Cash received by the
Company or another Restricted Subsidiary) within 365 days from the later of such
Asset Disposition or the receipt of such Net Available Cash; (C) third, to the
extent of the balance of such Net Available Cash after application in accordance
with clauses (A) and (B) exceeds $5 million, to make an Offer to purchase the
Notes pursuant to and subject to the conditions set forth in section (b) of this
covenant; and (D) fourth, to the extent of the balance of such Net Available
Cash after application in accordance with clauses (A), (B) and (C), to (x)
acquire Additional Assets (other than Indebtedness and Capital Stock) or (y)
prepay, repay or purchase Indebtedness of the Company (other than Indebtedness
owed to an Affiliate of the Company and other than Disqualified Stock of the
Company) or Indebtedness of any Restricted Subsidiary (other than Indebtedness
owed to the Company or an Affiliate of the Company), in each case described in
this clause (D) within one year from the receipt of such Net Available Cash or,
if the Company has made an Offer pursuant to clause (C), six months from the
date such Offer is consummated; provided, however, that in connection with any
prepayment, repayment or purchase of Indebtedness pursuant to clause (A), (C) or
(D) above, the Company or such Restricted Subsidiary will retire such
Indebtedness and will cause the related loan commitment (if any) to be
permanently reduced in an amount equal to the principal amount so prepaid,
repaid or purchased; provided further that prior to applying such Net Available
Cash in accordance with clause (A), (B), (C) or (D) above, such Net Available
Cash may be invested in Temporary Cash Investments. The Company and the
Restricted Subsidiaries will not be required to apply any Net Available Cash in
accordance with this covenant except to the extent that the aggregate Net
Available Cash from all Asset Dispositions which are not applied in accordance
with this covenant exceeds $500,000.
For the purposes of this covenant, the following will be deemed to be cash:
(x) the assumption of Indebtedness of the Company (other than Disqualified Stock
of the Company) or any Restricted Subsidiary and the release of the Company or
such Restricted Subsidiary from all liability on such Indebtedness in connection
with such Asset Disposition and (y) securities received by the Company or any
Restricted Subsidiary from the transferee that are promptly converted by the
Company or such Restricted Subsidiary into cash.
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(b) In the event of an Asset Disposition that requires the purchase of New
Notes pursuant to clause (a)(iii)(C) of this covenant, the Company will be
required to purchase Notes tendered pursuant to an Offer, commenced within one
year after the date of such Asset Disposition, by the Company for the New Notes
(the "Offer") at a purchase price of 100% of their principal amount plus accrued
interest to the Purchase Date in accordance with the procedures (including
prorationing in the event of oversubscription) set forth in clause (c) of this
covenant. If the aggregate purchase price of New Notes tendered pursuant to the
Offer is less than the Net Available Cash allotted to the purchase of the New
Notes, the Company will apply the remaining Net Available Cash in accordance
with clause (a)(iii)(D) of this covenant. The Company will not be required to
make an Offer for Notes pursuant to this covenant if the Net Available Cash
available therefor (after application of the proceeds as provided in clauses (A)
and (B) of this covenant section (a)(iii)) is less than $5 million for any Asset
Disposition (which lesser amounts will be carried forward for purposes of
determining whether an Offer is required with respect to the Net Available Cash
from any subsequent Asset Disposition).
(c) The Company will comply, to the extent applicable, with the requirements
of Section 14(e) of the Exchange Act and any other securities laws or
regulations in connection with the repurchase of Notes pursuant to this
covenant. To the extent that the provisions of any securities laws or
regulations conflict with provisions of this covenant, the Company will comply
with the applicable securities laws and regulations and will not be deemed to
have breached its obligations under this covenant by virtue thereof.
Limitation on Affiliate Transactions. (a) The Company will not, and will not
permit any Restricted Subsidiary to, enter into or permit to exist any
transaction (including the purchase, sale, lease or exchange of any property,
employee compensation arrangements or the rendering of any service) with any
Affiliate of the Company, except for the issuance of the Convertible Preferred
Stock, the Existing Note Conversion and the payment of investment banking and
financial advisory fees in the amount of $800,000 and $475,000 to Lepercq, de
Neuflize & Co. Incorporated and Hanseatic Corporation, respectively, in
connection with the issuance of the Notes and the Convertible Preferred Stock
and the Merger (an "Affiliate Transaction") unless the terms thereof (1) are no
less favorable to the Company or such Restricted Subsidiary than those which
could be obtained at the time of such transaction in arm's-length dealings with
a Person who is not such an Affiliate and (2) if such Affiliate Transaction
involves an amount in excess of $500,000, (i) are set forth in writing and (ii)
have been approved by a majority of the members of the Board of Directors having
no personal stake in such Affiliate Transaction. In addition if such Affiliate
Transaction involves an amount in excess of $5 million a fairness opinion must
be provided by a nationally recognized investment banking firm.
(b) The provisions of the foregoing paragraph (a) will not apply to (i) any
Restricted Payment permitted to be paid pursuant to the covenant described under
"--Limitation on Restricted Payments", (ii) any issuance of securities, or other
payments, awards or grants in cash, securities or otherwise pursuant to, or the
funding of, employment or indemnification arrangements, stock options and stock
ownership plans approved by the Board of Directors, (iii) the grant of stock
options or similar rights to employees and directors of the Company pursuant to
plans approved by the Board of Directors, (iv) loans or advances to employees in
the ordinary course of business in accordance with the past practices of the
Company or its Restricted Subsidiaries, but in any event not to exceed $250,000
in the aggregate outstanding at any one time; (v) the payment of reasonable fees
to directors of the Company and its Restricted Subsidiaries who are not
employees of the Company or its Restricted Subsidiaries; and (vi) any Affiliate
Transaction between the Company and a Wholly Owned Subsidiary or between Wholly
Owned Subsidiaries.
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Limitation on the Sale or Issuance of Capital Stock of Restricted
Subsidiaries. The Company will not sell any shares of Capital Stock of a
Restricted Subsidiary, and will not permit any Restricted Subsidiary, directly
or indirectly, to issue or sell any shares of its Capital Stock except (i) to
the Company or a Wholly Owned Subsidiary or (ii) if, immediately after giving
effect to such issuance or sale, such Restricted Subsidiary would no longer
constitute a Restricted Subsidiary. Notwithstanding the foregoing, the Company
is permitted to sell all the Capital Stock of a Subsidiary as long as the
Company is in compliance with the terms of the covenant described under
"--Limitation on Sales of Assets and Subsidiary Stock."
Limitation on Liens. The Company will not, and will not permit any
Restricted Subsidiary to, directly or indirectly, create or permit to exist any
Lien on any of its property or assets (including Capital Stock), whether owned
on the Issue Date or thereafter acquired, securing any obligation other than
Permitted Liens unless contemporaneously therewith effective provision is made
to secure the New Notes equally and ratably with (or on a senior basis to, in
the case of Subordinated Obligations) such obligation for so long as such
obligation is so secured.
Limitation on Sale/Leaseback Transactions. The Company will not, and will
not permit any Restricted Subsidiary to, enter into any Sale/Leaseback
Transaction with respect to any property unless (i) the Company or such
Subsidiary would be entitled to (A) Incur Indebtedness in an amount equal to the
Attributable Debt with respect to such Sale/Leaseback Transaction pursuant to
the covenant described under "--Limitation on Indebtedness" and (B) create a
Lien on such property securing such Attributable Debt without equally and
ratably securing the Notes pursuant to the covenant described under
"--Limitation on Liens", (ii) the net proceeds received by the Company or any
Restricted Subsidiary in connection with such Sale/Leaseback Transaction are at
least equal to the fair value (as determined by the Board of Directors) of such
property and (iii) the transfer of such property is permitted by, and the
Company applies the proceeds of such transaction in compliance with, the
covenant described under "--Limitation on Sales of Assets and Subsidiary Stock."
Limitation on Lines of Business. The Company will not, and will not permit
any Restricted Subsidiary to, engage in any business, other than a Related
Business.
Future Note Guarantors. After the Issue Date, the Company will cause each
Restricted Subsidiary which Incurs Indebtedness, other than Indebtedness owed to
the Company or a Wholly Owned Subsidiary, including each Restricted Subsidiary
which is a guarantor of Indebtedness Incurred pursuant to clause (b)(1) of the
covenant described under "--Limitation on Indebtedness", to execute and deliver
to the Trustee a supplemental indenture pursuant to which such Restricted
Subsidiary will Guarantee payment of the New Notes.
Merger and Consolidation. The Company will not consolidate with or merge
with or into, or convey, transfer or lease all or substantially all its assets
to, any Person, unless: (i) the resulting, surviving or transferee Person (the
"Successor Company") shall be a Person organized and existing under the laws of
the United States of America, any State thereof or the District of Columbia and
the Successor Company (if not the Company) will expressly assume, by an
indenture supplemental hereto, executed and delivered to the Trustee, in form
satisfactory to the Trustee, all the obligations of the Company under the Notes
and the Indenture; (ii) immediately after giving effect to such transaction (and
treating any Indebtedness which becomes an obligation of the Successor Company
or any Subsidiary as a result of such transaction as having been Incurred by
such Successor Company or such Subsidiary at the time of such transaction), no
Default shall have occurred and be continuing; (iii) immediately after giving
effect to such transaction, the Successor Company would be able to Incur an
additional $1.00 of Indebtedness pursuant to paragraph (a) under "--Limitation
on Indebtedness"; (iv) immediately after giving effect to such transaction, the
Successor Company will have Consolidated Net Worth in an amount which is not
less than the Consolidated Net Worth of the Company prior to such transaction;
and (v) the Company will have
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delivered to the Trustee an Officers' Certificate and an Opinion of Counsel,
each stating that such consolidation, merger or transfer and such supplemental
indenture (if any) comply with the Indenture.
The Successor Company will be the successor to the Company and will succeed
to, and be substituted for, and may exercise every right and power of, the
Company under the Indenture, but the predecessor Company in the case of a
conveyance, transfer or lease will not be released from the obligation to pay
the principal of and interest on the New Notes.
Notwithstanding the foregoing clauses (ii), (iii) and (iv), any Restricted
Subsidiary may consolidate with, merge into or transfer all or part of its
properties and assets to the Company or a Wholly Owned Subsidiary.
SEC Reports. Notwithstanding that the Company may not be required to remain
or be subject to the reporting requirements of Section 13 or 15(d) of the
Exchange Act, the Company will file with the SEC and provide the Trustee and
Noteholders and prospective Noteholders (upon request) with such annual reports
and such information, documents and other reports specified in Sections 13 and
15(d) of the Exchange Act. The Company will also comply with the other
provisions of TIA Sec.314(a).
DEFAULTS
An Event of Default is defined in the Indenture as (i) a default in the
payment of interest on the Notes when due, continued for 30 days, (ii) a default
in the payment of principal of any Note when due at its Stated Maturity, upon
optional redemption, upon required repurchase, upon declaration or otherwise,
(iii) the failure by the Company to comply with its obligations under "--Certain
Covenants--Merger and Consolidation" above, (iv) the failure by the Company to
comply for 30 days after notice with any of its obligations under the covenants
described above under "-- Change of Control" or under the covenants described in
"--Certain Covenants" (in each case, other than a failure to purchase Notes),
(v) the failure by the Company or any Note Guarantor to comply for 60 days after
notice with its other agreements contained in the Indenture, (vi) the failure of
the Company or any Subsidiary to pay any Indebtedness within any applicable
grace period after final maturity or the acceleration of any Indebtedness by the
holders thereof because of a default and the total amount of such Indebtedness
unpaid or accelerated exceeds $5 million and such failure continues for 10 days
after notice (the "cross acceleration provision"), (vii) certain events of
bankruptcy, insolvency or reorganization of the Company or a Restricted
Subsidiary (the "bankruptcy provisions"), (viii) the rendering of any judgment
or decree for the payment of money in excess of $5 million against the Company
or a Subsidiary, which remains outstanding for a period of 60 days following
such judgment and is not discharged, waived or stayed within 10 days after
notice (the "judgment default provision") or (ix) any Note Guarantee shall cease
to be in full force and effect (except as contemplated by the terms thereof) or
any Note Guarantor shall deny or disaffirm its obligations under the Indenture
or any Note Guarantee and such default continues for 10 days.
The foregoing will constitute Events of Default whatever the reason for any
such Event of Default and whether it is voluntary or involuntary or is effected
by operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body.
However, a default under clauses (iv), (v), (vi) and (viii) will not
constitute an Event of Default until the Trustee or the Holders of 25% in
principal amount of the outstanding Notes notify the Company of the default and
the Company does not cure such default within the time specified after receipt
of such notice.
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If an Event of Default occurs and is continuing, the Trustee or the Holders
of at least 25% in principal amount of the outstanding Notes may declare the
principal of and accrued but unpaid interest on all the Notes to be due and
payable. Upon such a declaration, such principal and interest shall be due and
payable immediately. If an Event of Default relating to certain events of
bankruptcy, insolvency or reorganization of the Company occurs and is
continuing, the principal of and interest on all the Notes will ipso facto
become and be immediately due and payable without any declaration or other act
on the part of the Trustee or any Holders. Under certain circumstances, the
Holders of a majority in principal amount of the outstanding Notes may rescind
any such acceleration with respect to the Notes and its consequences.
Subject to the provisions of the Indenture relating to the duties of the
Trustee, in case an Event of Default occurs and is continuing, the Trustee will
be under no obligation to exercise any of the rights or powers under the
Indenture at the request or direction of any of the Holders of the Notes unless
such Holders have offered to the Trustee reasonable indemnity or security
against any loss, liability or expense. Except to enforce the right to receive
payment of principal, premium (if any) or interest when due, no Holder may
pursue any remedy with respect to the Indenture or the Notes unless (i) such
Holder has previously given the Trustee notice that an Event of Default is
continuing, (ii) Holders of at least 25% in principal amount of the outstanding
Notes have requested the Trustee to pursue the remedy, (iii) such Holders have
offered the Trustee reasonable security or indemnity against any loss, liability
or expense, (iv) the Trustee has not complied with such request within 60 days
after the receipt thereof and the offer of security or indemnity and (v) the
Holders of a majority in principal amount of the outstanding Notes have not
given the Trustee a direction inconsistent with such request within such 60-day
period. Subject to certain restrictions, the Holders of a majority in principal
amount of the outstanding Notes are given the right to direct the time, method
and place of conducting any proceeding for any remedy available to the Trustee
or of exercising any trust or power conferred on the Trustee. The Trustee,
however, may refuse to follow any direction that conflicts with law or the
Indenture or that the Trustee determines is unduly prejudicial to the rights of
any other Holder or that would involve the Trustee in personal liability.
The Indenture provides that if a Default occurs and is continuing and is
known to the Trustee, the Trustee must mail to each Holder notice of the Default
within the earlier of 90 days after it occurs or 30 days after it is known to a
trust officer. Except in the case of a Default in the payment of principal of,
premium (if any) or interest on any Note, the Trustee may withhold notice if and
so long as a committee of its trust officers determines that withholding notice
is not opposed to the interest of the Holders. In addition, the Company is
required to deliver to the Trustee, within 120 days after the end of each fiscal
year, a certificate indicating whether the signers thereof know of any Default
that occurred during the previous year. The Company also is required to deliver
to the Trustee, within 30 days after the occurrence thereof, written notice of
any event which would constitute certain Defaults, their status and what action
the Company is taking or proposes to take in respect thereof.
AMENDMENTS AND WAIVERS
Subject to certain exceptions, the Indenture may be amended with the consent
of the Holders of a majority in principal amount of the Notes then outstanding
(including consents obtained in connection with a tender offer or exchange for
the Notes) and any past default or compliance with any provisions may also be
waived with such a consent of the Holders of a majority in principal amount of
the Notes then outstanding. However, without the consent of each Holder of an
outstanding Note, no amendment may, among other things, (i) reduce the amount of
Notes whose Holders must consent to an amendment, (ii) reduce the rate of or
extend the time for payment of interest on any Note, (iii) reduce the principal
of or extend the Stated Maturity of any Note, (iv) reduce the premium payable
upon the redemption of any Note or change the time at which any Note may or
shall be redeemed as described under "--Optional Redemption" above, (v) make any
Note
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payable in money other than that stated in the Note, (vi) impair the right of
any Holder to receive payment of principal of and interest on such Holder's
Notes on or after the due dates therefor or to institute suit for the
enforcement of any payment on or with respect to such Holder's Notes, (vii)
modify the Note Guarantees in any manner adverse to the Holders or (viii) make
any change in the amendment provisions which require each Holder's consent or in
the waiver provisions.
Without the consent of any Holder, the Company and Trustee may amend the
Indenture to cure any ambiguity, omission, defect or inconsistency, to provide
for the assumption by a successor corporation of the obligations of the Company
under the Indenture, to provide for uncertificated Notes in addition to or in
place of certificated Notes (provided that the uncertificated Notes are issued
in registered form for purposes of Section 163(f) of the Code, or in a manner
such that the uncertificated Notes are described in Section 163(f)(2)(B) of the
Code), to add further Guarantees with respect to the Notes, to secure the Notes,
to add to the covenants of the Company for the benefit of the Holders or to
surrender any right or power conferred upon the Company, to make any change that
does not adversely affect the rights of any Holder or to comply with any
requirement of the SEC in connection with the qualification of the Indenture
under the TIA.
The consent of the Holders is not necessary under the Indenture to approve
the particular form of any proposed amendment. It is sufficient if such consent
approves the substance of the proposed amendment.
After an amendment under the Indenture becomes effective, the Company is
required to mail to Holders a notice briefly describing such amendment. However,
the failure to give such notice to all Holders, or any defect therein, will not
impair or affect the validity of the amendment.
TRANSFER
A New Noteholder may transfer or exchange New Notes in accordance with the
Indenture. Upon any transfer or exchange, the registrar and the Trustee may
require a New Noteholder, among other things, to furnish appropriate
endorsements and transfer documents and the Company may require a New Noteholder
to pay any taxes required by law or permitted by the Indenture. The Company is
not required to transfer or exchange any New Note selected for redemption or to
transfer or exchange any New Note for a period of 15 days prior to the selection
of New Notes to be redeemed. The New Notes will be issued in registered form and
the registered Holder of a New Note will be treated as the owner of such New
Note for all purposes.
DEFEASANCE
The Company at any time may terminate all its obligations under the Notes
and the Indenture ("legal defeasance"), except for certain obligations,
including those respecting the defeasance trust and obligations to register the
transfer or exchange of the New Notes, to replace mutilated, destroyed, lost or
stolen New Notes and to maintain a registrar and paying agent in respect of the
New Notes. The Company at any time may terminate its obligations under the
covenants described under "--Certain Covenants" (other than the covenants
described under "--Merger and Consolidation"), the operation of the cross
acceleration provision, the bankruptcy provisions with respect to Subsidiaries
and the judgment default provision described under "--Certain Covenants--
Defaults" above and the limitations contained in clauses (iii) and (iv) under
"--Merger and Consolidation" above ("covenant defeasance").
The Company may exercise its legal defeasance option notwithstanding its
prior exercise of its covenant defeasance option. If the Company exercises its
legal defeasance option, payment of the Notes may not be accelerated because of
an Event of Default with respect thereto. If the Company exercises its covenant
defeasance option, payment of the Notes may not be accelerated because of an
Event of Default specified in clause (iv), (vi), (vii) (with respect only to
Subsidiaries)
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or (viii) under "--Defaults" above or because of the failure of the Company to
comply with clause (iii) or (iv) under "--Certain Covenants--Merger and
Consolidation" above.
In order to exercise either defeasance option, the Company must irrevocably
deposit in trust (the "defeasance trust") with the Trustee money or U.S.
Government Obligations for the payment of principal, premium (if any) and
interest on the Notes to redemption or maturity, as the case may be, and must
comply with certain other conditions, including delivery to the Trustee of an
Opinion of Counsel to the effect that holders of the Notes will not recognize
income, gain or loss for Federal income tax purposes as a result of such deposit
and defeasance and will be subject to Federal income tax on the same amount and
in the same manner and at the same times as would have been in the case if such
deposit and defeasance had not occurred (and, in the case of legal defeasance
only, such Opinion of Counsel must be based on a ruling of the Internal Revenue
Service or other change in applicable Federal income tax law).
CONCERNING THE TRUSTEE
United States Trust Company of New York is to be the Trustee under the
Indenture and has been appointed by the Company as Registrar and Paying Agent
with regard to the New Notes.
The Holders of a majority in principal amount of the outstanding Notes will
have the right to direct the time, method and place of conducting any proceeding
for exercising any remedy available to the Trustee, subject to certain
exceptions. The Indenture provides that if an Event of Default occurs (and is
not cured), the Trustee will be required, in the exercise of its power, to use
the degree of case of a prudent man in the conduct of his own affairs. Subject
to such provisions, the Trustee will be under no obligation to exercise any of
its rights or powers under the Indenture at the request of any Holder, unless
such Holder will have offered to the Trustee security and indemnity satisfactory
to it against any loss, liability or expense and then only to the extent
required by the terms of the Indenture.
GOVERNING LAW
The Indenture provides that it and the New Notes will be governed by, and
construed in accordance with, the laws of the State of New York without giving
effect to applicable principles of conflicts of law to the extent that the
application of the law of another jurisdiction would be required thereby.
CERTAIN DEFINITIONS
"Additional Assets" means (i) any property or assets (other than
Indebtedness and Capital Stock) in a Related Business; (ii) the Capital Stock of
a Person that becomes a Restricted Subsidiary as a result of the acquisition of
such Capital Stock by the Company or another Restricted Subsidiary or (iii)
Capital Stock constituting a minority interest in any Person that at such time
is a Restricted Subsidiary; provided, however, that any such Restricted
Subsidiary described in clauses (ii) or (iii) above is primarily engaged in a
Related Business.
"Affiliate" of any specified Person means (i) any other Person, directly or
indirectly, controlling or controlled by or under direct or indirect common
control with such specified Person or (ii) any Person who is a director or
executive officer (a) of such Person, (b) of any Subsidiary of such Person or
(c) of any Person described in clause (i) above. For the purposes of this
definition, "control" when used with respect to any Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and controlled" have meanings correlative to the
foregoing. For purposes of the provisions described under "--Certain
Covenants--Limitation on Affiliate Transactions" and "--Certain
Covenants--Limitations on Sales of Assets and Subsidiary Stock" only,
"Affiliate" shall also mean any beneficial owner of shares representing 5% or
more
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of the total voting power of the Voting Stock (on a fully diluted basis) of the
Company or of rights or warrants to purchase such Voting stock (whether or not
currently exercisable) and any Person who would be an Affiliate of any such
beneficial owner pursuant to the first sentence hereof.
"Asset Disposition" means any sale, lease, transfer or other disposition of
shares of Capital Stock of a Restricted Subsidiary (other than directors'
qualifying shares), property or other assets (each referred to for the purposes
of this definition as a "disposition") by the Company or any of its Restricted
Subsidiaries (including any disposition by means of a merger, consolidation or
similar transaction) other than (i) a disposition by a Restricted Subsidiary to
the Company or by the Company or a Restricted Subsidiary to a Wholly Owned
Subsidiary, (ii) a disposition of inventory in the ordinary course of business,
(iii) a disposition of all or substantially all of the assets of the Company
permitted by the covenant described under "--Certain Covenants--Merger and
Consolidation" and (iv) for purposes of the covenant described under "--Certain
Covenants--Limitation on Sales of Assets and Subsidiary Stock" only, a
disposition that constitutes a Restricted Payment permitted by the covenant
described under "--Certain Covenants--Limitation on Restricted Payments".
"Attributable Debt" in respect of a Sale/Leaseback Transaction means, as at
the time of determination, the present value (discounted at the interest rate
borne by the Notes, compounded annually) of the total obligations of the lessee
for rental payments during the remaining term of the lease included in such
Sale/Leaseback Transaction (including any period for which such lease has been
extended).
"Average Life" means, as of the date of determination, with respect to any
Indebtedness or Preferred Stock, the quotient obtained by dividing (i) the sum
of the products of numbers of years from the date of determination to the dates
of each successive scheduled principal payment of such Indebtedness or
redemption or similar payment with respect to such Preferred Stock multiplied by
the amount of such payment by (ii) the sum of all such payments.
"Board of Directors" means the Board of Directors of the Company or any
committee thereof duly authorized to act on behalf of such Board.
"Business Day" means any day other than a Saturday, Sunday or other day on
which commercial banks in New York City are authorized or required by law to
close.
"Capital Lease Obligation" means an obligation that is required to be
classified and accounted for as a capitalized lease for financial reporting
purposes in accordance with GAAP, and the amount of Indebtedness represented by
such obligation shall be the capitalized amount of such obligation determined in
accordance with GAAP; and the Stated Maturity thereof shall be the date of the
last payment of rent or any other amount due under such lease prior to the first
date upon which such lease may be terminated by the lessee without payment of a
penalty.
"Capital Stock" of any Person means any and all shares, interests, rights to
purchase, warrants, options, participations or other equivalents of or interests
in (however designated) equity of such Person, including any Preferred Stock,
but excluding any debt securities convertible into such equity.
"Code" means the Internal Revenue Code of 1986, as amended.
"Consolidated Coverage Ratio" as of any date of determination means the
ratio of (i) the aggregate amount of EBITDA for the period of the most recent
four consecutive fiscal quarters ending prior to the date of such determination
as to which financial statements are available to (ii) Consolidated Interest
Expense for such four fiscal quarters; provided, however, that (1) if the
Company or any Restricted Subsidiary has Incurred any Indebtedness since the
beginning of such period that remains outstanding on such date of determination
or if the transaction giving rise to the need to calculate the Consolidated
Coverage Ratio is an Incurrence of Indebtedness, or both,
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EBITDA and Consolidated Interest Expense for such period shall be calculated
after giving effect on a pro forma basis to such Indebtedness as if such
Indebtedness had been Incurred on the first day of such period and the discharge
of any other Indebtedness repaid, repurchased, defeased or otherwise discharged
with the proceeds of such new Indebtedness as if such discharge had occurred on
the first day of such period, (2) if since the beginning of such period the
Company or any Restricted Subsidiary shall have made any Asset Disposition, the
EBITDA for such period shall be reduced by an amount equal to the EBITDA (if
positive) directly attributable to the assets which are the subject of such
Asset Disposition for such period, or increased by an amount equal to the EBITDA
(if negative), directly attributable thereto for such period and Consolidated
Interest Expense for such period shall be reduced by an amount equal to the
Consolidated Interest Expense directly attributable to any Indebtedness of the
Company or any Restricted Subsidiary repaid, repurchased, defeased or otherwise
discharged with respect to the Company and its continuing Restricted
Subsidiaries in connection with such Asset Disposition for such period (or, if
the Capital Stock of any Restricted Subsidiary is sold, the Consolidated
Interest Expense for such period directly attributable to the Indebtedness of
such Restricted Subsidiary to the extent the Company and its continuing
Restricted Subsidiaries are no longer liable for such Indebtedness after such
sale), (3) if since the beginning of such period the Company or any Restricted
Subsidiary (by merger or otherwise) shall have made an Investment in any
Restricted Subsidiary (or any Person which becomes a Restricted Subsidiary) or
an acquisition of assets, including any acquisition of assets occurring in
connection with a transaction causing a calculation to be made hereunder, which
constitutes all or substantially all of an operating unit of a business, EBITDA
and Consolidated Interest Expense for such period shall be calculated after
giving pro forma effect thereto (including the Incurrence of any Indebtedness)
as if such Investment or acquisition occurred on the first day of such period,
(4) if since the beginning of such period the Company or any Restricted
Subsidiary shall have repaid, repurchased, defeased or otherwise discharged any
Indebtedness, pursuant to the terms of the Indenture, with the Net Cash Proceeds
received by the Company from the issuance or sale of its Capital Stock (other
than Disqualified Stock and other than an issuance or sale to a Subsidiary of
the Company and other than an issuance or sale to an employee stock ownership
plan or other trust established by the Company or any of its Subsidiaries for
the benefit of their employees to the extent the purchase by such plan or trust
is financed by Indebtedness of such plan or trust and for which the Company is
liable as Guarantor or otherwise), EBITDA and Consolidated Interest Expense for
such period shall be calculated after giving effect on a pro forma basis to such
discharge of Indebtedness as if such discharge had occurred on the first day of
such period, and (5) if since the beginning of such period any Person (that
subsequently became a Restricted Subsidiary or was merged with or into the
Company or any Restricted Subsidiary since the beginning of such period) shall
have made any Asset Disposition, any Investment or acquisition of assets that
would have required an adjustment pursuant to clause (2) or (3) above if made by
the Company or a Restricted Subsidiary during such period, EBITDA and
Consolidated Interest Expense for such period shall be calculated after giving
pro forma effect thereto as if such Asset Disposition, Investment or acquisition
occurred on the first day of such period. For purposes of this definition,
whenever pro forma effect is to be given to an acquisition of assets, the amount
of income or earnings relating thereto, and the amount of Consolidated Interest
Expense associated with any Indebtedness Incurred in connection therewith, the
pro forma calculations shall be determined in good faith by a responsible
financial or accounting Officer of the Company. If any Indebtedness bears a
floating rate of interest and is being given pro forma effect, the interest of
such Indebtedness shall be calculated as if the rate in effect on the date of
determination had been the applicable rate for the entire period (taking into
account any Interest Rate Agreement applicable to such Indebtedness if such
Interest Rate Agreement has a remaining term as at the date of determination in
excess of 12 months).
"Consolidated Interest Expense" means, for any period, the total interest
expense of the Company and its Consolidated Restricted Subsidiaries, plus, to
the extent not included in such total
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interest expense, and to the extent incurred by the Company or its Restricted
Subsidiaries, (i) interest expense attributable to Capital Lease Obligations,
(ii) amortization of debt discount, (iii) capitalized interest, (iv) non-cash
interest expenses, (v) commissions, discounts and other fees and charges owed
with respect to letters of credit and bankers' acceptance financing, (vi) net
costs associated with Hedging Obligations (including amortization of fees),
(vii) Preferred Stock dividends in respect of all Preferred Stock of
Subsidiaries of the Company and Disqualified Stock of the Company held by
Persons other than the Company or a Wholly Owned Subsidiary, (viii) interest
accruing on any Indebtedness of any other Person to the extent such Indebtedness
is Guaranteed by the Company or any Restricted Subsidiary; provided that payment
of such amounts by the Company or any Restricted Subsidiary is being made to, or
is sought by, the holders of such Indebtedness pursuant to such guarantee, and
(ix) the cash contributions to any employee stock ownership plan or similar
trust to the extent such contributions are used by such plan or trust to pay
interest or fees to any Person (other than the Company) in connection with
Indebtedness Incurred by such plan or trust.
"Consolidated Net Income" means, for any period, the net income (loss) of
the Company and its Consolidated Subsidiaries; provided, however, that there
shall not be included in such Consolidated Net Income: (i) any net income (loss)
of any Person if such Person is not a Restricted Subsidiary, except that (A)
subject to the limitations contained in clause (iv) below, the Company's equity
in the net income of any such Person for such period shall be included in such
Consolidated Net Income up to the aggregate amount of cash actually distributed
by such Person during such period to the Company or a Restricted Subsidiary as a
dividend or other distribution (subject, in the case of a dividend or other
distribution paid to a Restricted Subsidiary, to the limitations contained in
clause (iii) below) and (B) the Company's equity in a net loss of any such
Person (other than an Unrestricted Subsidiary) for such period shall be included
in determining such Consolidated Net Income, up to the aggregate amount of cash
actually contributed or advanced to such Person by the Company or its Restricted
Subsidiaries during or with respect to such period; (ii) any net income (loss)
of any Person acquired by the Company or a Subsidiary in a pooling of interests
transaction for any period prior to the date of such acquisition; (iii) any net
income of any Restricted Subsidiary if such Restricted Subsidiary is subject at
such time to restrictions, directly or indirectly, on the payment of dividends
or the making of distributions by such Restricted Subsidiary, directly or
indirectly, to the Company, except that (A) subject to the limitations contained
in clause (iv) below, the Company's equity in the net income of any such
Restricted Subsidiary for such period shall be included in such Consolidated Net
Income up to the aggregate amount of cash that could have been distributed by
such Restricted Subsidiary during such period to the Company or another
Restricted Subsidiary as a dividend or other distribution (subject, in the case
of a dividend or other distribution that could have been made to another
Restricted Subsidiary, to the limitation contained in this clause) and (B) the
Company's equity in a net loss of any such Restricted Subsidiary for such period
shall be included in determining such Consolidated Net Income; (iv) any gain
(but not loss) realized upon the sale or other disposition of any property,
plant or equipment of the Company or its Consolidated Subsidiaries (including
pursuant to any Sale/Leaseback Transaction) which is not sold or otherwise
disposed of in the ordinary course of business and any gain (but not loss)
realized upon the sale or other disposition of any Capital Stock of any Person;
(v) extraordinary gains (but not losses); (vi) the cumulative effect of a change
in accounting principles; (vii) any transaction costs or writeoffs attributable
to the Merger; and (viii) amounts paid to the shareholders of Funtime in respect
of Consolidated Net Income pursuant to the Merger Agreement. Notwithstanding the
foregoing, for the purposes of the covenant described under "Certain
Covenants--Limitation on Restricted Payments" only, there shall be excluded from
Consolidated Net Income any dividends, repayments of loans or advances or other
transfers of assets from Unrestricted Subsidiaries to the Company or a
Restricted Subsidiary to the extent such dividends, repayments or transfers
increase the amount of Restricted Payments permitted under such covenant
pursuant to clause (a)(3)(D) thereof.
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"Consolidated Net Worth" means the total of the amounts shown on the balance
sheet of the Company and the Restricted Subsidiaries, determined on a
Consolidated basis in accordance with GAAP, as of the end of the most recent
fiscal quarter of the Company ending prior to the taking of any action for the
purpose of which the determination is being made as to which financial
statements are available, as (i) the par or stated value of all outstanding
Capital Stock of the Company plus (ii) paid-in capital or capital surplus
relating to such Capital Stock plus (iii) any retained earnings or earned
surplus less (A) any accumulated deficit and (B) any amounts attributable to
Disqualified Stock.
"Consolidation" means the consolidation of the amounts of each of the
Restricted Subsidiaries with those of the Company in accordance with GAAP
consistently applied; provided, however, that "Consolidation" will not include
consolidation of the accounts of any Unrestricted Subsidiary, but the interest
of the Company or any Restricted Subsidiary in an Unrestricted Subsidiary will
be accounted for as an Investment. The term "Consolidated" has a correlative
meaning.
"Convertible Preferred Stock" means the Company's Series A 7% Convertible
Preferred Stock issued in connection with the issuance of the Notes.
"Currency Agreement" means in respect of a Person any foreign exchange
contract, currency swap agreement or other similar agreement as to which such
Person is a party or a beneficiary.
"Default" means any event which is, or after notice or passage of time or
both would be, an Event of Default.
"Disqualified Stock" means, with respect to any Person, any Capital Stock
which by its terms (or by the terms of any security into which it is convertible
or for which it is exchangeable or exercisable) or upon the happening of any
event (i) matures or is mandatorily redeemable pursuant to a sinking fund
obligation or otherwise, (ii) is convertible or exchangeable for Indebtedness or
Disqualified Stock or (iii) is redeemable at the option of the holder thereof,
in whole or in part, in the case of clauses (i), (ii) or (iii) on or prior to
the first anniversary of the Stated Maturity of the Notes.
"East 79th Street Partnership Agreement" means the Agreement of 229 East
79th Street Associates, dated July 24, 1987, as amended to the Issue Date.
"EBITDA" for any period means the Consolidated Net Income for such period,
plus the following to the extent deducted in calculating such Consolidated Net
Income: (i) all income tax expense of the Company, (ii) Consolidated Interest
Expense, (iii) depreciation expense and (iv) amortization expense, in each case
for such period. Notwithstanding the foregoing, the provision for taxes based on
the income or profits of, and the depreciation and amortization and other non-
cash charges of, a Restricted Subsidiary of the Company shall be added to
Consolidated Net Income to compute EBITDA only to the extent (and in the same
proportion) that the net income of such Subsidiary was included in calculating
Consolidated Net Income and only if a corresponding amount would be permitted at
the date of determination to be dividended to the Company by such Restricted
Subsidiary without prior approval (that has not been obtained), pursuant to the
terms of its charter and all agreements, instruments, judgments, decrees,
orders, statutes, rules and governmental regulations applicable to such
Restricted Subsidiary or its stockholders.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Existing Note Conversion" means the conversion by the holders of the
Company's 9.5% Convertible Subordinated Notes and the Company's 8% Junior
Subordinated Notes into shares of the Company's common stock.
"Funtime" means Funtime Parks, Inc., an Ohio corporation.
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"GAAP" means generally accepted accounting principles in the United States
of America as in effect as of the Issue Date, including, without limitation,
those set forth in the opinions and pronouncements of the Accounting Principles
Board of the American Institute of Certified Public Accountants and statements
and pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as approved by a significant segment of the
accounting profession. All ratios and computations based on GAAP contained in
the Indenture shall be computed in conformity with GAAP.
"Guarantee" means any obligation, contingent or otherwise, of any Person
directly or indirectly guaranteeing any Indebtedness or other obligation of any
other Person and any obligation, direct or indirect, contingent or otherwise, of
such Person (i) to purchase or pay (or advance or supply funds for the purchase
or payment of) such Indebtedness or other obligation of such other Person
(whether arising by virtue of partnership arrangements, or by agreements to
keep-well, to purchase assets, goods, securities or services, to take-or-pay, or
to maintain financial statement conditions or otherwise) or (ii) entered into
for the purpose of assuring in any other manner the obligee of such Indebtedness
or other obligation of the payment thereof or to protect such obligee against
loss in respect thereof (in whole or in part); provided, however, that the term
"Guarantee" shall not include endorsements for collection or deposit in the
ordinary course of business. The term "Guarantee" used as a verb has a
corresponding meaning. The term "Guarantor" shall mean any Person Guaranteeing
any obligation.
"Hedging Obligations" of any Person means the obligations of such Person
pursuant to any Interest Rate Agreement or Currency Agreement.
"Holder" or "Noteholder" means the Person in whose name a Note is registered
on the Registrar's books.
"Incur" means issue, assume, Guarantee, incur or otherwise become liable
for; provided, however, that any Indebtedness or Capital Stock of a Person
existing at the time such Person becomes a Subsidiary (whether by merger,
consolidation, acquisition or otherwise) shall be deemed to be Incurred by such
Subsidiary at the time it becomes a Subsidiary. The term "Incurrence" when used
as a noun shall have a correlative meaning.
"Indebtedness" means, with respect to any Person on any date of
determination (without duplication), (i) the principal of and premium (if any)
in respect of indebtedness of such Person for borrowed money; (ii) the principal
of and premium (if any) in respect of obligations evidenced by bonds,
debentures, notes or other similar instruments; (iii) all obligations of such
Person in respect of letters of credit or other similar instruments (including
reimbursement obligations with respect thereto); (iv) all obligations of such
Person to pay the deferred and unpaid purchase price of property or services
(except Trade Payables), which purchase price is due more than six months after
the date of placing such property in service or taking delivery and title
thereto or the completion of such services; (v) all Capital Lease Obligations of
such Person and all Attributable Debt of such Person; (vi) the amount of all
obligations of such Person with respect to the redemption, repayment or other
repurchase of any Disqualified Stock or, with respect to any Subsidiary of the
Company, any Preferred Stock (but excluding, in each case, any accrued
dividends); (vii) all Indebtedness of other Persons secured by a Lien on any
asset of such Person, whether or not such Indebtedness is assumed by such
Person; provided, however, that the amount of Indebtedness of such Person shall
be the lesser of (A) the fair market value of such asset at such date of
determination and (B) the amount of such Indebtedness of such other Persons;
(viii) all Indebtedness of other Persons to the extent Guaranteed by such
Person; and (ix) to the extent not otherwise included in this definition,
Hedging Obligations of such Person. The amount of Indebtedness of any Person at
any date shall be the outstanding balance at such date of all unconditional
obligations as described above and the maximum liability, upon the occurrence of
the contingency giving rise to the obligation, of any contingent obligations at
such date.
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"Interest Rate Agreement" means with respect to any Person any interest rate
protection agreement, interest rate future agreement, interest rate option
agreement, interest rate swap agreement, interest rate cap agreement, interest
rate collar agreement, interest rate hedge agreement or other similar agreement
or arrangement as to which such Person is party or a beneficiary.
"Investment" in any Person means any direct or indirect advance, loan (other
than advances to customers in the ordinary course of business that are recorded
as accounts receivable on the balance sheet of such Person) or other extension
of credit (including by way of Guarantee or similar arrangement) or capital
contribution to (by means of any transfer of cash or other property to others or
any payment for property or services for the account or use of others), or any
purchase or acquisition of Capital Stock, Indebtedness or other similar
instruments issued by such Person. For purposes of the definition of
"Unrestricted Subsidiary", the definition of "Restricted Payment" and the
covenant described under "--Certain Covenants--Limitation on Restricted
Payments", (i) "Investment" shall include the portion (proportionate to the
Company's equity interest in such Subsidiary) of the fair market value of the
net assets of any Subsidiary of the Company at the time that such Subsidiary is
designated an Unrestricted Subsidiary; provided, however, that upon a
redesignation of such Subsidiary as a Restricted Subsidiary, the Company shall
be deemed to continue to have a permanent "Investment" in an Unrestricted
Subsidiary equal to an amount (if positive) equal to (x) the Company's
"Investment" in such Subsidiary at the time of such redesignation less (y) the
portion (proportionate to the Company's equity interest in such Subsidiary) of
the fair market value of the net assets of such Subsidiary at the time of such
redesignation; and (ii) any property transferred to or from an Unrestricted
Subsidiary shall be valued at its fair market value at the time of such
transfer, in each case as determined in good faith by the Board of Directors.
"Issue Date" means the date on which the Notes were originally issued.
"Lien" means any mortgage, pledge, security interest, encumbrance, lien or
charge of any kind (including any conditional sale or other title retention
agreement or lease in the nature thereof).
"Merger" means the merger of Premier Parks Acquisition Inc. into Funtime
pursuant to the Merger Agreement.
"Merger Agreement" means the Agreement and Plan of Merger among the Company,
Premier Parks Acquisition Inc., Funtime and certain shareholders of Funtime,
dated as of June 30, 1995.
"Net Available Cash" from an Asset Disposition means cash payments received
(including any cash payments received by way of deferred payment of principal
pursuant to a note or installment receivable or otherwise, but only as and when
received, but excluding any other consideration received in the form of
assumption by the acquiring person of Indebtedness or other obligations relating
to the properties or assets that are the subject of such Asset Disposition or
received in any other noncash form) therefrom in each case net of (i) all legal,
title and recording tax expenses, commissions and other fees and expenses
incurred, and all Federal, state, provincial, foreign and local taxes required
to be accrued as a liability under GAAP, as a consequence of such Asset
Disposition, (ii) all payments made on any Indebtedness which is secured by any
assets subject to such Asset Disposition, in accordance with the terms of any
Lien upon or other security agreement of any kind with respect to such assets,
or which must by its terms, or in order to obtain a necessary consent to such
Asset Disposition, or by applicable law be repaid out of the proceeds from such
Asset Disposition, (iii) all distributions and other payments required to be
made to minority interest holders in Subsidiaries or joint ventures as a result
of such Asset Disposition and (iv) appropriate amounts to be provided by the
seller as a reserve, in accordance with GAAP, against any liabilities associated
with the assets disposed of in such Asset Disposition and retained by the
Company or any Restricted Subsidiary after such Asset Disposition.
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"Net Cash Proceeds," with respect to any issuance or sale of Capital Stock,
means the cash proceeds of such issuance or sale net of attorneys' fees,
accountants' fees, underwriters' or placement agents' fees, discounts or
commissions and brokerage, consultant and other fees actually incurred in
connection with such issuance or sale and net of taxes paid or payable as a
result thereof.
"Note Guarantee" means any Guarantee which may from time to time be executed
and delivered by a Subsidiary of the Company pursuant to the terms of the
Indenture. Each such Note Guarantee will be in the form prescribed in the
Indenture.
"Note Guarantor" means any Subsidiary that has issued a Note Guarantee.
"Officer" means the Chairman of the Board, the Chief Executive Officer, the
President, the Chief Financial Officer, the Chief Operating Officer, any Vice
President, the Treasurer or the Secretary of the Company.
"Officers' Certificate" means a certificate signed by two Officers.
"Opinion of Counsel" means a written opinion from legal counsel who is
reasonably acceptable to the Trustee. The counsel may be an employee of or
counsel to the Company or the Trustee.
"Permitted Holders" means Hanseatic Corporation, Robert J. Gellert, Michael
E. Gellert, Jack Tyrell, and each of their respective Affiliates.
"Permitted Investment" means an Investment by the Company or any Restricted
Subsidiary in (i) a Restricted Subsidiary or a Person which will, upon the
making of such Investment, become a Restricted Subsidiary; provided, however,
that the primary business of such Restricted Subsidiary is a Related Business;
(ii) another Person if as a result of such Investment such other Person is
merged or consolidated with or into, or transfers or conveys all or
substantially all its assets to, the Company or a Restricted Subsidiary;
provided, however, that such Person's primary business is a Related Business;
(iii) another Person if the aggregate amount of all Investments in all such
other Persons does not exceed $5.0 million; provided, however, that such
Person's primary business is a Related Business; (iv) promissory notes received
as consideration for an Asset Disposition which are secured by a lien on the
asset subject to such Asset Disposition; provided that the aggregate amount of
all such promissory notes at any one time outstanding does not exceed $1.0
million; (v) Temporary Cash Investments; (vi) receivables owing to the Company
or any Restricted Subsidiary, if created or acquired in the ordinary course of
business and payable or dischargeable in accordance with customary trade terms;
provided, however, that such trade terms may include such concessionary trade
terms as the Company or any such Restricted Subsidiary deems reasonable under
the circumstances; (vii) payroll, travel and similar advances to cover matters
that are expected at the time of such advances ultimately to be treated as
expenses for accounting purposes and that are made in the ordinary course of
business; (viii) loans or advances to employees made in the ordinary course of
business consistent with past practices of the Company or such Restricted
Subsidiary; (ix) stock, obligations or securities received in settlement of
debts created in the ordinary course of business and owing to the Company or any
Restricted Subsidiary or in satisfaction of judgments; and (x) Investments in
the aggregate not to exceed $100,000 in any year pursuant to the East 79th
Street Partnership Agreement.
"Permitted Liens" means, with respect to any Person, (a) pledges or deposits
by such Person under workmen's compensation laws, unemployment insurance laws or
similar legislation, or good faith deposits in connection with bids, tenders,
contracts (other than for the payment of Indebtedness) or leases to which such
Person is a party, or deposits to secure public or statutory obligations of such
Person or deposits of cash or United States government bonds to secure surety or
appeal bonds to which such Person is a party, or deposits as security for
contested taxes or import duties or for the payment of rent, in each case
Incurred in the ordinary course of business; (b) Liens imposed by law, such as
carriers', warehousemen's and mechanics' Liens, in each case
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for sums not yet due or being contested in good faith by appropriate proceedings
or other Liens arising out of judgments or awards against such Person with
respect to which such Person shall then be proceeding with an appeal or other
proceedings for review; (c) Liens for property taxes not yet due or payable or
subject to penalties for non-payment or which are being contested in good faith
and by appropriate proceedings; (d) Liens in favor of issuers of surety bonds or
letters of credit issued pursuant to the request of and for the account of such
Person in the ordinary course of its business; provided, however, that such
letters of credit do not constitute Indebtedness; (e) minor survey exceptions,
minor encumbrances, easements or reservations of, or rights of others for,
licenses, rights of way, sewers, electric lines, telegraph and telephone lines
and other similar purposes, or zoning or other restrictions as to the use of
real properties or Liens incidental to the conduct of the business of such
Person or to the ownership of its properties which were not Incurred in
connection with Indebtedness and which do not in the aggregate materially impair
the use of such properties in the operation of the business of such Person; (f)
Liens securing Purchase Money Indebtedness; provided, however, that (i) the
Indebtedness secured by such Liens is otherwise permitted to be Incurred under
the Indenture, (ii) the principal amount of any Indebtedness secured by any such
Lien does not exceed the cost of assets or property so acquired or constructed
and (iii) the amount of Indebtedness secured by any such Lien is not
subsequently increased; (g) Liens to secure Indebtedness permitted under the
provisions described in clause (b)(1) or (8) under "--Certain
Covenants--Limitation on Indebtedness"; (h) Liens existing on the Issue Date;
(i) Liens on property or shares of Capital Stock of another Person at the time
such other Person becomes a Subsidiary of such Person; provided, however, that
such Liens are not created, incurred or assumed in connection with, or in
contemplation of, such other Person becoming such a Subsidiary; provided
further, however, that such Lien may not extend to any other property owned by
such Person or any of its Subsidiaries; (j) Liens on property at the time such
Person or any of its Subsidiaries acquires the property, including any
acquisition by means of a merger or consolidation with or into such Person or a
Subsidiary of such Person; provided, however, that such Liens are not created,
incurred or assumed in connection with, or in contemplation of, such
acquisition; provided further, however, that the Liens may not extend to any
other property owned by such Person or any of its Subsidiaries; (k) Liens
securing Indebtedness or other obligations of a Subsidiary of such Person owing
to such Person or a wholly owned Subsidiary of such Person; (l) Liens securing
Hedging Obligations so long as the related Indebtedness is, and is permitted to
be under the Indenture, secured by a Lien on the same property securing such
Hedging Obligations; (m) Liens to secure any Refinancing (or successive
Refinancings) as a whole, or in part, of any Indebtedness secured by any Lien
referred to in the foregoing clauses (f), (h), (i) and (j); provided, however,
that (x) such new Lien shall be limited to all or part of the same property that
secured the original Lien (plus improvements on such property) and (y) the
Indebtedness secured by such Lien at such time is not increased to any amount
greater than the sum of (A) the outstanding principal amount or, if greater,
committed amount of the Indebtedness described under clauses (f), (h), (i) or
(j) at the time the original Lien became a Permitted Lien and (B) an amount
necessary to pay any fees and expenses, including premiums, related to such
refinancing, refunding, extension, renewal or replacement and (n)(i) mortgages,
liens, security interests, restrictions or encumbrances that have been placed by
any developer, landlord or other third party on property over which the Company
or any Restricted Subsidiary of the Company has easement rights or on any real
property leased by the Company and subordination or similar agreements relating
thereto and (ii) any condemnation or eminent domain proceedings affecting any
real property. Notwithstanding the foregoing, "Permitted Liens" will not include
any Lien described in clauses (f), (i) or (j) above if such Lien applies to any
Additional Assets acquired directly or indirectly from Net Available Cash
pursuant to the covenant described under "Certain Covenants-- Limitation on Sale
of Assets and Subsidiary Stock."
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"Person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization, government
or any agency or political subdivision thereof or any other entity.
"Preferred Stock", as applied to the Capital Stock of any corporation, means
Capital Stock of any class or classes (however designated) which is preferred as
to the payment of dividends, or as to the distribution of assets upon any
voluntary or involuntary liquidation or dissolution of such corporation, over
shares of Capital Stock of any other class of such corporation.
"principal" of a Note means the principal of the Note plus the premium, if
any, payable on the Note which is due or overdue or is to become due at the
relevant time.
"Public Equity Offering" means an underwritten primary public offering of
common stock of the Company with aggregate gross proceeds of at least $15
million pursuant to an effective registration statement (other than a
registration statement on Form S-4, S-8 or any successor or similar forms) under
the Securities Act.
"Public Market" means any time after a Public Equity Offering has been
consummated and the common stock subject thereto has been distributed by means
of an effective registration statement under the Securities Act.
"Purchase Money Indebtedness" means Indebtedness (i) consisting of the
deferred purchase price of property, conditional sale obligations, obligation
under any title retention agreement and other purchase money obligations, in
each case where the maturity of such Indebtedness does not exceed the
anticipated useful life of the asset being financed, and (ii) incurred to
finance the acquisition by the Company or a Restricted Subsidiary of such asset,
including additions and improvements; provided, however, that any Lien arising
in connection with any such Indebtedness shall be limited to the specified asset
being financed or, in the case of real property or fixtures, including additions
and improvements, the real property on which such asset is attached; and
provided further, that such Indebtedness is Incurred within 180 days after such
acquisition, addition or improvement by the Company or Restricted Subsidiary of
such asset.
"Refinance" means, in respect of any Indebtedness, to refinance, extend,
renew, refund, repay, prepay, redeem, defease or retire, or to issue other
Indebtedness in exchange or replacement for, such indebtedness. "Refinanced" and
"Refinancing" shall have correlative meanings.
"Refinancing Indebtedness" means Indebtedness that Refinances any
Indebtedness of the Company or any Restricted Subsidiary existing on the Issue
Date or Incurred in compliance with the Indenture including Indebtedness that
Refinances Refinancing Indebtedness; provided, however, that (i) such
Refinancing Indebtedness has a Stated Maturity no earlier than the Stated
Maturity of the Indebtedness being Refinanced, (ii) such Refinancing
Indebtedness has an Average Life at the time such Refinancing Indebtedness is
Incurred that is equal to or greater than the Average Life of the Indebtedness
being Refinanced and (iii) such Refinancing Indebtedness has an aggregate
principal amount (or if Incurred with original issue discount, an aggregate
issue price) that is equal to or less than the aggregate principal amount (or if
Incurred with original issue discount, the aggregate accreted value) then
outstanding or committed under the Indebtedness being Refinanced; provided
further, however, that Refinancing Indebtedness shall not include (x)
Indebtedness of a Restricted Subsidiary that Refinances Indebtedness of the
Company or (y) Indebtedness of the Company or a Restricted Subsidiary that
Refinances Indebtedness of an Unrestricted Subsidiary.
"Related Business" means any business related, ancillary or complementary to
the businesses of the Company and the Restricted Subsidiaries on the Issue Date.
"Restricted Payment" with respect to any Person means (i) the declaration or
payment of any dividends or any other distributions of any sort in respect of
its Capital Stock (including any
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payment in connection with any merger or consolidation involving such Person) or
similar payment to the direct or indirect holders of its Capital Stock (other
than dividends or distributions payable solely in its Capital Stock (other than
Disqualified Stock) or rights to acquire its Capital Stock (other than
Disqualified Stock) and dividends or distributions payable solely to the Company
or a Restricted Subsidiary, and other than pro rata dividends or other
distributions made by a Subsidiary that is not a Wholly Owned Subsidiary to
minority stockholders (or owners of an equivalent interest in the case of a
Subsidiary that is an entity other than a corporation)), (ii) the purchase,
redemption or other acquisition or retirement for value of any Capital Stock of
the Company or of any Restricted Subsidiary held by any Person (other than a
Wholly Owned Subsidiary), including the exercise of any option to exchange any
Capital Stock (other than into Capital Stock of the Company that is not
Disqualified Stock), (iii) the purchase, repurchase, redemption, defeasance or
other acquisition or retirement for value, prior to scheduled maturity,
scheduled repayment or scheduled sinking fund payment of any Subordinated
Obligations (other than the purchase, repurchase or other acquisition of
Subordinated Obligations purchased in anticipation of satisfying a sinking fund
obligation, principal installment or final maturity, in each case due within one
year of the date of acquisition) or (iv) the making of any Investment, other
than a Permitted Investment, in any Unrestricted Subsidiary or any Affiliate of
the Company other than a Wholly Owned Subsidiary or a Person that will become a
Wholly Owned Subsidiary as a result of any such Investment.
"Restricted Subsidiary" means any Subsidiary of the Company that is not an
Unrestricted Subsidiary.
"Sale/Leaseback Transaction" means an arrangement relating to property now
owned or hereafter acquired whereby the Company or a Restricted Subsidiary
transfers such property to a Person and the Company or a Restricted Subsidiary
leases it from such Person, other than leases between the Company and a Wholly
Owned Subsidiary or between Wholly Owned Subsidiaries.
"SEC" means the Securities and Exchange Commission.
"Senior Credit Facility" means the $20 million senior secured credit
facility among the Company, the financial institutions party thereto and
Chemical Bank, as agent for such financial institutions, as such facility was in
effect on the Issue Date.
"Senior Indebtedness" means any Indebtedness which is not by its express
terms subordinated in right of payment to the Notes or any Note Guarantee.
"Stated Maturity" means, with respect to any security, the date specified in
such security as the fixed date on which the final payment of principal of such
security is due and payable, including pursuant to any mandatory redemption
provision (but excluding any provision providing for the repurchase of such
security at the option of the holder thereof upon the happening of any
contingency beyond the control of the issuer unless such contingency has
occurred).
"Subordinated Obligation" means any Indebtedness of the Company (whether
outstanding on the Issue Date or thereafter Incurred) which is subordinate or
junior in right of payment to the Notes pursuant to a written agreement to that
effect.
"Subsidiary" means, in respect of any Person, any corporation, association,
partnership or other business entity of which more than 50% of the total voting
power of shares of Capital Stock or other interests (including partnership
interests) entitled (without regard to the occurrence of any contingency) to
vote in the election of directors, managers or trustees thereof is at the time
owned or controlled, directly or indirectly, by (i) such Person, (ii) such
Person and one or more Subsidiaries of such Person or (iii) one or more
Subsidiaries of such Person.
"Temporary Cash Investments" means any of the following: (i) any investment
in direct obligations of the United States of America or any agency thereof or
obligations guaranteed by the United States of America or any agency thereof,
(ii) investments in time deposit accounts,
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certificates of deposit and money market deposits maturing within 180 days of
the date of acquisition thereof issued by a bank or trust company which is
organized under the laws of the United States of America, any state thereof or
any foreign country recognized by the United States, and which bank or trust
company has capital, surplus and undivided profits aggregating in excess of
$250,000,000 (or the foreign currency equivalent thereof) and has outstanding
debt which is rated "A" (or such similar equivalent rating) or higher by at
least one nationally recognized statistical rating organization (as defined in
Rule 436 under the Securities Act), (iii) repurchase obligations with a term of
not more than 30 days for underlying securities of the types described in clause
(i) above entered into with a bank meeting the qualifications described in
clause (ii) above, (iv) investments in commercial paper, maturing not more than
90 days after the date of acquisition, issued by a corporation (other than an
Affiliate of the Company) organized and in existence under the laws of the
United States of America or any foreign country recognized by the United States
of America with a rating at the time as of which any investment therein is made
of "P-1" (or higher) according to Moody's Investors Service, Inc. or "A-1" (or
higher) according to Standard and Poor's Corporation, and (v) investments in
securities with maturities of six months or less from the date of acquisition
issued or fully guaranteed by any state, commonwealth or territory of the United
States of America, or by any political subdivision or taxing authority thereof,
and rated at least "A" by Standard & Poor's Corporation or "A" by Moody's
Investors Service, Inc.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. Sec.Sec.
77aaa-77bbbb) as amended by the Trust Indenture Reform Act of 1990, as it may be
amended from time to time.
"Trade Payables" means, with respect to any Person, any accounts payable or
any Indebtedness or monetary obligation to trade creditors Incurred by such
Person arising in the ordinary course of business in connection with the
acquisition of goods or services.
"Trustee" means the party named as such in the Indenture until a successor
replaces it and, thereafter, means the successor.
"Unrestricted Subsidiary" means (i) any Subsidiary of the Company that at
the time of determination shall be designated an Unrestricted Subsidiary by the
Board of Directors in the manner provided below and (ii) any Subsidiary of an
Unrestricted Subsidiary. The Board of Directors may designate any Subsidiary of
the Company (including any newly acquired or newly formed Subsidiary) to be an
Unrestricted Subsidiary unless such Subsidiary or any of its Subsidiaries owns
any Capital Stock or Indebtedness of, or holds any Lien on any property of, the
Company or any other Subsidiary of the Company that is not a Subsidiary of the
Subsidiary to be so designated; provided, however, that either (A) the
Subsidiary to be so designated has total consolidated assets of $1,000 or less
or (B) if such Subsidiary has consolidated assets greater than $1,000, such
designation would be permitted under the covenant entitled "--Certain
Covenants--Limitation on Restricted Payments." The Board of Directors may
designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided,
however, that immediately after giving effect to such designation (x) the
Company could Incur $1.00 of additional Indebtedness under paragraph (a) of the
covenant described under "--Limitation on Indebtedness" and (y) no Default shall
have occurred and be continuing. Any such designation by the Board of Directors
shall be evidenced to the Trustee by promptly filing with the Trustee a copy of
the board resolution giving effect to such designation and an Officers'
Certificate certifying that such designation complied with the foregoing
provisions.
"U.S. Government Obligations" means direct obligations (or certificates
representing an ownership interest in such obligations) of the United States of
America (including any agency or instrumentality thereof) for the payment of
which the full faith and credit of the United States of America is pledged and
which are not callable at the issuer's option.
"Voting Stock" of a corporation means all classes of Capital Stock of such
corporation then outstanding and normally entitled to vote in the election of
directors.
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"Wholly Owned Subsidiary" means a Restricted Subsidiary of the Company all
the Capital Stock of which (other than directors' qualifying shares) is owned by
the Company or one or more Wholly Owned Subsidiaries.
BOOK-ENTRY; DELIVERY AND FORM
Except as set forth below, the Notes will initially be issued in the form of
one or more registered notes in global form without coupons (each a "Global
Note"). Each Global Note will be deposited on the date of the closing of the
sale of the Notes (the "Closing Date") with, or on behalf of, the Depository
Trust Company (the "Depository") and registered in the name of Cede & Co., as
nominee of the Depository, or will remain in the custody of the Trustee pursuant
to the FAST Balance Certificate Agreement between Depository and the Trustee.
The Depository has advised the Company that it is (i) a limited purpose
trust company organized under the laws of the State of New York, (ii) a member
of the Federal Reserve System, (iii) a "clearing corporation" within the meaning
of the Uniform Commercial Code, as amended, and (iv) a "Clearing Agency"
registered pursuant to Section 17A of the Exchange Act. The Depository was
created to hold securities for its participants (collectively, the
"Participants") and facilitates the clearance and settlement of securities
transactions between Participants through electronic book-entry changes to the
accounts of its Participants, thereby eliminating the need for physical transfer
and delivery of certificates. The Depository's Participants include securities
brokers and dealers (including the Initial Purchaser), banks and trust
companies, clearing corporations and certain other organizations. Access to the
Depository's system is also available to other entities such as banks, brokers,
dealers and trust companies (collectively, the "Indirect Participants") that
clear through or maintain a custodial relationship with a Participant, either
directly or indirectly. QIBs may elect to hold Notes purchased by them through
the Depository. QIBs or other Persons who are not Participants may beneficially
own securities held by or on behalf of the Depository only through Participants
or Indirect Participants.
The Company expects that pursuant to procedures established by the
Depository (i) upon deposit of the Global Notes, the Depository will credit the
accounts of Participants designated by the Initial Purchaser with an interest in
the Global Note and (ii) ownership of the Notes will be shown on, and the
transfer of ownership thereof will be effected only through, records maintained
by the Depository (with respect to the interest of Participants), the
Participants and the Indirect Participants. The laws of some states require that
certain persons take physical delivery in definitive form of securities that
they own and that security interests in negotiable instruments can only be
perfected by delivery of certificates representing the instruments.
Consequently, the ability to transfer Notes or to pledge the Notes as collateral
will be limited to such extent.
So long as the Depository or its nominee is the registered owner of a Global
Note, the Depository or such nominee, as the case may be, will be considered the
sole owner or Holder of the Notes represented by the Global Note for all
purposes under the Indenture. Except as provided below, owners of beneficial
interests in a Global Note will not be entitled to have Notes represented by
such Global Note registered in their names, will not receive or be entitled to
receive physical delivery of Certificated Securities, and will not be considered
the owners or Holders thereof under the Indenture for any purpose, including
with respect to the giving of any directions, instruction or approval to the
Trustee thereunder. As a result, the ability of a person having a beneficial
interest in Notes represented by a Global Note to pledge such interest to
persons or entities that do not participate in the Depository's system or to
otherwise take action with respect to such interest, may be affected by the lack
of a physical certificate evidencing such interest.
Accordingly, each Person owning a beneficial interest in a Global Note must
rely on the procedures of the Depository and, if such Person is not a
Participant or an Indirect Participant, on the procedures of the Participant
through which such Person owns its interest, to exercise any
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rights of a Holder under the Indenture or such Global Note. The Company
understands that under existing industry practice, in the event the Company
requests any action of Holders or a Person that is an owner of a beneficial
interest in a Global Note desires to take any action that the Depository, as the
Holder of such Global Note, is entitled to take, the Depository would authorize
the Participants to take such action and the Participant would authorize Persons
owning through such Participants to take such action or would otherwise act upon
the instruction of such Persons. Neither the Company nor the Trustee will have
any responsibility or liability for any aspect of the records relating to or
payments made on account of Notes by the Depository, or for maintaining,
supervising or reviewing any records of the Depository relating to such Notes.
Payments with respect to the principal of, premium, if any, and interest on
any Notes represented by a Global Note registered in the name of the Depository
or its nominee on the applicable record date will be payable by the Trustee to
or at the direction of the Depository or its nominee in its capacity as the
registered Holder of the Global Note representing such Notes under the
Indenture. Under the terms of the Indenture, the Company and the Trustee may
treat the Persons in whose names the Notes, including the Global Notes, are
registered as the owners thereof for the purpose of receiving such payment and
for any and all other purposes whatsoever. Consequently, neither the Company nor
the Trustee has or will have any responsibility or liability for the payment of
such amounts to beneficial owners of Notes (including principal, premium, if
any, and interest), or to immediately credit the accounts of the relevant
Participants with such payment, in amounts proportionate to their respective
holdings in principal amount of beneficial interest in the Global Note as shown
on the records of the Depository. Payments by the Participants and the Indirect
Participants to the beneficial owners of Notes will be governed by standing
instructions and customary practice and will be the responsibility of the
Participants or the Indirect Participants.
CERTIFICATED SECURITIES
If (i) the Company notifies the Trustee in writing that the Depository is no
longer willing or able to act as a depository and the Company is unable to
locate a qualified successor within 90 days or (ii) the Company, at its option,
notifies the Trustee in writing that it elects to cause the issuance of Notes in
definitive form under the Indenture, then, upon surrender by the Depository of
its Global Notes, Certificated Securities will be issued to each person that the
Depository identifies as the beneficial owner of the Notes represented by the
Global Note.
Neither the Company nor the Trustee shall be liable for any delay by the
Depository or any Participant or Indirect Participant in identifying the
beneficial owners of the related Notes and each such person may conclusively
rely on, and shall be protected in relying on, instructions from the Depository
for all purposes (including with respect to the registration and delivery, and
the respective principal amounts, of the Notes to be issued).
PLAN OF DISTRIBUTION
Each broker-dealer that receives New Notes for its own account pursuant to
the Exchange Offer must acknowledge that it will deliver a prospectus in
connection with any resale of such New Notes. This Prospectus, as it may be
amended or supplemented from time to time, may be used by a broker-dealer in
connection with resales of New Notes received in exchange for Old Notes where
such Old Notes were acquired as a result of market-making activities or other
trading activities. Each of the Company and the Note Guarantors has agreed that
for a period of 180 days after the Expiration Date, it will make this
Prospectus, as amended or supplemented, available to any broker-dealer for use
in connection with any such resale. In addition, until , 1995 all
dealers effecting transactions in the New Notes may be required to deliver a
prospectus.
Neither the Company nor any Note Guarantor will receive any proceeds from
any sale of New Notes by broker-dealers. New Notes received by broker-dealers
for their own account pursuant to
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the Exchange Offer may be sold from time to time in one or more transactions in
the over-the-counter market, in negotiated transactions, through the writing of
options on the New Notes or a combination of such methods of resale, at market
prices prevailing at the time of resale, at prices related to such prevailing
market prices or negotiated prices. Any such resale may be made directly to
purchasers or to or through brokers or dealers who may receive compensation in
the form of commissions or concessions from any such broker-dealer and/or the
purchasers of any such New Notes. Any broker-dealer that resells New Notes that
were received by it for its own account pursuant to the Exchange Offer and any
broker or dealer that participates in a distribution of such New Notes may be
deemed to be an "underwriter" within the meaning of the Securities Act and any
profit on any such resale of New Notes and any commissions or concessions
received by any such persons may be deemed to be underwriting compensation under
the Securities Act. The Letter of Transmittal states that, by acknowledging that
it will deliver and by delivering a prospectus, a broker-dealer will not be
deemed to admit that it is an "underwriter" within the meaning of the Securities
Act.
For a period of 90 days after the Expiration Date, the Company will promptly
send additional copies of this Prospectus and any amendment or supplement to
this Prospectus to any broker-dealer that requests such documents in the Letter
of Transmittal. The Company and each Note Guarantor have, jointly and severally,
agreed to pay all expenses incident to the Exchange Offer (including the
expenses of one counsel for holders of Old Notes) other than commissions or
concessions of any brokers or dealers and will indemnify the Holders of the Old
Notes (including any broker-dealers) against certain liabilities, including
liabilities under the Securities Act.
LEGAL MATTERS
The validity of the Notes offered hereby will be passed upon for the Company
by Baer Marks & Upham LLP, New York, New York.
EXPERTS
The consolidated financial statements of Premier Parks Inc. included herein
and in the registration statement have been audited as of December 31, 1994 and
1993 and for the years then ended by KPMG Peat Marwick LLP, independent
certified public accountants, and for the year ended December 31, 1992 by
Pannell Kerr Forster PC, independent certified public accountants. Such
consolidated financial statements have been included in reliance upon the
reports appearing elsewhere herein of KPMG Peat Marwick LLP and Pannell Kerr
Forster PC, and upon the authority of said firms as experts in accounting and
auditing.
The consolidated financial statements of Funtime Parks, Inc. as of December
31, 1994 and 1993 and for each of the years in the three-year period ended
December 31, 1994, have been included herein and in the registration statement
in reliance upon the report of Ernst & Young LLP, independent certified public
accountants, appearing elsewhere herein, and upon the authority of said firm as
experts in accounting and auditing.
The financial statements of 229 East 79th Street Associates LP as of
December 31, 1994 and 1993 and for each of the years in the three-year period
ended December 31, 1994, have been included herein and in the registration
statement in reliance upon the report of Tackman, Pilla, Arnone and Company,
P.C., independent certified public accountants, appearing elsewhere herein, and
upon the authority of said firm as experts in accounting and auditing.
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PREMIER PARKS INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PREMIER PARKS INC.:
Independent Auditors' Report......................................................... F-2
Report of Predecessor Auditors....................................................... F-3
Consolidated Balance Sheets at December 31, 1993 and 1994, and June 30, 1995
(Unaudited)........................................................................ F-4
Consolidated Statements of Operations--Years ended December 31, 1992, 1993, and 1994,
and Six Months ended June 30, 1994 (Unaudited) and 1995 (Unaudited)................ F-5
Consolidated Statements of Stockholders' Equity--Years ended December 31, 1992, 1993,
and 1994, and Six Months ended June 30, 1995 (Unaudited)........................... F-6
Consolidated Statements of Cash Flows--Years ended December 31, 1992, 1993, and 1994,
and Six Months ended June 30, 1994 (Unaudited) and 1995 (Unaudited)................ F-7
Notes to Consolidated Financial Statements........................................... F-9
FUNTIME PARKS, INC.:
Report of Independent Auditors....................................................... F-22
Consolidated Balance Sheets at December 31, 1993 and 1994, and July 2, 1995
(Unaudited)........................................................................ F-23
Consolidated Statements of Redeemable Preferred Stock and Stockholders' Equity
(Deficit)--Years ended December 31, 1992, 1993, and 1994, and Six Months ended July
2, 1995 (Unaudited)................................................................ F-24
Consolidated Statements of Operations--Years ended December 31, 1992, 1993, and 1994,
and Six Months ended July 3, 1994 (Unaudited) and July 2, 1995 (Unaudited)......... F-26
Consolidated Statements of Cash Flows--Years ended December 31, 1992, 1993, and 1994,
and Six Months ended July 3, 1994 (Unaudited) and July 2, 1995 (Unaudited)......... F-27
Notes to Consolidated Financial Statements........................................... F-28
229 EAST 79TH STREET ASSOCIATES L.P.
Independent Auditors' Report......................................................... F-38
Balance Sheets at December 31, 1993 and 1994 and June 30, 1995 (Unaudited)........... F-39
Statements of Revenues and Expenses--Years ended December 31, 1992, 1993 and 1994 and
Six Months ended June 30, 1994 (Unaudited) and June 30, 1995 (Unaudited)........... F-40
Statements of Changes in Partners' (Deficit): Years ended December 31, 1993 and 1994
and Six Months ended June 30, 1995 (Unaudited)..................................... F-41
Statements of Cash Flows: Years ended December 31, 1992, 1993 and 1994 and Six Months
ended June 30, 1994 (Unaudited) and June 30, 1995 (Unaudited)...................... F-44
Notes to Financial Statements........................................................ F-45
</TABLE>
F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Stockholders
PREMIER PARKS INC.:
We have audited the accompanying consolidated balance sheets of Premier Parks
Inc. (formerly known as The Tierco Group, Inc.) as of December 31, 1993 and
1994, and the related consolidated statements of operations, stockholders'
equity, and cash flows for the years then ended. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Premier Parks Inc.
as of December 31, 1993 and 1994, and the results of its operations and its cash
flows for the years then ended in conformity with generally accepted accounting
principles.
KPMG PEAT MARWICK LLP
Oklahoma City, Oklahoma
February 24, 1995
F-2
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors
THE TIERCO GROUP, INC.
We have audited the accompanying consolidated statements of operations,
stockholders' equity and cash flows of The Tierco Group, Inc. (presently known
as Premier Parks Inc.) for the year ended December 31, 1992. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the results of operations and cash
flows of The Tierco Group, Inc. (presently known as Premier Parks Inc.) for the
year ended December 31, 1992, in conformity with generally accepted accounting
principles.
As discussed in note 1 to the consolidated financial statements, the Company
adopted the provisions of Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes." in 1992.
PANNELL KERR FORSTER PC
New York, New York
March 10, 1993
F-3
<PAGE>
PREMIER PARKS INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------- JUNE 30,
1993 1994 1995
----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents.............................. $ 3,025,859 $ 1,365,728 $ 1,862,861
Accounts receivable.................................... 373,909 869,796 1,200,878
Inventories............................................ 896,369 1,017,791 1,723,112
Prepaid expenses....................................... 464,550 765,200 917,494
----------- ----------- -----------
Total current assets............................... 4,760,687 4,018,515 5,704,345
----------- ----------- -----------
Other assets:
Investment in and advances to a partnership, at
equity............................................... 1,123,817 1,123,708 1,123,356
Deferred charges....................................... 422,446 428,608 382150
Deposits principally for future rides and
attractions.......................................... 224,848 1,107,732 77,132
Other.................................................. 295,929 288,143 284,250
----------- ----------- -----------
Total other assets................................. 2,067,040 2,948,191 1,866,888
----------- ----------- -----------
Property and equipment, at cost......................... 34,169,132 44,841,784 50,455,007
Less accumulated depreciation.......................... 4,289,427 6,269,852 7,380,613
----------- ----------- -----------
29,879,705 38,571,932 43,074,394
----------- ----------- -----------
Total assets....................................... $36,707,432 $45,538,638 $50,645,627
----------- ----------- -----------
----------- ----------- -----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses.................. $ 769,929 $ 1,281,061 $ 6,073,342
Accrued interest payable............................... 34,751 101,857 146,701
Current portion of capitalized lease obligations....... 407,038 452,645 489,248
Current portion of long-term debt--unrelated parties... 1,765,085 1,239,160 1,226,098
Current portion of long-term debt--related parties..... -- 200,000 200,000
Revolving credit facility.............................. -- -- 3,500,000
----------- ----------- -----------
Total current liabilities.......................... 2,976,803 3,274,723 11,635,389
----------- ----------- -----------
Long-term debt and capitalized lease obligations:
Capitalized lease obligations.......................... 1,872,569 1,419,924 1,302,593
Long-term debt--unrelated parties:
Senior subordinated notes............................ 1,240,000 1,240,000 1,240,000
Term notes........................................... 7,025,083 11,901,080 11,882,090
Long-term debt--related parties:
Senior subordinated notes............................ 5,760,000 5,760,000 5,760,000
Junior subordinated loan............................. 2,751,163 1,895,000 1,895,000
----------- ----------- -----------
Total long-term debt and capitalized lease
obligations...................................... 18,648,815 22,216,004 22,079,683
Deferred income taxes................................... 1,889,900 1,913,900 667,918
----------- ----------- -----------
Total liabilities.................................. 23,515,518 27,404,627 34,382,990
----------- ----------- -----------
Stockholders' equity:
Preferred stock, $1 par value, 500,000 shares
authorized at December 31, 1993 and 1994, and June
30, 1995 (no shares issued and outstanding).......... -- -- --
Common stock, $.01 par value, 45,000,000 shares
authorized at December 31, 1993 and 1994, and June
30, 1995; 13,407,825 shares issued as of December 31,
1993 and 16,992,335 shares issued as of December 31,
1994, and June 30, 1995.............................. 134,078 169,923 169,923
Capital in excess of par value......................... 45,768,909 50,572,978 50,572,978
Accumulated deficit.................................... (32,022,306) (31,920,123) (33,791,497)
----------- ----------- -----------
13,880,681 18,822,778 16,951,404
Less: 131,728 shares of treasury stock at cost......... 688,767 688,767 688,767
----------- ----------- -----------
Total stockholders' equity......................... 13,191,914 18,134,011 16,262,637
----------- ----------- -----------
Total liabilities and stockholders' equity......... $36,707,432 $45,538,638 $50,645,627
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
See accompanying notes to consolidated financial statements.
F-4
<PAGE>
PREMIER PARKS INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEARS ENDED DECEMBER 31, JUNE 30,
--------------------------------------- -------------------------
1992 1993 1994 1994 1995
----------- ----------- ----------- ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenue:
Theme park admissions.............. $10,185,865 $12,873,884 $13,935,566 $ 3,996,944 $ 5,675,268
Theme park food, merchandise, and
other............................ 7,206,435 8,985,957 10,963,167 3,312,094 3,692,255
----------- ----------- ----------- ----------- -----------
Total revenue.................. 17,392,300 21,859,841 24,898,733 7,309,038 9,367,523
----------- ----------- ----------- ----------- -----------
Costs and expenses:
Operating expenses................. 9,292,720 10,400,898 12,358,205 5,947,817 5,882,948
Selling, general and
administrative................... 4,433,746 4,767,990 5,447,264 2,443,608 3,239,644
Costs of products sold............. 1,736,194 2,135,214 2,553,146 799,901 826,942
Depreciation and amortization...... 1,441,612 1,536,515 1,996,903 859,076 1,110,761
----------- ----------- ----------- ----------- -----------
Total costs and expenses....... 16,904,272 18,840,617 22,355,518 10,050,402 11,060,295
----------- ----------- ----------- ----------- -----------
Income (loss) from
operations................... 488,028 3,019,224 2,543,215 (2,741,364) (1,692,772)
Other income (expense):
Interest expense, net.............. (1,413,138) (1,438,257) (2,299,066) (1,081,090) (1,383,353)
Minority interest in income........ (269,951) -- -- -- --
Equity in loss of partnership...... (122,232) (142,157) (83,309) (36,566) (38,912)
Other income....................... 9,196 5,754 9,343 60 81
----------- ----------- ----------- ----------- -----------
Total other income (expense)... (1,796,125) (1,574,660) (2,373,032) (1,117,596) (1,422,184)
----------- ----------- ----------- ----------- -----------
Income (loss) from continuing
operations before income
taxes........................ (1,308,097) 1,444,564 170,183 (3,858,960) (3,114,956)
Income tax expense (benefit)........ 426,500 91,000 68,000 (1,543,584) (1,243,582)
----------- ----------- ----------- ----------- -----------
Income (loss) from continuing
operations before
extraordinary item and
cumulative effect of
accounting change............ (1,734,597) 1,353,564 102,183 (2,315,376) (1,871,374)
Loss from discontinued operations,
net of tax benefit of $1,397,700... (2,252,498) -- -- -- --
----------- ----------- ----------- ----------- -----------
Income (loss) before
extraordinary item and
cumulative effect of change
in accounting for income
taxes........................ (3,987,095) 1,353,564 102,183 (2,315,376) (1,871,374)
Extraordinary item--gain on transfer
of assets less income taxes of
$5,068,000......................... 18,350,087 -- -- -- --
Cumulative effect of change in
account ing for income taxes....... 2,297,900 -- -- -- --
----------- ----------- ----------- ----------- -----------
Net income (loss).............. $16,660,892 $ 1,353,564 $ 102,183 $(2,315,376) $(1,871,374)
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Income (loss) per share:
Income (loss) from continuing
operations....................... $ (.42) $ .10 $ .01 $ (0.17) $ (0.11)
Loss from discontinued
operations....................... (.54) -- -- -- --
Extraordinary item................. 4.43 -- -- -- --
Cumulative effect of accounting
change........................... .56 -- -- -- --
----------- ----------- ----------- ----------- -----------
Net income (loss).............. $ 4.03 $ .10 $ .01 $ (0.17) $ (0.11)
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Weighted average number of shares
outstanding....................... 4,139,485 13,276,097 14,051,922 13,276,097 16,860,607
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
</TABLE>
See accompanying notes to consolidated financial statements.
F-5
<PAGE>
PREMIER PARKS INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31, SIX MONTHS
------------------------------------------ ENDED
1992 1993 1994 JUNE 30, 1995
------------ ------------ ------------ -------------
(UNAUDITED)
<S> <C> <C> <C> <C>
Common stock--shares outstanding:
Balance, beginning of period............ 2,276,097 13,276,097 13,276,097 16,860,607
Issuance of common stock for cash....... 7,390,000 -- 3,099,073 --
Exchange of debt for equity............. 3,500,000 -- 485,437 --
Issuance of common stock for services... 110,000 -- -- --
------------ ------------ ------------ -------------
Balance, end of period.................. 13,276,097 13,276,097 16,860,607 16,860,607
------------ ------------ ------------ -------------
------------ ------------ ------------ -------------
Common stock--amount:
Balance, beginning of period............ $ 24,078 $ 134,078 $ 134,078 $ 169,923
Issuances of common stock:
Cash proceeds, net.................... 73,900 -- 30,991 --
Exchange of debt for equity........... 35,000 -- 4,854 --
For services rendered................. 1,100 -- -- --
------------ ------------ ------------ -------------
Balance, end of period.................. $ 134,078 $ 134,078 $ 169,923 $ 169,923
------------ ------------ ------------ -------------
------------ ------------ ------------ -------------
Capital in excess of par value:
Balance, beginning of period............ $ 35,143,767 $ 45,768,909 $ 45,768,909 $ 50,572,978
Issuances of common stock:
Cash proceeds, net.................... 7,161,242 -- 4,153,583 --
Exchange of debt for equity........... 3,465,000 -- 650,486 --
For services rendered................. (1,100) -- -- --
------------ ------------ ------------ -------------
Balance, end of period.................. $ 45,768,909 $ 45,768,909 $ 50,572,978 $ 50,572,978
------------ ------------ ------------ -------------
------------ ------------ ------------ -------------
Accumulated deficit:
Balance, beginning of period............ $(50,036,762) $(33,375,870) $(32,022,306) $(31,920,123 )
Net income (loss)....................... 16,660,892 1,353,564 102,183 (1,871,374 )
------------ ------------ ------------ -------------
Balance, end of period.................. $(33,375,870) $(32,022,306) $(31,920,123) $(33,791,497 )
------------ ------------ ------------ -------------
------------ ------------ ------------ -------------
Treasury stock:
Balance, beginning and end of period.... $ 688,767 $ 688,767 $ 688,767 $ 688,767
------------ ------------ ------------ -------------
------------ ------------ ------------ -------------
Total:
Balance, beginning of period............ $(15,557,684) $ 11,838,350 $ 13,191,914 $ 18,134,011
Issuances of common stock:
Cash proceeds, net.................... 7,235,142 -- 4,184,574 --
Exchange of debt for equity........... 3,500,000 -- 655,340 --
Net income (loss)....................... 16,660,892 1,353,564 102,183 (1,871,374 )
------------ ------------ ------------ -------------
Balance, end of period.................. $ 11,838,350 $ 13,191,914 $ 18,134,011 $ 16,262,637
------------ ------------ ------------ -------------
------------ ------------ ------------ -------------
</TABLE>
See accompanying notes to consolidated financial statements.
F-6
<PAGE>
PREMIER PARKS INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEARS ENDED DECEMBER 31, JUNE 30,
----------------------------------------- -------------------------
1992 1993 1994 1994 1995
------------ ----------- ------------ ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
Cash flows from operating
activities:
Net income (loss).............. $ 16,660,892 $ 1,353,564 $ 102,183 (2,315,376) (1,871,374)
Adjustments to reconcile net
income (loss) to net cash
provided by (used in)
operating activities:
Depreciation and
amortization............. 2,906,394 1,536,515 1,996,903 859,076 1,110,761
Amortization of discount on
debt and debt issuance
costs.................... 805,253 290,037 93,990 43,451 50,351
Minority interest in
income................... 269,951 -- -- -- --
Gain on sale of assets..... -- (1,800) (8,531) (8,531) --
Equity in losses of
partnerships............. 1,100,372 142,157 83,309 36,566 38,912
Decrease in escrow cash
accounts................. 151,483 506,545 -- -- --
(Increase) decrease in
accounts receivable...... 848,765 (210,192) (495,887) (866,787) (331,082)
Increase (decrease) in
deferred income taxes.... 1,798,900 91,000 24,000 (1,543,584) (1,245,982)
Increase in inventories and
prepaid expenses......... (650,257) (338,960) (422,072) (946,051) (857,615)
(Increase) decrease in
deposits and other
assets................... (276,115) (123,416) (891,576) 160,915 1,030,600
Increase (decrease) in
accounts payable and
accrued expenses......... (1,926,596) (532,031) 511,132 3,126,061 3,977,281
Increase (decrease) in
accrued interest payable. 3,708,822 (14,021) 67,106 86,016 44,844
Payments of debt issuance
costs.................... -- (400,446) (100,152) (73,906) --
Gain on transfer of
assets................... (23,418,087) -- -- -- --
------------ ----------- ------------ ----------- -----------
Total adjustments........ (14,681,115) 945,388 858,222 873,226 3,818,070
------------ ----------- ------------ ----------- -----------
Net cash provided by
(used in) operating
activities............. 1,979,777 2,298,952 960,405 (1,442,150) 1,946,696
------------ ----------- ------------ ----------- -----------
Cash flows from investing
activities:
Cash balances of discontinued
businesses................... (370,229) -- -- -- --
Proceeds from the sale of
equipment.................... -- 90,000 14,000 14,000 --
Purchase of minority interest
in Frontier City Partners
Limited Partnership.......... (650,000) -- -- -- --
Purchase of theme parks........ (500,000) -- -- -- --
Purchase option payment........ (50,000) -- -- -- --
Increase in investments in and
advances to partnerships..... (122,920) (113,520) (83,200) (53,160) (38,560)
Additions to property and
equipment.................... (3,956,316) (7,674,265) (10,108,121) (7,923,273) (4,798,223)
------------ ----------- ------------ ----------- -----------
Net cash used in
investing activities... (5,649,465) (7,697,785) (10,177,321) (7,923,433) (4,836,783)
------------ ----------- ------------ ----------- -----------
</TABLE>
F-7
<PAGE>
PREMIER PARKS INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS--(CONTINUED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEARS ENDED DECEMBER 31, JUNE 30,
----------------------------------------- -------------------------
1992 1993 1994 1994 1995
------------ ----------- ------------ ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
Cash flows from financing
activities:
Repayment of debt.............. (5,319,395) (8,251,989) (5,079,289) (68,802) (169,280)
Proceeds from borrowings....... 6,820,000 10,757,828 8,451,500 8,965,276 3,556,500
Net cash proceeds from issuance
of common stock.............. 7,235,142 -- 4,184,574 -- --
------------ ----------- ------------ ----------- -----------
Net cash provided by
financing activities... 8,735,747 2,505,839 7,556,785 8,896,474 3,387,220
------------ ----------- ------------ ----------- -----------
(Decrease) increase in cash and
cash equivalents.............. $ 5,066,059 $(2,892,994) $ (1,660,131) (508,109) 497,133
Cash and cash equivalents at
beginning of period........... 852,794 5,918,853 3,025,859 3,025,859 1,365,728
------------ ----------- ------------ ----------- -----------
Cash and cash equivalents at end
of period..................... $ 5,918,853 $ 3,025,859 $ 1,365,728 2,517,750 1,862,861
------------ ----------- ------------ ----------- -----------
------------ ----------- ------------ ----------- -----------
Supplementary cash flow
information:
Cash paid during the period
for:
Interest relating to:
Continuing operations...... $ 710,664 $ 1,791,294 $ 2,179,950 995,074 1,338,509
Discontinued operations.... 793,938 -- -- -- --
------------ ----------- ------------ ----------- -----------
Total.................... $ 1,504,602 $ 1,791,294 $ 2,179,950 995,074 1,338,509
------------ ----------- ------------ ----------- -----------
------------ ----------- ------------ ----------- -----------
Cash paid for income taxes..... $ -- $ -- $ 37,802 $ -- $ --
------------ ----------- ------------ ----------- -----------
------------ ----------- ------------ ----------- -----------
</TABLE>
Supplemental disclosure of noncash investing and financing activities:
1992
. In connection with an asset transfer agreement, the Company transferred
assets having a book value of $52,711,922 in exchange for the full
satisfaction of $76,130,009 of indebtedness and other liabilities (note
2).
. Debt in the amount of $3,500,000 was exchanged for equity (note 8).
. The Company purchased certain assets of a theme and water park subject to
a promissory note in the face amount of $5,500,000 (note 3).
. In connection with the purchase of the minority interest in Frontier City
Partners Limited Partnership (Frontier), the Company recognized negative
goodwill of $2,629,843.
. The Company entered into three separate note agreements, aggregating
$604,326 for the purchase of property and equipment.
1993
. The Company purchased certain rides and attractions through capital leases
with obligations totaling $2,745,000.
. In connection with a term loan obtained during the year, $5,823,672 was
used to retire existing notes with the same institution.
1994
. Common stock (485,437 shares) was exchanged for $655,340 of debt (note 8).
. The Company entered into two separate note agreements, aggregating
$570,000 for the purchase of property and equipment.
See accompanying notes to consolidated financial statements.
F-8
<PAGE>
PREMIER PARKS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1992, 1993, AND 1994, AND JUNE 30, 1995
(INFORMATION AS OF JUNE 30, 1995, AND FOR THE
SIX MONTHS ENDED JUNE 30, 1994 AND 1995 IS UNAUDITED)
(1) SUMMARY OF SIGNIFICANT POLICIES
ORGANIZATION
In 1994 the stockholders of Premier Parks Inc. (the Company) approved a
change of name from The Tierco Group, Inc., to more accurately reflect the
themed amusement park nature of its business. The Company is primarily engaged
in the ownership of regional theme parks. The Company and its subsidiaries
currently own and operate three parks: Frontier City, a western theme park
located in Oklahoma City, Oklahoma; White Water Bay, a water park located in
Oklahoma City, Oklahoma; and Adventure World, a combination theme and water park
located in Largo, Maryland.
BASIS OF PRESENTATION
The Company's accounting policies reflect industry practices and conform to
generally accepted accounting principles.
The consolidated financial statements include the accounts of the Company,
its wholly owned subsidiaries, and the limited partnership (Frontier City
Partners Limited Partnership) in which the Company beneficially owns 100% of the
partnership interests. Intercompany transactions and accounts have been
eliminated in consolidation. Minority interest represents the minority partner's
proportionate share of the limited partnership in 1992. The Company purchased
the minority partner's share in 1992.
The equity method of accounting is used for the Company's investment in a
partnership in which it does not own a controlling interest.
In the opinion of management, the accompanying unaudited consolidated
financial statements as of June 30, 1995, and for the six months ended June 30,
1994 and 1995, reflect all adjustments (all of which were normal and recurring)
which, in the opinion of management, are necessary for fair statement of the
financial position and results of operations for the interim periods presented.
The results of operations for the six month period ended June 30, 1995 are not
necessarily indicative of the results to be expected for the full year.
CASH EQUIVALENTS
Cash equivalents consist of short-term highly liquid investments with an
original maturity of three months or less, which are readily convertible into
cash.
INVENTORIES
Inventories are stated at the lower of cost (first in, first out) or market
and consist of products for resale including merchandise and food and
miscellaneous supplies including repair parts for rides.
F-9
<PAGE>
PREMIER PARKS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1992, 1993, AND 1994, AND JUNE 30, 1995
(INFORMATION AS OF JUNE 30, 1995, AND FOR THE
SIX MONTHS ENDED JUNE 30, 1994 AND 1995 IS UNAUDITED)
(1) SUMMARY OF SIGNIFICANT POLICIES--(CONTINUED)
DEFERRED CHARGES
The Company capitalizes all costs related to the issuance of debt with such
costs included in deferred charges in the consolidated balance sheets. The
capitalized debt costs relate primarily to the senior subordinated debt and bank
debt issued and the amortization of such costs is recognized as interest expense
under a method approximating the interest method over the life of the respective
debt issue.
ADVERTISING COSTS
Production costs of commercials and programming are charged to operations in
the year first aired. The costs of other advertising, promotion, and marketing
programs are charged to operations in the year incurred. The amounts capitalized
at year-end are included in prepaid expenses.
DEPRECIATION AND AMORTIZATION
Buildings and improvements are depreciated over their estimated useful lives
of approximately 28 years--31.5 years by use of the straight-line method.
Furniture and equipment are depreciated using the straight-line method over 5-10
years. Rides and attractions are depreciated using the straight-line method over
5-25 years. Amortization of property associated with capitalized lease
obligations is included in depreciation expense.
Maintenance and repairs are charged directly to expense as incurred, while
betterments and renewals are generally capitalized in the property accounts.
When an item is retired or otherwise disposed of, the cost and applicable
accumulated depreciation are removed and the resulting gain or loss is
recognized.
INTEREST EXPENSE RECOGNITION
Interest on notes payable is generally recognized as expense on the basis of
stated interest rates. Notes payable and capitalized lease obligations that do
not have a stated interest rate or that have interest rates considered to be
lower than prevailing market rates (when the obligations were incurred) are
carried at amounts discounted to impute a market rate of interest cost. Total
interest incurred, including amounts attributable to discontinued operations,
was as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
-------------------------------------- --------------------------
1992 1993 1994 1994 1995
---------- ---------- ---------- ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
From continuing
operations............... $1,443,923 $1,480,554 $2,341,046 $ 1,101,268 $ 1,389,258
From discontinued
operations............... 2,865,093 -- -- -- --
---------- ---------- ---------- ----------- -----------
Total.................. $4,309,016 $1,480,554 $2,341,046 $ 1,101,268 $ 1,389,258
---------- ---------- ---------- ----------- -----------
---------- ---------- ---------- ----------- -----------
</TABLE>
F-10
<PAGE>
PREMIER PARKS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1992, 1993, AND 1994, AND JUNE 30, 1995
(INFORMATION AS OF JUNE 30, 1995, AND FOR THE
SIX MONTHS ENDED JUNE 30, 1994 AND 1995 IS UNAUDITED)
(1) SUMMARY OF SIGNIFICANT POLICIES--(CONTINUED)
Interest expense in the accompanying consolidated statements of operations
is shown net of interest income.
INCOME TAXES
In 1992, the Company adopted Statement of Financial Accounting Standards No.
109, "Accounting for Income Taxes," which required a change from the deferred
method under Accounting Principles Board Opinion No. 11 to the asset and
liability method of accounting for income taxes. Under the asset and liability
method, deferred tax assets and liabilities are recognized for the estimated
future tax consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and their
respective tax bases and operating loss carryforwards. Deferred tax assets and
liabilities are measured using the enacted tax rates in effect for the year in
which those temporary differences are expected to be recovered or settled. The
cumulative effect of the change in method of accounting for income taxes was
reported in the 1992 consolidated statement of operations (see note 7).
INCOME (LOSS) PER SHARE
Income (loss) per share is computed based on the weighted average number of
common shares outstanding during the period. For the years ended December 31,
1992, 1993, and 1994, and the six months ended June 30, 1994 and 1995, warrants
and options outstanding have been excluded from the per share calculations as no
active trading market existed for the Company's common stock during the
three-year period ended December 31, 1994 and the six months ended June 30,
1995.
The Company's senior subordinated notes are convertible into common shares
and are potentially dilutive securities. The weighted average number of common
shares attributable to the conversion feature of the notes was 2,378,082 for the
year ended December 31, 1993, and 5,600,000 for the year ended December 31,
1994, and the six months ended June 30, 1994 and 1995. The senior subordinated
notes bear interest and if the notes were converted, the interest expense on the
notes would not have been incurred. After consideration of the increase in
income that would have occurred from the reduction in interest expense, the
effect of the convertible shares on income per share was antidilutive. Since the
senior subordinated notes were issued during 1993, there is no effect on the
calculation of the weighted average number of common shares outstanding for the
year ended December 31, 1992.
CONCENTRATIONS OF CREDIT RISK
The Company has a substantial portion of its cash deposits with one bank
consisting principally of demand deposits. The amount of cash deposits is in
excess of the federal insurance coverage limit. The Company has not experienced
any losses on its cash deposits.
F-11
<PAGE>
PREMIER PARKS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1992, 1993, AND 1994, AND JUNE 30, 1995
(INFORMATION AS OF JUNE 30, 1995, AND FOR THE
SIX MONTHS ENDED JUNE 30, 1994 AND 1995 IS UNAUDITED)
(2) DISPOSITION OF ASSETS AND DISCONTINUED OPERATIONS
In 1992, the Company transferred to an entity owned by certain of the
Company's then creditors all of the Company's interests in its hotel operations
and a real estate partnership in full satisfaction of approximately $39.9
million of nonrecourse indebtedness which was secured by the transferred assets.
As a result of this transaction, the Company recognized an extraordinary gain of
$23,418,087 before tax effect of $5,068,000.
The transfer has been recorded as a disposal of a segment of a business.
Accordingly, the net operating results of the hotel have been classified as
discontinued operations in the 1992 consolidated statement of operations.
(3) ACQUISITION OF THEME PARKS
On January 17, 1992, a subsidiary of the Company purchased substantially all
of the assets of a combination theme and water park located in Prince George's
County, Maryland, for a total purchase price of $6,000,000. In connection with
this acquisition the subsidiary paid cash of $500,000 and delivered a
non-interest-bearing promissory note to the seller in the principal amount of
$5,500,000. The note was paid in 1993.
In addition, the subsidiary entered into an option agreement to purchase an
additional 400 acres of land adjacent to the park. The subsidiary paid $50,000
for this option, which was exercised during 1993 at an exercise price of
approximately $2,692,000.
On September 30, 1992, the Company acquired the remaining minority interest
in the partnership that owns Frontier City for $650,000. Negative goodwill
resulting from this transaction has been allocated to reduce the theme park
assets and is being amortized over 15 years.
(4) INVESTMENT IN AND ADVANCES TO A PARTNERSHIP
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------ MARCH 31,
1993 1994 1993
---------- ---------- ------------
(UNAUDITED)
<S> <C> <C> <C>
40% general partner capital interest (including
cumulative advances of $1,194,723, $1,277,923, and
$1,339,283 at December 31, 1993 and 1994, and June
30, 1995, respectively) in 229 East 79th Street
Associates LP, a limited partnership (Associates)
formed in 1987 to acquire, operate, manage, and
convert to cooperative ownership a residential
building located at 229 East 79th Street, New
York, NY........................................... $1,123,817 $1,123,708 $ 1,123,356
---------- ---------- ------------
---------- ---------- ------------
</TABLE>
While the Company is a general partner, the Company does not operate,
manage, or control the limited partnership. Operations, management, and control
are performed by the managing general partner.
F-12
<PAGE>
PREMIER PARKS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1992, 1993, AND 1994, AND JUNE 30, 1995
(INFORMATION AS OF JUNE 30, 1995, AND FOR THE
SIX MONTHS ENDED JUNE 30, 1994 AND 1995 IS UNAUDITED)
(4) INVESTMENT IN AND ADVANCES TO A PARTNERSHIP--(CONTINUED)
Under the terms of the partnership agreement, the Company funds 40% of
required working capital needed by the partnership. During 1993 and 1994 and for
the six months ended June 30, 1995, the Company made advances of $113,520,
$83,200 and $38,560, respectively. Presently, the Company expects to continue to
advance funds as needed during 1995. The Company has guaranteed up to
approximately $316,000 of borrowings by Associates in connection with its
acquisition of real estate. However, if at the time of a default by Associates,
the lender is paid amounts accrued to date, the Company will be relieved of its
obligation under its guaranty.
The following information summarizes the financial position of Associates
and the results of its operations:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------ JUNE 30,
1993 1994 1995
---------- ---------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Assets............................................... $4,197,936 $3,686,256 $ 3,538,552
---------- ---------- -----------
---------- ---------- -----------
Liabilities.......................................... $4,375,205 $4,071,798 $ 4,021,370
Partners' deficit.................................... (177,269) (385,542) (482,818)
---------- ---------- -----------
$4,197,936 $3,686,256 $ 3,538,552
---------- ---------- -----------
---------- ---------- -----------
</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
----------------------------------- --------------------------
1992 1993 1994 1994 1995
--------- --------- --------- ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenues........................ $ 347,581 $ 300,228 $ 293,875 $ 140,185 $ 142,757
Costs and expenses.............. 708,101 612,617 534,355 264,581 240,232
--------- --------- --------- ----------- -----------
(360,520) (312,389) (240,480) (124,396) (97,475)
(Loss) gain on sale of co-op
shares........................ 54,936 (43,003) 32,207 32,980 195
--------- --------- --------- ----------- -----------
Net loss.................. $(305,584) $(355,392) $(208,273) $ (91,416) $ (97,280)
--------- --------- --------- ----------- -----------
--------- --------- --------- ----------- -----------
</TABLE>
F-13
<PAGE>
PREMIER PARKS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1992, 1993, AND 1994, AND JUNE 30, 1995
(INFORMATION AS OF JUNE 30, 1995, AND FOR THE
SIX MONTHS ENDED JUNE 30, 1994 AND 1995 IS UNAUDITED)
(5) PROPERTY AND EQUIPMENT
Property and equipment, at cost, are classified as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------- JUNE 30,
1993 1994 1995
----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Theme parks:
Land........................................... $ 5,347,750 $ 5,964,062 $ 5,964,062
Buildings and improvements..................... 11,654,276 15,212,661 15,212,661
Rides and attractions.......................... 14,346,236 20,178,616 25,809,624
Equipment...................................... 2,820,870 3,486,445 3,468,660
----------- ----------- -----------
Total theme parks.......................... 34,169,132 44,841,784 50,455,007
Less accumulated depreciation.................. 4,289,427 6,269,852 7,380,613
----------- ----------- -----------
$29,879,705 $38,571,932 $43,074,394
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
Included in property and equipment are costs and accumulated depreciation
associated with capital leases as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------ JUNE 30,
1993 1994 1995
---------- ---------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Costs................................................ $2,745,000 $2,745,000 $ 2,745,000
Accumulated depreciation............................. (54,900) (164,700) (219,600)
---------- ---------- -----------
$2,690,100 $2,580,300 $ 2,525,400
---------- ---------- -----------
---------- ---------- -----------
</TABLE>
F-14
<PAGE>
PREMIER PARKS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1992, 1993, AND 1994, AND JUNE 30, 1995
(INFORMATION AS OF JUNE 30, 1995, AND FOR THE
SIX MONTHS ENDED JUNE 30, 1994 AND 1995 IS UNAUDITED)
(6) LONG-TERM DEBT AND CAPITALIZED LEASE OBLIGATIONS
Long-term debt and capitalized lease obligations consist of:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------- JUNE 30,
1993 1994 1995
----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Capitalized lease obligations:
Capitalized lease obligations expiring in 1997
requiring annual payments of approximately
$512,000 and secured by equipment with a net
book value of approximately $2,059,000 and
$2,015,000 as of December 31, 1994, and June
30, 1995, respectively (a)................... $ 1,831,638 $ 1,520,651 $ 1,444,080
Capitalized lease obligation expiring in 1997,
requiring annual payments of approximately
$140,000 and secured by equipment with a net
book value of approximately $522,000 and
$510,000 as of December 31, 1994, and June
30, 1995, respectively (b)................... 447,969 351,918 347,761
----------- ----------- -----------
Total--capitalized lease obligations....... 2,279,607 1,872,569 1,791,841
----------- ----------- -----------
Debt to unrelated parties:
Senior subordinated convertible debt maturing
in 2000, requiring quarterly interest
payments at 9.5% per annum (c)............... 1,240,000 1,240,000 1,240,000
Term note payable due December 1998, requiring
monthly interest payments at prime plus 1%
(9.5% as of December 31, 1994, and 10.0% as
of June 30, 1995) and principal payments
annually (d)................................. 8,632,000 12,451,083 12,451,083
Revolving line of credit due December 1995,
requiring monthly interest payments at prime
plus 1% (10% at June 30, 1995) (d)........... -- -- 3,500,000
Other debt..................................... 158,168 689,157 657,105
----------- ----------- -----------
Total--debt to unrelated parties........... 10,030,168 14,380,240 17,848,188
----------- ----------- -----------
Debt to related parties:
Junior subordinated loan payable with interest
at 8% per annum plus accrued interest
unpaid (e) 2,751,163 2,095,000 2,095,000
Senior subordinated convertible debt maturing
in 2000, requiring quarterly interest
payments at 9.5% per annum (c)............... 5,760,000 5,760,000 5,760,000
----------- ----------- -----------
Total--debt to related parties............. 8,511,163 7,855,000 7,855,000
----------- ----------- -----------
Total...................................... $20,820,938 $24,107,809 $27,495,029
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
(Footnotes on following page)
F-15
<PAGE>
PREMIER PARKS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1992, 1993, AND 1994, AND JUNE 30, 1995
(INFORMATION AS OF JUNE 30, 1995, AND FOR THE
SIX MONTHS ENDED JUNE 30, 1994 AND 1995 IS UNAUDITED)
(6) LONG-TERM DEBT AND CAPITALIZED LEASE OBLIGATIONS--(CONTINUED)
(Footnotes for preceding page)
- ------------
(a) In January 1993, the Company entered into two separate lease agreements to
acquire attractions. Under the terms of the agreements, the Company is
required to pay aggregate monthly installments of $102,349 during the months
of May through September, until the expiration of the leases in September
1997. The leases have an implicit interest rate of approximately 11%. Upon
the expiration of the respective leases, the Company has the option to
purchase the attractions for $360,000.
(b) During 1993, the Company financed the acquisition of a ride through a lease
agreement. Under the terms of the agreement, monthly payments during the
months of July through November of $28,004, including implicit interest at a
rate of 9.875% thereon, are required until maturity in November 1997.
(c) During 1993, the Company consummated a private placement of $7,000,000 of
its 9.5% senior subordinated convertible notes due March 2000. The notes
were funded on July 29, 1993. The notes are convertible into shares of
common stock at the conversion price of $1.25 per share subject to certain
antidilution adjustments, and require a premium to be paid should the
Company elect to prepay all or a portion of the principal outstanding before
March 8, 1998. The Company has agreed to provide the noteholders certain
registration rights under the Securities Act of 1933 relating to shares
issued upon conversion of the notes.
(d) In December 1993, the Company entered into a loan agreement with a financial
institution which provides for a $13,583,000 term loan due December 31,
1998, and a $3,500,000 revolving line of credit due December 31, 1995. The
term loan was fully funded in 1994. Certain amounts under this loan
agreement were originally utilized to retire existing indebtedness. The
annual minimum principal payments on the term facility are approximately
$1,132,000. Beginning in 1997, the Company is required to make additional
principal payments (not to exceed approximately $1,132,000 in the aggregate)
equal to 20% of the Company's operating cash flow, after debt service and
funding of capital improvements approved by the lender. The amounts
available under the revolving line facility range annually from zero in
November to $3,500,000 in June. Substantially all of the Company's assets
are pledged as collateral under the loan agreement.
(e) In October 1992, in connection with a private placement (see note 8), the
Company consolidated the outstanding Windcrest Partners (Windcrest) loans in
the principal amount of $2,095,000 into a junior subordinated term loan.
Under the terms of this loan agreement, interest is payable monthly at the
rate of 8% per annum until maturity on December 31, 1999. Commencing
December 31, 1995, and continuing annually through December 31, 1998, the
Company is required to make principal payments of $200,000 per annum.
Included in the amount shown at December 31, 1993, is $655,340 of accrued
interest owed to Windcrest which payment had been deferred at October 30,
1992. This amount was exchanged for common stock (485,437 shares) during
1994.
Certain of the above loan agreements place restrictions on operations,
require maintenance of certain financial ratios, and limit the Company's ability
to pay dividends or make other distributions to the holders of its common stock.
The following schedule of maturities of long-term debt and capitalized lease
obligations during the five years subsequent to December 31, 1994, assumes that
all debt payments will be made in accordance with the terms of the respective
agreement, as amended.
1995......................................................... $ 1,891,805
1996......................................................... 1,874,366
1997......................................................... 2,338,565
1998......................................................... 9,271,529
1999 and thereafter.......................................... 8,731,544
-----------
$24,107,809
-----------
-----------
F-16
<PAGE>
PREMIER PARKS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1992, 1993, AND 1994, AND JUNE 30, 1995
(INFORMATION AS OF JUNE 30, 1995, AND FOR THE
SIX MONTHS ENDED JUNE 30, 1994 AND 1995 IS UNAUDITED)
(7) INCOME TAXES
Income tax expense (benefit) attributable to continuing operations for 1992,
1993, and 1994 and for the six-month periods ended June 30, 1994 and 1995,
consists of the following:
<TABLE>
<CAPTION>
CURRENT DEFERRED TOTAL
--------- ----------- -----------
<S> <C> <C> <C>
1992:
Federal........................................... $(415,800) $ 769,900 $ 354,100
State and local................................... (85,000) 157,400 72,400
--------- ----------- -----------
$(500,800) $ 927,300 $ 426,500
--------- ----------- -----------
--------- ----------- -----------
1993:
Federal........................................... $ -- $ 75,000 $ 75,000
State and local................................... -- 16,000 16,000
--------- ----------- -----------
$ -- $ 91,000 $ 91,000
--------- ----------- -----------
--------- ----------- -----------
1994:
Federal........................................... $ 44,000 $ 15,000 $ 59,000
State and local................................... -- 9,000 9,000
--------- ----------- -----------
$ 44,000 $ 24,000 $ 68,000
--------- ----------- -----------
--------- ----------- -----------
Six months ended June 30, 1994:
Federal........................................... $ -- $(1,157,688) $(1,157,688)
State and local................................... -- (385,896) (385,896)
--------- ----------- -----------
$ -- $(1,543,584) $(1,543,584)
--------- ----------- -----------
--------- ----------- -----------
Six months ended June 30, 1995:
Federal........................................... $ 2,400 $ (935,789) $ (933,389)
State and local................................... -- (310,193) (310,193)
--------- ----------- -----------
$ -- $(1,245,982) $(1,243,582)
--------- ----------- -----------
--------- ----------- -----------
</TABLE>
Recorded income tax expense (benefit) differed from amounts computed by
applying the U.S. federal income tax rate of 34% to pretax income from
continuing operations approximately as follows:
<TABLE>
<CAPTION>
1992 1993 1994
--------- --------- -------
<S> <C> <C> <C>
Computed "expected" federal income tax expense (benefit)..... $(445,000) $ 491,000 $58,000
Depreciation not resulting in corresponding net operating
loss carryforward.......................................... 769,900 -- --
Other, net................................................... 29,200 (6,000) 1,000
Effect of state and local income taxes....................... 72,400 16,000 9,000
Change in the beginning-of-the-year balance of the valuation
allowance for deferred tax assets.......................... -- (410,000) --
--------- --------- -------
$ 426,500 $ 91,000 $68,000
--------- --------- -------
--------- --------- -------
</TABLE>
F-17
<PAGE>
PREMIER PARKS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1992, 1993, AND 1994, AND JUNE 30, 1995
(INFORMATION AS OF JUNE 30, 1995, AND FOR THE
SIX MONTHS ENDED JUNE 30, 1994 AND 1995 IS UNAUDITED)
(7) INCOME TAXES--(CONTINUED)
Income tax benefit for each of the six months ended June 30, 1994 and 1995,
was approximately 40% of the period's loss from continuing operations before
income tax benefit.
Substantially all of the Company's future taxable temporary differences
(deferred tax liabilities) relate to the different financial accounting and tax
depreciation methods and periods for property and equipment. The Company's net
operating loss carryforwards and alternative minimum tax carryforwards represent
future income tax deductions (deferred tax assets). The tax effects of these
temporary differences as of December 31, are presented below:
1993 1994
---------- ----------
Deferred tax assets before valuation allowance....... $1,471,000 $3,161,000
Less valuation allowance............................. -- --
---------- ----------
Net deferred tax assets.............................. 1,471,000 3,161,000
Deferred tax liabilities............................. 3,360,900 5,074,900
---------- ----------
Net deferred tax liability........................... $1,889,900 $1,913,900
---------- ----------
---------- ----------
The Company's deferred tax liability results from its assets being
depreciated over a seven-year period for tax reporting purposes and a longer 20-
to 25-year period for financial purposes. The faster tax depreciation has
resulted in tax losses which can be carried forward to offset future taxable
income. Because the Company's assets' financial carrying value and tax basis
difference will primarily reverse before the expiration of the net operating
losses and taking into account the Company's projections of future taxable
income over the same period, management believes that it will more likely than
not realize the benefits of these deductible differences.
The Company experienced an ownership change within the meaning of the
Internal Revenue Code Section 382 and the regulations thereunder on October 30,
1992, as a result of the issuance of 11,000,000 shares of common stock. As a
result of the ownership change, net operating loss carryforwards generated
before the ownership change can be deducted in subsequent periods only for
certain limited purposes. Accordingly, it is probable that the Company will not
be able to use net operating loss carryforwards generated prior to October 30,
1992. For that reason, none of the pre-October 30, 1992, net operating loss
carryforwards were considered in computing the Company's available net operating
loss carryforwards and deferred tax liability. Net operating loss carryforwards
generated after October 30, 1992, can be utilized without restriction unless
another ownership change, as defined previously, occurs.
As of December 31, 1994, the Company has approximately $7,695,000 of
unrestricted net operating loss and $44,000 of alternative minimum tax
carryforwards available for federal income tax purposes.
As discussed in note 1, the Company adopted the provisions of Statement No.
109 in 1992. The cumulative effect of this change in accounting for income taxes
of $2,297,900 was determined as of January 1, 1992, and is reported separately
in the consolidated statement of operations.
F-18
<PAGE>
PREMIER PARKS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1992, 1993, AND 1994, AND JUNE 30, 1995
(INFORMATION AS OF JUNE 30, 1995, AND FOR THE
SIX MONTHS ENDED JUNE 30, 1994 AND 1995 IS UNAUDITED)
(8) CAPITAL STOCK
The Company has authorized 500,000 shares of preferred stock, $1 par value.
None have been issued to date.
On October 30, 1992, the Company issued an additional 11,000,000 common
shares in a private placement. In connection with this placement, Windcrest
exchanged $3,500,000 of debt for 3,500,000 shares of common stock. The Company
has agreed to provide the stockholders certain registration rights in the
future.
In June 1993, the Company increased its authorized shares of common stock
from 20,000,000 to 45,000,000 authorized shares, $.01 par value.
In October 1994, the Company issued an additional 3,099,073 common shares in
a private placement with existing stockholders for cash. In connection with this
placement, Windcrest also exchanged $655,340 of debt for 485,437 shares of
common stock. The Company has agreed to provide the stockholders certain
registration rights in the future.
(9) STOCK OPTIONS AND WARRANTS
In 1993 and 1994, certain members of the Company's management were issued
seven-year options to purchase 766,002 and 180,000 shares of common stock, at an
exercise price of $1.00 and $1.50 per share, respectively, under the Company's
1993 Stock Option and Incentive Plan. These options may be exercised on a
cumulative basis with 20% of the total exercisable on date of issuance and with
an additional 20% being available for exercise on each of the succeeding
anniversary dates. Any unexercised portion of the options will automatically and
without notice terminate upon the seventh anniversary of the issuance date or
upon termination of employment. At December 31, 1994, options for 36,000 shares
related to the 1994 issuance and 306,401 shares related to the 1993 issuance
were exercisable.
In October 1989, the Company's current chairman was issued a ten-year
warrant to purchase 131,728 shares of common stock (currently being held as
treasury stock) at an exercise price of $.20 per share and a ten-year warrant to
purchase 93,466 shares of common stock at an exercise price of $.20 per share.
(10) 401(K) PLAN
The Company has a qualified, contributory 401(k) plan (the Plan). All
regular employees are eligible to participate in the Plan if they have completed
one full year of service and are at least 21 years old. The Company currently
does not match contributions made by employees. The accounts of all
participating employees are fully vested.
(11) CASUALTY LOSS
On July 27, 1994, high winds damaged the Company's Adventure World location.
The loss was covered by insurance and the total insurance benefits recognized
during 1994 were $748,000,
F-19
<PAGE>
PREMIER PARKS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1992, 1993, AND 1994, AND JUNE 30, 1995
(INFORMATION AS OF JUNE 30, 1995, AND FOR THE
SIX MONTHS ENDED JUNE 30, 1994 AND 1995 IS UNAUDITED)
(11) CASUALTY LOSS--(CONTINUED)
including approximately $348,000 accrued as a receivable which was collected
subsequent to December 31, 1994. The Company spent approximately $393,000 in
1994 to replace and repair capital assets which had been destroyed or damaged.
Insurance proceeds in excess of the net book value of destroyed assets and the
repair costs of damaged assets were approximately $417,000 and are reflected in
the 1994 statement of operations in theme parks revenue.
(12) COMMITMENTS AND CONTINGENCIES
The Company leases office space under a lease agreement which expires April
30, 2001. The lease requires minimum monthly payments over its term and also
escalation charges for proportionate share of expenses as defined in the lease.
The Company may also terminate the lease during 1996 and pay a termination
penalty. Windcrest shares the office space with the Company and has agreed to
pay 50% of the rental payments. Rent expense recognized by the Company (after
deduction of amounts paid by Windcrest) for the years ended December 1992, 1993,
and 1994, aggregated $68,080, $70,075, and $68,100, respectively. Rent expense
for the six-month periods ended June 30, 1994 and 1995, was $32,000 and $33,000,
respectively.
The Company leases certain equipment under operating lease agreements,
expiring in 1998 and 2000, which specify a minimum annual rent of approximately
$252,000 and $427,000, respectively. Each of the leases contains a cancellable
feature allowing the Company to terminate the agreements in 1996 and 1998,
respectively. Rental expense for the equipment for 1994 was $252,000. Rental
expense incurred with respect to the six-month periods ended June 30, 1994 and
1995 was $63,000 and $130,000, respectively.
Future minimum lease payments (exclusive of amounts to be reimbursed by
Windcrest) on operating leases for the Company's office space and equipment
(with initial or remaining lease terms in excess of one year), are as follows:
1995............................................................ $788,944
1996............................................................ 791,093
1997............................................................ 792,167
1998............................................................ 792,167
1999............................................................ 539,935
Later years..................................................... 577,537
The Company is not a party to, nor is its property subject to, any pending
material legal proceedings.
(13) SUBSEQUENT EVENTS (UNAUDITED)
Pursuant to a merger agreement, the Company acquired Funtime Parks, Inc., a
company owning three regional theme parks, for approximately $60 million,
subject to certain post-closing adjustments related to the 1995 operations of
the acquired theme parks. To fund the acquisition, on August 15, 1995, the
Company issued $90,000,000 of aggregate principal amount of unsecured 12% senior
notes due 2003 (Old Notes) and $20,000,000 of convertible preferred stock and
F-20
<PAGE>
PREMIER PARKS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1992, 1993, AND 1994, AND JUNE 30, 1995
(INFORMATION AS OF JUNE 30, 1995, AND FOR THE
SIX MONTHS ENDED JUNE 30, 1994 AND 1995 IS UNAUDITED)
(13) SUBSEQUENT EVENTS (UNAUDITED)--(CONTINUED)
converted approximately $9 million of previously existing indebtedness into
Company common shares. In connection with the sale of the Old Notes in a private
placement, the Company and its primary subsidiaries entered into an agreement
with the purchaser of the Old Notes providing for the exchange of the Old Notes
for notes (New Notes) which will have the same form and terms as the Old Notes
except that the New Notes will be registered under the Securities Act of 1933
and, therefore, will not bear legends restricting their transfer. Except in the
case of a Change of Control (as defined in the indenture relating to the Notes)
and certain other circumstances, no principal payment on the Notes is due and
payable prior to maturity (August 15, 2003). The New Notes will evidence the
same debt as the Old Notes and will be entitled to the benefits of the indenture
agreement pursuant to which the Old Notes were issued.
The Company is a holding company with no operations or assets other than its
investment in its wholly-owned direct and indirect subsidiaries. All of the
Company's subsidiaries, except for one indirect wholly-owned subsidiary,
Funtime-Famous Recipe, Inc., are full, unconditional, and joint and several
guarantors of the Notes. The assets and operations of Funtime-Famous Recipe,
Inc. are inconsequential to the Company and its consolidated financial condition
and results of operations. Condensed financial statement information for the
guarantors is not included herewith, as the Company does not believe such
information would be material to the understanding of the Company and its direct
and indirect subsidiaries.
The acquisition is being accounted for as a purchase. Allocations of the
purchase price have been determined based upon estimates of fair value as
determined by independent appraisal. The acquisition includes an obligation by
the Company based upon the 1995 results of the acquired theme parks. The
contingent payment has not yet been included in the allocation of the purchase
price. Any payment made by the Company under the contingent pricing feature will
result in additional purchase price. As a result of the preliminary allocation,
there is approximately $4 million of cost in excess of the fair value of the net
assets acquired. Such excess will be amortized on a straight-line basis over its
estimated useful life.
The following summarized pro forma results of operations for the year ended
December 31, 1994 and the six months ended June 30, 1995, assume that the
acquisition and related transactions occurred as of the beginning of the
respective periods (dollars in thousands, except for per share amounts):
SIX MONTHS
YEAR ENDED ENDED
DECEMBER 31, 1994 JUNE 30, 1995
----------------- -------------
Total revenue.............................. $75,594 $24,608
Income (loss) from operations.............. (9,574) (5,586)
Net income (loss).......................... (1,714) (6,951)
Income (loss) per common share............. $ (.08) $ (.29)
F-21
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Board of Directors and Stockholders
FUNTIME PARKS, INC.
Aurora, Ohio
We have audited the accompanying consolidated balance sheets of Funtime Parks,
Inc. and subsidiaries as of December 31, 1994 and 1993, and the related
consolidated statements of operations, redeemable preferred stock and
stockholders' equity (deficit), and cash flows for each of the three years in
the period ended December 31, 1994. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Funtime Parks,
Inc. and subsidiaries at December 31, 1994 and 1993, and the consolidated
results of their operations and their cash flows for each of the three years in
the period ended December 31, 1994, in conformity with generally accepted
accounting principles.
As discussed in Note 1 to the financial statements, in 1993 the Company changed
its method of accounting for income taxes.
ERNST & YOUNG LLP
January 25, 1995,
except for Note 13, as to which the date is
August 29, 1995
Akron, Ohio
F-22
<PAGE>
FUNTIME PARKS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------- JULY 2,
1993 1994 1995
----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash................................................... $ 185,800 $ 171,394 $ 107,016
Trade receivable....................................... 8,881 6,714 2,454,980
Other receivables...................................... 196,707 138,546 93,346
Refundable income taxes................................ 240,000 -- --
Prizes and other supplies.............................. 1,876,825 1,720,528 2,849,395
Other current assets--Note 6........................... 757,183 590,197 583,297
----------- ----------- -----------
Total current assets............................... 3,265,396 2,627,379 6,088,034
Deferred charges, less accumulated amortization
(1993--$44,614; 1994--$313,494; July 2,
1995--$559,468)......................................... 777,929 519,049 276,340
Property and equipment
Land and land improvements............................. 18,092,049 19,986,705 19,986,706
Buildings and building improvements.................... 15,950,066 16,899,094 16,899,094
Equipment.............................................. 39,888,326 43,000,651 43,000,650
Construction in progress............................... 380,359 118,111 1,072,817
----------- ----------- -----------
74,310,800 80,004,561 80,959,267
Less accumulated depreciation.......................... 30,491,646 35,784,701 39,100,701
----------- ----------- -----------
43,819,154 44,219,860 41,858,566
----------- ----------- -----------
Total assets....................................... $47,862,479 $47,366,288 $48,222,940
----------- ----------- -----------
----------- ----------- -----------
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Revolving line of credit............................... $ 4,133,192 $ 5,500,351 $ 8,075,979
Accounts payable....................................... 1,059,004 719,457 3,547,036
Accrued taxes, other than income taxes................. 608,029 639,493 920,033
Accrued payroll and related expenses................... 227,923 5,132 622,292
Income taxes payable................................... 392,048 92,342 43,641
Accrued interest....................................... 390,711 1,539,017 1,820,486
Other accrued liabilities--Note 6...................... 2,123,132 2,571,202 4,358,741
Current portion of long-term debt...................... 3,100,000 20,782,304 20,157,705
----------- ----------- -----------
Total current liabilities............................... 12,034,039 31,849,298 39,545,913
Non-current obligations:
Long-term debt, less current portion--Note 2........... 31,796,627 10,528,131 10,643,283
Deferred income taxes--Note 4.......................... 7,356,000 7,205,000 4,483,055
Other long-term liabilities............................ 556,240 1,483,293 1,487,518
----------- ----------- -----------
39,708,867 19,216,424 16,613,856
Stockholders' equity (deficit)
Common stock--without par value (stated value of $1,000
per share, authorized 4,000 shares; issued 1,800
shares at December 31, 1993 and 3,013 shares at
December 31, 1994 and July 2, 1995, respectively).... 1,800,000 3,013,043 3,013,043
Retained earnings (deficit)............................ (5,409,191) (6,278,262) (10,546,965)
----------- ----------- -----------
(3,609,191) (3,265,219) (7,502,614)
Less:
Cost of common stock in treasury....................... 166,536 329,515 298,207
Value of warrant put option............................ 104,700 104,700 104,700
----------- ----------- -----------
Total stockholders' equity (deficit)............... (3,880,427) (3,699,434) (7,936,829)
----------- ----------- -----------
Total liabilities and stockholders' equity
(deficit)........................................ $47,862,479 $47,366,288 $48,222,940
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
See accompanying notes.
F-23
<PAGE>
FUNTIME PARKS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF REDEEMABLE PREFERRED STOCK AND
STOCKHOLDERS' EQUITY (DEFICIT)
YEARS ENDED DECEMBER 31, 1992, 1993 AND 1994, AND THE
SIX MONTHS ENDED JULY 2, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
SIX
MONTHS
ENDED
JULY 2,
1992 1993 1994 1995
----------- ------------ ----------- ------------
(UNAUDITED)
<S> <C> <C> <C> <C>
Redeemable Preferred Stock:
Series A Senior Preferred Stock:
Balance, beginning of year...... $ 7,000,000 $ 7,000,000 $ -- $ --
Redeem Preferred Stock in
exchange for subordinated debt.. -- (7,000,000) -- --
----------- ------------ ----------- ------------
Balance, end of year............ $ 7,000,000 $ -- $ -- $ --
----------- ------------ ----------- ------------
----------- ------------ ----------- ------------
Series B Senior Preferred Stock:
Balance, beginning of year...... $ 2,354,940 $ 3,027,780 $ -- $ --
Issuance of 672.84 shares of
Series B Senior Preferred
Stock for payment of stock
dividend...................... 672,840 -- -- --
Issuance of 1,176.82 shares of
Series B Senior Preferred
Stock for payment of stock
dividend...................... -- 1,176,820 -- --
Redeem Preferred Stock in
exchange for subordinated
debt.......................... -- (4,204,600) -- --
----------- ------------ ----------- ------------
Balance, end of period.......... $ 3,027,780 $ -- $ -- $ --
----------- ------------ ----------- ------------
----------- ------------ ----------- ------------
Series A Junior Preferred Stock:
Balance, beginning of year...... $ 2,500,000 $ 2,500,000 $ -- $ --
Redeem preferred stock in
exchange for long-term debt... -- (2,500,000) -- --
----------- ------------ ----------- ------------
Balance, end of year............ $ 2,500,000 $ -- $ -- $ --
----------- ------------ ----------- ------------
----------- ------------ ----------- ------------
Series B Junior Preferred Stock:
Balance, beginning of year...... $ 886,025 $ 1,139,175 $ -- $ --
Issuance of 253.15 shares of
Series B Junior Preferred
Stock for payment of stock
dividend...................... 253,150 -- -- --
Issuance of 442.768 shares
Series B Junior Preferred
Stock for payment of stock
dividend...................... -- 442,768 -- --
Redeem preferred stock in
exchange for long-term debt... -- (1,581,943) -- --
----------- ------------ ----------- ------------
Balance, end of year............ $ 1,139,175 $ -- $ -- --
----------- ------------ ----------- ------------
----------- ------------ ----------- ------------
Total Redeemable Preferred Stock:
Balance, beginning of year...... $12,740,965 $ 13,666,955 $ -- $ --
Issuance of Series B Senior
Preferred Stock for payment of
stock dividend................ 672,840 1,176,820 -- --
Issuance of Series B Junior
Preferred Stock for payment of
stock dividend................ 253,150 442,768 -- --
Redeem Preferred Stock in
exchange for subordinated
debt.......................... -- (11,204,600) -- --
Redeem Preferred Stock in
exchange for long term debt... -- (4,081,943) -- --
----------- ------------ ----------- ------------
Balance, end of year............ $13,666,955 $ -- $ -- $ --
----------- ------------ ----------- ------------
----------- ------------ ----------- ------------
</TABLE>
F-24
<PAGE>
FUNTIME PARKS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF REDEEMABLE PREFERRED STOCK AND
STOCKHOLDERS' EQUITY (DEFICIT)--(CONTINUED)
YEARS ENDED DECEMBER 31, 1992, 1993 AND 1994, AND THE
SIX MONTHS ENDED JULY 2, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
SIX
MONTHS
ENDED
JULY 2,
1992 1993 1994 1995
----------- ------------ ----------- ------------
(UNAUDITED)
<S> <C> <C> <C> <C>
Stockholder's Equity (Deficit)
Common stock--shares outstanding:
Balance, beginning of year...... $ 1,800 $ 1,800 $ 1,800 $ 3,013
Exercise G Warrants............. -- -- 1,213 --
----------- ------------ ----------- ------------
Balance, end of year............ $ 1,800 $ 1,800 $ 3,013 $ 3,013
----------- ------------ ----------- ------------
----------- ------------ ----------- ------------
Common stock--amount:
Balance, beginning of year...... $ 1,800,000 $ 1,800,000 $ 1,800,000 $ 3,013,043
Exercise G Warrants............. -- -- 1,213,043 --
----------- ------------ ----------- ------------
Balance, end of period.......... $ 1,800,000 $ 1,800,000 $ 3,013,043 $ 3,013,043
----------- ------------ ----------- ------------
----------- ------------ ----------- ------------
Treasury Stock:
Balance, beginning of year...... $ (166,536) $ (166,536) $ (166,536) $ (329,515)
Purchase treasury shares........ -- -- (207,416) --
Issue treasury shares........... -- -- 44,437 31,308
----------- ------------ ----------- ------------
Balance, end of period.......... $ (166,536) $ (166,536) $ (329,515) $ (298,207)
----------- ------------ ----------- ------------
----------- ------------ ----------- ------------
Warrant Put Option:
Balance, beginning of year...... $ -- $ -- $ (104,700) $ (104,700)
Record value of warrant put
option........................ -- (104,700) -- --
----------- ------------ ----------- ------------
Balance, end of year............ $ -- $ (104,700) $ (104,700) $ (104,700)
----------- ------------ ----------- ------------
----------- ------------ ----------- ------------
Accumulated deficit:
Balance, beginning of year...... $(2,120,572) $ (3,301,914) $(5,409,191) $ (6,278,262)
Net income (loss)............... 383,791 330,902 263,196 (4,257,395)
Dividends Paid.................. (639,143) (809,579) -- --
Issuance of Series B Senior
Preferred Stock for payment of
stock dividend.............. (672,840) (1,176,820) -- --
Issuance of Series B Junior
Preferred Stock for payment of
stock dividend.............. (253,150) (442,768) -- --
Unamortized discount on
subordinated debt, net of
income tax.................... -- 586,288 -- --
Cancel H Warrants............... -- (700,000) -- --
Record value of warrant put
option........................ -- 104,700 -- --
Issue treasury shares........... -- -- (12,437) (11,308)
Exercise G Warrants............. -- -- (1,211,830) --
Discount on subordinated debt,
net of tax reversal........... -- -- 92,000 --
----------- ------------ ----------- ------------
Balance, end of period.......... $(3,301,914) $ (5,409,191) $(6,278,262) $(10,546,965)
----------- ------------ ----------- ------------
----------- ------------ ----------- ------------
</TABLE>
See accompanying notes to consolidated financial statements.
F-25
<PAGE>
FUNTIME PARKS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, -------------------------
--------------------------------------- JULY 3, JULY 2,
1992 1993 1994 1994 1995
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
(UNAUDITED) (UNAUDITED)
Gross operating revenue:
Admissions......................... $19,351,912 $20,820,183 $20,339,357 $ 5,851,250 $ 6,194,935
Food, merchandise, and other....... 27,500,479 30,432,656 30,095,314 9,407,089 8,958,332
----------- ----------- ----------- ----------- -----------
46,852,391 51,252,839 50,434,671 15,258,339 15,153,267
Operating expenses:
Operating labor.................... 11,671,322 12,379,822 12,366,501 5,156,886 5,233,118
Payroll taxes and benefits......... 1,826,112 1,892,503 1,922,107 826,483 809,300
Supplies and services.............. 1,608,152 1,756,904 1,998,955 943,200 994,110
Utilities.......................... 1,503,466 1,586,050 1,635,735 619,131 609,982
Maintenance and repairs............ 2,364,407 2,290,017 2,792,803 2,025,944 1,659,278
Licenses, taxes and rent........... 1,478,803 1,600,755 1,781,712 704,078 851,011
Professional services.............. 207,393 186,827 132,897 95,183 105,070
Miscellaneous...................... 507,307 510,787 577,081 328,994 275,346
----------- ----------- ----------- ----------- -----------
Total operating expenses............ 21,166,962 22,203,665 23,207,791 10,699,899 10,537,215
Selling general, and
administrative...................... 8,663,536 8,217,796 8,432,771 3,339,518 3,459,003
Cost of sales....................... 5,739,824 6,554,625 6,634,686 2,053,130 2,083,004
Depreciation........................ 6,182,228 5,631,903 5,956,481 2,978,240 3,316,000
----------- ----------- ----------- ----------- -----------
Operating Profit.................... 5,099,841 8,644,850 6,202,942 (3,812,448) (4,241,955)
Other expenses:
Interest expense, net.............. 2,770,635 2,736,777 4,518,212 2,262,603 2,495,153
Amortization....................... 230,388 45,814 272,784 134,440 245,974
Litigation costs................... 48,129 38,003 261,444 -- --
Other.............................. 54,898 239,663 36,079 166,248 (3,742)
----------- ----------- ----------- ----------- -----------
Total other expenses................ 3,104,050 3,060,257 5,088,519 2,563,291 2,737,385
----------- ----------- ----------- ----------- -----------
Income (loss) before income taxes
and cumulative effect of change in
accounting method................... 1,995,791 5,584,593 1,114,423 (6,375,739) (6,979,340)
Provision for income tax expense
(benefit)
Current:
Federal.......................... 700,000 760,000 785,000 -- --
State............................ 236,000 389,691 125,227 -- --
Deferred........................... -- 895,000 (59,000) (2,486,538) (2,721,945)
Charge in lieu of income taxes..... 676,000 -- -- -- --
----------- ----------- ----------- ----------- -----------
1,612,000 2,044,691 851,227 (2,486,538) (2,721,945)
----------- ----------- ----------- ----------- -----------
Income (loss) before cumulative
effect of change in accounting
method............................. 383,791 3,539,902 263,196 (3,889,201) (4,257,395)
Cumulative effect as of January 1,
1993 of change in accounting
method............................. -- 3,209,000 -- -- --
----------- ----------- ----------- ----------- -----------
Net income (loss)................... $ 383,791 $ 330,902 $ 263,196 $(3,889,201) $(4,257,395)
Preferred stock dividend
requirements..................... 724,359 426,094 -- -- --
----------- ----------- ----------- ----------- -----------
Net income (loss) applicable to
common shareholders.............. $ (340,568) $ (95,192) $ 263,196 $(3,889,201) $(4,257,395)
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Income (loss) per share:
Income (loss) before cumulative
effect of accounting change (net
of preferred stock dividend
requirements).................... $ (201.52) $ 1,842.49 $ 102.93 $ (1,416.83) $ (1,498.03)
Cumulative effect of accounting
change........................... -- (1,898.82) -- -- --
----------- ----------- ----------- ----------- -----------
Net income (loss) applicable to
common shareholders............ $ (201.52) $ (56.33) $ 102.93 $ (1,416.83) (1,498.03)
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Weighted average number of shares
outstanding...................... 1,690 1,690 2,557 2,745 2,842
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
</TABLE>
See accompanying notes.
F-26
<PAGE>
FUNTIME PARKS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEARS ENDED DECEMBER 31, -------------------------
--------------------------------------- JULY 3, JULY 2,
1992 1993 1994 1994 1995
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
(UNAUDITED) (UNAUDITED)
OPERATING ACTIVITIES
Net income (loss)................. $ 383,791 $ 330,902 $ 263,196 $(3,889,201) $(4,257,395)
Adjustments to reconcile net
income to net cash provided by
operating activities:
Depreciation and amortization.... 6,412,616 5,707,300 6,464,501 3,112,680 3,561,974
Provision for deferred income
taxes.......................... -- 895,000 (151,000) (2,486,538) (2,721,945)
Change in lieu of income taxes... 676,000 -- -- -- --
Cumulative effect adjustment..... 47,957 3,209,000 -- -- --
Provision for deferred
compensation................... -- 44,499 12,415 -- --
Other long-term liabilities...... 680 -- 914,638 10,310 4,225
(Gain) Loss on sale of property
and equipment................... (151,517) 886 (2,500) -- --
Deferred charges................. (673,026) (10,000) -- (3,265)
Changes in operating assets and
liabilities:
Trade and other receivables.... (40,106) (26,227) 60,328 (1,913,459) (2,403,066)
Refundable income taxes........ -- (240,000) 240,000 -- --
Prizes and other supplies...... 71,399 (677,743) 156,297 (1,175,009) (1,128,867)
Other current assets........... 181,136 (321,621) 166,986 242,511 6,900
Accounts payable............... (199,318) 672,033 (339,547) 2,350,266 2,827,579
Accrued taxes, other than
income taxes................. (104,778) (62,436) 31,464 394,928 280,540
Accrued payroll and related
expenses..................... 69,755 (73,577) (222,791) 426,136 617,160
Income taxes payable........... (374,950) 208,198 (299,706) (348,407) (48,701)
Accrued interest............... (10,651) 205,957 1,148,306 728,912 281,469
Other accrued liabilities...... (12,352) (19,425) 351,132 756,235 1,787,539
----------- ----------- ----------- ----------- -----------
Net cash provided by (used in)
operating activities.............. 6,949,662 9,179,720 8,783,719 (1,790,636) (1,195,853)
INVESTING ACTIVITIES
Purchases of property and
equipment....................... (2,970,877) (4,394,647) (4,211,090) (2,926,675) (954,706)
Shareholders settlement........... -- -- (2,150,000) -- --
Purchase of stock warrants........ -- (700,000) -- -- --
Proceeds from sale of property and
equipment....................... -- -- 2,500 2,500 --
(Purchase) sale of common stock... -- -- (77,266) 29,213 20,000
Discount on subordinated debt..... -- -- 92,000 -- --
----------- ----------- ----------- ----------- -----------
Net cash used in investing
activities...................... (2,970,877) (5,094,647) (6,343,856) (2,894,962) (934,706)
FINANCING ACTIVITIES
Proceeds from long-term
borrowings...................... -- 20,521,789 -- 117,618 115, 152
Principal payments on long-term
borrowings...................... (5,177,780) (23,324,751) (3,821,428) (721,428) (624,599)
Net proceeds from borrowings under
a revolving line-of-credit....... 1,684,383 (636,384) 1,367,159 5,332,625 2,575,628
Dividends......................... (639,143) (809,579) -- -- --
----------- ----------- ----------- ----------- -----------
Net cash (used in) provided by
financing activities.............. (4,132,540) (4,248,925) (2,454,269) 4,728,815 2,066,181
----------- ----------- ----------- ----------- -----------
Net decrease in cash.............. (153,755) (163,852) (14,406)
Cash at beginning of year......... 503,407 349,652 185,800 185,800 171,394
----------- ----------- ----------- ----------- -----------
Cash at end of year............... $ 349,652 $ 185,800 $ 171,394 $ 229,017 $ 107,016
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
</TABLE>
See accompanying notes.
F-27
<PAGE>
FUNTIME PARKS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1994 AND JULY 2, 1995
(INFORMATION AS OF JULY 2, 1995 OR FOR THE SIX MONTHS ENDED
JULY 3, 1994 AND JULY 2, 1995 IS UNAUDITED)
(1) ACCOUNTING POLICIES
BASIS OF PRESENTATION
In the opinion of management, the accompanying unaudited consolidated
financial statements as of July 2, 1995, and for the six months ended July 3,
1994 and July 2, 1995, reflect all adjustments (all of which were normal and
recurring) which, in the opinion of management, are necessary for fair statement
of the financial position and results of operations for the interim periods
presented.
CONSOLIDATION
The consolidated financial statements include the accounts of the Company
and its wholly-owned subsidiaries. All significant intercompany transactions and
accounts have been eliminated upon consolidation.
NATURE OF OPERATIONS
The Company owns and operates Geauga Lake, Darien Lake and Wyandot Lake
amusement parks in Aurora, Ohio; Darien Center, New York and Columbus, Ohio,
respectively. The Company also owns and operates a Famous Recipe and Mr. Hero
restaurant.
PRIZES AND OTHER SUPPLIES
Prizes and other supplies are valued at cost which approximates market.
DEFERRED CHARGES
Deferred charges include primarily costs associated with obtaining long-term
debt and are amortized on the straight-line method over the term of the related
debt.
PROPERTY AND EQUIPMENT
Property and equipment are carried at cost. For financial reporting
purposes, depreciation is computed by the straight-line method over the
estimated useful lives of the assets. Accelerated methods are used for income
tax purposes where permitted. Maintenance and repairs are charged to operating
expenses as incurred. Major renewals and betterments are capitalized and
depreciated over their estimated useful lives. The cost of assets retired or
sold and the related accumulated depreciation are removed from the accounts and
any profit or loss on disposition is credited or charged to earnings.
INCOME TAXES
Effective January 1, 1993, the Company adopted the provisions of Statement
of Financial Accounting Standards (SFAS) No. 109 "Accounting for Income Taxes."
Under SFAS No. 109, the liability method is used in accounting for income taxes
and accordingly deferred tax assets and liabilities are determined based on
differences between the financial reporting basis and the tax basis of assets
and liabilities and are measured using the enacted tax rates and laws that will
be in
F-28
<PAGE>
FUNTIME PARKS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(1) ACCOUNTING POLICIES--(CONTINUED)
effect when the differences are expected to reverse. Prior to the adoption of
SFAS No. 109, income tax expense was determined using the deferred method.
Deferred tax expense was based on items of income and expense that were reported
in different years in the financial statements and tax returns and were measured
at the tax rate in effect in the year the difference originated.
As permitted by SFAS No. 109, the Company has elected not to restate the
financial statements of any prior years. The effect of the change has been
presented in the income statement in 1993 as a cumulative effect adjustment.
PER COMMON SHARE AMOUNTS
Per common share amounts are computed after preferred stock dividend
requirements on the basis on the weighted average number of shares of Common
Stock outstanding.
STATEMENT OF CASH FLOWS
For purposes of the statement of cash flows, temporary cash investments are
considered cash equivalents.
RECLASSIFICATION
Certain amounts for 1993 and 1992 have been reclassified to conform to the
1994 presentation.
(2) FINANCING ARRANGEMENTS
The Company entered into a financing agreement on November 12, 1993, amended
October 5, 1994, which provided borrowings of up to $38,103,733. This financing
agreement provided three term loans totaling $24,603,733 and a revolving credit
facility of up to $13,500,000. The financing agreement also contains provisions
which require the maintenance of certain financial ratios and limit additional
indebtedness, dividends and capital expenditures. The financing agreement
terminates on December 31, 1995. The Company believes that it has the ability to
and will refinance its current debt obligation prior to the expiration of the
term loan agreement on December 31, 1995.
The Company also entered into a subordinated debt agreement on November 12,
1993 which provided additional borrowings of $11,204,600.
Long-term debt consists of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------- JULY 2,
1993 1994 1995
----------- ----------- -----------
<S> <C> <C> <C>
Term loan from a finance company, payable in
installments through November 1, 1995, with a
balloon payment due on December 31, 1995, plus
interest payable monthly at a variable rate
(10.125% and 7.625% at December 31, 1994 and
1993, respectively).............................. $24,603,732 $20,782,304 $20,157,705
Subordinated debt, due December 31, 1997 with
interest at 13.5%................................ 11,204,600 11,204,600 11,204,600
Unamortized discount on subordinated debt.......... (911,705) (676,469) (561,317)
----------- ----------- -----------
34,896,627 31,310,435 30,800,988
Less current portion............................... 3,100,000 20,782,304 20,157,705
----------- ----------- -----------
$31,796,627 $10,528,131 $10,643,283
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
F-29
<PAGE>
FUNTIME PARKS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(2) FINANCING ARRANGEMENTS--(CONTINUED)
The scheduled installments of the term loan are coordinated so that four
payments totaling $775,000 are due monthly from August through November each
year during the term of the financing agreement. In addition, proceeds from the
sale of significant assets or from the exercise of stock purchase warrants must
be applied to the unpaid term loan balances. The Company may have to pay an
additional installment on the term loan each year during April. This installment
is based on a formula in the financing agreement. At December 31, 1995, all
unpaid term loan balances are due.
The subordinated debt includes interest at 7.5% payable semi-annually, plus
interest of 6% which is added to the outstanding principal balance. In 1993,
stock purchase warrants were issued to the subordinated debt holder in
conjunction with the subordinated financing. A portion of the subordinated loan
proceeds has been allocated to these warrants based on a formula which considers
the fair market values of the warrants and the loan proceeds. The portion of the
loan proceeds allocated to the warrants represents an additional interest cost
of the subordinated financing and totaled $911,705, $676,469, and $561,317 at
December 31, 1993, 1994, and July 2, 1995, respectively. This cost will be
recognized during the term of the note based on the interest method of
amortization. Amortization totaling $29,583, $235,236 and $115,152 is included
with 1993, 1994, and the six months ended July 2, 1995 interest expense,
respectively.
Maturities of long-term debt are $20,782,304 in 1995 and $11,204,600 in
1997. The Company may prepay all or portions of long-term debt without penalty.
The revolving credit note is due December 31, 1995. Interest is payable
monthly at the prime rate plus 1.625 percent (10.125% and 7.625% at December 31,
1994 and 1993 respectively). At December 31, 1994 and July 2, 1995, borrowings
of $7,999,649 and $5,424,021, respectively, were available under the revolving
credit note.
The revolving line-of-credit and term loans are secured by substantially all
of the Company's assets. The common stock of the Company's subsidiaries has also
been pledged under the term loan.
The Company paid $2,662,000, $2,455,668, $3,136,114 and $2,214,584 in
interest costs during the years ended December 31, 1992, 1993 and 1994 and the
six months ended July 2, 1995, respectively.
(3) LEASE COMMITMENTS
The Company has an agreement with the Columbus Zoological Park Association
(Zoo) to lease and operate Wyandot Lake amusement park located near Columbus,
Ohio. There are five years remaining on this lease which has two renewable
option periods of four years each. The agreement calls for minimum annual rent
payments of $100,000 plus a percentage of gross receipts in excess of
$2,000,000. Rent expense relating to this agreement totaled $216,000, $287,000,
$282,000 and $71,000 in 1992, 1993 and 1994 and the six months ended July 2,
1995, respectively. Additionally, the Company must incur minimum annual
expenditures of $50,000 to maintain or improve the appearance of the Park.
F-30
<PAGE>
FUNTIME PARKS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(3) LEASE COMMITMENTS
Future minimum annual lease payments under noncancelable operating leases
with initial or remaining terms of one year or more as of December 31, 1994,
1993 and 1992 are as follows:
OPERATING
LEASES
---------
1995............................................................ $ 322,000
1996............................................................ 286,000
1997............................................................ 240,000
1998............................................................ 144,000
1999............................................................ --
---------
Total minimum lease payments.................................... $ 992,000
---------
---------
Total rent expense was approximately $462,000, $466,000 and $518,000 in
1992, 1993, and 1994 respectively. Total rent expense was approximately $216,000
and $221,000 during the six months ended July 3, 1994 and July 2, 1995,
respectively.
(4) INCOME TAXES
The effective income tax rate varied from the statutory federal income tax
rate as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER
31
---------------------
1994 1993 1992
---- ----- ----
<S> <C> <C> <C>
Statutory federal income tax rate...................................... 35.0% 35.0% 34.0%
State and local income taxes, net of federal income tax benefit........ 10.0 5.0 5.0
Depreciation on differences between purchase price and
tax basis of assets.................................................. 36.1 10.3 39.1
Other, net............................................................. (4.7) (13.7) 2.7
---- ----- ----
Effective income tax rate.............................................. 76.4% 36.6% 80.8%
---- ----- ----
---- ----- ----
</TABLE>
Significant components of the Company's deferred tax liabilities and assets
are as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------- JULY 2,
1993 1994 1995
------------ ------------ ------------
<S> <C> <C> <C>
Deferred tax liabilities:
Accelerated depreciation..................... $(10,368,000) $ (9,860,000) $ (9,460,000)
Inventory purchases.......................... (349,000) (292,000) (292,000)
Subordinated debt discount................... (355,000) (263,000) (263,000)
Other........................................ (309,000) (171,000) (171,000)
------------ ------------ ------------
(11,381,000) (10,586,000) (10,186,000)
Deferred tax assets:
Net operating loss carryforwards............. 2,160,000 1,319,000 3,640,945
Tax credits.................................. 1,554,000 2,224,000 2,224,000
Accrued liabilities.......................... 570,000 338,000 338,000
Deferred compensation........................ 158,000 173,000 173,000
Litigation accrual........................... 195,000 -- --
Deferred revenue............................. 195,000 195,000 195,000
Other........................................ 90,000 163,000 163,000
------------ ------------ ------------
4,922,000 4,412,000 6,733,945
Valuation allowance............................ (897,000) (1,031,000) (1,031,000)
------------ ------------ ------------
Net deferred tax assets........................ 4,025,000 3,381,000 5,702,945
------------ ------------ ------------
Net deferred taxes............................. $ (7,356,000) $ (7,205,000) $ (4,483,055)
------------ ------------ ------------
------------ ------------ ------------
</TABLE>
F-31
<PAGE>
FUNTIME PARKS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(4) INCOME TAXES--(CONTINUED)
Management believes that the timing of the reversal of its deferred tax
liabilities, principally relating to accelerated depreciation, will more likely
than not be sufficient to recognize fully its deferred tax assets, except for
certain New York net operating loss carryforwards. The valuation allowance
included with net deferred taxes at December 31, 1994 relates primarily to these
assets. The turnaround of the remaining deferred tax assets, primarily net
operating loss and tax credit carryforwards, will occur over an extended period
of time and as a result will be realized for tax purposes over those future
periods and beyond.
The 1994 current federal provision represents Alternative Minimum Tax (AMT)
payable. Regular tax was reduced to a minor amount with a net operating loss
carryforward not available for AMT purposes. AMT income was further increased by
deprecation adjustments required by the AMT system.
The income tax provision for 1992 includes a charge in lieu of income taxes
of $676,000, representing taxes which would have been provided in the absence of
net operating loss carryforwards. The net operating loss carryforwards utilized
in 1992 were generated prior to the Company's purchase of Funtime, Inc. and
Subsidiaries and therefore, were used to reduce the Company's carrying amount of
Funtime, Inc.'s fixed assets.
For federal income tax purposes, the Company has net operating loss and
investment tax credit carryforwards that expire as follows:
NET OPERATING INVESTMENT
LOSS TAX CREDIT
CARRYFORWARDS CARRYFORWARDS
------------- -------------
1995........................................... $ $20,000
1996........................................... 22,000
1997........................................... 25,000
1998........................................... 12,000
2002........................................... 1,905,000
------------- -------------
$ 1,905,000 $79,000
------------- -------------
------------- -------------
The utilization of the carryforwards expiring prior to 2003 is limited to
the future taxable income or income taxes payable of the respective subsidiary
which generated the loss or credit. Additionally, alternative minimum tax
credits of approximately $2,224,000 are available to offset the Company's
regular tax liability in future years.
The Company made income tax payments of approximately $1,491,000, $1,312,000
and $1,306,000 in 1992, 1993 and 1994, respectively. The Company also received
income tax refunds in 1994 of approximately $257,000.
(5) EMPLOYEE BENEFITS
The Company sponsors a defined contribution pension plan covering all
employees meeting specified age and service requirements. The Company's
contributions under this plan are 100% of the first 2% of each qualified
employee's salary plus an additional matching requirement of 25% of the next 6%
of the employee's contribution. Expense recorded under this plan amounted to
$95,000, $115,000, $114,000 and $59,000 in 1992, 1993, 1994 and the six months
ended July 2, 1995, respectively.
F-32
<PAGE>
FUNTIME PARKS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(6) OTHER CURRENT ASSETS AND ACCRUED LIABILITIES
The components of other current assets are as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1993 1994 JULY 2, 1995
-------- -------- ------------
<S> <C> <C> <C>
Prepaid maintenance and expenses......................... $652,243 $430,459 $476,232
Other.................................................... 104,940 159,738 107,065
-------- -------- ------------
Total other current assets............................... $757,183 $590,197 $583,297
-------- -------- ------------
-------- -------- ------------
</TABLE>
The components of other accrued liabilities are as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------
1993 1994 JULY 2, 1995
---------- ---------- ------------
<S> <C> <C> <C>
Deferred revenue..................................... $ 642,967 $ 705,745 $ 2,908,411
Other................................................ 1,480,165 1,865,457 1,450,330
---------- ---------- ------------
Total other accrued liabilities...................... $2,123,132 $2,571,202 $ 4,358,741
---------- ---------- ------------
---------- ---------- ------------
</TABLE>
(7) COMMITMENTS AND CONTINGENCIES
The estimated cost to complete construction in progress as of July 2, 1995
is $-0-.
During 1988, a lawsuit was brought against the former Board of Directors of
Funtime, Inc. by several minority shareholders challenging the adequacy of the
$7 per share price of the 1987 merger of Funtime, Inc. into a subsidiary of the
Company. The plaintiffs were demanding damages and compensation from each
director of Funtime, Inc. as well as attorney fees, expenses and costs. The
Company recorded a reserve totaling $500,000 during 1988 to indemnify the former
Board of Directors of Funtime, Inc. for defense costs and for losses that may be
incurred in connection with this lawsuit. In 1994, $761,000 of litigation costs
were incurred of which $261,000 were charged to operations, the remaining
portion was charged against the reserve. Legal costs incurred in 1993 and 1992
totaled $38,000 and $48,000, respectively. In 1994, the Company agreed to pay
the minority shareholders $2,150,000 which was accounted for as additional
purchase price and reflected as additional property and equipment. The Company
paid $750,000 relating to this settlement in 1994. The remainder of the
settlement is due in two installments of $700,000 in 1995 and 1996.
(8) REDEEMABLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY
On April 11, 1994 1,213 warrants were exercised to purchase 1,213 shares of
common stock for $1 per share. At December 31, 1994, 900 warrants were
outstanding which grant the holders the right to purchase 900 shares of the
Company's common stock. The 900 warrants outstanding are comprised of two
agreements. The first warrant agreement, which expires on November 12, 2003,
provides the right to purchase 783 shares of common stock at $894.44 per share,
upon the occurrence of certain events as stated in the warrant agreement. Such
events principally include the Company's default under the financing agreement
dated November 12, 1993, amended October 5, 1994, or action which dilutes the
aggregate ownership of the Company's outstanding common stock held by the
current principal stockholders to less than 50%.
F-33
<PAGE>
FUNTIME PARKS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(8) REDEEMABLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY--(CONTINUED)
The second warrant agreement, which expires on December 31, 1997, provides
the right to purchase 117 shares of common stock at $1 per share, upon the
occurrence of certain events as stated in the warrant agreement. Such events
principally include the Company's default under the financing agreement dated
November 12, 1993, amended October 5, 1994, or action which dilutes the
aggregate ownership of the Company's outstanding common stock held by the
current principal stockholders to less than 50%. Effective January 1, 1994, the
warrantholder under this agreement has the right to require the Company to
purchase the warrants (put option) at an amount determined by a nationally
recognized investment banking firm. The estimated value of this put option is
included as a component of stockholders' equity at December 31, 1993 and 1994
and July 2, 1995.
At December 31, 1992, redeemable preferred stock included Series A and
Series B senior and junior shares at $.01 par value. These shares were recorded
at a liquidation value of $1,000 per share. All authorized Series A shares were
issued and outstanding. Authorized Series B preferred stock included 7,000
senior and 2,500 junior shares. Issued and outstanding Series B preferred stock
included 3,027.78 senior and 1,139.175 junior shares.
On November 12, 1993, the Company redeemed all junior preferred stock (2,500
shares Series A; and 1,139 shares Series B) held by the lender in exchange for
long-term debt and redeemed all senior preferred stock (7,000 shares Series A;
and 3,027 Series B) in exchange for subordinated debt.
A provision of the 1993 financing agreement required the Company to redeem
783 then outstanding warrants, for $700,000.
The transferability of the Company's common stock is restricted in
accordance with the terms of a stockholder agreement. Under this agreement, the
death or termination of employment of a stockholder obligates the stockholder or
their legal representative to offer to sell the shares owned to the Company at a
price established by the agreement.
(9) RELATED PARTY TRANSACTIONS
In January 1993, the Company entered into a three year agreement with an
advertising agency (the "Agency") for whom a director and stockholder of the
Company is also a director. The agreement appoints the Agency as the Company's
principal advertising agency which entitles it to receive compensation for the
reimbursement of costs incurred plus commissions. Agency commissions amounted to
approximately $633,000, $522,000, $518,000 and $150,000 in 1992, 1993, 1994 and
the six months ended July 2, 1995, respectively. Other costs paid to the Agency
in 1995, 1994, 1993 and 1992, represented reimbursement of expenses paid by the
Agency on behalf of the Company. The Agency served as the Company's principal
advertising agency over the past 20 years and it is management's opinion that
this agreement was negotiated at arms-length.
The subordinated debtholder's president serves on the Company's Board of
Directors.
(10) STOCK OPTIONS
Effective April 26, 1988, the Company granted certain key executives options
to purchase 80 shares of the Company's common stock for $1,000 per share. The
options expire on various dates from May 31, 1994 to November 30, 1996 and are
contingent upon continued employment with the Company. During 1994, 32 of these
options were exercised and three expired unexercised.
F-34
<PAGE>
FUNTIME PARKS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(10) STOCK OPTIONS--(CONTINUED)
During the second quarter of 1995 20 of these options were exercised. At
December 31, 1994 and July 2, 1995, 45 and 25 of these options remain
outstanding, respectively.
(11) PERFORMING ARTS CENTER
Beginning in 1993, the Company participated with an entertainment company in
the construction and operation of a performing arts center (the Center) located
at Darien Lake Park. On October 31, 1994, the Company purchased for $514,000 the
entertainment company's portion of the Center. At December 31, 1994 and July 2,
1995 the Company's investment in property and equipment at the Center
approximated $1,500,000 and $1,800,000 respectively. The Company is seeking a
third-party to share in the revenues and expenses of the Center.
As a part of establishing the Center, the Company entered into a separate
agreement with a food and beverage vendor. The agreement provides the vendor
with the exclusive right to sell food and beverage products to patrons at all
Center sponsored events through May 31, 2003 in exchange for a portion of such
sales. Under the agreement, the Company received a payment of $500,000 in 1993
and $300,000 in 1995 from the vendor. These payments represent an advance of the
Company's future proceeds from the Center which was used during 1993 and 1995 to
fund a portion of the construction costs of the Center. The Company has
committed to reimburse the advance at an annual rate of $100,000 for 1993 and
1994 and $75,000 per year thereafter contingent upon the Centers' ability to
generate sufficient profit. At December 31, 1994 and July 2, 1995, the
commitment totaled $300,000, and $563,000 the current portion of which has been
accounted for in other accrued liabilities and the non-current portion has been
accounted for in other long-term liabilities. Either party may terminate the
contract subsequent to October 1, 1998.
(12) QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
The Company's unaudited results of operations for 1994 and 1993 are set
forth below.
<TABLE>
<CAPTION>
NET INCOME NET INCOME
(LOSS) APPLICABLE (LOSS) PER
QUARTER TOTAL GROSS PROFIT NET INCOME TO COMMON COMMON
ENDED REVENUE (LOSS) (LOSS) SHAREHOLDER SHARE
----------- ----------- ------------ ------------ ----------------- ----------
<S> <C> <C> <C> <C> <C> <C>
1995........... April 2 $ 107,707 $ (4,556,368) $ (4,222,504) $(4,222,504) $(1,493.11)
July 2 15,045,560 3,773,416 (34,891) (34,891) (12.28)
----------- ----------- ------------ ------------ ----------------- ----------
1994........... April 3 136,106 (4,477,124) (3,888,563) (3,888,563) (2,298.21)
July 3 15,122,233 4,004,194 (638) (638) (.23)
October 2 34,557,975 18,417,293 7,854,358 7,854,358 2,677.93
December 31 618,357 (3,308,650) (3,701,961) (3,701,961) (1,302.13)
----------- ----------- ------------ ------------ ----------------- ----------
1993........... April 4 180,406 (3,843,931) (6,357,320)* (6,357,320)* (3,761.73)
July 4 15,077,987 4,507,503 622,443 196,349 116.18
October 3 35,246,519 19,844,334 9,415,271 9,415,271 5,571.17
December 31 747,927 (3,645,260) (3,349,492) (3,349,492) (1,981.95)
----------- ----------- ------------ ------------ ----------------- ----------
</TABLE>
Gross profit (loss) is revenue less operating expenses, cost of sales and
depreciation.
* Includes a $3,509,000 charge for the cumulative effect of a change in
accounting method as described in Note 1.
(13) SUBSEQUENT EVENT
Pursuant to a merger agreement, the Company was acquired by Premier Parks
Inc for approximately $60 million, subject to certain post-closing adjustments
related to the 1995 operations of the Company's acquired theme parks.
F-35
<PAGE>
FUNTIME PARKS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(13) SUBSEQUENT EVENT--(CONTINUED)
On August 15, 1995 pursuant to the merger with Premier Parks, Inc, all
outstanding warrants and options referred to in Notes 8 and 10, were exercised.
If the common shares issued on August 10, 1995, with respect to these warrants
and options had been outstanding for all periods presented, the number of
weighted average shares outstanding and income (loss) per share would have been
as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, --------------------------
---------------------------- JULY 3, JULY 2,
1992 1993 1994 1994 1995
------- ------- ------ ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
Weighted average number of shares
outstanding........................... 3,848 3,848 3,502 3,690 3,767
Income (loss) per common share.......... $(88.51) $(24.74) $75.16 $ (1,053.98) $ (1,130.18)
</TABLE>
F-36
<PAGE>
229 EAST 79TH STREET ASSOCIATES LP
FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
AND
SIX MONTHS ENDED JUNE 30, 1995 AND 1994 (UNAUDITED)
F-37
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To the Partners
229 East 79th Street Associates LP
New York, New York
We have audited the accompanying balance sheets of 229 East 79th Street
Associates LP (a Delaware limited partnership) as of December 31, 1994 and 1993,
and the related statements of revenues and expenses, changes in partners'
capital (deficit), and cash flows for the years then ended. We have also audited
the accompanying statements of revenues and expenses and cash flows for the year
ended December 31, 1992. These financial statements are the responsibility of
the Partnership's management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of 229 East 79th Street Associates
LP as of December 31, 1994 and 1993, and the results of its operations and its
cash flows for the three years ended December 31, 1994, 1993 and 1992 in
conformity with generally accepted accounting principles.
TACKMAN, PILLA, ARNONE AND COMPANY, P.C.
March 4, 1995
except for Note H, as to which the date is September 29, 1995
Stamford, CT.
F-38
<PAGE>
229 EAST 79TH STREET ASSOCIATES LP
BALANCE SHEETS
DECEMBER 31, 1994 AND 1993
JUNE 30, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
1994 1993 JUNE 30, 1995
----------- ----------- -------------
UNAUDITED
<S> <C> <C> <C>
ASSETS
INVESTMENT IN 229 EAST 79 LIMITED................. $ 3,673,118 $ 4,182,022 $ 3,514,608
----------- ----------- -------------
OTHER ASSETS
Cash............................................ 902 3,626 9,683
Tenants' security deposits--Cash................ 8,768 9,489 8,798
Receivable from tenants......................... 1,774 2,594 2,935
Partners' loan receivable....................... 1,694 205 2,528
----------- ----------- -------------
TOTAL OTHER ASSETS............................ 13,138 15,914 23,944
----------- ----------- -------------
TOTAL ASSETS...................................... $ 3,686,256 $ 4,197,936 $ 3,538,552
----------- ----------- -------------
----------- ----------- -------------
LIABILITIES AND PARTNERS' DEFICIT
MORTGAGE PAYABLE.................................. $ 788,906 $ 1,283,368 $ 673,386
----------- ----------- -------------
OTHER LIABILITIES
Accrued expenses................................ 71,111 62,256 51,572
Tenants' security deposits...................... 8,768 9,383 8,798
Deferred revenue................................ 7,272 30,915 815
Loans payable--Partners......................... 3,194,810 2,989,283 3,285,880
Interest payable--Partners...................... 1,703,787 1,300,016 1,914,682
Tenants' credits................................ 931 -- 919
----------- ----------- -------------
TOTAL OTHER LIABILITIES....................... 4,986,679 4,391,853 5,262,666
----------- ----------- -------------
TOTAL LIABILITIES................................. 5,775,585 5,675,221 5,936,052
PARTNERS' DEFICIT................................. (2,089,329) (1,477,285) (2,397,500)
----------- ----------- -------------
TOTAL LIABILITIES AND PARTNERS' DEFICIT........... $ 3,686,256 $ 4,197,936 $ 3,538,552
----------- ----------- -------------
----------- ----------- -------------
</TABLE>
See accompanying notes.
F-39
<PAGE>
229 EAST 79TH STREET ASSOCIATES LP
STATEMENTS OF REVENUES AND EXPENSES
YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
SIX MONTHS ENDED JUNE 30, 1995 AND 1994 (UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
------------------------------
1994 1993 1992 JUNE 30, 1995 JUNE 30, 1994
--------- --------- --------- ------------- -------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
REVENUES
Rental income............ $ 269,902 $ 270,664 $ 298,833 $ 140,183 $ 131,228
Senior citizen tax
abatement.............. -- -- 44,749 -- --
Miscellaneous income..... 23,973 29,564 3,999 2,574 8,957
--------- --------- --------- ------------- -------------
TOTAL REVENUES......... 293,875 300,228 347,581 142,757 140,185
--------- --------- --------- ------------- -------------
OPERATING EXPENSES
Interest expense......... 100,232 161,091 220,128 34,632 60,787
Interest expense--
Partners............... 403,771 371,899 333,276 210,891 198,566
Management fees.......... 11,032 11,008 11,733 5,662 5,494
Electricity.............. 247 1,714 773 -- 248
Maintenance.............. 662 1,974 2,086 294 901
Painting and
decorating............. 4,356 7,990 7,269 998 --
Repairs.................. 4,915 1,616 6,591 1,784 1,878
Legal and accounting
fees................... 12,869 12,915 27,599 12,371 7,415
Advertising.............. 3,093 4,476 3,372 -- 1,317
Miscellaneous taxes...... 25,155 97 20,000 -- 100
Co-op maintenance fees... 288,867 307,769 294,754 146,086 142,805
Miscellaneous............ 635 2,115 2,704 220 492
Depreciation............. 82,292 94,479 104,525 38,185 43,144
Amortization--Deferred
organization costs..... -- 5,373 6,567 -- --
--------- --------- --------- ------------- -------------
TOTAL EXPENSES......... 938,126 984,516 1,041,377 451,123 463,147
--------- --------- --------- ------------- -------------
LOSS BEFORE OTHER INCOME... (644,251) (684,288) (693,796) (308,366) (322,962)
Profit (loss) on sale of
co-op shares........... 32,207 (43,003) 54,936 195 32,980
--------- --------- --------- ------------- -------------
NET LOSS................... $(612,044) $(727,291) $(638,860) $(308,171) $(289,982)
--------- --------- --------- ------------- -------------
--------- --------- --------- ------------- -------------
</TABLE>
See accompanying notes.
F-40
<PAGE>
229 EAST 79TH STREET ASSOCIATES LP
STATEMENT OF CHANGES IN PARTNERS' DEFICIT
YEAR ENDED DECEMBER 31, 1993
<TABLE>
<CAPTION>
PARTNERS' PARTNERS'
INITIAL DEFICIT DEFICIT
CAPITAL BEGINNING NET END
PERCENTAGE CONTRIBUTION OF YEAR LOSS OF YEAR
---------- ------------ --------- --------- -----------
<S> <C> <C> <C> <C> <C>
GENERAL PARTNERS
George S. Kaufman............ 4.40 $ 176,000 $ (33,000) $ (32,001) $ (65,001)
Edward J. Hart............... 2.00 80,000 (15,000) (14,546) (29,546)
Ivor Braka................... 3.50 140,000 (26,250) (25,455) (51,705)
Issac Ralph Dweck............ 2.25 90,000 (16,875) (16,364) (33,239)
Jack Ralph Dweck............. 2.25 90,000 (16,875) (16,364) (33,239)
Hank Dweck................... 1.50 60,000 (11,250) (10,909) (22,159)
Isaac Robert Dweck........... 1.50 60,000 (11,250) (10,909) (22,159)
Richard Dweck................ 1.50 60,000 (11,250) (10,909) (22,159)
David Chabbott............... 1.00 40,000 (7,500) (7,273) (14,773)
The Tierco Group, Inc........ 40.00 1,600,000 (299,997) (290,917) (590,914)
Coreal N.V., Inc............. 40.00 1,600,000 (299,997) (290,917) (590,914)
LIMITED PARTNER
George S. Kaufman............ .10 4,000 (750) (727) (1,477)
---------- ------------ --------- --------- -----------
100.00 $ 4,000,000 $(749,994) $(727,291) $(1,477,285)
---------- ------------ --------- --------- -----------
---------- ------------ --------- --------- -----------
</TABLE>
See accompanying notes.
F-41
<PAGE>
229 EAST 79TH STREET ASSOCIATES LP
STATEMENT OF CHANGES IN PARTNERS' DEFICIT
YEAR ENDED DECEMBER 31, 1994
<TABLE>
<CAPTION>
PARTNERS' PARTNERS'
INITIAL DEFICIT DEFICIT
CAPITAL BEGINNING NET END
PERCENTAGE CONTRIBUTION OF YEAR LOSS OF YEAR
---------- ------------ ----------- --------- -----------
<S> <C> <C> <C> <C> <C>
GENERAL PARTNERS
George S. Kaufman........... 4.40 $ 176,000 $ (65,001) $ (26,930) $ (91,931)
Edward J. Hart.............. 2.00 80,000 (29,546) (12,241) (41,787)
Ivor Braka.................. 3.50 140,000 (51,705) (21,422) (73,127)
Issac Ralph Dweck........... 2.25 90,000 (33,239) (13,771) (47,010)
Jack Ralph Dweck............ 2.25 90,000 (33,239) (13,771) (47,010)
Hank Dweck.................. 1.50 60,000 (22,159) (9,181) (31,340)
Isaac Robert Dweck.......... 1.50 60,000 (22,159) (9,181) (31,340)
Richard Dweck............... 1.50 60,000 (22,159) (9,181) (31,340)
David Chabbott.............. 1.00 40,000 (14,773) (6,120) (20,893)
The Tierco Group, Inc....... 40.00 1,600,000 (590,914) (244,817) (835,731)
Coreal N.V., Inc............ 40.00 1,600,000 (590,914) (244,817) (835,731)
LIMITED PARTNER
George S. Kaufman........... .10 4,000 (1,477) (612) (2,089)
---------- ------------ ----------- --------- -----------
100.00 $ 4,000,000 $(1,477,285) $(612,044) $(2,089,329)
---------- ------------ ----------- --------- -----------
---------- ------------ ----------- --------- -----------
</TABLE>
See accompanying notes.
F-42
<PAGE>
229 EAST 79TH STREET ASSOCIATES LP
STATEMENT OF CHANGES IN PARTNERS' DEFICIT
SIX MONTHS ENDED JUNE 30, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
PARTNERS'
INITIAL DEFICIT PARTNERS'
CAPITAL BEGINNING DEFICIT END
PERCENTAGE CONTRIBUTION OF PERIOD NET LOSS OF PERIOD
---------- ------------ ----------- --------- -----------
<S> <C> <C> <C> <C> <C>
GENERAL PARTNERS
George S. Kaufman....... 4.40 $ 176,000 $ (91,931) $ (13,559) $ (105,490)
Edward J. Hart.......... 2.00 80,000 (41,787) (6,163) (47,950)
Ivor Braka.............. 3.50 140,000 (73,127) (10,786) (83,913)
Isaac Ralph Dweck....... 2.25 90,000 (47,010) (6,934) (53,944)
Jack Ralph Dweck........ 2.25 90,000 (47,010) (6,934) (53,944)
Hank Dweck.............. 1.50 60,000 (31,340) (4,623) (35,963)
Isaac Robert Dweck...... 1.50 60,000 (31,340) (4,623) (35,963)
Richard Dweck........... 1.50 60,000 (31,340) (4,623) (35,963)
David Chabbott.......... 1.00 40,000 (20,893) (3,082) (23,975)
The Tierco Group, Inc... 40.00 1,600,000 (835,731) (123,268) (958,999)
Coreal N.V., Inc........ 40.00 1,600,000 (835,731) (123,268) (958,999)
LIMITED PARTNER
George S. Kaufman....... .10 4,000 (2,089) (308) (2,397)
---------- ------------ ----------- --------- -----------
100.00 $4,000,000 $(2,089,329) $(308,171) $(2,397,500)
---------- ------------ ----------- --------- -----------
---------- ------------ ----------- --------- -----------
</TABLE>
See accompanying notes.
F-43
<PAGE>
229 EAST 79TH STREET ASSOCIATES
STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
SIX MONTHS ENDED JUNE 30, 1995 AND 1994 (UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
------------------------------
1994 1993 1992 JUNE 30, 1995 JUNE 30, 1994
--------- --------- --------- ------------- -------------
UNAUDITED
------------------------------
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss.............................. $(612,044) $(727,291) $(638,860) $(308,171) $(289,982)
--------- --------- --------- ------------- -------------
Adjustments to reconcile net loss to
net cash used by operating
activities:
Depreciation........................ 82,292 99,852 111,092 38,185 43,144
Loss (profit) on sale of co-op
shares............................ (32,207) 43,003 (54,936) (195) (32,980)
Gain on sale of furniture and
equipment......................... (1,362) -- -- -- (1,362)
Decrease (increase) in receivable
from tenants...................... 820 8,613 (6,921) (1,161) 1,868
Change in tenants' security
deposits.......................... 106 (106) -- -- --
Increase (decrease) in bank
overdraft......................... -- (2,251) 2,251 -- --
Increase (decrease) in accrued
expenses.......................... 8,855 (13,016) 44,201 (19,535) 735
Increase in interest
payable--Partners................. 403,771 371,899 333,276 210,891 198,566
Increase (decrease) in tenants'
credits........................... 931 -- -- (12) --
Decrease in deferred revenue........ (23,643) (4,205) (1,093) (6,457) (12,371)
--------- --------- --------- ------------- -------------
Total adjustments................. 439,563 503,789 427,870 221,716 197,600
--------- --------- --------- ------------- -------------
NET CASH USED BY OPERATING
ACTIVITIES........................ (172,481) (223,502) (210,990) (86,455) (92,382)
--------- --------- --------- ------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES
Note receivable payment............... -- -- 6,385 -- --
Cash payments for the purchase of
property............................ (12,500) -- (6,500) -- --
Proceeds of sale of co-op shares...... 470,636 411,174 640,385 120,520 471,409
Proceeds of sale of furniture and
equipment........................... 2,045 -- -- -- 2,045
--------- --------- --------- ------------- -------------
NET CASH PROVIDED BY INVESTING
ACTIVITIES........................ 460,181 411,174 640,270 120,520 473,454
--------- --------- --------- ------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES
Mortgage principal payments--BRT
Realty.............................. (494,462) (470,384) (738,127) (115,520) (494,463)
Increase in loans payable--Partners... 205,527 286,273 307,300 91,070 127,247
Decrease (increase) in partners' loan
receivable.......................... (1,489) 65 (270) (834) (579)
--------- --------- --------- ------------- -------------
NET CASH USED BY FINANCING
ACTIVITIES........................ (290,424) (184,046) (431,097) (25,284) (367,795)
--------- --------- --------- ------------- -------------
NET CHANGE IN CASH...................... (2,724) 3,626 (1,817) 8,781 13,277
CASH--BEGINNING OF YEAR................. 3,626 -- 1,817 902 3,626
--------- --------- --------- ------------- -------------
CASH--END OF YEAR....................... $ 902 $ 3,626 $ -- $ 9,683 $ 16,903
--------- --------- --------- ------------- -------------
--------- --------- --------- ------------- -------------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash paid during the year for
interest.......................... $ 104,272 $ 165,091 $ 226,279 $ 35,594 $ 64,087
</TABLE>
See accompanying notes.
F-44
<PAGE>
229 EAST 79TH STREET ASSOCIATES LP
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1994, 1993 AND 1992
SIX MONTHS ENDED JUNE 30, 1995 AND 1994 (UNAUDITED)
NOTE A--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accounting principles followed by 229 East 79th Street Associates LP,
and the methods of applying those principles which materially affect the
determination of financial position, results of operations, and changes in cash
flows, are summarized below:
1. Conversion to Cooperative Housing
On December 13, 1989, the Partnership sold its land and 89-unit apartment
building, located in New York City, to 229 East 79 Limited, a New York
cooperative housing corporation, in exchange for all of the issued and
outstanding shares, 70,751 shares, of the co-op's stock. As of December 31,
1994, the Partnership had sold 63 units or 50,553 shares. During the first six
months of 1995, one unit or 596 shares were sold.
2. Shares of 229 East 79 Limited
The Partnership at December 31, 1994 owns 20,198 shares (28.5% of total
shares) or 26 units of 229 East 79 Limited. At June 30, 1995, the Partnership
owned 19,602 shares (27.7% of total shares) or 25 units. The shares are recorded
at cost. The Partnership has allocated the cost of the shares between
depreciable (the apartments) and non-depreciable costs. Depreciation of the
apartments is computed on a straight-line method over an estimated useful life
of 31.5 years.
3. Basis of Accounting
The Partnership maintains its books and prepares its tax returns on the
accrual basis of accounting. However, 1994 financial statement and tax return
results of operations differ in the calculation of depreciation and in the
profit (loss) on disposition of co-op shares.
4. Income Taxes
The accompanying financial statements do not reflect a provision or
liability for federal income taxes as the partners are taxed individually on
their share of partnership earnings.
5. Revenues
The Partnership rents apartments to tenants on short-term leases. Revenues
are recognized monthly when billed.
F-45
<PAGE>
229 EAST 79TH STREET ASSOCIATES LP
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1994, 1993 AND 1992
SIX MONTHS ENDED JUNE 30, 1995 AND 1994 (UNAUDITED)
NOTE B--INVESTMENT IN 229 EAST 79 LIMITED
The investment in 229 East 79 Limited is comprised of the following:
<TABLE>
<CAPTION>
1994 1993 JUNE 30, 1995
---------- ---------- -------------
UNAUDITED
<S> <C> <C> <C>
Non-depreciable costs........... $1,589,011 $1,777,036 $ 1,542,123
Apartments...................... 2,478,849 2,758,189 2,393,572
Office furniture................ -- 2,272 --
---------- ---------- -------------
4,067,860 4,537,497 3,935,695
---------- ---------- -------------
Less accumulated depreciation... 394,742 355,475 421,087
---------- ---------- -------------
Net Book Value.................. $3,673,118 $4,182,022 $ 3,514,608
---------- ---------- -------------
---------- ---------- -------------
</TABLE>
NOTE C--PROFIT (LOSS) ON SALE OF CO-OP SHARES
The Partnership sold three apartments (2,390 shares) in 1994, three
apartments (2,403 shares) in 1993 and four apartments (3,022 shares) in 1992 of
229 East 79 Limited. For the six months ended June 30, 1995 and 1994,
respectively, the Partnership sold 1 unit (596 shares) and 3 units (2,390
shares). The financial statement profit (loss) on sale of the shares is computed
as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
------------------------------
1994 1993 1992 JUNE 30, 1995 JUNE 30, 1994
-------- -------- -------- ------------- -------------
UNAUDITED
<S> <C> <C> <C> <C> <C>
Selling price................. $552,000 $535,000 $816,000 $ 150,000 $ 552,000
Less expenses of sale......... 81,364 123,826 175,615 29,480 80,591
-------- -------- -------- ------------- -------------
Proceeds of sale.............. 470,636 411,174 640,385 120,520 471,409
Less land and apartment, net
of accumulated depreciation. 438,429 454,177 585,449 120,325 438,429
-------- -------- -------- ------------- -------------
Profit (loss) on Sale......... $ 32,207 $(43,003) $ 54,936 $ 195 $ 30,980
-------- -------- -------- ------------- -------------
-------- -------- -------- ------------- -------------
</TABLE>
NOTE D--MORTGAGE PAYABLE
On December 13, 1989, the Partnership borrowed $7,100,000 from BRT Realty
Trust, guaranteed by the general partners, with a maturity date of December 12,
1995. The mortgage bears interest at 13%.
On November 6, 1991, the mortgage was extended to December 31, 1995 and the
interest rate was reduced to 10% per annum. On May 11, 1995, the due date of the
mortgage was extended to December 31, 1997. Interest on the outstanding balance
is payable monthly. Mortgage principle is payable from available cash flow from
the sale of co-op shares. During 1994, the mortgage was reduced by $494,462 and
the outstanding balance as of December 31, 1994 is $788,906.During the first six
months of 1995, the mortgage was reduced by $115,520 and the outstanding balance
at June 30, 1995 is $673,386.
F-46
<PAGE>
229 EAST 79TH STREET ASSOCIATES LP
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1994, 1993 AND 1992
SIX MONTHS ENDED JUNE 30, 1995 AND 1994 (UNAUDITED)
NOTE E--RELATED PARTY TRANSACTION
The Partnership's corporate managing agent is wholly-owned by the
Partnership's managing general partner. Management fees of $11,032 in 1994,
$11,008 in 1993, $11,733 in 1992 and $5,662 and $5,494 in the six months ended
June 30, 1995 and 1994, respectively, based on 4% of rents collected are
included in the statement of revenues and expenses. The corporate managing agent
also receives certain brokerage commissions on the sale of the apartments.
NOTE F--PARTNERS' LOANS PAYABLE
The partners made additional loans in 1994, 1993 and 1992 of $205,527,
$286,273, and $307,300, respectively, and $91,070 in the first six months of
1995. The loan balance at December 31, 1994 is $3,194,810 and at June 30, 1995
is $3,285,880.
The loans by partners bear interest at an annual rate equal to the interest
on the mortgage plus three (3%) percent, or a total of 13% beginning November 1,
1989 and are non-recourse to the other general partners. Though no interest has
been paid, interest payable to partners accrued in the financial statements at
December 31, 1994 and June 30, 1995 totals $1,703,787 and $1,914,682,
respectively.
NOTE G--COMMITMENTS
In 1994 the Partnership agreed to pay a tenant $12,500 for the surrender of
the tenant s lease. At December 31, 1994, the final payment of $5,000 has been
accrued and was paid on January 26, 1995.
NOTE H--SUBSEQUENT EVENT
Subsequent to the original issuance of the qualified auditor's report dated
March 4, 1995, the Partnership on September 29, 1995 changed its method of
accounting for interest on partners loans. Accordingly, the financial statements
have been revised to include interest expense on partners loans of $403,771,
$371,899 and $333,276 for 1994, 1993 and 1992, respectively and for the six
months ended June 30, 1995 and 1994 respectively, $210,891 and $198,566.
Cumulative through December 31, 1994 and June 30, 1995, partners deficit
reflects accrued interest payable to partners of $1,703,787 and $1,914,682,
respectively.
F-47
<PAGE>
NO PERSON HAS BEEN AUTHORIZED TO GIVE OFFER FOR ALL OUTSTANDING
ANY INFOR MATION OR TO MAKE ANY 12% SENIOR NOTES DUE 2003
REPRESENTATIONS OTHER THAN THOSE IN EXCHANGE FOR
CONTAINED IN THIS PROSPECTUS, AND, 12% SENIOR NOTES DUE 2003
IF GIVEN OR MADE, SUCH INFORMATION OF
OR REPRESENTATIONS MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY Premier Parks Inc.
THE COMPANY. THIS PROSPECTUS DOES
NOT CONSTITUTE AN OFFER TO SELL
OR A SOLICITATION OF ANY OFFER
TO BUY ANY SECURITIES OTHER
THAN THE SECURITIES TO WHICH IT
RELATES, OR ANY OFFER TO SELL OR [PREMIER PARKS LOGO]
THE SOLICITATION OF AN OFFER TO BUY
SUCH SECURITIES IN ANY CIRCUMSTANCES
IN WHICH SUCH OFFER OR SOLICITATION
IS UNLAWFUL. NEITHER THE DELIVERY OF
THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE AN IMPLICATION
THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE
DATE HEREOF OR THAT THE INFORMATION
CONTAINED HEREIN IS CORRECT AS OF ANY
TIME SUBSEQUENT TO ITS DATE.
- -------------------------------------------
TABLE OF CONTENTS
Available Information................ 2
Summary.............................. 3
Summary Pro Forma Financial Data..... 12
Summary Historical Financial Data.... 13
Risk Factors......................... 15
The Company.......................... 19
Use of Proceeds...................... 20
Capitalization....................... 21
Selected Historical Financial and
Operating Data...................... 22
Unaudited Pro Forma Combined
Financial Statements................ 25 Prospectus
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 32
Business............................. 38
Management........................... 58
Stock Ownership of Management and
Certain Beneficial Holders.......... 63
Certain Transactions................. 65
The Merger........................... 65
Capital Structure.................... 67
The Exchange Offer................... 69
Federal Income Tax Considerations.... 77
Description of The New Notes......... 78
Plan of Distribution................. 103
Legal Matters........................ 104
Experts.............................. 104 , 1995
Index to Consolidated Financial
Statements......................... F-1
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution.
The following table sets forth the expenses payable in connection with the
offering of the securities to be registered and offered hereby. All of such
expenses are estimates, other than the registration fee payable to the
Securities and Exchange Commission
Securities and Exchange Commission Fee . . . $ 31,034.48
Printing and Engraving Expenses . . . . . . 70,000.00
Legal Fees and Expenses . . . . . . . . . . 40,000.00
Exchange Agent Fees and Expenses . . . . . . 3,500.00
Accounting Fees and Expenses . . . . . . . . 20,000.00
Miscellaneous . . . . . . . . . . . . . . . 5,465.52
-----------
Total . . . . . . . . . . . . . . . . . 170,000.00
===========
Item 14. Indemnification of Directors and Officers.
Delaware law authorizes corporations to limit or to eliminate the personal
liability of directors to corporations and their stockholders for monetary
damages for breach of directors' fiduciary duty of care. The Certificate of
Incorporation of Premier Parks Inc. (the "Company"), limits the liability of
Company's directors to the Company or its stockholders to the fullest extent
permitted by the Delaware statute as in effect from time to time. Specifically,
directors of the Company will not be personally liable for monetary damages for
breach of a director's fiduciary duty as a director, except for liability (i)
for any breach of the director's duty of loyalty to the Company or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) for unlawful
payments of dividends or unlawful stock repurchases or redemptions as provided
in the Delaware law, or (iv) for any transaction from which the director derived
an improper personal benefit.
The By-laws of the Company provide that the Company shall indemnify its
officers and directors and former officers and directors to the fullest extent
permitted by the General Corporation Law of the State of Delaware. Pursuant to
the provisions of Section 145 of the General Corporation law of the State of
Delaware, the Company has the power to indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending, or
completed action, suit or proceeding (other than an action by or in the right of
the Company) by reason of the fact that he is or was a director, officer,
employee, or agent of the Company, against any and all expenses, judgments,
fines, and amounts paid in settlement actually and reasonably incurred in
connection with such action, suit, or proceeding. The power to indemnify
applies only if such person acted in good faith and in a manner he reasonably
believed to be in the best interest, or not opposed to the best interest, of the
Company and with respect to any criminal action or proceeding, had no reasonable
cause to believe his product was unlawful.
II-1
<PAGE>
The power to indemnify applies to actions brought by or in the right of the
Company as well, but only to the extent of defense and settlement expenses and
not to any satisfaction of a judgment or settlement of the claim itself, and
with the further limitation that in such actions no indemnification shall be
made in the event of any adjudication of negligence or misconduct unless the
court, in its discretion, believes that in light of all the circumstances
indemnification should apply.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the Company
pursuant to the foregoing provisions, or otherwise, the Company has been advised
that in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the Act and is
therefore unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment of the Company of expenses incurred or
paid by a director, officer of controlling person thereof in the successful
defense of any action, suit or proceeding) is asserted by a director, officer or
controlling person in connection with the securities being registered, the
Company will, unless in the opinion of its counsel the matter has been settled
by controlling precedent, submit to a court of appropriate jurisdiction the
question of whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
Item 15. Recent Sales of Unregistered Securities
On October 30, 1992, the Company (then known as The Tierco Group, Inc.)
issued and sold 11,000,000 shares of its common stock at a purchase price of
$1.00 per share. Of the shares sold, 3,500,000 shares were issued upon
conversion of certain indebtedness of the Company in the aggregate
principal amount of $3,500,000. The balance of the shares were issued for
cash. The shares were sold to 24 "accredited investors" as defined in
Regulation D under the Securities Act.
On March 8, 1993, the Company issued $7,000,000 principal amount of its
9.5% Senior Subordinated Convertible Notes (the "Notes") for $7,000,000 in
cash. The purchase price for the Notes was funded in July 1993. The Notes were
sold to 15 accredited investors.
In October 1994, the Company issued 3,584,509 shares of common stock to
nine accredited investors at a purchase price of $1.25 per share. Of such
shares, 485,437 shares were issued upon conversion of $655,340 principal amount
of certain indebtedness of the Company. The balance of the shares were issued
for cash.
On August 15, 1995, the Company sold 200,000 shares of its 7% Series A
Cumulative Convertible Preferred Stock ("Preferred Stock") to 13 accredited
investors for an aggregate purchase price of $20,000,000. Also on that date,
holders of $9,050,000 principal amount of indebtedness of the Company (including
the Notes) converted such indebtedness into 7,427,162 shares of common stock.
Exemption from registration with respect to the above-described sales by
the Company was claimed under Section 4(2) of the Securities Act regarding
transactions by an issuer not involving any public offering.
On August 15, 1995, the Company sold $90,000,000 aggregate principal
amount of 12% Senior Notes due 2003 (the "Old Notes") in a private
II-2
<PAGE>
placement in reliance of Section 4(2) under the Securities Act, at a price equal
to 100% of the stated principal amount of such Old Notes. The Old Notes were
immediately resold by the initial purchaser thereof in reliance on Rule 144a
under the Securities Act.
Item 16. Exhibits and Financial Statement Schedules
(3) Articles of Incorporation and By-Laws:
1. Certificate of Incorporation of Premier Parks Inc. ("Registrant")
dated March 24, 1981 -- incorporated by reference from Exhibit 3 to
Form 10-Q of Registrant for the quarter ended June 30, 1987.
2. Plan and Agreement of Merger of Registrant and Tierco, a Massachusetts
business trust, dated March 31, 1981 -- incorporated by reference from
Exhibit 3 to Form 10-Q of Registrant for the quarter ended June 30,
1987.
3. Certificate of Amendment of Certificate of Incorporation of Registrant
dated April 14, 1985 -- incorporated by reference from Exhibit 3 to
Form 10-Q of Registrant for the quarter ended June 30, 1987.
4. Certificate of Amendment of Certificate of Incorporation of Registrant
dated May 8, 1987 -- incorporated by reference from Exhibit 3 to
Form 10-Q of Registrant for the quarter ended June 30, 1987.
5. Certificate of Amendment of Certificate of Incorporation of Registrant
dated June 11, 1987 -- incorporated by reference from Exhibit 3 to
Form 10-Q of Registrant for the quarter ended June 30, 1987.
6. Certificate of Amendment of Certificate of Incorporation of Registrant
dated April 30, 1991 -- incorporated by reference from Exhibit 3(f) to
Form 10-K of Registrant for the year ended December 31, 1991.
7. Certificate of Amendment of Certificate of Incorporation of Registrant
dated June 30, 1992 -- incorporated by reference from Exhibit 3(g) to
Form 10-K of Registrant for the year ended December 31, 1992.
8. Certificate of Amendment of Certificate of Incorporation of
Registrant dated June 23, 1993 -- incorporated by reference
from Exhibit 3(a) to Form 10-Q of Registrant for the quarter
ended June 30, 1993.
9. Certificate of Amendment to Certificate of Incorporation dated
October 7, 1994 -- incorporated by reference from Exhibit 3(i) to Form
10-K of Registrant for the year ended December 31, 1994.
* 10. Certificate of Designation of Series A Cumulative Convertible
Preferred Stock of Registrant ("Preferred Stock") filed August 14,
1995.
- ---------------------
* Previously Filed
II-3
<PAGE>
11. By-laws of Registrant as amended through March 31, 1992 --
incorporated by reference from Exhibit 3(g) to Form 10-K of Registrant
for the year ended December 31, 1991.
* 12. Certificate of Incorporation of Tierco Maryland, Inc.
* 13. By-laws of Tierco Maryland, Inc.
* 14. Certificate of Incorporation of Tierco Water Park, Inc.
* 15. By-laws of Tierco Water Park, Inc.
* 16. Certificate of Incorporation of Frontier City Properties, Inc.
* 17. By-laws of Frontier City Properties, Inc.
* 18. Articles of Incorporation of Funtime Parks, Inc.
* 19. Code of Regulations of Funtime Parks, Inc.
* 20. Articles of Incorporation of Funtime, Inc.
* 21. Code of Regulations of Funtime, Inc.
* 22. Articles of Incorporation of Wyandot Lake, Inc.
* 23. Code of Regulations of Wyandot Lake, Inc.
* 24. Certificate of Incorporation of Darien Lake Theme Park and Camping
Resort, Inc.
* 25. By-laws of Darien Lake Theme Park and Company Resort, Inc.
* 26. Articles of Incorporation of D.L. Holdings, Inc.
* 27. Code of Regulations of D.L. Holdings, Inc.
(4) Instruments Defining the Rights of Security Holders, Including Indentures:
* 1. Credit Facility, dated August 15, 1995, among the Registrant, certain
subsidiaries thereof, Chemical Bank, The Merchant Bank of New York and
Chemical Bank as agent (including forms of guarantee agreements,
security agreements and pledge agreements)
* 2. Indenture dated as of August 15, 1995, among the Registrant,
certain subsidiaries of the Registrant named therein and
United States Trust Company of New York (including form of
Notes).
**2.1. Form of First Supplemental Indenture, dated as of November __, 1995.
* 3. Purchase Agreement, dated August 10, 1995, among the Registrant,
certain subsidiaries of the Registrant and Chemical Securities, Inc.
- ---------------------
* Previously Filed
** Filed Herewith
II-4
<PAGE>
* 4. Exchange and Registration Rights Agreement, dated August 15, 1995,
among the Registrant certain subsidiaries of the Registrant and
Chemical Securities, Inc.
5. Convertible Note Purchase Agreement, dated as of March 3, 1993,
between the Registrant and the purchasers named therein (including
forms of Senior Subordinated Convertible Note and Registration Rights
Agreement) -- incorporated by reference from Exhibit 4(i) to Form 10-K
of the Registrant for the year ended December 31, 1992.
6. Form of Subscription Agreement, dated October 1992, between the
Registrant and certain investors -- incorporated by reference from
Exhibit 4(a) to the Registrant's Current Report on Form 8-K dated
October 30, 1992.
7. Stock Purchase and Warrant Issuance Agreement, dated October 16, 1989,
between the Registrant and Kieran E. Burke -- incorporated by
reference from Exhibit 4(i) to Form 10-K of Registrant for the year
ended December 31, 1989.
8. Warrant, dated October 16, 1989, to purchase 131,728 shares of Common
Stock issued by the Registrant to Kieran E. Burke -- incorporated by
reference from Exhibit 4(k) to Form 10-K of Registrant for the year
ended December 31, 1989.
9. Warrant, dated October 16, 1989, to purchase 93,466 shares of Common
Stock issued by the Registrant to Kieran E. Burke -- incorporated by
reference from Exhibit 4(1) to Form 10-K of Registrant for the year
ended December 31, 1989.
* 10. Form of Subscription Agreement between the Registrant and each of
the purchasers of Preferred Stock.
*(5) (8) Opinion of Baer Marks & Upham, including consent.
(10) Material Contracts:
1. Agreement of Limited Partnership of 229 East 79th Street Associates LP
dated July 24, 1987, together with amendments thereto dated,
respectively, August 31, 1987, October 21, 1987, and December 21, 1987
-- incorporated by reference from Exhibit 10(i) to Form 10-K of
Registrant for year ended December 31, 1987.
2. Agreement of Limited Partnership of Frontier City Partners Limited
Partnership, dated October 18, 1989, between Frontier City Properties,
Inc. as general partner, and The Tierco Group, Inc. and Frontier City
Properties, Inc. as limited partners -- incorporated by reference
from Exhibit 10(g) to the Registrant's Current Report on Form 8-K
dated October 18, 1989.
3. Asset Purchase Agreement, dated December 10, 1990, between Registrant
and Silver Dollar City, Inc., -- incorporated by reference from
Exhibit 10(c) to the Registrant's Current Report on Form 8-K dated
February 6, 1991.
- ---------------------
* Previously Filed
II-5
<PAGE>
4. Asset Purchase Agreement, dated December 16, 1991, among the
Registrant, Tierco Maryland, RWP, John J. Mason and Stuart A.
Bernstein -- incorporated by reference from Exhibit 10(a) to the
Registrant's Current Report on Form-8K dated January 31, 1992.
5. Asset Transfer Agreement, dated as of June 30, 1992, by and among the
Registrant, B&E Holding Company and the creditors referred to therein
-- incorporated by reference from Exhibit 10(a) to the Registrant's
Current Report on Form 8-K dated July 20, 1992.
6. Purchase Agreement, dated September 30, 1992, among the Registrant,
Palma Real Estate Management Company, First Stratford Life Insurance
Company and Executive Life Insurance Company -- incorporated by
reference to Exhibit 2(a) to the Registrant's Current Report on Form
8-K dated September 30, 1992.
7. Lease Agreement, dated January 18, 1993, among Registrant, Frontier
City Partners Limited Partnership and Fitraco N.V. -- incorporated by
reference from Exhibit 10(k) to Form 10-K of Registrant for the year
ended December 31, 1992.
8. Lease Agreement, dated January 18, 1993, among Registrant, Tierco
Maryland, Inc. and Fitraco N.V. -- incorporated by reference from
Exhibit 10(l) to Form 10-K of Registrant for the year ended December
31, 1992.
9. Security Agreement and Conditional Sale Contract, between Chance
Rides, Inc. and Tierco Maryland, Inc. and Guaranty of Registrant in
favor of Chance Rides, Inc. -- incorporated by reference from Exhibit
10(m) to Form 10-K of Registrant for the year ended December 31, 1992.
10. Registrant's 1993 Stock Option and Incentive Plan -- incorporated by
reference from Exhibit 10(k) to Form 10-K of Registrant for the year
ended December 31, 1993.
* 11. Agreement and Plan of Merger, dated as of June 30, 1995, among the
Registrant, Premier Parks Acquisition Inc., Funtime Parks, Inc.
("Funtime") and its shareholders
* 12. Escrow Agreement, dated as of August 15, 1995, among the Registrant,
certain shareholders of Funtime and First National Bank of Ohio, Trust
Division.
* 13. Consulting Agreement dated August 15, 1995 between Registrant and
Bruce E. Walborn.
* 14. Consulting Agreement dated August 15, 1995 between Registrant and
Gaspar C. Lococo
**(12) Computation of Ratio of Earnings to Fixed Charges.
*(21) Subsidiaries of the Registrant
- ---------------------
* Previously Filed
** Filed herewith
II-6
<PAGE>
(23) Consents:
1. Consent of Baer Marks & Upham (included in Exhibit (5) and (8))
** 2. Consent of KPMG Peat Marwick LLP
** 3. Consent of Ernst & Young LLP
* 5. Consent of Pannell Kerr Forster PC
** 6. Consent of Tackman, Pilla, Arnone and Company, P.C.
* 24.1 --Powers of Attorney
* 25.1 --Form T-1 of United States Trust Company of New York, as Trustee
under the Indenture filed as Exhibit 4.1.
** 99.1 --Form of Letter of Transmittal.
- ---------------------
* Previously Filed
** Filed Herewith
Item 17. Undertakings.
(a) The undersigned Co-Registrants hereby undertake:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) to include any prospectus required by Section 10(a)(3)
of the Securities Act;
(ii) to reflect in the prospectus any facts or events
arising after the effective date of the registration statement (or the
most recent post-effective amendment thereof) which, individually or
in the aggregate, represent a fundamental change in the information
set forth in the registration statement; notwithstanding the
foregoing, any increase or decrease in volume of securities offered
(if the total dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high end of
the estimated maximum offering range may be reflected in the form of
prospectus file with the Commission pursuant to Rule 424(b) if, in the
aggregate the changes in the volume and price represent no more than a
20% change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective registration
statement; and
(iii) to include any material information with respect to the
plan of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if
the registration statement is on Form S-3, Form S-8 or Form F-3, and the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the registrant pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in the
registration statement.
II-7
<PAGE>
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered herein, and
the offering of such securities at the time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(4) To supply by means of a post-effective amendment all information
concerning a transaction, and the company being acquired therein, that was
not the subject of an included in the registration statement when it became
effective.
(b) See Item 14.
II-8
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
each of the Co-Registrant has duly caused this Amendment to this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Oklahoma City, State of Oklahoma, on the 1st day
of November, 1995.
PREMIER PARKS INC.
By: Kieran E. Burke
Chairman of the Board and
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Amendent to this Registration Statement has been signed by the
following persons in the capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
Chairman of the November 1, 1995
Kieran E. Burke Board, Chief
Executive Officer
and Director of the
Co-Registrant listed
above (Principal
Executive Officer)
President, Chief November 1, 1995
Gary Story* Operating Officer
and Director of the
Co-Registrant listed
above
Chief Financial
Officer and
Director of the Co- November 1, 1995
James F. Dannhauser Registrant listed
above (Principal
Financial Officer)
Vice President of November 1, 1995
Richard R. Webb* the Co-Registrant
listed above
(Principal
Accounting Officer)
Director of the Co- November 1, 1995
Paul A. Biddelman* Registrant listed
above
Director of the Co- November 1, 1995
Michael E. Gellert* Registrant listed
above
Director of the Co- November 1, 1995
Jack Tyrrell* Registrant listed
above
* By: James M. Coughlin
Attorney-in-Fact
II-9
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
each of the Co-Registrants listed below have duly caused this Amendment
to this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Oklahoma City,
State of Oklahoma, on the 1st day of November, 1995.
Tierco Maryland, Inc.
Tierco Water Park, Inc.
Frontier City Properties, Inc.
(on behalf of itself as general
partner of Frontier City Partners
Limited Partnership)
By: Kieran E. Burke
Chairman of the Board and
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933,
as amended, this Amendment to this Registration Statement has
been signed by the following persons in the capacities and on
the dates indicated.
Signature Title Date
--------- ----- ----
Chairman of the November 1, 1995
Board, Chief
Kieran E. Burke* Executive Officer
and Director of the
Co-Registrants
listed above
(Principal Executive
and Financial
Officer)
President, Chief November 1, 1995
Operating Officer
Gary Story* and Director of the
Co-Registrants
listed above
Vice President of November 1, 1995
the Co-Registrants
Richard R. Webb* listed above
(Principal
Accounting Officer)
*By: James M. Coughlin
Attorney-in-Fact
II-10
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
each of the Co-Registrants listed below have duly caused this Amendment
to this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Oklahoma City,
State of Oklahoma, on the 1st day of November, 1995.
Funtime Parks, Inc.
Funtime, Inc.
Wyandot Lake, Inc.
Darien Lake Theme Park
and Camping Resort, Inc.
D.L. Holdings, Inc.
By:
Kieran E. Burke
Chairman of the Board and
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933,
as amended, this Amendment to this Registration Statement has been
signed by the following persons in the capacities and on the dates
indicated.
Signature Title Date
--------- ----- ----
Chairman of the November 1, 1995
Board, Chief
Kieran E. Burke* Executive Officer
and Director of the
Co-Registrants
listed above
(Principal Executive
and Financial
Officer)
President, Chief November 1, 1995
Operating Officer
Gary Story* and Director of the
Co-Registrants
listed above
Vice President of November 1, 1995
the Co-Registrant
John P. Gannon* listed above
(Principal
Accounting Officer)
II-11
*By: James M. Coughlin
Attorney-In-Fact
<PAGE>
EXHIBIT INDEX
(3) Articles of Incorporation and By-Laws:
1. Certificate of Incorporation of Premier Parks Inc. ("Registrant")
dated March 24, 1981 -- incorporated by reference from Exhibit 3 to
Form 10-Q of Registrant for the quarter ended June 30, 1987.
2. Plan and Agreement of Merger of Registrant and Tierco, a Massachusetts
business trust, dated March 31, 1981 -- incorporated by reference from
Exhibit 3 to Form 10-Q of Registrant for the quarter ended June 30,
1987.
3. Certificate of Amendment of Certificate of Incorporation of Registrant
dated April 14, 1985 -- incorporated by reference from Exhibit 3 to
Form 10-Q of Registrant for the quarter ended June 30, 1987.
4. Certificate of Amendment of Certificate of Incorporation of Registrant
dated May 8, 1987 -- incorporated by reference from Exhibit 3 to
Form 10-Q of Registrant for the quarter ended June 30, 1987.
5. Certificate of Amendment of Certificate of Incorporation of Registrant
dated June 11, 1987 -- incorporated by reference from Exhibit 3 to
Form 10-Q of Registrant for the quarter ended June 30, 1987.
6. Certificate of Amendment of Certificate of Incorporation of Registrant
dated April 30, 1991 -- incorporated by reference from Exhibit 3(f) to
Form 10-K of Registrant for the year ended December 31, 1991.
7. Certificate of Amendment of Certificate of Incorporation of Registrant
dated June 30, 1992 -- incorporated by reference from Exhibit 3(g) to
Form 10-K of Registrant for the year ended December 31, 1992.
8. Certificate of Amendment of Certificate of Incorporation of
Registrant dated June 23, 1993 -- incorporated by reference
from Exhibit 3(a) to Form 10-Q of Registrant for the quarter
ended June 30, 1993.
9. Certificate of Amendment to Certificate of Incorporation dated
October 7, 1994 -- incorporated by reference from Exhibit 3(i) to Form
10-K of Registrant for the year ended December 31, 1994.
* 10. Certificate of Designation of Series A Cumulative Convertible
Preferred Stock of Registrant ("Preferred Stock") filed August 14,
1995.
- ---------------------
* Previously Filed
<PAGE>
11. By-laws of Registrant as amended through March 31, 1992 --
incorporated by reference from Exhibit 3(g) to Form 10-K of Registrant
for the year ended December 31, 1991.
* 12. Certificate of Incorporation of Tierco Maryland, Inc.
* 13. By-laws of Tierco Maryland, Inc.
* 14. Certificate of Incorporation of Tierco Water Park, Inc.
* 15. By-laws of Tierco Water Park, Inc.
* 16. Certificate of Incorporation of Frontier City Properties, Inc.
* 17. By-laws of Frontier City Properties, Inc.
* 18. Articles of Incorporation of Funtime Parks, Inc.
* 19. Code of Regulations of Funtime Parks, Inc.
* 20. Articles of Incorporation of Funtime, Inc.
* 21. Code of Regulations of Funtime, Inc.
* 22. Articles of Incorporation of Wyandot Lake, Inc.
* 23. Code of Regulations of Wyandot Lake, Inc.
* 24. Certificate of Incorporation of Darien Lake Theme Park and Camping
Resort, Inc.
* 25. By-laws of Darien Lake Theme Park and Company Resort, Inc.
* 26. Articles of Incorporation of D.L. Holdings, Inc.
* 27. Code of Regulations of D.L. Holdings, Inc.
(4) Instruments Defining the Rights of Security Holders, Including Indentures:
* 1. Credit Facility, dated August 15, 1995, among the Registrant, certain
subsidiaries thereof, Chemical Bank, The Merchant Bank of New York and
Chemical Bank as agent (including forms of guarantee agreements,
security agreements and pledge agreements)
* 2. Indenture dated as of August 15, 1995, among the Registrant,
certain subsidiaries of the Registrant named therein and
United States Trust Company of New York (including form of
Notes).
** 2.1 Form of First Supplemental Indenture, dated as of November __, 1995.
* 3. Purchase Agreement, dated August 10, 1995, among the Registrant,
certain subsidiaries of the Registrant and Chemical Securities, Inc.
- ---------------------
* Previously Filed
** Filed Herewith
<PAGE>
* 4. Exchange and Registration Rights Agreement, dated August 15, 1995,
among the Registrant certain subsidiaries of the Registrant and
Chemical Securities, Inc.
5. Convertible Note Purchase Agreement, dated as of March 3, 1993,
between the Registrant and the purchasers named therein (including
forms of Senior Subordinated Convertible Note and Registration Rights
Agreement) -- incorporated by reference from Exhibit 4(i) to Form 10-K
of the Registrant for the year ended December 31, 1992.
6. Form of Subscription Agreement, dated October 1992, between the
Registrant and certain investors -- incorporated by reference from
Exhibit 4(a) to the Registrant's Current Report on Form 8-K dated
October 30, 1992.
7. Stock Purchase and Warrant Issuance Agreement, dated October 16, 1989,
between the Registrant and Kieran E. Burke -- incorporated by
reference from Exhibit 4(i) to Form 10-K of Registrant for the year
ended December 31, 1989.
8. Warrant, dated October 16, 1989, to purchase 131,728 shares of Common
Stock issued by the Registrant to Kieran E. Burke -- incorporated by
reference from Exhibit 4(k) to Form 10-K of Registrant for the year
ended December 31, 1989.
9. Warrant, dated October 16, 1989, to purchase 93,466 shares of Common
Stock issued by the Registrant to Kieran E. Burke -- incorporated by
reference from Exhibit 4(1) to Form 10-K of Registrant for the year
ended December 31, 1989.
* 10. Form of Subscription Agreement between the Registrant and each of
the purchasers of Preferred Stock.
*(5) (8) Opinion of Baer Marks & Upham, including consent.
(10) Material Contracts:
1. Agreement of Limited Partnership of 229 East 79th Street Associates LP
dated July 24, 1987, together with amendments thereto dated,
respectively, August 31, 1987, October 21, 1987, and December 21, 1987
-- incorporated by reference from Exhibit 10(i) to Form 10-K of
Registrant for year ended December 31, 1987.
2. Agreement of Limited Partnership of Frontier City Partners Limited
Partnership, dated October 18, 1989, between Frontier City Properties,
Inc. as general partner, and The Tierco Group, Inc. and Frontier City
Properties, Inc. as limited partners -- incorporated by reference
from Exhibit 10(g) to the Registrant's Current Report on Form 8-K
dated October 18, 1989.
3. Asset Purchase Agreement, dated December 10, 1990, between Registrant
and Silver Dollar City, Inc., -- incorporated by reference from
Exhibit 10(c) to the Registrant's Current Report on Form 8-K dated
February 6, 1991.
- ---------------------
* Previously Filed
<PAGE>
4. Asset Purchase Agreement, dated December 16, 1991, among the
Registrant, Tierco Maryland, RWP, John J. Mason and Stuart A.
Bernstein -- incorporated by reference from Exhibit 10(a) to the
Registrant's Current Report on Form-8K dated January 31, 1992.
5. Asset Transfer Agreement, dated as of June 30, 1992, by and among the
Registrant, B&E Holding Company and the creditors referred to therein
-- incorporated by reference from Exhibit 10(a) to the Registrant's
Current Report on Form 8-K dated July 20, 1992.
6. Purchase Agreement, dated September 30, 1992, among the Registrant,
Palma Real Estate Management Company, First Stratford Life Insurance
Company and Executive Life Insurance Company -- incorporated by
reference to Exhibit 2(a) to the Registrant's Current Report on Form
8-K dated September 30, 1992.
7. Lease Agreement, dated January 18, 1993, among Registrant, Frontier
City Partners Limited Partnership and Fitraco N.V. -- incorporated by
reference from Exhibit 10(k) to Form 10-K of Registrant for the year
ended December 31, 1992.
8. Lease Agreement, dated January 18, 1993, among Registrant, Tierco
Maryland, Inc. and Fitraco N.V. -- incorporated by reference from
Exhibit 10(l) to Form 10-K of Registrant for the year ended December
31, 1992.
9. Security Agreement and Conditional Sale Contract, between Chance
Rides, Inc. and Tierco Maryland, Inc. and Guaranty of Registrant in
favor of Chance Rides, Inc. -- incorporated by reference from Exhibit
10(m) to Form 10-K of Registrant for the year ended December 31, 1992.
10. Registrant's 1993 Stock Option and Incentive Plan -- incorporated by
reference from Exhibit 10(k) to Form 10-K of Registrant for the year
ended December 31, 1993.
* 11. Agreement and Plan of Merger, dated as of June 30, 1995, among the
Registrant, Premier Parks Acquisition Inc., Funtime Parks, Inc.
("Funtime") and its shareholders
* 12. Escrow Agreement, dated as of August 15, 1995, among the Registrant,
certain shareholders of Funtime and First National Bank of Ohio, Trust
Division.
* 13. Consulting Agreement dated August 15, 1995 between Registrant and
Bruce E. Walborn.
* 14. Consulting Agreement dated August 15, 1995 between Registrant and
Gaspar C. Lococo
**(12) Computation of Ratio of Earnings to Fixed Charges.
*(21) Subsidiaries of the Registrant
- ---------------------
* Previously Filed
** Filed herewith
<PAGE>
(23) Consents:
1. Consent of Baer Marks & Upham (included in Exhibit (5) and (8))
** 2. Consent of KPMG Peat Marwick LLP
** 3. Consent of Ernst & Young LLP
* 5. Consent of Pannell Kerr Forster PC
** 6. Consent of Tackman, Pilla, Arnone and Company, P.C.
* 24.1 --Powers of Attorney
* 25.1 --Form T-1 of United States Trust Company of New York, as Trustee
under the Indenture filed as Exhibit 4.1.
** 99.1 --Form of Letter of Transmittal.
- ---------------------
* Previously Filed
** Filed Herewith
Exhibit (4).2-1
FIRST SUPPLEMENTAL INDENTURE
FIRST SUPPLEMENTAL INDENTURE dated as of November , 1995, between
---
PREMIER PARKS INC., a Delaware corporation (the "Company"); FUNTIME PARKS, INC.,
an Ohio corporation, FUNTIME, INC., an Ohio corporation, WYANDOT LAKE, INC., an
Ohio corporation, DARIEN LAKE THEME PARK AND CAMPING RESORT, INC., a New York
corporation, D.L. HOLDINGS, INC., an Ohio corporation, TIERCO WATER PARK, INC.,
an Oklahoma corporation, FRONTIER CITY PROPERTIES, INC., an Oklahoma
corporation, and FRONTIER CITY PARTNERS, LIMITED PARTNERSHIP, an Oklahoma
limited partnership (collectively, the "Note Guarantors"); and UNITED STATES
TRUST Company, a New York corporation, (the "Trustee").
RECITALS
WHEREAS, the Company, the Note Guarantors and the Trustee entered into an
Indenture, dated as of August 15, 1995 (the "Indenture"), pursuant to which the
Company issued $90,000,00 in principal amount of 12% Senior Notes due 2003 (the
"Securities") (capitalized terms used herein without definition shall have the
respective meanings ascribed to them in the Indenture); and
WHEREAS, Section 9.01 of the Indenture provides that the Company, the Note
Guarantors and the Trustee may amend the Indenture without notice to or consent
of the Holders to (A) cure any ambiguity, omission, defect or inconsistency in
the Indenture, and (B) make any change in the Indenture that does not adversely
affect the rights of any Securityholder; and
WHEREAS, all acts and things prescribed by the Indenture, by law and by the
Certificate of Incorporation and By-Laws of the Company, the Note Guarantors and
of the Trustee necessary to make this First Supplemental Indenture a valid
instrument legally binding on the Company and the Trustee, in accordance with
its terms, have been duly done and performed.
NOW, THEREFORE, to comply with the provisions of the Indenture and in
consideration of the above premises, the Company, the Note Guarantors and the
Trustee covenant and agree for the equal and proportionate benefit of the
respective Holders of the Securities as follows:
<PAGE>
ARTICLE 1
Section 1.1 First Supplemental Indenture. This First Supplemental
Indenture is supplemental to the Indenture and does and shall be deemed to form
a part of, and shall be construed in connection with and as part of, the
Indenture for any and all purposes.
Section 1.2 Effective Date. This First Supplemental Indenture shall
become effective immediately upon its execution and delivery by each of the
Company, the Note Guarantors and the Trustee.
Section 1.3 Amendment to Section 2.02 of Indenture. The fourth
paragraph of Section 2.02 of the Indenture is hereby amended by deleting
therefrom the figure "$85,000,000" and replacing such figure with the figure
"$90,000,000".
Section 1.4 Amendment to Section 6.07 of Indenture. Section 6.07 of the
Indenture is hereby amended by adding the phrase "(including against any Note
Guarantor)" immediately after the word "enforcement" in the ninth line of
Section 6.07.
Section 1.5 Amendment to Section 10.01 of Indenture. The sixth
paragraph of Section 10.01 of the Indenture is hereby amended by deleting from
the ninth line thereof the phrase ", upon receipt of written demand by the
Trustee,".
ARTICLE 2
Section 2.1 Incorporation of First Supplemental Indenture, Ratification
of Indenture. All of the provisions of this First Supplemental Indenture shall
be deemed to be incorporated in, and made a part of, the Indenture; and the
Indenture, as supplemented and amended by this First Supplemental Indenture,
shall be read, taken and construed as one and the same instrument. Except as
otherwise expressly modified herein, the Indenture shall remain in full force
and effect and is hereby ratified.
-2-
<PAGE>
Section 2.2 Headings. The headings of the Articles and Sections of this
First Supplemental Indenture have been inserted for convenience of reference
only and are not to be considered a part of this First Supplemental Indenture
and shall in no way modify or restrict any of the terms or provisions hereof.
Section 2.3 Counterpart Originals. The parties may sign any number of
copies of this First Supplemental Indenture. Each signed copy shall be an
original, but all of them taken together represent the same agreement.
Section 2.4 Conflict with Trust Indenture Act. If any provision of this
First Supplemental Indenture limits, qualifies or conflicts with the duties
imposed by TIA Sec. 318(c), the imposed duties shall control.
Section 2.5 Successors. All agreements of the Company and the Note
Guarantors in this First Supplemental Indenture shall bind their successors.
All agreements of the Trustee in this First Supplemental Indenture shall bind
its successors.
Section 2.6 Benefits of First Supplemental Indenture. Nothing in this
First Supplemental Indenture, express or implied, shall give to any person other
than the parties hereto and their successors hereunder and the Holders, any
benefit or legal or equitable right, remedy or claim under this First
Supplemental Indenture.
Section 2.7 Defined Terms. Unless otherwise defined in this First
Supplemental Indenture, all terms used in this First Supplemental Indenture
which are defined in the Indenture shall have the meanings ascribed to them in
the Indenture.
Section 2.8 No Representation. The Trustee makes no representation as
to the validity or sufficiency of this First Supplemental Indenture. The
recitals contained herein are recitals of the Company, and the Trustee makes no
representation with respect thereto and shall have no responsibility therefor.
Section 2.9 Governing Law. The internal law of the State of New York
shall govern and be used to construe this First Supplemental Indenture without
regard to principles of conflict of laws.
IN WITNESS WHEREOF, the Company, the Note Guarantors and the Trustee have
caused this First Supplemental Indenture to be duly executed and attested, all
as of the day and year first above written.
PREMIER PARKS INC.,
by
----------------------------
Name: Kieran E. Burke
Title: Chairman
-3-
<PAGE>
FUNTIME PARKS INC.,
by
----------------------------
Name: Kieran E. Burke
Title: Chairman
FUNTIME, INC.,
by
----------------------------
Name: Kieran E. Burke
Title: Chairman
WYANDOT LAKE, INC.,
by
----------------------------
Name: Kieran E. Burke
Title: Chairman
DARIEN LAKE THEME PARK AND
CAMPING RESORT, INC.,
by
----------------------------
Name: Kieran E. Burke
Title: Chairman
D.L. HOLDINGS, INC.,
by
----------------------------
Name: Kieran E. Burke
Title: Chairman
TIERCO MARYLAND, INC.,
by
----------------------------
Name: Kieran E. Burke
Title: Chairman
-4-
<PAGE>
TIERCO WATER PARK, INC.,
by
----------------------------
Name: Kieran E. Burke
Title: Chairman
FRONTIER CITY PROPERTIES, INC.,
by
----------------------------
Name: Kieran E. Burke
Title: Chairman
FRONTIER CITY PARTNERS,
Limited Partnership,
by Frontier City Properties,
Inc., as General Partner
by
----------------------------
Name: Kieran E. Burke
Title: Chairman
UNITED STATES TRUST COMPANY OF
NEW YORK
by
----------------------------
Name:
Title:
-5-
<TABLE><CAPTION>
Exhibit 12
Ratio Earnings to Fixed Charges
Premier Parks Inc.
Computation of Ratio of Earnings to Fixed Charges
For Each of the Years in the 5 Year Period Ended December 31, 1994 and Six
Months Ended June 30, 1995 and 1994
Computation of Pro Forma Earnings to Combined Fixed Charges and Preferred
Stock Dividends Year ended December 31, 1994 and Six Months Ended June 30, 1995
PRO FORMA
-----------------
SIX SIX SIX
MONTHS MONTHS MONTHS
---------------------------------------------- ENDED ENDED \ ENDED
1990 1991 1992 1993 1994 1994 June 30, 1995 June 30, 1995 June 30, 1994
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Earnings:
Earnings (loss) from continuing operations (937) (118) (1,735) 1,354 102 (1,714) (6,951) (1,871) (2,315)
Income tax expense (benefit) -- -- 426 91 68 ( 207) (4,389) (1,244) (1,544)
Interest expense, net (59) 858 1,413 1,438 2,299 11,385 5,719 1,383 1,081
Equity in loss of affiliated partnerships 326 176 122 142 83 83 39 39 37
Minority interest in earnings -- 223 270 -- --
1/3 of rental expense -- 5 23 23 107 279 126 54 32
----------------------------------------------------------------------------------------
Adjusted earnings (loss) (670) 1,144 519 3,048 2,659 9,826 (5,456) (1,639) (2,709)
========================================================================================
Fixed Charges:
Interest expense -- 858 1,413 1,438 2,299 11,385 5,719 1,383 1,081
1/3 of rental expense -- 5 23 23 107 279 126 54 32
----------------------------------------------------------------------------------------
Total fixed charges -- 863 1,436 1,461 2,406 11,644 5,845 1,437 1,113
========================================================================================
Ratio of earnings to fixed charges N/A 1.3 0.4 2.1 1.1 0.8 N/A N/A N/A
---------------------------------------------------------------------------------------
670 917 1,838 11,301 3,076 3,822
Deficiency
</TABLE>
Exhibit 23.2
Independent Auditors' Consent
The Board of Directors
Premier Parks Inc.:
We consent to the use of report included herein and to the reference to our
firm under the heading "Experts" in the prospectus.
/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
Oklahoma City, Oklahoma
November 2, 1995
Exhibit 23.3
Independent Auditors' Consent
The Board of Directors
Premier Parks, Inc.:
We consent to the reference to our firm under the captions "Experts" and to the
use of our report dated January 25, 1995, except for Note 13 date August 29,
1995 with respect to the financial statements of Funtime Parks, Inc. included
in Amendment No. 2 to the Registration Statement (Form S-1 No. 33-62225) and
related Prospectus of Premier Parks, Inc. for the registration of 12% Senior
Notes due 2003.
/s/ Ernst & Young LLP
November 2, 1995
Exhibit 23.6
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
Premier Parks Inc.:
We consent to the use of our reports included herein and to the reference
to our firm under the heading "Experts" in the prospectus.
TACKMAN, PILLA, ARNONE AND COMPANY, P.C.
Stanford, Connecticut
November 2, 1995
Exhibit 99.1
LETTER OF TRANSMITTAL
for
12% Senior Notes Due 2003
of
PREMIER PARKS INC.
Pursuant to the Prospectus
dated ________, 1995
of
PREMIER PARKS INC.
THE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON
________, 1995, UNLESS EXTENDED (THE "EXPIRATION DATE").
To:
Exchange Agent
____________________
<TABLE>
<S> <C> <C>
By Hand Delivery By Registered or By Overnight Delivery
Certified Mail:
United States Trust Company United States Trust Company United States Trust Company
of New York of New York of New York
65 Beaver Street P.O. Box 844-Peter Cooper Station 770 Broadway
New York, New York 10005 New York, NY 10276-0843 New York, New York 10003
Attention: Ground Level Attention: Corporate Trust
Corporate Trust Operations Operations
Confirm by Telephone
(800) 548-6565
</TABLE>
For information with respect to
the Offer, call Customer Service at the Exchange Agent:
(800) 548-6565
Delivery of this instrument to an address other than as set forth above,
will not constitute a valid delivery. The instructions contained herein
should be read carefully before this Letter of Transmittal is completed.
The undersigned acknowledges receipt of the Prospectus, dated
________, 1995 (the "Prospectus"), of PREMIER PARKS INC., a Delaware
corporation (the "Company"), relating to the offer of the Company, upon the
terms and subject to the conditions set forth in the Prospectus and in this
Letter of Transmittal and the instructions hereto (which together with the
Prospectus constitute the "Offer"), to exchange $1,000 principal amount of
its 12% Senior Notes Due 2003 (the "New Notes") for each $1,000 principal
amount of the outstanding 12% Senior Notes Due 2003 of the Company (the
"Old Notes"), of which $90,000,000 aggregate principal amount is
outstanding. Capitalized terms used herein
<PAGE>
but not defined herein have the meanings given to them in the Prospectus.
The undersigned has completed the appropriate boxes below and
signed and delivered this Letter of Transmittal to indicate the action the
undersigned desires to take with respect to the Offer.
This Letter of Transmittal is to be used whether the Old Notes
are to be physically delivered herewith, or whether guaranteed delivery
procedures are being used, pursuant to the procedures set forth in the
Prospectus under the caption "The Exchange Offer -- Procedures for
Tendering Old Notes."
As also described under the caption "The Exchange Offer -- Procedures
for Tendering Old Notes," with respect to holders of Old Notes for whom "Book-
Entry Transfer" is available, although delivery of Old Notes may be effected
through book-entry transfer at the "Book-Entry Transfer Facility," the Letter of
Transmittal must, in any case other than as provided in the next sentence, be
used. With respect to DTC and its participants, in lieu of using this Letter of
Transmittal, electronic instructions must be sent to DTC in which the tendering
holder acknowledges receipt of this Letter of Transmittal and agrees to be bound
by the terms hereof.
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
-2-
<PAGE>
Ladies and Gentlemen:
Upon the terms and subject to the conditions of the Offer, the
undersigned hereby tenders to the Company the principal amount of the Old
Notes indicated below. Subject to, and effective upon, the acceptance for
exchange of the Old Notes tendered hereby, the undersigned hereby
irrevocably sells, assigns and transfers to or upon the order of the
Company all right, title and interest in and to such Old Notes, and hereby
irrevocably constitutes and appoints the Exchange Agent the true and lawful
agent and attorney-in-fact of the undersigned (with full knowledge that
said Exchange Agent also acts as the agent of the Company and as Trustee
under the indenture governing the Old Notes and the New Notes) with respect
to such Old Notes, with full power of substitution (such power of attorney
being deemed to be an irrevocable power coupled with an interest) to (a)
deliver certificates representing such Old Notes, and to deliver all
accompanying evidences of transfer and authenticity to or upon the order of
the Company upon receipt by the Exchange Agent, as the undersigned's agent,
of the New Notes to which the undersigned is entitled upon the acceptance
by the Company of such Old Notes for exchange pursuant to the Offer, (b)
receive all benefits and otherwise to exercise all rights of beneficial
ownership of such Old Notes, all in accordance with the terms of the Offer,
and (c) present such Old Notes for transfer on the register for such Old
Notes.
The undersigned acknowledges that prior to this Offer, there has
been no public market for the Old Notes or the New Notes. If a market for
the New Notes should develop, the New Notes could trade at a discount from
their principal amount. The undersigned is aware that the Company does not
intend to list the New Notes on a national securities exchange and that
there can be no assurance that an active market for the New Notes will
develop.
The undersigned also acknowledges that this Offer is being made
in reliance on an interpretation by the staff of the Securities and
Exchange Commission (the "SEC") that the New Notes issued pursuant to the
Offer in exchange for the Old Notes may be offered for resale, resold and
otherwise transferred by any person receiving such New Notes whether or not
such person is the holder thereof, (other than any such holder or other
person which is an "affiliate" of the Company within the meaning of Rule
405 under the Securities Act of 1933, as amended (the "Securities Act"),
without compliance with the registration and prospectus delivery provisions
of the Securities Act, provided that such New Notes are acquired in the
ordinary course of business of such holder or other person, such holder or
other person is not engaged in or intending to engage in a distribution of
New Notes, and such holders or other person has no arrangement with any
person to participate in the distribution of such New Notes. See
-3-
<PAGE>
"Morgan Stanley & Co., Inc.," SEC No-Action Letter (available June 5,
1991), and "Exxon Capital Holdings Corporation," SEC No-Action Letter
(available May 13, 1988).
If the undersigned is not a broker-dealer, the undersigned
represents that it is not engaged in, and does not intend to engage in, a
distribution of New Notes. If the undersigned is a broker-dealer that will
receive New Notes, it represents that the Old Notes to be exchanged for New
Notes were acquired as a result of market-making activities or other
trading activities and it acknowledges that it will deliver a prospectus in
connection with any resale of such New Notes; however, by so acknowledging
and by delivering a prospectus, the undersigned will not be deemed to admit
that it is an "underwriter" within the meaning of the Securities Act.
As provident in the Prospectus, any holder of Old Notes who is not
eligible to participate in this Offer can elect to have such holder's Old Notes
registered in a "shelf" registration statement. In order to make such election,
each holder must check the appropriate box below. Such election must be
made prior to the Expiration Date of this Offer in order for holders to elect to
have a "shelf" registration effected.
The Offer is not being made to, nor will tenders be accepted from
or on behalf of, holders of the Old Notes in any jurisdiction in which the
making of the Offer or acceptance thereof would not be in compliance with
the laws of such jurisdiction or would otherwise not be in compliance with
any provision of any applicable security law.
The undersigned represents that (i) the New Notes acquired
pursuant to the Offer are being obtained in the ordinary course of business
of the undersigned or other person receiving such New Notes; (ii) neither
the undersigned nor any such other person is engaged in or intends to
engage in a distribution of such New Notes; (iii) neither the undersigned
nor any such other person has any arrangement or understanding with any
person to participate in a distribution of the New Notes; and (iv) neither
the undersigned nor any such other person is an "affiliate", as defined
under Rule 405 of the Securities Act, of the Company or, if such holder is
such an affiliate, that such holder will comply with the registration and
the prospectus delivery requirements of the Securities Act in connection
with the disposition of any New Notes to the extent applicable.
The undersigned understands and acknowledges that the Company
reserves the right in its sole discretion to purchase or make offers for
any Old Notes that remain outstanding subsequent to the Expiration Date or,
as set forth in the Prospectus under the caption "Conditions to the
Exchange Offer," to terminate the Offer and, to the extent permitted by
applicable law, purchase Old Notes in the open market, in privately
negotiated transactions or otherwise. The terms of any such purchases or
offers will differ from the terms of the Offer.
The undersigned hereby represents and warrants that the
undersigned accepts the terms and conditions of the Offer, has full power
and authority to tender, exchange, assign and transfer the Old Notes
tendered hereby, and that when the same are
-4-
<PAGE>
accepted for exchange by the Company, the Company will acquire good and
unencumbered title thereto, free and clear of all liens, restrictions,
charges and encumbrances and not subject to any adverse claim or right.
The undersigned will, upon request, execute and deliver any additional
documents deemed by the Exchange Agent or the Company to be necessary or
desirable to complete the sale, assignment and transfer of the Old Notes
tendered hereby.
The undersigned agrees that all authority conferred or agreed to
be conferred by this Letter of Transmittal and every obligation of the
undersigned hereunder shall be binding upon the successors, assigns, heirs,
executors, administrators, trustees in bankruptcy and legal representatives
of the undersigned and shall not be affected by, and shall survive, the
death or incapacity of the undersigned. The undersigned also agrees that,
except as stated in the Prospectus, the Old Notes tendered hereby cannot be
withdrawn.
The undersigned understands that tenders of the Old Notes
pursuant to any one of the procedures described in the Prospectus under the
caption "The Exchange Offer -- Procedures for Tendering Old Notes" and in
the instructions hereto will constitute a binding agreement between the
undersigned and the Company in accordance with the terms and subject to the
conditions of the Offer.
The undersigned understands that by tendering Old Notes pursuant
to one of the procedures described in the Prospectus and the instructions
thereto, the tendering holder will be deemed to have waived the right to
receive any payment in respect of interest on the Old Notes accrued up to
the date of issuance of the New Notes.
The undersigned recognizes that, under certain circumstances set
forth in the Prospectus, the Company may not be required to accept for
exchange any of the Old Notes tendered. Old Notes not accepted for
exchange or withdrawn will be returned to the undersigned at the address
set forth below unless otherwise indicated under "Special Delivery
Instructions" below.
Unless otherwise indicated herein under the box entitled "Special
Issuance Instructions" below, please issue New Notes, and Old Notes not
validly tendered or accepted for exchange, in the name of the undersigned.
Similarly, unless otherwise indicated under the box entitled "Special
Delivery Instructions" below, please send New Notes, and Old Notes not
validly tendered or accepted for exchange, to the undersigned at the
address shown below the signature of the undersigned. The undersigned
recognizes that the Company has no obligation pursuant to the "Special
Issuance Instructions" to transfer any Old Notes from the name of the
Registered Holder thereof if the
-5-
<PAGE>
Company does not accept for exchange any of the principal amount of such
Old Notes so tendered.
All questions as to the validity, form, eligibility (including
time of receipt) and withdrawal of the tendered Old Notes will be
determined by the Company in its sole discretion, which determination will
be final and binding. The Company reserves the absolute right to reject
any and all Old Notes not properly tendered or any Old Notes the Company's
acceptance of which would, in the opinion of counsel for the Company, be
unlawful. The Company also reserves the right to waive any irregularities
or conditions of tender as to particular Old Notes. The Company's
interpretation of the terms and conditions of this Offer (including the
instructions in this Letter of Transmittal) will be final and binding on
all parties. Unless waived, any defects or irregularities in connection
with tenders of Old Notes must be cured within such time as the Company
shall determine. Neither the Company, the Exchange Agent nor any other
person shall be under any duty to give notification of defects or
irregularities with respect to tenders of Old Notes, nor shall any of them
incur any liability for failure to give such notification. Tenders of Old
Notes will not be deemed to have been made until such irregularities have
been cured or waived. Any Old Notes received by the Exchange Agent that
are not properly tendered and as to which the defects or irregularities
have not been cured or waived will be returned without cost to such holder
by the Exchange Agent to the tendering holders of Old Notes, unless
otherwise provided in this Letter of Transmittal, as soon as practicable
following the Expiration Date.
-6-
<PAGE>
THE UNDERSIGNED, BY COMPLETING THE BOX ENTITLED "DESCRIPTION OF
OLD NOTES" BELOW AND SIGNING THIS LETTER, WILL BE DEEMED TO HAVE TENDERED
THE OLD NOTES AND MADE CERTAIN REPRESENTATIONS (INCLUDING AS TO FINANCIAL
STATUS) DESCRIBED HEREIN AND IN THE PROSPECTUS.
PLEASE SIGN HERE
(TO BE COMPLETED BY ALL TENDERING HOLDERS)
(See instructions 1 and 3 and the following paragraph)
X ,
---------------------------------- ---------- -----
Date
X ,
---------------------------------- ---------- -----
Signature of Registered Holder(s) Date
Area Code and Tel. No.:
------------------------------
This Letter of Transmittal must be signed by the Registered Holder(s) as
the name(s) appear(s) on the certificate(s) for Old Notes or on a security
position listing or by person(s) authorized to become Registered Holder(s)
by endorsements and documents transmitted herewith. If signature is by a
trustee, executor, administrator, guardian, officer or other person acting
in a fiduciary or representative capacity, please set forth the full title
below. See Instruction 3.
Name(s):
--------------------------------------------------
--------------------------------------------------
(Please Type or Print)
Capacity:
--------------------------------------------------
Address:
--------------------------------------------------
(Include Zip Code)
[ ] Check here if you are a holder who is not eligible
to participate in this Offer and are electing to
have Old Notes held by you registered in a "shelf"
registration statement. If you are checking this
box, it is a condition to the Company's obligation
to effect a "shelf" registration statement that you
include herewith detailed documentation as to the
facts and circumstances pursuant to which you are
not eligible to participate in this Offer.
-7-
<PAGE>
SIGNATURE GUARANTEE
(If required by Instruction 3)
Signature(s) Guaranteed by
an Eligible Institution:
---------------------------------------------------
(Authorized Signature)
- --------------------------------------------------------------------------
(Printed Name)
- ---------------------------------------------------------------------------
(Title)
- ---------------------------------------------------------------------------
(Name of Firm)
Dated:
---------------------------------------------------------------------
IMPORTANT: THIS LETTER OF TRANSMITTAL OR A FACSIMILE HEREOF
(TOGETHER WITH THE CERTIFICATES FOR OLD NOTES OR A NOTICE OF GUARANTEED
DELIVERY AND ALL OTHER REQUIRED DOCUMENTS) MUST BE RECEIVED BY THE EXCHANGE
AGENT PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE.
-8-
<PAGE>
List below the Old Notes to which this Letter of Transmittal
relates. If the space provided below is inadequate, the certificate
numbers and principal amounts should be listed on a separate signed
schedule affixed hereto. The minimum permitted tender is $1,000 principal
amount of Old Notes; all other tenders must be in integral multiples of
$1,000.
DESCRIPTION OF OLD NOTES
(i) (ii) (iii) (iv)
Name(s) and Address(es) of Certificate Aggregate Principal
Holder(s) Number(s) Principal Amount
Please fill in the blank) --------- Amount Tendered
- ------------------------- Represented* --------
-----------
Total . . . . . . . . . . . .
* Unless otherwise indicated in the column labeled "Principal Amount
Tendered" and subject to the terms and conditions of the Offer, the
undersigned will be deemed to have tendered the entire aggregate
principal amount represented by the Old Notes indicated in the column
labeled "Aggregate Principal Amount Represented." See Instruction 8.
/ / CHECK HERE IF TENDERED OLD NOTES ARE ENCLOSED HEREWITH.
/ / CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED PURSUANT TO A
NOTICE OF GUARANTEED DELIVERY PREVIOUSLY DELIVERED TO THE EXCHANGE
AGENT AND COMPLETE THE FOLLOWING (See Instructions 1 and 4):
Name(s) of Registered Holder(s):
--------------------------------------
Date of Execution of Notice
of Guaranteed Delivery:
---------------------------------------------
Name of Eligible Institution
that Guaranteed Delivery:
-------------------------------------------
/ / CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10
ADDITIONAL COPIES OF THE PROSPECTUS AND COPIES OF ANY AMENDMENTS OR
SUPPLEMENTS THERETO
Name:
--------------------
Address:
-----------------
--------------------
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<PAGE>
SPECIAL ISSUANCE INSTRUCTIONS
(See Instructions 3, 4 and 6)
To be completed ONLY if certificates for Old Notes in a principal amount
not exchanged and/or certificates for New Notes are to be registered in the
name of or issued to someone other than the person or persons whose
signature(s) appear(s) on this Letter of Transmittal above.
Issue and mail:
(check appropriate box(es)):
/ / New Notes to:
/ / Old Notes to:
Name(s)
-----------------------------------------------------------------
(Please Type or Print)
-----------------------------------------------------------------
(Please Type or Print)
Address/
Zip Code
-----------------------------------------------------------------
-----------------------------------------------------------------
Employer Identification or
Social Security Number
(Complete the Substitute Form W-9)
-----------------------------------------
-10-
<PAGE>
SPECIAL DELIVERY INSTRUCTIONS
(See Instructions 3, 4 and 6)
To be completed ONLY if certificates for Old Notes in a principal amount
not exchanged and/or certificates for New Notes are to be sent to someone
other than the person or persons whose signature(s) appear(s) on the Letter
of Transmittal above or to such person or persons at an address other than
that shown in the box entitled "Description of Old Notes" on this Letter of
Transmittal above.
Mail or deliver:
(check appropriate box(es)):
/ / New Notes to:
/ / Old Notes to:
Name(s)
-----------------------------------------------------------------
(Please Type or Print)
------------------------------------------------------------
(Please Type or Print)
Address/
Zip Code
-----------------------------------------------------------------
------------------------------------------------------------
Employer Identification or
Social Security Number
(Complete the Substitute Form W-9)
-----------------------------------------
-11-
<PAGE>
TO BE COMPLETED BY ALL EXCHANGING HOLDERS
(See Instruction 5)
PAYOR'S NAME: PREMIER PARKS INC.
SUBSTITUTE Part 1 -- PLEASE TIN:
Form W-9 PROVIDE YOU TIN IN ---------------------
THE BOX AT RIGHT AND Social Security Number
CERTIFY BY SIGNING Employer Identification
AND DATING BELOW. Number
Department of the CERTIFICATION--UNDER THE PENALTIES OF
Treasury Internal PERJURY, I CERTIFY THAT (1) the number
Revenue Service shown on this form is my correct taxpayer
identification number (or I am waiting for
a number to be issued to me), (2) I am not
subject to backup withholding either
because I have not been notified by the
Internal Revenue Service (the "IRS") that I
am subject o backup withholding as a result
of a failure to report all interest or
dividends or the IRS has notified me that I
am no longer subject to backup withholding
and (3) all other information provided on
this form is true and correct.
SIGNATURE DATE Part 2--
--------------------- --------------
Awaiting TIN / /
You must cross out item (2) above if you have been notified by the IRS that
you are subject to backup withholding because of under reporting interest
or dividends on your tax return and you have not been notified by the IRS
that you are no longer subject to backup withholding.
-12-
<PAGE>
INSTRUCTIONS
Forming Part of the Terms and Conditions
of the Offer
1. Delivery of this Letter of Transmittal and Certificates; Guaranteed
Delivery Procedure
To be effectively tendered pursuant to the Offer, the Old Notes,
together with a properly completed Letter of Transmittal, duly executed by
the Registered Holder thereof, and any other documents required by this Letter
of Transmittal, must be received by the Exchange Agent at one of its addresses
set forth on the front page of this Letter of Transmittal prior to 5:00 p.m. on
the Expiration Date. If the beneficial owner of any Old Notes is not the
Registered Holder, then such person may validly tender his or her Old Notes
only by obtaining and submitting to the Exchange Agent a properly completed
Letter of Transmittal from the Registered Holder. Old Notes should be delivered
only to the Exchange Agent and not to the Company or to any other person.
The method of delivery of Old Notes and all other required
documents to the Exchange Agent is at the election and risk of the holder,
but if such delivery is by mail it is suggested that the holder use
properly insured, registered mail with return receipt requested. Instead
of delivery by mail, it is recommended that Old Notes and all other required
documents be delivered by hand or by courier.
If certificates for Old Notes are sent by mail, it is suggested
that the mailing be made sufficiently in advance of the Expiration Date to
permit delivery to the Exchange Agent prior to 5:00 p.m., New York City
time, on the Expiration Date.
If a holder desires to tender Old Notes and such holder's Old
Notes are not immediately available or time will not permit such holder's
Letter of Transmittal, Old Notes or other required documents to reach the
Exchange Agent on or before the Expiration Date, such holder's tender may
be effected if:
(a) such tender is made by or through an Eligible Institution
(as defined below);
(b) on or prior to the Expiration Date, the Exchange Agent has
received a properly completed and duly executed Notice of Guaranteed
Delivery (by facsimile transmission, mail or hand delivery) from such
Eligible Institution setting forth the name and address of the holder
of such Old Notes, the certificate numbers of such Old Notes (if
available) and the principal amount of Old Notes tendered and stating
that the tender is being made thereby and guaranteeing that, within
three (3) New York Stock Exchange ("NYSE") trading days after the
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<PAGE>
Expiration Date, a duly executed Letter of Transmittal, together
with the Old Notes, and any other documents required by this Letter of
Transmittal and the instructions hereto, will be deposited by such
Eligible Institution with the Exchange Agent; and
(c) this Letter of Transmittal, a Notice of Guaranteed Delivery
and Old Notes, in proper form for transfer, and all other required
documents are received by the Exchange Agent within three NYSE trading
days after the date of such telegram, facsimile transmission or letter.
2. Withdrawal of Tenders.
Tendered Old Notes may be withdrawn at any time prior to 5:00 p.m.,
New York City time, on the Expiration Date, unless previously accepted for
exchange.
To be effective, a written or (for DTC participants) electronic ATOP
transmission notice of withdrawal must (i) be received by the Exchange Agent at
one of its addresses set forth on the first page of this Letter of Transmittal
prior to 5:00 p.m., New York City time, on the Expiration Date, unless
previously accepted for exchange, (ii) specify the name of the person who
tendered the Old Notes, (iii) contain the description of the Old Notes to
be withdrawn, the certificate numbers shown on the particular certificates
evidencing such Old Notes and the aggregate principal amount represented by
such Old Notes, and (iv) be signed by the holder of such Old Notes in the
same manner as the original signature appears on this Letter of Transmittal
(including any required signature guarantees) (or with respect to DTC and
participants, by electronic instructions through ATOP) or be accompanied by
evidence sufficient to have the Trustee with respect to the Old Notes register
the transfer of such Old Notes into the name of the holder withdrawing the
tender. The signature(s) on the notice of withdrawal must be guaranteed by
an Eligible Institution unless such Old Notes have been tendered (i) by a
Registered Holder of Old Notes who has not completed either the box
entitled "Special Issuance Instructions" or the box entitled "Special
Delivery Instructions" on this Letter of Transmittal or (ii) for the
account of an Eligible Institution. All questions as to the validity, form
and eligibility (including time of receipt) of such withdrawal notices
shall be determined by the Company, whose determination shall be final and
binding on all parties. If the Old Notes to be withdrawn have been
delivered or otherwise identified to the Exchange Agent, a signed notice of
withdrawal is effective immediately upon receipt by the Exchange Agent of a
written, or (for DTC participants) electronic ATOP transmission notice of
withdrawal even if physical release is not yet effected. In addition, such
notice must specify, in the case of Old Notes tendered by delivery of
certificates for such Old Notes, the name of the Registered Holder (if different
from that of the tendering
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<PAGE>
holder) to be credited with the withdrawn Old Notes. Withdrawals may not
be rescinded, and any Old Notes withdrawn will thereafter be deemed not
validly tendered for purposes of the Offer. However, properly withdrawn
Old Notes may be retendered by following one of the procedures described
under "The Exchange Offer-Procedures for Tendering Old Notes" in the
Prospectus at any time on or prior to the applicable Expiration Date.
3. Signatures on this Letter of Transmittal, Bond Powers and
Endorsements; Guarantee of Signatures.
If this Letter of Transmittal is signed by the Registered
Holder(s) of the Old Notes tendered hereby, the signature must correspond
exactly with the name(s) as written on the face of the certificates without
any change whatsoever.
If any Old Notes tendered hereby are owned of record by two or
more joint owners, all such owners must sign this Letter of Transmittal.
If any Old Notes tendered hereby are registered in different
names on several certificates, it will be necessary to complete, sign and
submit as many separate copies of this Letter of Transmittal as there are
different registrations of certificates.
When this Letter of Transmittal is signed by the Registered
Holder or holders specified herein and tendered hereby, no endorsements of
certificates or separate bond powers are required unless New Notes are to
be issued, or certificates for any untendered principal amount of Old Notes
are to be reissued, to a person other than the Registered Holder.
If this Letter of Transmittal is signed by a person other than
the Registered Holder or holders of any certificate(s) specified herein
such certificate(s) must be endorsed or accompanied by appropriate bond
powers, in either case signed exactly as the name or names of the
Registered Holder or holders appear(s) on the certificate(s).
If this Letter of Transmittal or a Notice of Guaranteed Delivery
or any certificates or bond powers are signed by trustees, executors,
administrators, guardians, attorneys-in-fact, officers of corporations or
others acting in a fiduciary or representative capacity, such persons
should so indicate when signing, and, unless waived by the Company, proper
evidence satisfactory to the Company of their authority so to act must be
submitted.
Except as described below, signatures on this Letter of
Transmittal or a notice of withdrawal, as the case may be, must be
guaranteed by an Eligible Institution. Signatures on
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<PAGE>
this Letter of Transmittal or a notice of withdrawal, as the case may be,
need not be guaranteed if the Old Notes tendered pursuant hereto are
tendered (i) by a Registered Holder of Old Notes who has not completed
either the box entitled "Special Issuance Instructions" or the box entitled
"Special Delivery Instructions" on this Letter of Transmittal or (ii) for
the account of an Eligible Institution. In the event that signatures on
this Letter of Transmittal or a notice of withdrawal, as the case may be,
are required to be guaranteed, such guarantee must be by a firm which is a
member of a registered national securities exchange or a member of the
National Association of Securities Dealers, Inc. or by a commercial bank or
trust company having an office or correspondent in the United States (each
an "Eligible Institution").
Endorsements on certificates for Old Notes or signatures on bond
powers required by this Instruction 3 must be guaranteed by an Eligible
Institution.
4. Special Issuance and Delivery Instructions.
Tendering holders should indicate in the applicable box the name
and address to which certificates for New Notes and/or substitute
certificates evidencing Old Notes for the principal amounts not exchanged
are to be issued or sent, if different from the name and address of the
person signing this Letter of Transmittal. In the case of issuance in a
different name, the employer identification or social security number of
the person named must also be indicated. If no such instructions are
given, any Old Notes not exchanged will be returned to the name and address
of the person signing this Letter of Transmittal.
5. Tax Identification Number and Backup Withholding.
Federal income tax law of the United States requires that a
holder of Old Notes whose Old Notes are accepted for exchange provide the
Company with his correct taxpayer identification number, which, in the case
of a holder who is an individual, is his social security number, or
otherwise establish an exemption from backup withholding. If the Company
is not provided with the correct taxpayer identification number, the
exchanging holder of Old Notes may be subject to a $50 penalty imposed by
the Internal Revenue Service. In addition, interest on the New Notes
acquired pursuant to the Offer may be subject to backup withholding in an
amount equal to 31% percent of any interest payment. If withholding occurs
and results in an overpayment of taxes, a refund may be obtained.
To prevent backup withholding, each exchanging holder of Old
Notes subject to backup withholding must provide his correct taxpayer
identification number by completing the
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<PAGE>
Substitute Form W-9 provided in this Letter of Transmittal, certifying that
the taxpayer identification number provided is correct (or that the
exchanging holder of Old Notes is awaiting a taxpayer identification
number) and that either (a) the exchanging holder has not been notified by
the Internal Revenue Service that such holder is subject to backup
withholding as a result of failure to report all interest or dividends or
(b) the Internal Revenue Service has notified the exchanging holder that
such holder is no longer subject to backup withholding.
Certain exchanging holders of Old Notes (including, among
others, all corporations and certain foreign individuals) are not subject
to these backup withholding requirements. A foreign individual and other
exempt holders (e.g., corporations) should certify, in accordance with the
enclosed Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9, to such exempt status on the Substitute Form W-9
provided in this Letter of Transmittal.
6. Transfer Taxes.
Holders tendering pursuant to the Offer will not be obligated to
pay brokerage commissions or fees or to pay transfer taxes with respect to
their exchange under the Offer unless the box entitled "Special Issuance
Instructions" in this Letter of Transmittal has been completed, or unless
the securities to be received upon exchange are to be issued to any person
other than the holder of the Old Notes tendered for exchange. The Company
will pay all other charges or expenses in connection with the Offer. If
holders tender Old Notes for exchange and the Offer is not consummated,
certificates representing the Old Notes will be returned to the holders at
the Company's expense.
Except as provided in this Instruction 6, it will not be
necessary for transfer tax stamps to be affixed to the certificate(s)
specified in this Letter of Transmittal.
7. Inadequate Space.
If the space provided herein is inadequate, the aggregate principal
amount of the Old Notes being tendered and the certificate numbers (if
available) should be listed on a separate schedule attached hereto and
separately signed by all parties required to sign this Letter of
Transmittal.
8. Partial Tenders.
Tenders of Old Notes will be accepted only in integral
multiples of $1,000. If tenders are to be made with respect to less than
the entire principal amount of any Old Notes, fill in the principal amount
of Old Notes which are tendered in column (iv) of the "Description of Old
Notes." In
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<PAGE>
the case of partial tenders, new certificates representing the Old Notes in
fully registered form for the remainder of the principal amount of the Old
Notes will be sent to the person(s) signing this Letter of Transmittal,
unless otherwise indicated in the appropriate place on this Letter of
Transmittal, as promptly as practicable after the expiration or termination
of the Offer.
Unless otherwise indicated in column (iv) in the box labeled
"Description of Old Notes," and subject to the terms and conditions of the
Offer, tenders made pursuant to this Letter of Transmittal will be deemed
to have been made with respect to the entire aggregate principal amount
represented by the Old Notes indicated in column (iii) of such box.
9. Mutilated, Lost, Stolen or Destroyed Old Notes.
Any holder whose Old Notes have been mutilated, lost, stolen or
destroyed should contact the Exchange Agent at the address indicated above
for further instructions.
10. Requests for Assistance or Additional Copies.
Requests for assistance or additional copies of the Prospectus
or this Letter of Transmittal may be obtained from Customer Service of
the Exchange Agent at the telephone number set forth below.
Telephone: (800) 548-6565
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