<PAGE>
SUBJECT TO COMPLETION, DATED JUNE 18, 1999
INFORMATION CONTAINED IN THIS PROSPECTUS SUPPLEMENT IS NOT COMPLETE AND MAY BE
CHANGED. THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS DO NOT
CONSTITUTE AN OFFER TO SELL THESE SECURITIES OR A SOLICITATION OF AN OFFER TO
BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
<PAGE>
PRELIMINARY PROSPECTUS SUPPLEMENT Filed Pursuant to Rule 424b5
(To Prospectus Dated June 18, 1999) Registration No. 333-76595
$430,000,000
PREMIER PARKS INC.
[LOGO]
% SENIOR NOTES DUE 2007
________________________________________________________________________________
We are offering $430.0 million in aggregate principal amount of our %
Senior Notes due 2007. We will pay interest on the notes twice a year on
and , beginning on , 1999.
We may redeem all or part of the notes at the redemption prices and on the
conditions specified in this prospectus supplement under "Description of
Notes--Optional Redemption."
The notes will be senior unsecured obligations of Premier Parks Inc. The notes
will not be guaranteed by our subsidiaries.
The offering of the notes is being made in order to fund the tender offers by
Premier Parks Operations Inc. and Six Flags Theme Parks Inc., our two primary
operating subsidiaries, for up to $375.0 million aggregate principal amount of
their outstanding notes. The completion of the tender offers is conditioned,
among other things, upon the sale of the notes in this offering. The remaining
proceeds from the sale of the notes will be used to pay premiums, including
consent fees, associated with the tender offers (estimated to be approximately
$39.1 million), and to pay tender offer fees and expenses.
INVESTING IN THE NOTES INVOLVES RISKS--RISK FACTORS BEGIN ON PAGE S-12
OF THIS PROSPECTUS SUPPLEMENT AND PAGE 8 OF THE ACCOMPANYING PROSPECTUS.
<TABLE>
<CAPTION>
PER NOTE TOTAL
----------- --------------
<S> <C> <C>
Public Offering Price................................................................ % $
Underwriting Discount................................................................ % $
Proceeds to Premier Parks Inc. (before expenses)..................................... % $
</TABLE>
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The Underwriters expect to deliver the notes on or about June , 1999.
________________________________________________________________________________
LEHMAN BROTHERS
SALOMON SMITH BARNEY
GOLDMAN, SACHS & CO.
MERRILL LYNCH & CO.
MORGAN STANLEY DEAN WITTER
ING BARINGS
ALLEN & COMPANY INCORPORATED
BNY CAPITAL MARKETS, INC.
June , 1999
<PAGE>
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
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PAGE
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<S> <C>
Special Note on Forward-Looking Statements................................................................. S-3
Prospectus Supplement Summary.............................................................................. S-4
Risk Factors............................................................................................... S-12
Use of Proceeds............................................................................................ S-12
Capitalization............................................................................................. S-13
Historical and Pro Forma Financial and Operating Data...................................................... S-14
Management's Discussion and Analysis of Financial Condition and Results of Operations...................... S-18
Business................................................................................................... S-30
Management................................................................................................. S-39
Description of Notes....................................................................................... S-45
Description of Other Indebtedness.......................................................................... S-79
Certain United States Federal Income Tax Considerations.................................................... S-82
Underwriting............................................................................................... S-85
Legal Matters.............................................................................................. S-86
PROSPECTUS
About This Prospectus...................................................................................... 3
Where You Can Find More Information........................................................................ 3
Special Note On Forward-Looking Statements................................................................. 4
Premier Parks Inc.......................................................................................... 5
Risk Factors............................................................................................... 8
Consolidated Ratio of Earnings to Fixed Charges and Consolidated Ratio of Earnings to Combined Fixed
Charges and Preferred Stock Dividends.................................................................... 14
Use Of Proceeds............................................................................................ 14
Unaudited Pro Forma Statement of Operations and Other Data................................................. 15
Description of Debt Securities............................................................................. 20
Description of Common Stock................................................................................ 26
Description of Preferred Stock............................................................................. 28
Description of Warrants.................................................................................... 33
Description of Units....................................................................................... 34
Plan Of Distribution....................................................................................... 35
Legal Matters.............................................................................................. 36
Experts.................................................................................................... 36
</TABLE>
You should rely only on the information contained in or incorporated by
reference in this prospectus supplement and the accompanying prospectus. We have
not authorized anyone to provide you with different information. We are not
making an offer of these securities in any state where the offer is not
permitted. You should not assume that the information contained in or
incorporated by reference in this prospectus supplement or the accompanying
prospectus is accurate as of any date other than the dates of this prospectus
supplement or the accompanying prospectus or that any information we have
incorporated by reference is accurate as of any date other than the date of the
document incorporated by reference.
S-2
<PAGE>
SPECIAL NOTE ON FORWARD-LOOKING STATEMENTS
Some of the statements contained in or incorporated by reference in this
prospectus supplement or the accompanying prospectus discuss our plans and
strategies for our business or make other forward-looking statements, as this
term is defined in the Private Securities Litigation Reform Act. The words
"anticipates," "believes," "estimates," "expects," "plans," "intends" and
similar expressions are intended to identify these forward-looking statements,
but are not the exclusive means of identifying them. These forward-looking
statements reflect the current views of our management; however, various risks,
uncertainties and contingencies could cause our actual results, performance or
achievements to differ materially from those expressed in, or implied by, these
statements, including the following:
- the success or failure of our efforts to implement our business strategy
- the other factors discussed under the heading "Risk Factors" and elsewhere
in this prospectus supplement and the accompanying prospectus
We do not have any obligation to update publicly any forward-looking
statements, whether as a result of new information, future events or otherwise.
For a discussion of important risks of an investment in our securities,
including factors that could cause actual results to differ materially from
results referred to in the forward-looking statements, see "Risk Factors" in
this prospectus supplement and the accompanying prospectus. You should carefully
consider the information set forth under the caption "Risk Factors" in this
prospectus supplement and the accompanying prospectus. In light of these risks,
uncertainties and assumptions, the forward-looking events discussed in or
incorporated by reference in this prospectus supplement or the accompanying
prospectus might not occur.
S-3
<PAGE>
PROSPECTUS SUPPLEMENT SUMMARY
THIS SUMMARY MAY NOT CONTAIN ALL THE INFORMATION THAT MAY BE IMPORTANT TO
YOU. YOU SHOULD READ THE ENTIRE PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING
PROSPECTUS, AS WELL AS THE INFORMATION INCORPORATED BY REFERENCE IN THIS
PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS, BEFORE MAKING AN
INVESTMENT DECISION. IN THIS PROSPECTUS SUPPLEMENT, WE REFER TO PREMIER PARKS
INC. AND ITS SUBSIDIARIES AS "WE," "THE COMPANY" OR "PREMIER," UNLESS THE
CONTEXT CLEARLY INDICATES OTHERWISE.
THE COMPANY
GENERAL
We are the largest regional theme park operator and the second largest theme
park company in the world, based on 1998 attendance of approximately 38.7
million. We operate 34 regional parks, located in geographically diverse markets
with concentrated populations across the United States, as well as in Mexico,
France, Belgium and The Netherlands. Our parks include 16 of the 50 most highly
attended theme parks in North America. Our theme parks serve 9 of the 10 largest
metropolitan areas in the United States. We estimate that approximately
two-thirds of the population of the continental United States live within a
150-mile radius of one of our theme parks.
Since 1992, we have made numerous acquisitions of theme parks and have
achieved significant internal growth. In April 1998, we acquired all of the Six
Flags parks, consisting of eight regional theme parks, as well as three
separately gated water parks and a wildlife safari park (each of which is
located near one of the Six Flags theme parks). In March 1998, we expanded our
operations internationally by acquiring the European-based Walibi theme park
operations, which included three parks located in France, two in Belgium and one
in The Netherlands. We have continued our expansion in 1999 by acquiring Reino
Aventura, a theme park in Mexico City, Mexico, White Water Atlanta, a water park
located near Atlanta, Georgia, and Splashtown, a water park located near
Houston, Texas. These 1998 and 1999 park acquisitions have greatly expanded our
operations, which previously consisted of nine regional theme parks (seven of
which include a water park component) and four water parks at locations across
the United States.
During the 1998 operating season, the U.S. parks we owned or operated drew,
on average, approximately 75% of their patrons from within a 100-mile radius,
with approximately 36% of visitors utilizing group and other pre-sold tickets
and approximately 23% utilizing season passes. Our parks are individually themed
and provide a complete family-oriented entertainment experience. Our theme parks
generally offer 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. Our theme parks offer more than 800 rides,
including more than 90 roller coasters, making us the leading operator of thrill
rides in the industry.
Six Flags has operated regional theme parks under the Six Flags name for
over thirty years and has established a nationally recognized brand name. We
have worldwide ownership of the "Six Flags" brand name. To capitalize on this
name recognition, for the 1998 season we began using the Six Flags name at one
of our other parks (Six Flags Kentucky Kingdom) and we have added the name to
four additional parks for the 1999 season (Six Flags Elitch Gardens, Six Flags
America (formerly Adventure World), Six Flags Darien Lake and Six Flags Marine
World).
As part of our Six Flags acquisition, we obtained the exclusive license for
theme park usage throughout the United States (except the Las Vegas metropolitan
area) and Canada of certain Warner Bros. and DC Comics characters. These
characters include BUGS BUNNY, DAFFY DUCK, TWEETY BIRD, YOSEMITE SAM, BATMAN,
SUPERMAN and others. Since 1991, these characters have been used to market the
Six Flags parks and to provide visitors with an enhanced family entertainment
experience. Our license, which applies to all of our current U.S. theme parks,
as well as parks we may acquire that meet certain criteria, includes
S-4
<PAGE>
the right to sell merchandise featuring the characters at our parks, and to use
the characters in our advertising, as walk-around characters, in theming for
rides and attractions, and in retail outlets. Since the Six Flags acquisition,
we have continued making extensive use of these characters at the Six Flags
parks and, commencing in 1999, we have added the characters at many of our other
U.S. parks. We believe using these characters promotes increased attendance,
supports higher ticket prices, increases lengths-of-stay and enhances in-park
spending.
Since 1989, under our current management we have assumed control of 33 parks
and have achieved significant internal growth. For example, during 1998, the 13
parks which we controlled prior to the acquisitions of Six Flags, Walibi, Reino
Aventura, White Water Atlanta and Splashtown achieved same park growth in
attendance, revenue and park-level operating cash flow (representing all park
operating revenues and expenses without depreciation and amortization or
allocation of corporate overhead or interest expense) of 14.4%, 20.3% and 35.0%,
respectively, as compared to 1997.
We believe that our parks benefit from limited direct competition, since the
combination of a limited supply of real estate appropriate for theme park
development, high initial capital investment, long development lead-time and
zoning restrictions provides each of our parks with a significant degree of
protection from competitive new theme park openings. Based on our knowledge of
the development of other theme parks in the United States, we estimate that it
would cost at least $200 million and would take a minimum of two years to
construct a new regional theme park comparable to our largest parks.
Our senior and operating management team has extensive experience in the
theme park industry. Our nine senior executive officers have over 150 years
aggregate experience in the industry and our twenty-five general managers have
an aggregate of in excess of 440 years experience in the industry, including in
excess of 320 years at parks we operate.
According to AMUSEMENT BUSINESS, total North American amusement/theme park
attendance in 1998 was approximately 265-270 million. Total attendance for the
50 largest parks in North America was 165.7 million in 1998, compared to 145.0
million in 1994, representing a compound annual growth rate of 3.4%. The Company
believes that this growth reflects two trends: (i) demographic growth in the
5-24 year old age group, which is expected to continue through 2010, and (ii) an
increasing emphasis on family-oriented leisure and recreation activities.
STRATEGY
Our strategy for achieving continued growth includes pursuing growth at our
existing parks, expanding our parks, and making selective acquisitions.
PURSUING GROWTH AT OUR EXISTING PARKS
We believe there are substantial opportunities for continued growth at our
parks. We seek to increase revenue by increasing attendance and per capita
spending, while also maintaining strict control of operating expenses. The
primary elements we use to achieve these objectives are:
- adding rides and attractions and improving overall park quality
- adding the Six Flags brand name and the characters licensed from Warner
Bros. and DC Comics at selected parks
- enhancing marketing and sponsorship programs
- increasing group sales, season passes and other pre-sold tickets
- using ticket pricing strategies to maximize ticket revenues and park
utilization
- adding and enhancing restaurants and merchandise and other revenue outlets
- adding special events
S-5
<PAGE>
Our approach is designed to exploit the operating leverage inherent in the
theme park business. Once parks achieve certain critical attendance levels,
operating cash flow margins increase because revenue growth through incremental
attendance gains and increased in-park spending is not offset by a comparable
increase in operating expenses, because a large portion of these expenses is
relatively fixed during any given year.
EXPANDING OUR PARKS
We have expanded several of our parks by adding complementary attractions,
such as campgrounds, lodging facilities, new water parks and concert venues, in
order to increase attendance and per capita spending. For example, for the 1998
season we constructed a hotel at our Darien Lake park to supplement the existing
campgrounds, and in 1998 we purchased campgrounds and a hotel adjacent to Geauga
Lake. Further, we are adding a water park to Six Flags St. Louis for the 1999
season and plan to add a water park to Six Flags Great Adventure (located
between New York City and Philadelphia) for the 2000 season. We own additional
acreage which is suitable for development at many of our parks. For example, we
own over 1,500 undeveloped acres adjacent to Six Flags Great Adventure and 400
acres adjacent to Six Flags America (formerly Adventure World) suitable for
additional complementary purposes.
MAKING SELECTIVE ACQUISITIONS
The regional theme park industry is highly fragmented. We believe that, in
addition to our recent acquisitions, there are numerous acquisition
opportunities, both in the U.S. and abroad, through which we can further expand
our business. While we will continue to pursue acquisitions of regional parks
with annual attendance between 300,000 and 1.5 million, we will also consider
acquisitions of larger parks or park chains.
We believe we have a number of competitive advantages in acquiring theme
parks. Operators of destination or large regional park chains, other than Cedar
Fair L.P., have generally not been actively seeking to acquire parks in recent
years. Additionally, as a multi-park operator with a track record of
successfully acquiring, improving and repositioning parks, we believe we have
numerous competitive advantages over single-park operators in pursuing
acquisitions and improving the operating results at acquired parks. These
advantages include our ability to:
- exercise group purchasing power (for both operating expenses and capital
assets)
- use the Six Flags brand name and the characters licensed from Warner Bros.
and DC Comics
- attract greater sponsorship revenue and support from sponsors with
nationally-recognized brands and marketing partners
- achieve administrative economies of scale
- recruit and retain superior management
- use our access to capital markets as well as our common stock as all or a
portion of future acquisition consideration
ADDRESS
Our executive offices are located at 11501 Northeast Expressway, Oklahoma
City, Oklahoma 73131, (405) 475-2500, and at 122 East 42nd Street, New York, New
York 10168, (212) 599-4690.
S-6
<PAGE>
THE TENDER OFFERS
On May 27, 1999, each of Premier Parks Operations Inc. ("Premier
Operations") and Six Flags Theme Parks Inc. ("SFTP"), our two primary operating
subsidiaries, commenced tender offers to purchase up to $375.0 million aggregate
principal amount of their outstanding notes.
Premier Operations is offering to purchase for cash all of its outstanding
12% Series A Senior Notes due 2003. These notes were originally issued in August
1995 in the aggregate principal amount of $90.0 million, all of which remains
outstanding. SFTP is offering to purchase for cash all of its outstanding
12 1/4% Senior Subordinated Discount Notes due 2005. These notes were originally
issued in June 1995 in the aggregate principal amount at maturity of $285.0
million, all of which remains outstanding. The consummation of the tender offers
is conditioned, among other things, upon our sale of the notes being offered
pursuant to this prospectus supplement and the accompanying prospectus.
Concurrent with their respective tender offers, Premier Operations and SFTP
have obtained consents to the adoption of certain proposed amendments to the
indentures governing the Premier Operations and SFTP notes which, upon
consummation of the tender offers, will eliminate certain restrictive covenants
and other provisions contained in such indentures.
As a condition to the consummation of the tender offers, the Premier and Six
Flags credit facilities have been amended to permit Premier Operations and SFTP
to pay dividends to Premier to fund interest payments on the notes offered
hereby.
We intend to use the proceeds from the sale of the notes offered pursuant to
this prospectus supplement and the accompanying prospectus to fund these tender
offers and consent solicitations. We expect to consummate the tender offers
concurrently with the sale of the notes offered hereby.
The following table sets forth the expected sources and uses of funds from
this offering (assuming that 100% of the Premier Operations and SFTP notes are
tendered and purchased in the tender offers):
<TABLE>
<CAPTION>
AMOUNT
SOURCES (IN THOUSANDS)
- ------------------------------------------------------------------------------ --------------
<S> <C>
Notes offering................................................................ $ 430,000
--------------
--------------
USES
- ------------------------------------------------------------------------------
Purchase of Premier Operations 12% notes...................................... $ 100,200(1)
Purchase of SFTP 12 1/4% notes................................................ 319,500(1)
Offering fees, expenses and discounts and tender offer fees and expenses...... 10,300
--------------
Total......................................................................... $ 430,000
--------------
--------------
</TABLE>
- ------------------------
(1) Includes estimated premiums, including consent fees, associated with the
tender offers (estimated to be approximately $39.1 million) and accrued
interest on the tendered notes (estimated to be approximately $5.6 million
in the aggregate).
S-7
<PAGE>
Following the consummation of this offering and assuming 100% of each series
of notes are tendered and purchased in the tender offers, our capital structure
will be:
[CHART DETAILING CAPITAL STRUCTURE]
(a) Premier 10% Senior Discount Notes due 2008 in the aggregate principal amount
at maturity of $410.0 million (accreted balance of $277.5 million at March
31, 1999). Cash interest will be payable semi-annually after April 1, 2003.
(b) Premier Senior Notes due 2007 in the aggregate principal amount of $430.0
million, offered hereby.
(c) Premier 9 1/4% Senior Notes due 2006 in the aggregate principal amount of
$280.0 million. Approximately $70.7 million of the proceeds has been placed
in escrow to fund the first six semi-annual interest payments.
(d) Mandatorily convertible into the Company's common stock on April 1, 2001.
Requires annual dividends equal to 7 1/2% of the amount outstanding, payable
in cash or common stock at the Company's option.
(e) Premier Operations and SFTP are the principal operating subsidiaries of
Premier. The credit facilities of these entities have been amended to permit
payment of cash dividends to service interest on the $430.0 million Premier
notes offered hereby.
(f) The proceeds, together with other funds, were used to establish an escrow to
provide for the full repayment of the SFEC zero coupon senior notes (omitted
from this chart), at or prior to maturity in December 1999.
(g) Includes borrowings of $20.0 million at March 31, 1999 under the $75.0
million revolving credit facility, which must be paid in full once each
year.
* Shaded area denotes this offering.
S-8
<PAGE>
MAY 1999 ACQUISITIONS
In 1999, we have continued to implement our strategy of expanding our
operations through strategic park acquisitions. Our May 1999 acquisitions were
comprised of the following:
REINO AVENTURA. We acquired the Reino Aventura theme park in Mexico City,
Mexico for approximately $59.0 million, all of which was paid in cash. There are
approximately 22 million people living within 50 miles of the park. Reino
Aventura is the largest paid admission theme park in Mexico, based on 1998
attendance of approximately 1.7 million. The park, which first opened in 1982,
is located on a site of approximately 107 acres. We intend to re-brand this park
as a Six Flags park for the 2000 season in connection with a substantial
investment in additional rides and attractions, and expect a significant
increase in park performance as a result.
WHITE WATER ATLANTA. We acquired, through the partnership that owns Six
Flags Over Georgia, the White Water Atlanta water park located near Atlanta,
Georgia and approximately 20 miles from our Six Flags Over Georgia park. The
water park, which is located on a site of approximately 70 acres, had averaged
attendance of approximately 600,000 over the five years immediately prior to
1998. In 1998, the park experienced a fall-off in attendance to approximately
385,000 persons after an isolated e-coli bacteria incident caused by a park
guest. We believe that appropriate protective measures have been taken to
prevent similar incidents in the future. We believe that we can increase
attendance and revenues at both White Water Atlanta and our existing Six Flags
Over Georgia park through joint season pass and other joint ticketing and
marketing programs, and can increase operating efficiencies at both facilities
through shared expenses.
SPLASHTOWN. We acquired the Splashtown water park, located near Houston,
Texas and approximately 30 miles from our Six Flags AstroWorld and Six Flags
Water World parks. The water park, which is located on a site of approximately
60 acres, had 1998 attendance of approximately 465,000. We believe we can
increase attendance and revenues at both Splashtown and our existing Six Flags
AstroWorld and Six Flags Water World parks through joint season pass and other
joint ticketing and marketing programs, and can increase operating efficiencies
at all three facilities through shared expenses.
S-9
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THE OFFERING
<TABLE>
<S> <C>
Securities Offered.......... $430,000,000 in aggregate principal amount of % Senior
Notes due 2007.
Maturity Date............... , 2007.
Interest Payment Dates...... and of each year commencing , 1999.
Ranking..................... The notes:
- are general unsecured obligations of Premier Parks Inc.
- are PARI PASSU in right of payment with all our existing and
future senior indebtedness
- are not guaranteed by our subsidiaries
- are effectively subordinated to all indebtedness and other
liabilities (including trade payables) of our subsidiaries
Assuming consummation of this offering and the full $375.0
million aggregate principal amount of outstanding notes are
tendered and purchased in the Premier Operations and SFTP
tender offers, as of March 31, 1999, Premier on an
unconsolidated basis would have had total outstanding
indebtedness with a carrying value of $987.5 million (all of
which is senior indebtedness) and Premier's subsidiaries would
have had total indebtedness of $1,119.6 million (including
$185.4 million of notes which we will repay on or prior to
December 15, 1999 with funds already deposited in escrow) and
approximately $209.6 million outstanding of other liabilities
(other than deferred income taxes).
Optional Redemption......... On or after , 2003, we may redeem some or all of the
notes at any time at the redemption prices listed in the
section "Description of Notes" under the heading "Optional
Redemption."
Before , 2002, we may redeem up to 35% of the aggregate
principal amount of notes with the proceeds of certain public
offerings of our equity and/or strategic equity investments at
the price listed in the section "Description of Notes" under
the heading "Optional Redemption."
Mandatory Offer to If we experience specific kinds of changes in control, we must
Repurchase.................. offer to repurchase the notes at a purchase price equal to
101% of the aggregate principal amount of the notes, plus
accrued and unpaid interest to the date of purchase. There can
be no assurance that we will be able to raise sufficient funds
to meet this obligation should it arise. See "Risk
Factors--Change of Control Payment" and "Description of
Notes--Repurchase at the Option of Holders--Change of
Control." We must also offer to repurchase the notes if we
sell certain assets and do not reinvest the proceeds from
these sales. See "Description of Notes--Repurchase at the
Option of Holders--Asset Sales."
</TABLE>
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<TABLE>
<S> <C>
Certain Covenants........... We will issue the notes under an indenture containing
covenants for your benefit. These covenants restrict our
ability and the ability of our subsidiaries, with certain
exceptions, to, among other things:
- pay dividends or make other restricted payments
- incur additional debt or issue preferred stock
- engage in sale and leaseback transactions
- create or permit to exist liens
- incur dividends or other payment restrictions affecting
subsidiaries
- consolidate, merge or transfer all or substantially all our
assets
- enter into transactions with affiliates
- issue or sell equity interests in subsidiaries
- engage in certain business activities
For more details, see the section "Description of
Notes--Certain Covenants."
Use of Proceeds............. We intend to apply the net proceeds from this offering to fund
the tender offers by Premier Operations and SFTP for up to
$375.0 million aggregate principal amount of their outstanding
notes, to pay premiums, including consent fees, associated
with the tender offers (estimated to be approximately $39.1
million), to pay accrued interest on the tendered notes
(estimated to be approximately $5.6 million) and to pay tender
offer fees and expenses. See "Use of Proceeds."
</TABLE>
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<PAGE>
RISK FACTORS
YOU SHOULD CAREFULLY CONSIDER EACH OF THE FOLLOWING RISKS, AS WELL AS THE
RISKS SET FORTH IN THE ACCOMPANYING PROSPECTUS, AND ALL OTHER INFORMATION SET
FORTH IN THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS BEFORE
DECIDING TO INVEST IN OUR NOTES.
CHANGE OF CONTROL PAYMENT--WE MAY NOT BE ABLE TO REPURCHASE NOTES UPON A CHANGE
OF CONTROL.
If specified change of control events occur, each holder of the notes will
have the right to require us, subject to certain conditions, to repurchase all
or any part of that holder's notes. See "Description of Notes--Repurchase at the
Option of Holders--Change of Control." Prior to repurchasing the notes, however,
we may be required to repay all or some of our debt under our other debt
arrangements or to obtain consents from the lenders to permit the repurchase. If
we cannot repay that debt or obtain the consents necessary under those debt
arrangements, we may not be able to repurchase the notes. Also, we may not have
sufficient funds available or be able to obtain the financing necessary to make
any of the debt payments, including repurchases of the notes, described above.
If a change of control occurred and we did not have the funds or financing
available to make the debt payments and to repurchase the notes, an event of
default would be triggered under the indenture governing the notes and certain
of our other debt instruments. Each of these defaults could have a material
adverse effect on us and the holders of the notes.
HOLDING COMPANY STRUCTURE--ABILITY OF SUBSIDIARIES TO PROVIDE CASH FOR DEBT
SERVICE ON THE NOTES.
Premier is a holding company with limited assets, and we conduct
substantially all of our operations through our subsidiaries. Substantially all
of our income is from our subsidiaries. We will be dependent upon dividends and
other distributions from subsidiaries to generate the funds necessary to make
payments of principal and interest on the notes.
The ability of our subsidiaries to pay dividends to us is subject to, among
other things, the terms of the various debt instruments already issued by our
subsidiaries and which may in the future be issued by them.
On a pro forma basis, after giving effect to the consummation of this
offering and the tender offers (assuming 100% of the outstanding aggregate
principal amount of each of the Premier Operations and SFTP notes is tendered
and purchased pursuant to the tender offers), subject to compliance with certain
ratios, our subsidiaries would be able to pay dividends to us of up to
approximately $536.5 million in the aggregate under the applicable indentures of
such subsidiaries. Under our credit facilities, SFTP can pay semi-annual
dividends to us in an aggregate amount up to 76% of the semi-annual cash
interest payments on the notes offered hereby and Premier Operations can pay
semi-annual dividends to us in an aggregate amount up to 24% of the semi-annual
cash interest payments on the notes offered hereby. An inability by either SFTP
or Premier Operations to make dividend payments to us could result in our
inability to meet the cash interest obligations on the notes in the absence of a
bank waiver.
USE OF PROCEEDS
We expect the net proceeds from this offering, after deducting underwriting
discounts and commissions and estimated expenses payable by us, to be
approximately $421.0 million. We intend to use the net proceeds from this
offering to fund the tender offers by Premier Operations and SFTP for up to
$375.0 million aggregate principal amount of their outstanding notes, to pay
premiums, including consent fees, associated with the tender offers (estimated
to be approximately $39.1 million), to pay accrued interest on the tendered
notes (estimated to be approximately $5.6 million) and to pay tender offer fees
and expenses. If any notes are not so tendered, the excess proceeds will be used
for general corporate purposes.
Pending their ultimate use, any net proceeds from this offering not used in
connection with the tender offers may be invested in short-term, investment
grade, interest-bearing securities, certificates of deposit or direct or
guaranteed obligations of the United States.
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CAPITALIZATION
The following table sets forth as of March 31, 1999, (i) our actual
capitalization, and (ii) our pro forma capitalization after giving effect to the
consummation of the tender offers (assuming the full $375.0 million aggregate
principal amount of notes is tendered and purchased and $39.1 million of
premiums and consent fees are paid) and this offering. This table should be read
in conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations."
<TABLE>
<CAPTION>
MARCH 31, 1999
--------------------------
<S> <C> <C>
ACTUAL PRO FORMA
------------ ------------
<CAPTION>
(UNAUDITED)
(IN THOUSANDS, EXCEPT
SHARE AMOUNTS)
<S> <C> <C>
Cash and cash equivalents................................................. $ 261,372 $ 261,372
------------ ------------
------------ ------------
Restricted-use investments(1)............................................. $ 321,651 $ 321,651
------------ ------------
------------ ------------
Current maturities of long-term debt(2)................................... $ 222,088 $ 222,088
------------ ------------
------------ ------------
Long-term debt and capitalized lease obligations (excluding current
maturities):
Premier Operations credit facility.................................... $ 188,000 $ 188,000
Six Flags credit facility............................................. 408,500 408,500
Premier Parks 10% senior discount notes............................... 277,503 277,503
Premier Parks 9 1/4% senior notes..................................... 280,000 280,000
Premier Parks % senior notes offered hereby........................ -- 430,000
Premier Operations 12% senior notes................................... 90,000 --(3)
Premier Operations 9 1/4% senior notes................................ 125,000 125,000
Six Flags Entertainment Corporation 8 7/8% senior notes............... 170,000 170,000
SFTP 12 1/4% senior subordinated notes................................ 319,776(4) --(3)
Capitalized lease obligations......................................... 6,003 6,003
------------ ------------
Total long-term debt and capitalized lease obligations.............. 1,864,782 1,885,006(3)
------------ ------------
Stockholders' equity: common stock (150,000,000 shares authorized;
76,866,063 shares outstanding), and preferred stock (5,000,000 shares
authorized; 11,500 shares outstanding).................................. 1,536,497 1,530,895(5)
------------ ------------
Total capitalization................................................ $ 3,401,279 $ 3,415,901
------------ ------------
------------ ------------
</TABLE>
- ------------------------
(1) Includes cash which has been deposited in escrow and will be used to repay
the Six Flags Entertainment Corporation ("SFEC") zero coupon senior notes on
or prior to December 15, 1999.
(2) Includes $185.4 million carrying value of SFEC zero coupon senior notes,
which will be repaid at or prior to December 15, 1999 with funds already
deposited in escrow and reflected in restricted-use investments.
(3) Assumes 100% of the Premier Operations notes and SFTP notes are tendered and
purchased in the tender offers.
(4) Represents the carrying value of such notes, which is based on the estimated
fair value of such notes at April 1, 1998, the date of the Six Flags
acquisition. See Note 6 to Notes to Premier's Consolidated Financial
Statements, which are incorporated herein by reference. The fair market
value adjustment is being amortized over the remaining terms of the notes.
The principal amount outstanding of such notes is $285.0 million.
(5) Includes the tax-effected estimated extraordinary loss on early
extinguishment of debt of $5.6 million, as a result of the consummation of
the Premier Operations and SFTP tender offers.
S-13
<PAGE>
HISTORICAL AND PRO FORMA FINANCIAL AND OPERATING DATA
The following historical financial and operating data as of and for each of
the years in the three-year period ended December 31, 1998 are derived from our
audited financial statements, which are incorporated herein by reference. The
data as of and for the three-month periods ended March 31, 1998 and March 31,
1999 are derived from our unaudited financial statements, which are incorporated
herein by reference. The historical financial data for the year ended December
31, 1996 include the operations of Six Flags Elitch Gardens from October 31,
1996, the Waterworld parks from November 19, 1996 and The Great Escape from
December 4, 1996 (the dates of their respective acquisitions). The historical
financial data for the year ended December 31, 1997 include the operations of
Riverside Park from February 5, 1997 and Six Flags Kentucky Kingdom from
November 7, 1997 (the dates of their respective acquisitions). The historical
financial data for the year ended December 31, 1998 include the operations of
Walibi from March 26, 1998 and Six Flags from April 1, 1998 (the dates of their
respective acquisitions).
The following pro forma financial and operating data for the year ended
December 31, 1998 are derived from the Unaudited Pro Forma Statements of
Operations and Other Data appearing in the accompanying prospectus. The pro
forma financial and operating data are presented for informational purposes
only, have been prepared based on estimates and assumptions which we have deemed
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 relevant
acquisitions and financings had occurred on the assumed dates or which may be
achieved in the future.
S-14
<PAGE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------------------- THREE MONTHS ENDED MARCH
1998 31,
------------------------ ------------------------
1996 1997 PRO 1998 1999
----------- ------------- ----------- -----------
ACTUAL
FORMA(1)
----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
(UNAUDITED)
<CAPTION>
(IN THOUSANDS, EXCEPT PER SHARE AND RATIO AMOUNTS)
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenue:
Theme park admissions................ $ 41,162 $ 94,611 $ 423,461 $ 439,391 $ 3,779 $ 29,387
Theme park food, merchandise and
other.............................. 52,285 99,293 390,166 399,146 3,052 24,262
----------- ------------- ----------- ----------- ----------- -----------
Total revenue.................... 93,447 193,904 813,627 838,537 6,831 53,649
----------- ------------- ----------- ----------- ----------- -----------
Operating costs and expenses:
Operating expenses................... 42,425 81,356 297,266 347,571 11,375 52,780
Selling, general and
administrative..................... 16,927 35,442 126,985 149,670 7,089 35,052
Noncash compensation................. -- 1,125 6,362 6,362 675 5,035
Cost of products sold................ 11,101 23,025 103,051 106,056 137 3,193
Depreciation and amortization........ 8,533 19,792 109,841 137,124 5,801 35,729
----------- ------------- ----------- ----------- ----------- -----------
Total operating costs and
expenses....................... 78,986 160,720 643,505 746,783 25,077 131,789
----------- ------------- ----------- ----------- ----------- -----------
Income (loss) from operations........ 14,461 33,184 170,122 91,754 (18,246) (78,140)
----------- ------------- ----------- ----------- ----------- -----------
Other income (expense):
Interest expense, net................ (11,121) (17,775) (115,849) (155,901) (6,180) (38,873)
Equity in operations of theme park
partnerships....................... -- -- 24,054 10,902 -- (7,907)
Termination fee, net of expenses..... -- 8,364 -- -- -- --
Minority interest.................... -- -- (960) (960) -- (239)
Other income (expense)............... (78) (59) (1,023) (1,024) (10) --
----------- ------------- ----------- ----------- ----------- -----------
Total other income (expense)..... (11,199) (9,470) (93,778) (146,983) (6,190) (47,019)
----------- ------------- ----------- ----------- ----------- -----------
Income (loss) before income taxes.... 3,262 23,714 76,344 (55,229) (24,436) (125,159)
Income tax expense (benefit)........... 1,497 9,615 40,716 (2,108) (9,774) (42,345)
----------- ------------- ----------- ----------- ----------- -----------
Income (loss) before extraordinary
loss............................... $ 1,765 $ 14,099 $ 35,628 $ (53,121) $ (14,662) $ (82,814)
----------- ------------- ----------- ----------- ----------- -----------
----------- ------------- ----------- ----------- ----------- -----------
Income (loss) before extraordinary
loss per common share--basic(2).... $ .07 $ .39 $ .27 $ (1.01) $ (.39) $ (1.16)
----------- ------------- ----------- ----------- ----------- -----------
----------- ------------- ----------- ----------- ----------- -----------
Income (loss) before extraordinary
loss per common share--diluted(2).. $ .06 $ .38 $ .26 $ (1.01) $ (.39) $ (1.16)
----------- ------------- ----------- ----------- ----------- -----------
----------- ------------- ----------- ----------- ----------- -----------
OTHER DATA:
EBITDA(3).............................. $ 22,994 $ 62,465(4) $ 286,325 $ 235,240 $ (11,770) $ (37,376)
Adjusted EBITDA(5)..................... $ 22,994 $ 62,465(4) $ 321,733 $ 258,943 $ (11,770) $ (41,170)
Net cash provided by (used in)
operating activities................. $ 11,331 $ 47,150 $ 119,010 $ 95,046 $ (27,644) $ (25,857)
Capital expenditures................... $ 38,995 $ 129,049 $ 205,754 $ 231,089 $ 47,248 $ 111,459
Ratio of earnings to fixed
charges(6)........................... 1.3x 2.3x 1.5x (6) (6) (6)
Ratio of earnings to combined fixed
charges and preferred stock
dividends(6)......................... 1.2x 2.3x 1.2x (6) (6) (6)
RATIOS FOR THE TWELVE MONTHS ENDED
MARCH 31, 1999(7):
Net debt/Adjusted EBITDA............... 5.1x
Total debt/Adjusted EBITDA............. 6.5x
Adjusted EBITDA/cash interest expense,
net.................................. 2.5x
Adjusted EBITDA/total interest expense,
net.................................. 2.0x
</TABLE>
S-15
<PAGE>
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31, 1999
------------------------------------ ----------------------------
1996 1997 1998 ACTUAL PRO FORMA(8)
---------- ---------- ------------ ------------ --------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
(IN THOUSANDS)
BALANCE SHEET DATA:
Cash and cash equivalents.................... $ 4,043 $ 84,288 $ 400,578 $ 261,372 $ 261,372
Total assets................................. $ 304,803 $ 611,321 $ 4,052,465 $ 3,964,640 $ 3,970,229
Total long-term debt and capitalized lease
obligations (excluding current
maturities)................................ $ 149,342 $ 216,231 $ 1,862,687 $ 1,864,782 $ 1,885,006
Total debt and capitalized lease
obligations................................ $ 150,834 $ 217,026 $ 2,060,725 $ 2,086,870 $ 2,107,094
Stockholders' equity......................... $ 113,182 $ 323,749 $ 1,626,565 $ 1,536,497 $ 1,530,895
</TABLE>
- ------------------------
(1) The pro forma statement of operations and other data for the year ended
December 31, 1998 gives effect to the acquisitions of Walibi and Six Flags
and the related financings as if they had occurred on January 1, 1998
(December 29, 1997 in the case of the Six Flags acquisition). See "Unaudited
Pro Forma Statement of Operations and Other Data" appearing in the
accompanying prospectus.
(2) All per share data has been retroactively adjusted to give effect to a
two-for-one stock split consummated by the Company in July 1998.
(3) EBITDA is defined as income before extraordinary loss, interest expense,
net, income tax expense (benefit), depreciation and amortization, equity in
operations of theme park partnerships, minority interest, other income
(expense) and noncash compensation. The Company has included information
concerning EBITDA because it is used by certain investors as a measure of
the Company's ability to service and/or incur debt. EBITDA is not required
by generally accepted accounting principles ("GAAP") and should not be
considered in isolation or as an alternative to net income, net cash
provided by operating, investing and financing activities or other financial
data prepared in accordance with GAAP or as an indicator of the Company's
operating performance. This information should be read in conjunction with
the Statements of Cash Flows contained in the Company's financial
statements, which are incorporated by reference herein.
(4) Includes an $8,364,000 termination fee (net of expenses) paid to the Company
upon termination of its prior agreement to become managing general partner
of the partnership that owns Six Flags Over Texas.
(5) Adjusted EBITDA reflects the Company's EBITDA plus the Company's share of
the EBITDA of Six Flags Over Texas and Six Flags Over Georgia (the
"Partnership Parks"), which were acquired in 1998, and of Six Flags Marine
World which, in each case, is not already reflected in the Company's EBITDA.
The Company manages the operations of Six Flags Marine World, is entitled to
receive 80% of the cash flow from its operations after payment of municipal
bond debt service, and has an option to purchase the entire park beginning
in February 2002. Adjusted EBITDA is not indicative of the Company's ability
to service and/or incur debt and is not a measure of the Company's
profitability or liquidity.
(6) For the purpose of calculating the consolidated ratios of earnings to fixed
charges and of earnings to combined fixed charges and preferred stock
dividends, earnings consist of income (loss) before extraordinary loss and
before income taxes, minority interest in earnings, equity in operations of
theme park partnerships not distributed to Premier and fixed charges. Fixed
charges consist of interest expense, amortization of deferred financing
costs and discount or premium relating to indebtedness and the portion
(approximately one-third) of rental expense that management believes
represents the interest component of rent expense. Preferred stock dividend
requirements have been increased to an amount representing the before-tax
earnings which would have been required to cover such dividend
S-16
<PAGE>
requirements. For the quarters ended March 31, 1998 and March 31, 1999, the
Company's earnings were insufficient to cover fixed charges by $24,436,000
and $117,013,000, respectively, and were insufficient to cover combined
fixed charges and preferred stock dividends by $24,436,000 and $126,403,000,
respectively. On a pro forma basis, for the year ended December 31, 1998,
earnings were insufficient to cover fixed charges by $50,802,000 and were
insufficient to cover combined fixed charges and preferred stock dividends
by $88,363,000.
(7) Total debt/Adjusted EBITDA includes total outstanding indebtedness of the
Company (excluding $185.4 million of SFEC zero coupon notes, which will be
repaid on or prior to December 15, 1999 with funds already deposited in
escrow) of $1,901.5 million and Adjusted EBITDA of $292.3 million. Net debt
deducts from total outstanding indebtedness $397.2 million (representing
$261.4 million of cash and cash equivalents and $135.8 million of
restricted-use investments placed in escrow to fund the first six
semi-annual interest payments on the Premier Parks 9 1/4% senior notes and
to fund potential obligations to our partners in the Partnership Parks). See
"Capitalization." Adjusted EBITDA/cash interest expense, net is calculated
using the cash interest expense, net for the period of $115.2 million.
Adjusted EBITDA/total interest expense, net is calculated using the interest
expense, net for the period of $148.8 million (excluding interest on the
pre-funded SFEC zero coupon notes). The net proceeds of this offering will
be used by the Company to retire $375.0 million aggregate principal amount
of indebtedness with an annual cash interest expense, net and total interest
expense, net of approximately $45.7 million and $40.9 million, respectively
which are included in the calculations of cash interest expense, net and
total interest expense, net.
(8) Gives pro forma effect to the consummation of the tender offer (assuming the
full $375.0 million aggregate principal amount of notes is tendered and
purchased and $39.1 million of premiums and consent fees are paid) and this
offering.
S-17
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
Our revenue is derived from the sale of tickets for entrance to our parks
(approximately 44.0%, 48.8% and 52.0% in 1996, 1997 and 1998, respectively) and
the sale of food, merchandise, games and attractions inside our parks and other
income (approximately 56.0%, 51.2% and 48.0% in 1996, 1997 and 1998,
respectively). Our principal costs of operations include salaries and wages,
employee benefits, advertising, outside services, maintenance, utilities and
insurance. Our expenses are relatively fixed. Costs for full-time employees,
maintenance, utilities, advertising and insurance do not vary significantly with
attendance, thereby providing us with a significant degree of operating leverage
as attendance increases and fixed costs per visitor decrease.
Our historical results of operations for 1998 include the results of
Riverside Park and Kentucky Kingdom (each of which was acquired during 1997) for
the entire period. Results of Walibi and Six Flags are included in 1998 results
only from the dates of their respective acquisitions (March 26, 1998, in the
case of Walibi, and April 1, 1998, in the case of Six Flags). Historical results
for 1997 reflect the results of Riverside Park from its acquisition date
(February 5, 1997), and Kentucky Kingdom from its acquisition date (November 7,
1997) and do not include the results of Walibi or Six Flags for that year. In
addition, historical results for the year ended December 31, 1998 include in
equity in earnings of theme park partnerships our share of the operations of
Marine World. Those results are not included in the 1997 periods. With respect
to 1996, historical results include the results of the four parks (Elitch
Gardens, The Great Escape, Waterworld Concord and Waterworld Sacramento)
acquired in the fourth quarter of that year only from their respective
acquisition dates, and do not include the results of Riverside Park, Kentucky
Kingdom, Walibi, Six Flags or Marine World.
We believe that significant opportunities exist to acquire additional theme
parks. In addition, we intend to continue our on-going expansion of the rides
and attractions and overall improvement of our parks to maintain and enhance
their appeal. We believe this strategy has contributed to increased attendance,
lengths of stay and in-park spending and, therefore, profitability.
Results of operations for the three months ended March 31, 1999 include the
results of Walibi and Six Flags (each of which was acquired during 1998), for
the entire period. Results for the three months ended March 31, 1998 do not
include the results of Walibi and Six Flags.
Results of operations for the three-month period ended March 31, 1999 are
not indicative of the results expected for the full year. In particular, our
theme park operations contribute most of their annual revenue during the period
from Memorial Day to Labor Day each year. The information for such period
reflects all adjustments (all of which are normal and recurring) which are, in
the opinion of management, necessary to present a fair statement of the results
for the period presented.
S-18
<PAGE>
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1999 AND 1998
The table below sets forth certain financial information with respect to the
Company for the three months ended March 31, 1999 and with respect to the
Company, Six Flags and Walibi for the three months ended March 31, 1998 and on a
pro forma basis for such quarter with respect to depreciation and amortization,
interest expense, net, equity in operations of theme park partnerships, income
tax benefit and Adjusted EBITDA as if the acquisitions of Six Flags and Walibi
had occurred on the first day of 1998:
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31, 1998
-------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
HISTORICAL HISTORICAL
SIX FLAGS WALIBI FOR
FOR PERIOD PERIOD
THREE MONTHS PRIOR TO PRIOR TO PRO COMPANY
ENDED HISTORICAL APRIL 1, MARCH 26, FORMA PRO
MARCH 31, 1999 PREMIER 1998(1) 1998(2) ADJUSTMENTS FORMA
-------------- ----------- ----------- ----------- ----------- ---------
<CAPTION>
(UNAUDITED)
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Revenue:
Theme park admissions.............. $ 29,387 $ 3,779 $ 15,047 $ 883 -- $ 19,709
Theme park food, merchandise and
other............................ 24,262 3,052 8,356 624 -- 12,032
-------------- ----------- ----------- ----------- ----------- ---------
Total revenue.................. 53,649 6,831 23,403 1,507 -- 31,741
-------------- ----------- ----------- ----------- ----------- ---------
Operating costs and expenses:
Operating expenses................. 52,780 11,375 45,679 4,626 -- 61,680
Selling, general and
administrative................... 35,052 7,089 19,278 3,407 -- 29,774
Noncash compensation............... 5,035 675 -- -- -- 675
Costs of products sold............. 3,193 137 2,757 248 -- 3,142
Depreciation and amortization...... 35,729 5,801 17,629 3,214 6,440(3) 33,084
-------------- ----------- ----------- ----------- ----------- ---------
Total operating costs and
expenses..................... 131,789 25,077 85,343 11,495 6,440 128,355
-------------- ----------- ----------- ----------- ----------- ---------
Loss from operations....... (78,140) (18,246) (61,940) (9,988) (6,440) (96,614)
-------------- ----------- ----------- ----------- ----------- ---------
Other income (expense):
Interest expense, net.............. (38,873) (6,180) (22,508) (889) (16,655)(4) (46,232)
Equity in operations of theme park
partnerships..................... (7,907) -- -- -- (13,162)(5) (13,162)
Other expense, including minority
interest......................... (239) (10) -- (1) -- (11)
-------------- ----------- ----------- ----------- ----------- ---------
Total other income (expense)... (47,019) (6,190) (22,508) (890) (29,817) (59,405)
-------------- ----------- ----------- ----------- ----------- ---------
Loss before income taxes and
extraordinary loss................. (125,159) (24,436) (84,448) (10,878) (36,257) (156,019)
Income tax benefit................... 42,345 9,774 -- 4,786 40,009(6) 54,569
-------------- ----------- ----------- ----------- ----------- ---------
Loss before extraordinary loss $ (82,814) $ (14,662) $ (84,448) $ (6,092) $ 3,752 $(101,450)
-------------- ----------- ----------- ----------- ----------- ---------
-------------- ----------- ----------- ----------- ----------- ---------
EBITDA(7) $ (37,376) $ (11,770) $ (44,311) $ (6,774) -- $ (62,855)
-------------- ----------- ----------- ----------- ----------- ---------
-------------- ----------- ----------- ----------- ----------- ---------
Adjusted EBITDA(8) $ (41,170) $ (11,770) $ (44,311) $ (6,774) $ (11,705) $ (74,560)
-------------- ----------- ----------- ----------- ----------- ---------
-------------- ----------- ----------- ----------- ----------- ---------
</TABLE>
- ------------------------
(1) Includes results of Six Flags for the period prior to April 1, 1998, the
acquisition date, adjusted to (i) eliminate results of the Partnership
Parks, and (ii) eliminate the expense associated with certain one-time
option payments resulting from the Six Flags acquisition.
(2) Includes results of Walibi for the period prior to March 26, 1998, the
acquisition date.
S-19
<PAGE>
(3) Includes adjustments to eliminate the historical depreciation and
amortization for Six Flags and Walibi and the inclusion of estimated pro
forma depreciation and amortization for the three months ended March 31,
1998.
(4) Includes adjustments to reflect additional interest expense associated with
the Premier 9 1/4% senior notes, the Premier 10% senior discount notes, the
SFEC 8 7/8% senior notes, the Premier credit facility and the Six Flags
credit facility net of (a) the elimination of the historical interest
expense associated with the Premier and Six Flags credit facilities
previously outstanding and the long term debt of Walibi and (b) the
amortization of the fair market value adjustments on the SFTP 12 1/4% notes
and the SFEC zero coupon notes recorded in connection with the acquisition
of Six Flags. Issuance costs associated with the borrowings are being
amortized over their respective periods.
(5) Includes adjustments to reflect our share of the operations of the
Partnership Parks using the equity method of accounting.
(6) Includes adjustments to reflect the application of income taxes to the pro
forma adjustments and to the pre-acquisition operations of Six Flags and
Walibi, after consideration of permanent differences, at a rate of 38%.
(7) EBITDA is defined as income before extraordinary loss, interest expense, net
income tax expense (benefit), depreciation and amortization, equity in
operations of theme park partnerships, minority interest, other income
(expense) and noncash compensation. We have included information concerning
EBITDA because it is used by certain investors as a measure of a company's
ability to service and/or incur debt. EBITDA is not required by GAAP and
should not be considered in isolation or as an alternative to net income,
net cash provided by operating, investing and financing activities or other
financial data prepared in accordance with GAAP or as an indicator of our
operating performance. This information should be read in conjunction with
the Statements of Cash Flows contained in Premier's Consolidated Financial
Statements, which are incorporated by reference herein.
(8) Adjusted EBITDA is defined as the Company's EBITDA plus our share (based on
our ownership interests) of the EBITDA of the Partnership Parks.
- ------------------------
REVENUE. Revenue in the first quarter of 1999 totaled $53.6 million
compared to $6.8 million (actual) and $31.7 million (pro forma) for the first
quarter of 1998. The $21.9 million (69%) increase in 1999 revenue compared to
pro forma revenue for the first quarter of 1998 resulted primarily from
increased sponsorship income and increased season pass sales, principally at the
Six Flags parks, as we implemented new marketing plans.
OPERATING EXPENSES. Operating expenses for the first quarter of 1999
increased $41.4 million compared to actual expenses for the first quarter of
1998 and decreased $8.9 million compared to pro forma expenses for the first
quarter of 1998. The 14.4% decrease compared to pro forma expenses for 1998
resulted primarily from operating efficiencies realized at the Six Flags parks
subsequent to their acquisition on April 1, 1998.
SELLING, GENERAL AND ADMINISTRATIVE. Selling, general and administrative
expenses (including noncash compensation) for the first quarter of 1999
increased $32.3 million and $9.6 million, respectively, compared to the actual
and pro forma expenses for the first quarter of 1998. The $9.6 million increase
compared to pro forma expenses for 1998 resulted from increased advertising
expense of approximately $11.8 million and increased noncash compensation of
$4.4 million partially offset by a decrease in other selling, general and
administrative expenses of $6.6 million. The increase in advertising
expenditures reflects a return to historical advertising levels and timing of
expenditures at the Six Flags parks and additional expenditures in support of
the 1999 transition of four original Premier parks to the Six Flags brand. The
increase in noncash compensation related to the issuance of restricted stock and
conditional
S-20
<PAGE>
employee stock options during 1998. The $6.6 million decrease in remaining
selling, general and administrative expenses in the 1999 period resulted from
reduced corporate level expenditures, including staffing, related to the closing
of the former Six Flags corporate office subsequent to the April 1, 1998
acquisition.
COSTS OF PRODUCTS SOLD. Costs of products sold in the 1999 period increased
$3.1 million compared to actual expenses for the first quarter of 1998 and were
flat compared to pro forma expenses for the first quarter of 1998.
DEPRECIATION AND INTEREST EXPENSE. Depreciation and amortization expense
for the first quarter of 1999 increased $29.9 million and $2.6 million,
respectively, compared to the actual and pro forma amounts for the first quarter
of 1998. The increase compared to the pro forma 1998 level was attributable to
our on-going capital program. Interest expense, net increased $32.7 million
compared to the actual interest expense, net for the first quarter of 1998 and
decreased $7.4 million compared to the pro forma interest expense, net for the
first quarter of 1998. The decrease compared to pro forma interest expense, net
for 1998 reflected interest income earned on investment securities in the first
quarter of 1999, which investments were made after the 1998 period.
EQUITY IN OPERATIONS OF THEME PARKS. Equity in operations of theme park
partnerships reflects our share of the income or loss of Six Flags Over Texas
(33% effective Company ownership) and Six Flags Over Georgia (25% effective
Company ownership), the lease of Six Flags Marine World and the management of
all three parks. Our ownership interests in Six Flags Over Texas and Six Flags
Over Georgia commenced on April 1, 1998, the date of the Six Flags acquisition.
We recognized our share of the cash flow received from the lease and management
of Six Flags Marine World during the second half of 1998. The $5.3 million
reduction in the loss from equity in operations of theme park partnerships
compared to the pro forma level for the first quarter of 1998 was attributable
to improved operations at Six Flags Over Texas and Six Flags Over Georgia during
the first quarter of 1999, resulting primarily from increased sponsorship income
and season pass sales.
INCOME TAXES. Income tax benefit was $42.3 million for the first quarter of
1999 compared to a $9.8 million and $54.6 million benefit for the actual and pro
forma results, respectively, for the first quarter of 1998. The effective tax
rate for the first quarter of 1999 was 33.8% compared to a rate on the pro forma
amount of 35.0% for the first quarter of 1998. Our quarterly effective tax rate
will vary from period-to-period based upon the inherent seasonal nature of the
theme park business, as a result of permanent differences associated with
goodwill amortization for financial purposes and the deductible portion of the
amortization for tax purposes.
S-21
<PAGE>
YEARS ENDED DECEMBER 31, 1998 AND 1997
The table below sets forth certain financial information with respect to the
Company and, for periods prior to their respective acquisitions, Six Flags and
Walibi for the year ended December 31, 1998 and with respect to the Company, Six
Flags, Walibi and, for the period prior to its acquisition, Kentucky Kingdom for
the year ended December 31, 1997:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
YEAR ENDED DECEMBER 31, 1998 1997
---------------------------------------------------------- ------------------------
<S> <C> <C> <C> <C> <C> <C>
HISTORICAL HISTORICAL
SIX FLAGS FOR WALIBI FOR
PERIOD PRIOR TO PERIOD PRIOR TO HISTORICAL
HISTORICAL APRIL 1, MARCH 26, HISTORICAL HISTORICAL SIX
PREMIER 1998(1) 1998(2) COMBINED PREMIER(3) FLAGS(4)
----------- --------------- --------------- ----------- ----------- -----------
<CAPTION>
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
REVENUE:
Theme park admissions................. $ 423,461 $ 15,047 $ 883 $ 439,391 $ 94,611 $ 274,193
Theme park food, merchandise and
other............................... 390,166 8,356 624 399,146 99,293 257,679
----------- --------------- ------- ----------- ----------- -----------
Total revenue..................... 813,627 23,403 1,507 838,537 193,904 531,872
----------- --------------- ------- ----------- ----------- -----------
OPERATING COSTS AND EXPENSES:
Operating expenses.................... 297,266 45,679 4,626 347,571 81,356 229,588
Selling, general and administrative... 126,985 19,278 3,407 149,670 35,422 95,852
Noncash compensation.................. 6,362 -- -- 6,362 1,125 --
Costs of products sold................ 103,051 2,757 248 106,056 23,025 77,102
Depreciation and amortization......... 109,841 17,629 3,214 130,684 19,792 72,386
----------- --------------- ------- ----------- ----------- -----------
Total operating costs and
expenses........................ 643,505 85,343 11,495 740,343 160,720 474,928
----------- --------------- ------- ----------- ----------- -----------
Income (loss) from operations........... 170,122 (61,940) (9,988) 98,194 33,184 56,944
Equity in operations of theme park
partnerships.......................... 24,054 -- -- 24,054 -- --
OTHER INCOME (EXPENSE):
Interest expense, net................. (115,849) (22,508) (889) (139,246) (17,775) (84,430)
Termination fee, net of expenses...... -- -- -- -- 8,364 --
Minority interest..................... (960) -- -- (960) -- 1,147
Other income (expense)................ (1,023) -- (1) (1,024) (59) --
----------- --------------- ------- ----------- ----------- -----------
Total other income (expense)...... (117,832) (22,508) (890) (141,230) (9,470) (83,283)
----------- --------------- ------- ----------- ----------- -----------
Income (loss) before income taxes and
extraordinary loss.................... 76,344 (84,448) (10,878) (18,982) 23,714 (3,708)
Income tax expense (benefit)............ 40,716 -- (4,786) 35,930 9,615 --
----------- --------------- ------- ----------- ----------- -----------
Income (loss) before extraordinary
loss.................................. $ 35,628 $ (84,448) $ (6,092) $ (54,912) $ 14,099 $ (3,708)
----------- --------------- ------- ----------- ----------- -----------
----------- --------------- ------- ----------- ----------- -----------
<CAPTION>
<S> <C> <C> <C>
HISTORICAL
HISTORICAL KENTUCKY HISTORICAL
WALIBI KINGDOM(5) COMBINED
--------------- ------------- -----------
(UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C>
REVENUE:
Theme park admissions................. $ 43,742 $ 11,562 $ 424,108
Theme park food, merchandise and
other............................... 24,101 10,152 391,225
------- ------------- -----------
Total revenue..................... 67,843 21,714 815,333
------- ------------- -----------
OPERATING COSTS AND EXPENSES:
Operating expenses.................... 31,629 5,705 348,278
Selling, general and administrative... 10,567 5,194 147,035
Noncash compensation.................. -- -- 1,125
Costs of products sold................ 6,097 2,684 108,908
Depreciation and amortization......... 13,998 2,344 108,520
------- ------------- -----------
Total operating costs and
expenses........................ 62,291 15,927 713,866
------- ------------- -----------
Income (loss) from operations........... 5,552 5,787 101,467
Equity in operations of theme park
partnerships.......................... -- -- --
OTHER INCOME (EXPENSE):
Interest expense, net................. (3,409) (3,974) (109,588)
Termination fee, net of expenses...... -- -- 8,364
Minority interest..................... -- -- 1,147
Other income (expense)................ (289) 293 (55)
------- ------------- -----------
Total other income (expense)...... (3,698) (3,681) (100,132)
------- ------------- -----------
Income (loss) before income taxes and
extraordinary loss.................... 1,854 2,106 1,335
Income tax expense (benefit)............ 2,373 -- 11,988
------- ------------- -----------
Income (loss) before extraordinary
loss.................................. $ (519) $ 2,106 $ (10,653)
------- ------------- -----------
------- ------------- -----------
</TABLE>
- ------------------------
(1) Includes results of Six Flags for the period prior to April 1, 1998, the
acquisition date, adjusted to (i) eliminate results of the Partnership
Parks, and (ii) eliminate the expense associated with certain one-time
option payments made from the purchase price in the Six Flags acquisition.
(2) Includes results of Walibi for the period prior to March 26, 1998, the
acquisition date.
(3) Includes results of Riverside Park and Kentucky Kingdom from and after their
respective acquisition dates, February 5 and November 7, 1997.
(4) Includes results of Six Flags adjusted to eliminate results of the
Partnership Parks.
(5) Includes results of Kentucky Kingdom for the ten months of 1997 prior to its
acquisition by the Company.
REVENUE. Revenue aggregated $813.6 million in 1998 ($838.5 million
combined), compared to $193.9 million reported in 1997. Of reported 1998
revenue, $564.5 million represented revenues of Six Flags and Walibi (the
"Acquired Parks") which were acquired in 1998, and thus not included in reported
1997 results. Revenues generated by our other twelve parks (excluding Marine
World) amounted to $249.1 million in 1998, as compared to $193.7 million from
our eleven parks in 1997. Of this $55.4 million increase, $28.4 million relates
to Kentucky Kingdom which was purchased in November of the prior year,
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<PAGE>
and the balance ($27.0 million) results from improved performance at the other
eleven parks. During 1998, our thirteen parks (including Marine World and
excluding the Acquired Parks) experienced a 14.3% increase in attendance and a
5.0% increase in per capita spending over the performance of those thirteen
parks in the prior year.
OPERATING EXPENSES. Operating expenses increased during 1998 to $297.3
million ($347.6 million combined) from $81.4 million reported in 1997. Of
reported 1998 operating expenses, $197.4 million related directly to the
Acquired Parks. Operating expenses at our other twelve parks (excluding Marine
World) increased $18.5 million, primarily reflecting an incremental $10.3
million of operating expenses for Kentucky Kingdom which was included for only
two months in the prior year, and increased salary expense at the parks. As a
percentage of total reported revenue, reported operating expenses were 36.5% of
revenue (and combined operating expenses were 41.4% of combined revenues) in
1998 as compared to 42.0% in 1997.
SELLING, GENERAL AND ADMINISTRATIVE. Selling, general and administrative
expenses (including non-cash compensation) were $133.3 million in 1998 ($156.0
million on a combined basis), compared to $36.5 million reported for 1997. Of
reported expenses for 1998, $68.2 million related to the Acquired Parks.
Selling, general and administrative expenses at the remaining twelve parks
(excluding Marine World) increased $28.5 million over 1997 levels, primarily
reflecting an incremental $5.2 million of selling, general and administrative
expenses at Kentucky Kingdom, $5.3 million of noncash compensation relating to
restricted stock awards and conditional option grants over amounts included in
1997, increased corporate expenses reflecting the larger scope of our operations
and, to a lesser extent, increased marketing and advertising costs and real
estate taxes. As a percentage of total reported revenue, consolidated selling,
general and administrative expenses (excluding non cash compensation) were 15.6%
of revenue (and combined selling, general and administrative expenses (excluding
non cash compensation) were 17.8% of combined revenues) in 1998 as compared to
18.3% for 1997. The decrease is a result of our continued ability to use
operating leverage to increase operations without having to increase
administrative costs by a like percentage.
COSTS OF PRODUCTS SOLD. Costs of products sold were $103.1 million for 1998
($106.1 million on a combined basis) compared to $23.0 million reported for
1997. Reported costs for 1998 include $75.2 million related to the Acquired
Parks. The balance of the increase ($4.9 million) over reported 1997 costs
primarily related to $2.7 million of costs of sales at Kentucky Kingdom and to
increased product sales at the parks owned in both years.
DEPRECIATION AND INTEREST EXPENSE. Depreciation and amortization expense
increased $90.0 million from $19.8 million in 1997 to $109.8 million in 1998, of
which $82.6 million was attributable to the recognition of depreciation and
amortization expense for the Acquired Parks, an incremental $2.9 million was
attributable to Kentucky Kingdom and the balance was attributable to our
on-going capital program. Interest expense, net of interest income, increased
from $17.8 million to $115.9 million in 1998 principally as a result of
borrowings made in connection with the acquisitions of Six Flags and Walibi. See
"Description of Other Indebtedness" and Notes 2 and 6 to Notes to Premier's
Consolidated Financial Statements, which are incorporated herein by reference.
EQUITY IN OPERATIONS OF THEME PARKS. Equity in operations of theme park
partnerships results from our shares of the operations of Six Flags Over Texas
(33% effective Company ownership) and Six Flags Over Georgia (25% effective
Company ownership), the lease of Six Flags Marine World and the management of
all three parks. We did not have the partial ownership or lease arrangement with
any of the parks prior to commencement of the 1998 operating season. See Notes
2, 4 and 13 to Notes to Premier's Consolidated Financial Statements, which are
incorporated herein by reference.
INCOME TAXES. Income tax expense was $40.7 million for 1998 as compared to
$9.6 million for 1997. The increase in the effective tax rate to 53.3% from
40.5% is a function of the non-deductible intangible
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<PAGE>
asset amortization associated with the Six Flags acquisition. Approximately
$10.0 million of non-deductible amortization will be recognized each quarter.
Our quarterly effective income tax will vary from period-to-period based upon
the inherent seasonal nature of the theme park business.
At December 31, 1998, we estimated that we had approximately $346.1 million
of net operating losses ("NOLs") carryforwards for Federal income tax purposes.
The NOLs are subject to review and potential disallowance by the Internal
Revenue Service upon audit of the Federal income tax returns of Premier and our
subsidiaries. In addition, the use of such NOLs is subject to limitations on the
amount of taxable income that can be offset with such NOLS. Some of such NOLs
also are subject to a limitation as to which of the subsidiaries' income such
NOLs are permitted to offset. Accordingly, no assurance can be given as to the
timing or amount of the availability of such NOLs to the Company and our
subsidiaries. See Note 9 to Notes to Premier's Consolidated Financial
Statements, which are incorporated herein by reference.
NET INCOME. Net income applicable to common stock in 1998 reflects as a
charge to net income the preferred stock dividends accrued since the April 1,
1998 issuance of our Premium Income Equity Securities ("PIES"). The PIES accrue
cumulative dividends at 7 1/2% per annum (1 7/8% per quarter), which
approximates an annual dividend requirement of $23.3 million (approximately $5.8
million per quarter). The dividend is payable in cash or shares of common stock
at the option of the Company. To date, we have elected to pay the dividend in
cash.
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<PAGE>
YEARS ENDED DECEMBER 31, 1997 AND 1996
The table below sets forth certain financial information with respect to the
Company and Kentucky Kingdom and Marine World for the year ended December 31,
1997 and with respect to the Company (including Elitch Gardens, the Waterworld
parks, The Great Escape and Riverside Park (the "1996" Acquisitions)) for the
year ended December 31, 1996:
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER
YEAR ENDED DECEMBER 31, 1997 31, 1996
--------------------------------------------- -----------
<S> <C> <C> <C> <C>
HISTORICAL
PREMIER
(EXCLUDING
MARINE WORLD KENTUCKY
AND KENTUCKY KINGDOM AND HISTORICAL HISTORICAL
KINGDOM)(1) MARINE WORLD(2) PREMIER PREMIER(3)
------------- ----------------- ----------- -----------
<CAPTION>
(UNAUDITED) (UNAUDITED)
(IN THOUSANDS)
<S> <C> <C> <C> <C>
REVENUE:
Theme park admissions................................... $ 94,611 $ -- $ 94,611 $ 41,162
Theme park food, merchandise and other.................. 99,103 190 99,293 52,285
------------- ------- ----------- -----------
Total revenue....................................... 193,714 190 193,904 93,447
------------- ------- ----------- -----------
OPERATING COSTS AND EXPENSES:
Operating expenses...................................... 80,307 1,049 81,356 42,425
Selling, general and administrative..................... 35,336 86 35,422 16,927
Noncash compensation.................................... 1,125 -- 1,125 --
Costs of products sold.................................. 23,025 -- 23,025 11,101
Depreciation and amortization........................... 19,159 633 19,792 8,533
------------- ------- ----------- -----------
Total operating costs and expenses.................. 158,952 1,768 160,720 78,986
------------- ------- ----------- -----------
Income (loss) from operations............................. 34,762 (1,578) 33,184 14,461
------------- ------- ----------- -----------
OTHER INCOME (EXPENSE):
Interest expense, net................................... (17,763) (12) (17,775) (11,121)
Termination fee, net of expenses........................ 8,364 -- 8,364 --
Other income (expense).................................. (59) -- (59) (78)
------------- ------- ----------- -----------
Total other income (expense)........................ (9,458) (12) (9,470) (11,199)
------------- ------- ----------- -----------
Income (loss) before income taxes....................... 25,304 (1,590) 23,714 3,262
Income tax expense...................................... 9,615 -- 9,615 1,497
------------- ------- ----------- -----------
Net income (loss)....................................... $ 15,689 $ (1,590) $ 14,099 $ 1,765
------------- ------- ----------- -----------
------------- ------- ----------- -----------
<CAPTION>
<S> <C> <C> <C>
HISTORICAL
HISTORICAL 1996
NINE MONTHS ACQUISITIONS
ENDED FOR PERIODS
SEPTEMBER 30, SUBSEQUENT TO
1996 FOR 1996 SEPTEMBER 30, HISTORICAL
ACQUISITIONS(4) 1996(5) COMBINED
------------- ------------- -------------
(UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C>
REVENUE:
Theme park admissions................................... $ 34,062 $ 724 $ 75,948
Theme park food, merchandise and other.................. 30,453 1,020 83,758
------------- ------------- -------------
Total revenue....................................... 64,515 1,744 159,706
------------- ------------- -------------
OPERATING COSTS AND EXPENSES:
Operating expenses...................................... 23,204 3,116 68,745
Selling, general and administrative..................... 17,035 2,289 36,251
Noncash compensation.................................... -- -- --
Costs of products sold.................................. 9,448 347 20,896
Depreciation and amortization........................... 13,028 703 22,264
------------- ------------- -------------
Total operating costs and expenses.................. 62,715 6,455 148,156
------------- ------------- -------------
Income (loss) from operations............................. 1,800 (4,711) 11,550
------------- ------------- -------------
OTHER INCOME (EXPENSE):
Interest expense, net................................... (4,624) (517) (16,262)
Termination fee, net of expenses........................ -- -- --
Other income (expense).................................. (284) -- (362)
------------- ------------- -------------
Total other income (expense)........................ (4,908) (517) (16,624)
------------- ------------- -------------
Income (loss) before income taxes....................... (3,108) (5,228) (5,074)
Income tax expense...................................... 1,131 -- 2,628
------------- ------------- -------------
Net income (loss)....................................... $ (4,239) $ (5,228) $ (7,702)
------------- ------------- -------------
------------- ------------- -------------
</TABLE>
- ------------------------
(1) Excludes management fee and depreciation expense relating to Marine World
and results of Kentucky Kingdom for the period subsequent to the acquisition
date, November 7, 1997.
(2) Represents management fee and depreciation expense relating to Marine World
and results of Kentucky Kingdom from the acquisition date through December
31, 1997.
(3) Includes results of the 1996 Acquisitions from and after the acquisition
dates.
(4) Includes results of the 1996 Acquisitions for the nine months ended
September 30, 1996.
(5) Includes results of the 1996 Acquisitions for the respective periods
commencing October 1, 1996 and ending on the respective acquisition dates
(or in the case of Riverside Park, December 31, 1996).
REVENUE. Revenue aggregated $193.9 million in 1997 ($193.7 million at the
eleven parks owned during the 1997 season), compared to $93.4 million in 1996,
and to combined revenue of $159.7 million in 1996. This 21.3% increase in
revenue at the same eleven parks is primarily attributable to increased
attendance (8.9%) at these eleven parks, which resulted in part from increased
season pass and group sales at several parks.
OPERATING EXPENSES. Operating expenses increased during 1997 to $81.4
million ($80.3 million at the eleven parks owned during the 1997 season) from
$42.4 million reported in 1996, and from $68.7 million combined operating
expenses for 1996. This 16.9% increase in operating expenses at the same eleven
parks
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<PAGE>
is mainly due to additional staffing related to the increased attendance levels
and increased pay rates. As a percentage of revenue, operating expenses at these
parks constituted 41.5% for 1997 and 43.0% on a combined basis for 1996.
SELLING, GENERAL AND ADMINISTRATIVE. Selling, general and administrative
expenses (including noncash compensation) at the eleven owned parks were $36.5
million in 1997, compared to $16.9 million reported, and $36.3 million combined,
selling, general and administrative expenses for 1996. As a percentage of
revenues, these expenses at the same eleven parks constituted 18.8% for 1997 and
22.7% for 1996 combined. This increase over 1996 combined expenses relates
primarily to increased advertising and marketing expenses to promote the newly
acquired parks and the new rides and attractions at all of the parks, increased
sales taxes arising from increased volume generally and increased property taxes
and professional services, offset by significant reductions in personnel and
insurance expenses.
COSTS OF PRODUCTS SOLD. Costs of products sold were $23.0 million at the
eleven parks for 1997 compared to $11.1 million reported and $20.9 million
combined for 1996. Cost of products sold (as a percentage of in-park revenue) at
these parks constituted approximately 23.2% for 1997 and 25.0% for 1996
combined. This $2.1 million or 10.1% increase over combined 1996 results is
directly related to the 18.3% increase in food, merchandise and other revenues.
DEPRECIATION AND INTEREST EXPENSE. Depreciation expense increased $11.3
million over the reported 1996 results. The increase is a result of the full
year's effect of the 1996 Acquisitions (other than Riverside Park), the purchase
price paid for the Riverside Park and Kentucky Kingdom acquisitions and the
on-going capital program at our parks. Interest expense, net, increased $6.7
million from 1996 as a result of interest on the Premier Operations' 9 3/4%
Senior Notes due 2007 issued in January 1997.
TERMINATION FEE, NET OF EXPENSES. During October 1997, we entered into an
agreement with the limited partner of the partnership that owns Six Flags Over
Texas to become the managing general partner of the partnership, to manage the
operations of the park, to receive a portion of the income from such operations,
and to purchase limited partnership units over the term of the agreement.
The agreement was non-exclusive and contained a termination fee of $10.8
million payable to us in the event the agreement was terminated. Subsequent to
our agreement with the limited partnership, the prior operator of the park
reached an agreement with the limited partnership, and our agreement was
terminated. We received the termination fee in December 1997 and included the
termination fee, net of $2.4 million of expenses associated with the
transaction, as income in 1997.
INCOME TAXES. We incurred income tax expense of $9.6 million during 1997,
compared to $1.5 million during 1996. The effective tax rate for 1997 was
approximately 40.5% as compared to 45.9% in 1996. This decrease is the result of
the decline in the size of the non-deductible goodwill from our acquisition of
Funtime Parks and the acquisition of Riverside Park relative to our income.
LIQUIDITY, CAPITAL COMMITMENTS AND RESOURCES
At March 31, 1999, our indebtedness (including $185.4 million carrying value
of the SFEC zero coupon notes which will be repaid in full on or prior to
December 15, 1999 from the proceeds of SFEC's 8 7/8% Senior Notes due 2006
("SFEC Notes") together with other funds, all of which have been deposited in
escrow) aggregated $2,086.9 million, of which approximately $222.1 million
(including $185.4 million carrying value of the SFEC zero coupon notes) matures
prior to March 31, 2000. See "Description of Other Indebtedness" and Note 6 to
Premier's Consolidated Financial Statements, which are incorporated herein by
reference, for additional information regarding our indebtedness. After giving
effect to this offering and the tender offers (assuming the full $375.0 million
aggregate principal amount of notes are tendered and purchased), on a pro forma
basis as of March 31, 1999, we would have had total outstanding indebtedness
with a carrying value of $2,107.1 million (including $185.4 million carrying
value of SFEC
S-26
<PAGE>
zero coupon notes). In addition, annual dividend payments on the PIES are $23.3
million, payable at our option in cash or shares of common stock.
During the three months ended March 31, 1999, net cash used in operating
activities was $25.9 million. Net cash used in investing activities in the first
three months of 1999 totaled $124.8 million, consisting primarily of capital
expenditures. Net cash provided by financing activities in the first three
months of 1999 was $12.9 million, representing proceeds of borrowings under the
Premier credit facility described herein, net of cash dividends paid.
During the year ended December 31, 1998, net cash provided by operating
activities was $119.0 million. Net cash used in investing activities in 1998
totaled $1,664.9 million, consisting primarily of our acquisition of Six Flags
and Walibi ($1,037.4 million, net of cash acquired) and, to a lesser extent,
title to and the minority interest in Six Flags Fiesta Texas, a hotel near our
Geauga Lake theme park and capital expenditures for the 1998 and 1999 seasons.
Net cash provided by financing activities in 1998 totaled $1,861.1 million,
representing proceeds of borrowings under the Premier and Six Flags credit
facilities, and proceeds of the public offerings of common stock, PIES,
Premier's 9 1/4% senior notes due 2006, Premier's 10% senior discount notes due
2008 and SFEC Notes issued in connection with the Six Flags acquisition and
described in "Description of Other Indebtedness" and Notes 2 and 6 to Premier's
Consolidated Financial Statements, which are incorporated herein by reference,
offset in part by debt payments and the payment of certain debt issuance costs.
During 1997, we generated net cash of $47.2 million from operating
activities. Net cash used in investing activities in 1997 totaled $217.1
million, $81.4 million of which was employed in connection with the acquisition
of Riverside Park and Kentucky Kingdom and $135.7 million represented amounts
spent for capital expenditures at our parks. Net cash provided by financing
activities for 1997 totaled $250.2 million, reflecting the net proceeds from the
January 1997 offerings of common stock and $125.0 million principal amount of
Premier Operations notes, offset in part by repayment of borrowings under our
senior credit facility.
In addition to making required payments on debt and dividend payments on our
preferred stock, we must satisfy certain obligations with respect to Six Flags
Over Georgia and Six Flags Over Texas. We must make annual distributions to our
partners in such parks, which will amount to approximately $47.3 million in 1999
(of which we will be entitled to receive $14.4 million due to our current
ownership interest in such parks) with similar amounts (adjusted for changes in
cost of living) payable in future years. In addition, we must spend a minimum of
approximately 6% of each park's annual revenues over specified periods for
capital expenditures, which in 1999 is expected to be approximately $14.6
million. Further, each year we must offer to purchase partnership units from our
partners in such parks, which amount in 1999 aggregated approximately $3.3
million. We will use cash flow from the operations at these parks to satisfy the
first two obligations before we use any of our other funds. In addition, we have
deposited in escrow approximately $75.0 million which can be used to satisfy
these obligations. The obligations relating to Six Flags Over Georgia continue
until 2027 and those relating to Six Flags Over Texas continue until 2028.
Further, as a result of our purchase of Walibi, we have agreed to invest
approximately $38.0 million from 1999 through 2001 to expand the six Walibi
parks of which approximately $21.0 million is being invested for the 1999
season.
Our high level of debt and other obligations could have important negative
consequences to us and investors in our securities. See "Risk
Factors--Substantial Leverage" in the accompanying prospectus and "Description
of Other Indebtedness."
Our liquidity could be adversely affected by unfavorable weather, accidents
or the occurrence of an event or condition, including negative publicity or
significant local competitive events (such as the 1996 Summer Olympics in the
case of Six Flags Over Georgia) that significantly reduces paid attendance and,
therefore, revenue at any of our theme parks. On March 21, 1999, a raft capsized
in the river rapids ride at Six Flags Over Texas, resulting in one fatality and
injuries to ten others. While the park is covered by our
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<PAGE>
existing insurance, the impact of this incident on our financial position,
operations or attendance at the park has not yet been determined.
We believe that, based on current and anticipated operating results, cash
flow from operations, existing cash and available borrowings under the existing
credit facilities will be adequate to meet our future liquidity needs, including
anticipated requirements for working capital, capital expenditures, scheduled
debt payments and preferred stock dividends and our obligations under
arrangements relating to the Partnership Parks, for at least the next several
years. We may, however, need to refinance all or a portion of our existing debt
on or prior to maturity or to obtain additional financing. See "Risk Factors--
Substantial Leverage" in the accompanying prospectus.
IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS NOT YET ADOPTED
In June, 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities." SFAS No. 133 establishes accounting and reporting
standards for derivative instruments, including certain derivative instruments
embedded in other contracts, and for hedging activities. It requires an entity
to recognize all derivatives as either assets or liabilities in the statement of
financial position and measure those instruments at fair value. If certain
conditions are met, a derivative may be specifically designated as a hedge. The
accounting for changes in the fair value of a derivative (that is gains and
losses) depends on the intended use of the derivative and the resulting
designation. SFAS No. 133 is effective for all fiscal quarters of fiscal years
beginning after June 15, 1999. It is expected that we will adopt the provision
of SFAS No. 133 as of January 1, 2000. If the provisions of SFAS No. 133 were to
be applied as of March 31, 1999, they would not have a material effect on our
financial position as of such date, or the results of operations for the
three-month period then ended. The Financial Accounting Standards Board has
recently issued an exposure draft that would delay the required implementation
date of SFAS No. 133 by one year.
IMPACT OF YEAR 2000 ISSUE
Our Year 2000 Project (the "Project") is in process. The project is
addressing the Year 2000 issue caused by computer programs being written
utilizing two digits rather than four to define an applicable year. As a result,
our computer equipment, software and devices with embedded technology that are
time sensitive may misinterpret the actual date beginning on January 1, 2000.
This could result in a system failure or miscalculations causing disruptions of
operations, including, but not limited to, a temporary inability to process
transactions.
We have undertaken various initiatives intended to ensure that our computer
equipment and software will function properly with respect to dates in the Year
2000 and thereafter. In planning and developing the Project, we have considered
both our information technology ("IT") and our non-IT systems. The term
"computer equipment and software" includes systems that are commonly thought of
as IT systems, including accounting, data processing, telephone systems,
scanning equipment and other miscellaneous systems. Those items not to be
considered as IT technology include alarm systems, fax machines, monitors for
park operations or other miscellaneous systems. Both IT and non-IT systems may
contain embedded technology, which complicates our Year 2000 identification,
assessment, remediation and testing efforts. Based upon our identification and
assessment efforts to date, we are in the process of replacing the computer
equipment and upgrading the software we currently use to become Year 2000
compliant. In addition, in the ordinary course of replacing computer equipment
and software, we plan to obtain replacements that are in compliance with Year
2000.
We have initiated correspondence with our significant vendors and service
providers to determine the extent such entities are vulnerable to Year 2000
issues and whether the products and services purchased from such entities are
Year 2000 compliant. We expect to receive a favorable response from such third
parties and it is anticipated that their significant Year 2000 issues will be
addressed on a timely basis.
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<PAGE>
With regard to IT, non-IT systems and communications with third parties, we
anticipate that the Project will be completed in November 1999.
As noted above, we are in the process of replacing certain computer
equipment and software because of the Year 2000 issue. We estimate that the
total cost of such replacements will be no more than $1.5 million. Substantially
all of the personnel being used on the Project are existing Company employees.
Therefore, the labor costs of our Year 2000 identification, assessment,
remediation and testing efforts, as well as currently anticipated labor costs to
be incurred by us with respect to Year 2000 issues of third parties, are
expected to be less than $0.8 million.
We have not yet developed a most reasonably likely worst case scenario with
respect to Year 2000 issues, but instead have focused our efforts on reducing
uncertainties through the reviews described above. We have not developed Year
2000 contingency plans other than as described above, and do not expect to do so
unless merited by the results of our continuing review.
We presently do not expect to incur significant operational problems due to
the Year 200 issue. However, if all Year 2000 issues are not properly and timely
identified, assessed, remediated and tested, there can be no assurance that the
Year 2000 issues will not materially impact our results of operations or
adversely affect our relationships with vendors or others. Additionally, there
can be no assurance that the Year 2000 issues of other entities will not have a
material impact on our systems or results of operations.
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BUSINESS
GENERAL
We are the largest regional theme park operator and the second largest theme
park company in the world, based on 1998 attendance of approximately 38.7
million. We operate 34 regional parks, located in geographically diverse markets
with concentrated populations across the United States, as well as in Mexico,
France, Belgium and The Netherlands. Our parks include 16 of the 50 most highly
attended theme parks in North America. Our theme parks serve 9 of the 10 largest
metropolitan areas in the United States. We estimate that approximately
two-thirds of the population of the continental United States live within a
150-mile radius of one of our theme parks.
The following table sets forth certain information concerning our parks:
<TABLE>
<CAPTION>
NAME TYPE OF PARK PRIMARY MARKET
- -------------------------------------------- ---------------------- --------------------------------------------
<S> <C> <C>
HISTORICAL PARKS:
Bellewaerde................................. Theme Belgium
Frontier City............................... Theme Oklahoma City
Geauga Lake................................. Theme/Water Cleveland
The Great Escape............................ Theme/Water Lake George/Albany, New York
Riverside Park.............................. Theme/Water New England/Boston
Six Flags America........................... Theme/Water Baltimore/Washington, D.C.
Six Flags AstroWorld........................ Theme Houston
Six Flags Water World....................... Water Houston
Six Flags Darien Lake....................... Theme/Water Buffalo/Rochester
Six Flags Elitch Gardens.................... Theme/Water Denver
Six Flags Fiesta Texas...................... Theme/Water San Antonio
Six Flags Great Adventure................... Theme New York City/Philadelphia
Six Flags Wild Safari Animal Park........... Wildlife New York City/Philadelphia
Six Flags Great America..................... Theme Chicago/Milwaukee
Six Flags Kentucky Kingdom.................. Theme/Water Louisville
Six Flags Magic Mountain.................... Theme Los Angeles
Six Flags Hurricane Harbor.................. Water Los Angeles
Six Flags Marine World...................... Theme/Wildlife San Francisco
Six Flags St. Louis......................... Theme/Water St. Louis
Six Flags Over Georgia...................... Theme Atlanta
Six Flags Over Texas........................ Theme Dallas/Fort Worth
Six Flags Hurricane Harbor.................. Water Dallas/Fort Worth
Walibi Aquitaine............................ Theme France
Walibi Flevo................................ Theme The Netherlands
Walibi Rhone-Alpes.......................... Theme/Water France
Walibi Schtroumpf........................... Theme France
Walibi Wavre and Aqualibi................... Theme/Water Belgium
Waterworld USA/Concord...................... Water San Francisco
Waterworld USA/Sacramento................... Water Sacramento
White Water Bay............................. Water Oklahoma City
Wyandot Lake................................ Water Columbus, Ohio
MAY 1999 ACQUISITIONS:
Reino Aventura.............................. Theme Mexico City
Splashtown.................................. Water Houston
White Water Atlanta......................... Water Atlanta
</TABLE>
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<PAGE>
Since 1992, we have made numerous acquisitions of theme parks and have
achieved significant internal growth. In April 1998, we acquired all of the Six
Flags parks, consisting of eight regional theme parks, as well as three
separately gated water parks and a wildlife safari park (each of which is
located near one of the Six Flags theme parks). In March 1998, we expanded our
operations internationally by acquiring the European-based Walibi theme park
operations, which included three parks located in France, two in Belgium and one
in The Netherlands. We have continued our expansion in 1999 by acquiring Reino
Aventura, a theme park in Mexico City, Mexico, White Water Atlanta, a water park
located near Atlanta, Georgia, and Splashtown, a water park located near
Houston, Texas. These 1998 and 1999 park acquisitions have greatly expanded our
operations, which previously consisted of nine regional theme parks (seven of
which include a water park component) and four water parks at locations across
the United States.
During the 1998 operating season the U.S. parks we owned or operated drew,
on average, approximately 75% of their patrons from within a 100-mile radius,
with approximately 36% of visitors utilizing group and other pre-sold tickets
and approximately 23% utilizing season passes. Our parks are individually themed
and provide a complete family-oriented entertainment experience. Our theme parks
generally offer 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. Our theme parks offer more than 800 rides,
including more than 90 roller coasters, making us the leading operator of thrill
rides in the industry.
Six Flags has operated regional theme parks under the Six Flags name for
over thirty years and has established a nationally recognized brand name. We
have worldwide ownership of the "Six Flags" brand name. To capitalize on this
name recognition, for the 1998 season we began using the Six Flags name at one
of our other parks (Six Flags Kentucky Kingdom) and we have added the name to
four additional parks for the 1999 season (Six Flags Elitch Gardens, Six Flags
America (formerly Adventure World), Six Flags Darien Lake and Six Flags Marine
World).
As part of our Six Flags acquisition, we obtained the exclusive license for
theme park usage throughout the United States (except the Las Vegas metropolitan
area) and Canada of certain Warner Bros. and DC Comics characters. These
characters include BUGS BUNNY, DAFFY DUCK, TWEETY BIRD, YOSEMITE SAM, BATMAN,
SUPERMAN and others. Since 1991, these characters have been used to market the
Six Flags parks and to provide visitors with an enhanced family entertainment
experience. Our license, which applies to all of our current U.S. theme parks as
well as parks we may acquire that meet certain criteria, includes the right to
sell merchandise featuring the characters at our parks, and to use the
characters in our advertising, as walk-around characters, in theming for rides
and attractions and in retail outlets. Since the Six Flags acquisition, we have
continued making extensive use of these characters at the Six Flags parks and,
commencing in 1999, we have added the characters at many of our other U.S.
parks. We believe using these characters promotes increased attendance, supports
higher tickets prices, increases lengths-of-stay and enhances in-park spending.
Since 1989, under our current management we have assumed control of 33 parks
and have achieved significant internal growth. For example, during 1998, the 13
parks which we controlled prior to the acquisitions of Six Flags, Walibi, Reino
Aventura, White Water Atlanta and Splashtown achieved same park growth in
attendance, revenue and park-level operating cash flow (representing all park
operating revenues and expenses without depreciation and amortization or
allocation of corporate overhead or interest expense) of 14.4%, 20.3% and 35.0%
respectively, as compared to 1997.
We believe that our parks benefit from limited direct competition, since the
combination of a limited supply of real estate appropriate for theme park
development, high initial capital investment, long development lead-time and
zoning restrictions provides each of our parks with a significant degree of
protection from competitive new theme park openings. Based on our knowledge of
the development of other theme parks in the United States, we estimate that it
would cost at least $200 million and would take a minimum of two years to
construct a new regional theme park comparable to our largest parks.
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Our senior and operating management team has extensive experience in the
theme park industry. Our nine senior executive officers have over 150 years
aggregate experience in the industry and our twenty-five general managers have
an aggregate of in excess of 440 years experience in the industry, including in
excess of 320 years at parks we operate.
According to AMUSEMENT BUSINESS, total North American amusement/theme park
attendance in 1998 was approximately 265-270 million. Total attendance for the
50 largest parks in North America was 165.7 million in 1998, compared to 145.0
million in 1994, representing a compound annual growth rate of 3.4%. The Company
believes that this growth reflects two trends: (i) demographic growth in the
5-24 year old age group, which is expected to continue through 2010 and (ii) an
increasing emphasis on family-oriented leisure and recreation activities.
STRATEGY
Our strategy for achieving growth includes the following key elements: (i)
pursuing growth at our existing parks; (ii) expanding our parks; and (iii)
making selective acquisitions.
PURSUING GROWTH AT OUR EXISTING PARKS
We believe there are substantial opportunities for continued growth at our
parks. Our operating strategy is to increase revenue by increasing attendance
and per capita spending, while also maintaining strict control of operating
expenses. This approach is designed to exploit the operating leverage inherent
in the theme park business. Once parks achieve certain critical attendance
levels, operating cash flow margins increase because revenue growth through
incremental attendance gains and increased in-park spending is not offset by a
comparable increase in operating expenses, because a large portion of such
expenses is relatively fixed during any given year. The primary elements of this
strategy include:
- - ADDING RIDES AND ATTRACTIONS AND IMPROVING OVERALL PARK QUALITY. We regularly
make investments in the introduction of new rides and attractions at our
parks. We believe that the introduction of marketable rides is an important
factor in promoting each of the parks in order to increase market penetration
and encourage longer visits, which lead to increased attendance and sales of
food and merchandise. Once a park reaches an appropriate level of attractions
for its market size, we generally will add new marketable attractions at that
park only every three to four years.
- - ADDING THE SIX FLAGS BRAND NAME AND THE CHARACTERS LICENSED FROM WARNER BROS.
AND DC COMICS AT SELECTED PARKS. We believe that, by virtue of our Six Flags
acquisition, a number of the parks we owned prior to that acquisition have the
potential to accelerate their rate of growth over the next several seasons. We
believe that a number of those parks, particularly the ones located in or near
major metropolitan areas, can significantly accelerate their market
penetration and the expansion of their geographic market. Further, a
fundamental component of our acquisition strategy is to identify parks which
we believe can also gain market penetration and geographic market expansion
following our acquisition. We believe that we can achieve these ends through
the use of the Six Flags brand name, aggressive marketing campaigns featuring
the animated characters licensed from Warner Bros. and DC Comics and targeted
capital investment in new rides and attractions. We believe that this expanded
penetration, as well as the incorporation of the animated characters in the
parks and in merchandise sales, can result in increased attendance and per
capita spending both at the parks we owned prior to the Six Flags acquisition
and at parks we may acquire in the future. For example, in 1998, we commenced
use of the Six Flags brand name at Kentucky Kingdom. As a result of that
re-branding and an investment in new rides and attractions, the park achieved
attendance, revenue, and park-level operating cash flow growth of 19.5%, 35.0%
and 26.0%, respectively, over 1997 levels. In 1999, we re-branded four
pre-existing Premier parks: Six Flags America (formerly Adventure World), Six
Flags Elitch Gardens, Six Flags Darien Lake and Six Flags Marine World. We
also intend to re-brand the recently acquired Reino Aventura theme park in
Mexico City, Mexico, as a Six Flags park for the 2000 season and up to three
of our other existing parks as Six Flags parks over the next few years.
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- - ENHANCING MARKETING AND SPONSORSHIP PROGRAMS. Our 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. We have also implemented marketing programs that emphasize the Six Flags
brand name, as well as the characters licensed from Warner Bros. and DC Comics
and have successfully attracted well known sponsorship and promotional
partners, such as Pepsi, McDonald's, Coca-Cola, Taco Bell, Blockbuster,
7-Eleven, Wendy's, First USA Bank, Best Western and various supermarket
chains. We believe that our increased number of parks and annual attendance
will enable us to expand and enhance our sponsorship and promotional programs.
- - INCREASING GROUP SALES, SEASON PASSES AND OTHER PRE-SOLD TICKETS. Group sales
and pre-sold tickets provide us with a consistent and stable base of
attendance, representing over 36% of aggregate attendance at the U.S. parks
owned or operated by us in the 1998 season. In addition, approximately 23% of
our patrons at those parks utilized season passes. Accordingly, we intend to
continue emphasizing group sales and pre-sold ticket programs in our sales
efforts and will establish aggressive new programs at any parks we acquire in
the future where appropriate.
- - USING TICKET PRICING STRATEGIES TO MAXIMIZE TICKET REVENUES AND PARK
UTILIZATION. We regularly review our ticket price levels and ticket category
mix in order to capitalize on opportunities to implement selective price
increases. We believe 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, we offer discounts on season, multi-visit and group tickets, as well
as discounts on tickets for specific periods, in order to increase attendance
at less popular times, such as weekdays and evenings.
- - ADDING AND ENHANCING RESTAURANTS AND MERCHANDISE AND OTHER REVENUE OUTLETS. We
also seek to increase in-park spending by adding well-themed restaurants,
remodeling and updating existing restaurants and adding new merchandise
outlets. We have successfully increased spending on food and beverages by
introducing well-recognized local and national brands, such as Domino's,
Friendly's, KFC and TCBY. Typically, we operate these revenue outlets and we
are often the franchisee.
- - ADDING SPECIAL EVENTS. We have 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 and Fright
Fest-Registered Trademark-, Halloween events in which parks are transformed
with supernatural theming, scary rides and haunting shows; Oktoberfest, in
which traditional German food, theming, music and entertainment are presented
at the parks; and Holiday in the Park-Registered Trademark-, a winter holiday
event, in which several parks are transformed with winter and holiday theming.
We believe we have demonstrated the effectiveness of our strategy for
internal growth at our parks. Some of the examples of this growth are:
- In 1998, our first year of full operation of our Marine World park,
following a significant investment to add a full complement of theme park
rides and attractions, the Marine World park achieved single season
growth in attendance and revenue of 65.2% and 51.2%, respectively.
- During the 1997 season, we began to apply our operating strategy to the
five parks acquired in the 1996 Acquisitions. We invested approximately
$65 million in the parks for the 1997 season to add marketable rides and
attractions and make other improvements and implemented creative
marketing and sales programs. As a result of this strategy, during 1997,
these five parks achieved growth in attendance, revenue and park-level
operating cash flow of 33.8%, 37.9% and 228.9%, respectively, as compared
to 1996. In 1998, these parks achieved attendance growth of 9.8%, revenue
growth of 15.0%, and park-level operating cash flow growth of 31.8% over
1997 levels.
- For the 1996 and 1997 seasons, we invested approximately $21 million,
adding numerous rides and attractions and 50 recreational vehicles at
Darien Lake. Further, we entered into a long-term contract with a
national concert promoter under which the promoter invested $2.5 million
to make improvements at Darien Lake's 20,000 seat amphitheater and agreed
to book at least
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twenty nationally-recognized performers per season. As a result of these
investments and creative marketing and sales initiatives, during 1997,
Darien Lake achieved compound annual growth of 15.2% in attendance, 20.5%
in revenue and 45.2% in park-level operating cash flow over the results
for 1995. In 1998, Darien Lake achieved attendance growth of 7.0%,
revenue growth of 16.2% and park-level operating cash flow growth of
20.6% over 1997 levels.
In addition to the foregoing, we believe that our Walibi acquisition
provides us with a significant presence in the expanding theme park industry in
Europe and that our strategy of targeted capital investment and sophisticated
marketing can improve performance at these parks. We have agreed to invest
approximately $38.0 million in the Walibi parks over the three years commencing
with the 1999 season, of which approximately $21.0 million is being invested for
the 1999 season. We believe that because, prior to our acquisition, the Walibi
parks suffered from limited available funds for investment and a lack of
creative marketing, there is a substantial opportunity to achieve internal
growth at these parks.
EXPANDING OUR PARKS
We have expanded several of our parks by adding complementary attractions,
such as campgrounds, lodging facilities, new water parks and concert venues, in
order to increase attendance and per capita spending. For example, for the 1998
season we constructed a hotel at our Darien Lake park to supplement the existing
campgrounds and in 1998 we purchased campgrounds and a hotel adjacent to Geauga
Lake. Further, we are adding a water park to Six Flags St. Louis for the 1999
season and plan to add a water park to Six Flags Great Adventure (located
between New York City and Philadelphia) for the 2000 season. We own additional
acreage which is suitable for development at many of our parks. For example, we
own over 1,500 undeveloped acres adjacent to Six Flags Great Adventure and 400
acres adjacent to Six Flags America (formerly Adventure World) suitable for
additional complementary purposes.
MAKING SELECTIVE ACQUISITIONS
We expect to achieve further growth beyond that generated from internal
growth at our existing parks through continued selective acquisitions of
additional regional theme parks. Given our decentralized management approach, we
have significant experience in managing park assets in diverse locations, and we
seek acquisitions where we believe there are significant growth opportunities.
In that connection, in May 1999 we acquired Reino Aventura, a theme park located
in Mexico City, Mexico, Splashtown, a water park located near Houston, Texas,
and White Water Atlanta, a water park located near Atlanta, Georgia.
The regional theme park industry is highly fragmented with over 150 parks
owned by over 100 operators. We believe that, in addition to our recent
acquisitions, there are numerous acquisition opportunities, both in the U.S. and
abroad, that can expand our business. While we will continue to pursue
acquisitions of regional parks with annual attendance between 300,000 and 1.5
million, we will also consider acquisitions of larger parks or park chains.
We believe we have a number of competitive advantages in acquiring theme
parks. Operators of destination or large regional park chains, other than Cedar
Fair L.P., have generally not been actively seeking to acquire parks in recent
years. Additionally, as a multi-park operator with a track record of
successfully acquiring, improving and repositioning parks, we believe we have
numerous competitive advantages over single-park operators in pursuing
acquisitions and improving the operating results at acquired parks. These
advantages include the ability to:
- - exercise group purchasing power (for both operating expenses and capital
assets)
- - use the Six Flags brand name and the characters licensed from Warner Bros. and
DC Comics
- - attract greater sponsorship revenue and support from sponsors with
nationally-recognized brands and other marketing partners
- - achieve administrative economies of scale
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- - recruit and retain superior management
- - use our access to capital markets as well as our common stock as all or a
portion of future acquisition consideration
We expect to continue to acquire parks which have been undermanaged and have
not benefitted from sustained capital expenditures, and to reposition such parks
through the implementation of our operating strategies. We may also acquire
better performing parks which require less additional investment but where cash
flow can be improved through economies of scale in operating expenses and
capital assets and other enhancements.
We intend to locate acquisition targets primarily through our own direct
efforts. Our management has extensive contacts throughout the industry and is an
active participant in industry associations. Particular attention is given to
cultivating relationships over time with park owners who appear likely to be or
become potential sellers due to factors such as age or family or economic
circumstances. In addition, we have developed a reputation as an active acquiror
of regional parks. Through this reputation and general industry contacts, we
believe that we become aware of most acquisition opportunities that develop in
our area of focus.
MAY 1999 ACQUISITIONS
REINO AVENTURA. We acquired the Reino Aventura theme park in Mexico City,
Mexico for approximately $59.0 million, all of which was paid in cash. There are
approximately 22 million people living within 50 miles of the park. Reino
Aventura is the largest paid admission theme park in Mexico, based on 1998
attendance of approximately 1.7 million. The park, which first opened in 1982,
is located on a site of approximately 107 acres. We intend to re-brand this park
as a Six Flags park for the 2000 season in connection with a substantial
investment in additional rides and attractions, and expect a significant
increase in park performance as a result.
WHITE WATER ATLANTA. We acquired, through the partnership that owns Six
Flags Over Georgia, the White Water Atlanta water park located near Atlanta,
Georgia and approximately 20 miles from our Six Flags Over Georgia park. The
water park, which is located on a site of approximately 70 acres, had averaged
attendance of approximately 600,000 over the five years immediately prior to
1998. In 1998, the park experienced a fall-off in attendance to approximately
385,000 persons after an isolated e-coli bacteria incident caused by a park
guest. We believe that appropriate protective measures have been taken to
prevent similar incidents in the future. We believe that we can increase
attendance and revenues at both White Water Atlanta and our existing Six Flags
Over Georgia park through joint season pass and other joint ticketing and
marketing programs, and can increase operating efficiencies at both facilities
through shared expenses.
SPLASHTOWN. We acquired the Splashtown water park, located near Houston,
Texas and approximately 30 miles from our Six Flags AstroWorld and Six Flags
Water World parks. The water park, which is located on a site of approximately
60 acres, had 1998 attendance of approximately 465,000. We believe we can
increase attendance and revenues at both Splashtown and our existing Six Flags
AstroWorld and Six Flags Water World parks through joint season pass and other
joint ticketing and marketing programs, and can increase operating efficiencies
at all three facilities through shared expenses.
MARKETING AND PROMOTION
We attract visitors through national and local multi-media marketing and
promotional programs for each of our parks. The national programs are designed
to market and enhance the Six Flags brand name. Local programs are tailored to
address the different characteristics of their respective markets and to
maximize the impact of specific park attractions and product introductions. All
marketing and promotional programs are updated or completely revamped each year
to address new developments. Marketing
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programs are supervised by our Senior Vice President for Marketing, with the
assistance of our senior management and a national advertising agency.
We also develop partnership relationships with well-known national and
regional consumer goods companies and retailers to supplement our advertising
efforts and to provide attendance incentives in the form of discounts and/or
premiums. We also arrange for popular local radio and television programs to be
filmed or broadcast live from our parks.
Group sales and pre-sold tickets provide us with a consistent and stable
base of attendance, representing approximately 36% of aggregate attendance in
1998 at the U.S. parks which we owned or operated during that season. 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. Historically, we have been successful in increasing group sales and
pre-sold tickets at our existing and acquired parks.
We have also developed effective programs for marketing season pass tickets.
Season pass sales establish a solid attendance base in advance of the season,
thus reducing exposure to inclement weather. Additionally, season pass holders
often bring paying guests and generate "word-of-mouth" advertising for the
parks. During 1998, 23% of visitors to the 31 parks we owned or operated
utilized season passes.
A significant portion of our attendance is attributable to the sale of
discount admission tickets. We offer 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. The
increased in-park spending which results from such attendance is not offset by
incremental operating expenses, because such expenses are relatively fixed
during the operating season.
We also implement promotional programs as a means of targeting specific
market segments and geographic locations not reached through 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,
sponsorship marketing and targeted multi-media programs. The special promotional
offers are usually for a limited time and offer a reduced admission price or
provide some additional incentive to purchase a ticket, such as combination
tickets with a complementary location.
LICENSES
Pursuant to a license agreement (the "License Agreement") among Warner
Bros., DC Comics, Premier and SFTP, we have the exclusive right for a term
through 2053 to use Warner Bros. and DC Comics characters in theme parks
throughout the United States and Canada (other than the Las Vegas metropolitan
area). In particular, the License Agreement entitles us to use, subject to
customary approval rights of Warner Bros., and in limited circumstances,
approval rights of certain third parties, all animated cartoon and comic book
characters that Warner Bros. and DC Comics have the right to license, including
as of the date hereof, BATMAN, SUPERMAN, BUGS BUNNY, DAFFY DUCK, TWEETY BIRD and
YOSEMITE SAM, and includes the right to sell merchandise using the characters.
The license fee is fixed until 2005, and thereafter, the license fee will be
subject to periodic scheduled increases and will be payable on a per-theme park
basis. In addition, we are required to pay a royalty fee on merchandise
manufactured by or for us and sold that uses the licensed characters. Warner
Bros. has the right to terminate the License Agreement under certain
circumstances including if any persons involved in the movie or television
industries obtain control of the Company and upon a default under the
subordinated indemnity agreement between the Company and Time Warner Inc.
entered into in connection with the Six Flags acquisition. Premier also licenses
on a non-exclusive basis certain other characters, including POPEYE, for use at
certain parks.
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PARK OPERATIONS
We currently operate in geographically diverse markets in the United States,
Mexico and Europe. Each of our 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. Each park is
managed by a general manager who reports to one of our regional Executive Vice
Presidents (each of whom report to our Chief Operating Officer) and is
responsible for all operations and management of the individual park. Local
advertising, ticket sales, community relations and hiring and training of
personnel are the responsibility of individual park management in coordination
with corporate support teams.
Each of our 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 (including stock options and cash bonuses) for
individual park managers to execute our strategy and to maximize revenues and
operating cash flow at each park. Our 25 general managers have an aggregate of
approximately 440 years experience in the industry, including approximately 320
years at parks we operate.
Our parks are generally open daily from Memorial Day through Labor Day. In
addition, most of our parks are open during weekends prior to and following
their daily seasons, often in conjunction with themed events (such as
Hallowscream, Fright Fest-Registered Trademark-, Oktoberfest and Holiday in the
Park-Registered Trademark-). Due to their location, certain Six Flags parks have
longer operating seasons. 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.
CAPITAL IMPROVEMENTS
We regularly make capital investments in the introduction of new rides and
attractions at our parks. We purchase both new and used rides. In addition, we
rotate rides among parks to provide fresh attractions. We believe that the
introduction of new rides is an important factor in promoting each of the parks
in order to achieve market penetration and encourage longer visits, which lead
to increased attendance and in-park spending. In addition, we generally add
theming to acquired parks and enhance the theming and landscaping of our
existing parks in order to provide a complete family oriented entertainment
experience. Capital expenditures are planned on a seasonal basis with most
expenditures made during the off-season. Expenditures for materials and services
associated with maintaining assets, such as painting and inspecting rides, are
expensed as incurred and therefore are not included in capital expenditures.
Our level of capital expenditures are directly related to the optimum mix of
rides and attractions given park attendance and market penetration. These
targeted expenditures are intended to drive significant attendance growth at the
parks and to provide an appropriate complement of entertainment value, depending
on the size of a particular market. As an individual park begins to reach an
appropriate attendance penetration for its market, management generally plans a
new ride or attraction every three to four years in order to enhance the park's
entertainment product.
MAINTENANCE AND INSPECTION
Our rides are inspected daily by maintenance personnel during the operating
season. 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
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and defects) steel portions of certain rides at high-stress points. We have
approximately 1,000 full-time employees who devote substantially all of their
time to maintaining the parks and their rides and attractions.
In addition to our maintenance and inspection procedures, our 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 also 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. Furthermore, we use Ellis & Associates as water safety
consultants at our parks in order to train life guards and audit safety
procedures.
INSURANCE
We maintain insurance of the type and in amounts that we believe are
commercially reasonable and that are available to businesses in our industry. We
maintain multi-layered general liability policies that provide for excess
liability coverage of up to $100.0 million per occurrence. With respect to
liability claims arising out of (i) occurrences at the parks acquired in the Six
Flags acquisition, and (ii) occurrences on and after July 1, 1998 at our other
U.S. parks, there is no self-insured retention by the Company. With respect to
claims arising out of occurrences prior to July 1, 1998 at these other U.S.
parks, the self insurance retention is $50,000. We also maintain fire and
extended coverage, workers' compensation, business interruption and other forms
of insurance typical to business in this industry. The fire and extended
coverage policies insure our real and personal properties (other than land)
against physical damage resulting from a variety of hazards.
ENVIRONMENTAL AND OTHER REGULATION
Our operations are subject to increasingly stringent federal, state and
local environmental laws and regulations including laws and regulations
governing water discharges, air emissions, soil and groundwater contamination,
the maintenance of underground and above-ground storage tanks and the disposal
of waste and hazardous materials. In addition, our operations are subject to
other local, state and federal governmental regulations including, without
limitation, labor, health, safety, zoning and land use and minimum wage
regulations applicable to theme park operations, and local and state regulations
applicable to restaurant operations at each park. We believe that we are in
substantial compliance with applicable environmental and other laws and
regulations and, although no assurance can be given, we do not foresee the need
for any significant expenditures in this area in the near future.
In addition, portions of the undeveloped areas at certain of our parks are
classified as wetlands. Accordingly, we may need to obtain governmental permits
and other approvals prior to conducting development activities that affect these
areas, and future development may be prohibited in some or all of these areas.
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MANAGEMENT
DIRECTORS, EXECUTIVE OFFICERS AND KEY EMPLOYEES
The following table sets forth certain information with respect to the
directors, executive officers and key employees of the Company or its
subsidiaries.
<TABLE>
<CAPTION>
NAME AGE POSITION WITH COMPANY
- ----------------------------------- --- ----------------------------------------------------------------------
<S> <C> <C>
CORPORATE OFFICERS:
Kieran E. Burke.................... 42 Chairman and Chief Executive Officer; Director
Gary Story......................... 43 President and Chief Operating Officer; Director
James F. Dannhauser................ 46 Chief Financial Officer; Director
Daniel P. Aylward.................. 46 Executive Vice President
John E. Bement..................... 46 Executive Vice President
Hue W. Eichelberger................ 40 Executive Vice President
Traci E. Blanks.................... 38 Senior Vice President of Marketing
Richard A. Kipf.................... 64 Vice President of Administration; Corporate Secretary
James M. Coughlin.................. 47 General Counsel
Lesley K. Hudson................... 39 Vice President of Design
Brian Jenkins...................... 37 Vice President of Finance
Russell W. Kuteman................. 46 Vice President of Finance
Charles R. Roarty.................. 60 Vice President of Hospitality
David Thomas....................... 41 Vice President of Entertainment
Patrick J. Walker.................. 35 Vice President of Finance
Paul A. Biddelman.................. 53 Director
Michael E. Gellert................. 68 Director
Sandy Gurtler...................... 49 Director
Charles R. Wood.................... 85 Director
GENERAL MANAGERS:
Jack D. Bateman.................... 41 Six Flags Kentucky Kingdom
Timothy D. Black................... 33 Riverside Park
Edouard Bon........................ 38 Walibi Schtroumpf
James C. Bouy...................... 57 Six Flags Elitch Gardens
Stephen C. Calloway................ 48 Six Flags Over Texas; Six Flags Hurricane Harbor
John S. Collins.................... 39 The Great Escape
Luc DeRoo.......................... 33 Walibi Aquitaine
John P. Gannon..................... 41 Wyandot Lake
Manuel Gonzalez-Perez.............. 36 Reino Aventura
Ulla Harrison...................... 50 Walibi Rhone-Alpes
Charles G. Hendrix................. 46 Six Flags AstroWorld; Splashtown
Del Holland........................ 55 Six Flags Magic Mountain
Thomas J. Iven..................... 40 Six Flags St. Louis
Jeffrey A. Lococo.................. 43 Geauga Lake
Richard A. McCurley................ 39 Waterworld
Thomas J. Mehrmann................. 39 Six Flags Marine World
William Muirhead................... 43 Six Flags Great Adventure
John R. Odum....................... 41 Six Flags Fiesta Texas
Bradley Y. Paul.................... 51 Six Flags Darien Lake
Janet Porter....................... 35 Six Flags America
Hans van Driem..................... 52 Walibi Flevo
Paul van Havere.................... 46 Bellewaerde
Stefaan Vansteenkiste.............. 35 Walibi Wavre; Aqualibi Water Park
H. E. ("Gene") Weeks............... 46 Six Flags Over Georgia; White Water Atlanta
James H. Wintrode.................. 53 Six Flags Great America
</TABLE>
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<PAGE>
KIERAN E. BURKE has served as Chief Executive Officer and a Director of the
Company 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 was an investment banker prior to becoming President of Premier.
GARY STORY has served as President and a Director of the Company since June
1994 and as Chief Operating Officer since January 1992. From January 1992
through June 1994, he also served as Premier's Executive Vice President. Prior
to that time, he had been General Manager of Frontier City 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
(now Reino Aventura), our recently acquired theme park in Mexico City. From 1972
through 1981, Mr. Story served in various capacities with Six Flags.
JAMES F. DANNHAUSER became Chief Financial Officer of the Company in
October 1995 and has served as a Director of Premier since December 1992. From
1990 through June 1996, Mr. Dannhauser was a managing director of Lepercq de
Neuflize & Co. Incorporated, an investment banking firm ("Lepercq"). Mr.
Dannhauser is a member of the board of directors of Lepercq and of MeriStar
Hospitality Corporation.
DANIEL P. AYLWARD has served as Executive Vice President since June 1998.
Prior to that, beginning in February 1997, Mr. Aylward was General Manager of
Marine World. From January 1995 to February 1997, Mr. Aylward was President and
General Manager of Silverwood Theme Park, a small theme park operation in Idaho.
From June 1989 to January 1995 he served as General Manager of Old Tucson
Studios in Tucson, Arizona. Prior thereto, Mr. Aylward was employed at Kings
Island.
JOHN E. BEMENT has served as Executive Vice President since May 1998. From
January 1993 to May 1998 Mr. Bement was the General Manager at Six Flags Over
Georgia.
HUE W. EICHELBERGER has served as Executive Vice President since 1996;
prior thereto he served as 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. Prior thereto, Mr. Eichelberger served as General Manager of
White Water (a water park in Grand Prairie, Texas) and FantaSea (a water park in
Wichita, Kansas).
TRACI E. BLANKS has served as Senior Vice President of Marketing since
January 1998. Prior to that beginning in 1995, Ms. Blanks served as Vice
President of Marketing. From 1992 through 1994, she served as Vice President of
Marketing for Frontier City and White Water Bay. From 1986 through 1992, she
served as Director of Marketing for Frontier City, and as such was responsible
for all marketing and group sales programs. From 1986 through 1987, she also
served as Manager of Advertising and Promotions for Frontier City.
RICHARD A. KIPF has served as Corporate Secretary of the Company (or its
predecessors) since 1975 and has served as Vice President of Administration
since 1994.
JAMES M. COUGHLIN has served as General Counsel since May 1998. Prior to
that, Mr. Coughlin was a partner at the law firm of Baer Marks & Upham LLP for
in excess of five years.
LESLEY K. HUDSON has served as Vice President of Design for the Company
since May 1997. Prior to that, beginning in September 1993, he served as
Corporate Art Director. From 1984 to 1993 Mr. Hudson owned and operated Hudson
Design, a company which designed and produced custom themed signage and
decoration.
BRIAN JENKINS has served as Vice President of Finance for the Company since
April 1998. Prior to that, Mr. Jenkins served as Regional Vice President of
Finance for Six Flags from 1996 to 1998. Prior to
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joining Six Flags, Mr. Jenkins served in various financial positions with
FoxMeyer Health Corporation from 1990 to 1996, most recently as Vice President
of Business Development and Corporate Planning.
RUSSELL W. KUTEMAN has served as Vice President of Finance of the Company
since 1996. From 1986 through 1996, Mr. Kuteman served as the Vice President of
Finance for Wet 'n Wild and later Six Flags. Prior to 1986, Mr. Kuteman served
as Vice President of Finance for several independent petroleum companies. Mr.
Kuteman is a certified public accountant, and began his professional career with
Peat, Marwick, Mitchell & Co. in 1976.
CHARLES R. ROARTY has served as Vice President of Hospitality since January
1999 and prior thereto served as a consultant to the Company and was actively
involved in the construction of the Company's hotel at Six Flags Darien Lake.
Since 1991 he has also served as President of Classen Corporation, a leasing
company. From 1991 to 1993, Mr. Roarty was President of the Bahia Mar Hotel in
Fort Lauderdale, Florida. Previously, he had been Executive Vice President to
the predecessor of Meristar Hotels and President of the hotel division of Drexel
Burnham Lambert Realty. He began his career with Hilton Hotels.
DAVID THOMAS has served as Vice President of Entertainment since 1993. From
1987 through 1993, he was responsible for the Company's show productions
(including booking national touring acts to appear at the parks) as well as the
staging of numerous festivals including Oktoberfest and Hallowscream. Prior to
1987, he served as President of Silvertree Productions, producing over forty
stage shows, musicals, stunt spectaculars and magic illusion presentations.
PATRICK J. WALKER has served as Vice President of Finance since May 1998.
Prior thereto, since May 1992, he served in various capacities at Six Flags,
most recently as Corporate Controller.
PAUL A. BIDDELMAN has served as a Director of the Company since December
1992. Since December 1997, Mr. Biddelman has been president of Hanseatic
Corporation ("Hanseatic"), a private investment company. Prior to that date, he
was treasurer of Hanseatic for more than five years. 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. and
Star Gas Partners, L.P.
MICHAEL E. GELLERT has served as a Director of the Company since March
1989. He previously served as a Director of Premier and as a Trustee of its
predecessor 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 ("Windcrest"), a New York limited partnership. The
principal business of Windcrest is private investing. Mr. Gellert also serves as
a director of Devon Energy Corp., HSA Corp., Humana Inc., Seacor Smit Inc. and
Smith Barney World Funds, Inc.
SANDY GURTLER has served as a Director of the Company since 1997. Mr.
Gurtler is the Manager of Chilcott Entertainment L.L.C., which was the general
partner of the owner of Elitch Gardens prior to the acquisition of the park by
the Company in October 1996. Mr. Gurtler also serves as a consultant to the
Company.
CHARLES R. WOOD has served as a Director of the Company since 1997. Mr.
Wood is the President and sole shareholder of Storytown USA, Inc. and Fantasy
Rides Corporation, which collectively owned The Great Escape prior to the
acquisition of the park by the Company in December 1996. Mr. Wood also serves as
a consultant to the Company and owns, directly or through wholly-owned
corporations, a variety of businesses in the Lake George area, including real
estate, motels, restaurants and an action park.
JACK D. BATEMAN has served as General Manager of Six Flags Kentucky Kingdom
since its acquisition by the Company in November 1997. Prior to that time,
beginning in 1996, he served as Director of Marketing at Elitch Gardens. Prior
to joining Premier, Mr. Bateman worked in various capacities at Six Flags for
over fifteen years, most recently as Director of Destination Marketing at Six
Flags Fiesta Texas.
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<PAGE>
TIMOTHY D. BLACK has served as General Manager of Riverside Park since 1998
and prior thereto served as General Manager of Wyandot Lake beginning in 1997.
From 1995 through 1997, he was Manager of Park Operations at Six Flags Fiesta
Texas. From 1992 to 1995, he was Director of Operations and Maintenance at
Frontier City.
EDOUARD BON has served as General Manager of Walibi Schtroumpf since March
1996. From 1994 to March 1996, Mr. Bon served as General Manager for the Hotel
Mercure in Reims Est, France. From 1993 to 1994, he served as General Manager of
the Hotel Sofitel Imperial on the Mauritius Island. From 1988 to 1990, he was
Executive Assistant Manager of the Hotel Sofitel in Lyon, France.
JAMES C. BOUY served as General Manager of Geauga Lake from 1994 until 1996
and became General Manager of Six Flags Elitch Gardens following its 1996
acquisition by the Company. Prior thereto, from 1992 through 1994, he served as
Vice President and General Manager of Kennywood Park in Pittsburgh,
Pennsylvania. From 1985 through 1991, Mr. Bouy was employed by Funtime Parks as
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.
STEPHEN C. CALLOWAY has served as General Manager of Six Flags Over Texas
and Six Flags Hurricane Harbor since June 1998. From November 1995 to June 1998,
Mr. Calloway served as Vice President and General Manager of Six Flags Over
Texas. Mr. Calloway previously served as President of Six Flags St. Louis from
May 1993 through November 1995.
JOHN S. COLLINS has served as General Manager of The Great Escape since
December 1996. Prior to that time, he served in various capacities at Geauga
Lake for over ten years, most recently as Director of Marketing.
LUC DEROO has served as General Manager of Walibi Aquitaine since April 1,
1999. Prior to that, Mr. DeRoo served as In-Park Manager of Walibi Rhone-Alpes
from November 1996 to March 1999. From 1991 to 1996, he served as Manager of
Games, Retail and Candies at Walibi Wavre. From 1986 to 1991, he served as
Assistant In-Park Manager at Walibi Wavre.
JOHN P. GANNON has served as General Manager of Wyandot Lake since March
1999. Prior to that, Mr. Gannon served as Vice President of Finance for the
Company beginning in August of 1995 when Premier purchased Funtime Parks, Inc.
Mr. Gannon had previously served as Vice President and Treasurer for Funtime
Parks, Inc. from 1990 to 1995. From 1987 to 1990, he served as a controller for
Geauga Lake in Aurora, Ohio. Prior thereto, Mr. Gannon, a certified public
accountant, was employed with Ernst & Young, beginning in 1979, and was assigned
to the Funtime audit. Mr. Gannon is a past president of the Akron Chapter of the
Institute of Management Accountants.
MANUEL GONZALEZ-PEREZ became General Manager of Reino Aventura in May 1999
and prior thereto served as General Manager of Frontier City since 1996. From
1995 to 1996 he served as Director of Park Revenue and Operations at Frontier
City. From 1991 to 1995, Mr. Gonzalez-Perez was President and CEO for Park
Street (Family Entertainment Center) in Mexico and from 1991 to 1994 he served
as Revenue Director for Reino Arthon in Mexico City.
ULLA HARRISON has served as General Manager of Walibi Rhone-Alpes since
October 1998. From 1991 to 1998, she served as Park Manager of Tusenfrued
Amusement Park in Norway.
CHARLES G. HENDRIX has served as General Manager of Six Flags AstroWorld
since September 1998. Prior to September 1998, Mr. Hendrix owned and operated a
real estate development business and an import/export company in Atlanta,
Georgia. Mr. Hendrix also previously served as Park President and as
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<PAGE>
Chief Development Officer of American Dream Parks in China. Mr. Hendrix began
his career in 1969 at Six Flags Over Georgia.
DEL HOLLAND has served as General Manager of Six Flags Magic Mountain since
January 1993. Mr. Holland served as Vice President and General Manager of Six
Flags Over Georgia from 1991 to 1992 and as Vice President of Retail for Six
Flags' corporate office from 1982 to 1986. Prior to 1982, Mr. Holland served in
various retail and operations positions within Six Flags. He has been a
full-time employee of Six Flags since August 1963.
THOMAS J. IVEN has served as General Manager of Six Flags St. Louis since
August 1998. From 1996 to August 1998, Mr. Iven was Regional Director of Retail
Operations of the Six Flags Texas region. From 1992 to 1996, Mr. Iven served as
Vice President of Retail Operations at Six Flags Over Texas.
JEFFREY A. LOCOCO served as General Manager of Wyandot Lake since 1989 and
became the General Manager of Geauga Lake following its 1995 acquisition by the
Company. 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 Marriott's Great America Theme Park.
RICHARD A. MCCURLEY served as General Manager of Frontier City and White
Water Bay beginning in 1994 until he became General Manager of Waterworld
following its 1996 acquisition by the Company. 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 (now Six Flags
America). From 1985 through 1992, Mr. McCurley was Food Service Manager and
later Food Service Director at Knotts Berry Farm. 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 J. MEHRMANN has served as General Manager of Six Flags Marine World
since May 1998. Prior to May 1998, Mr. Mehrmann served as Vice President of Park
Operations and Entertainment for Knott's Berry Farm in Buena Park, California,
where he served in various management capacities over a 22-year period. From
1991 to 1994, he served as Director of Park Operations, Entertainment and
Merchandise for the design, construction and opening of Knott's Camp Snoopy at
Mall of America in Minneapolis, Minnesota.
WILLIAM MUIRHEAD has served as General Manager of Six Flags Great Adventure
since July 1998 and prior thereto was General Manager of Riverside Park since
January 1997. Prior to that, beginning in 1992, he served as Vice President and
General Manager of Expo/Tiered Retail Services Inc., a company headquartered in
Hong Kong and specialized in developing themed retail and gaming operations in
the South Pacific rim. Prior thereto, Mr. Muirhead was employed at Dorney Park
and Six Flags Great Adventure.
JOHN R. ODUM has served as General Manager of Six Flags Fiesta Texas since
August 1998. From 1996 to August 1998, Mr. Odum served as General Manager of Six
Flags St. Louis. From 1991 to 1996, he held the position of Retail Vice
President at Six Flags Magic Mountain. Mr. Odum was Games & Attractions Manager
and Retail Vice President at that park from 1982 to 1991. Mr. Odum began his
career in 1974 at Six Flags Over Georgia.
BRADLEY Y. PAUL has served as General Manager of Six Flags Darien Lake
since 1991. From 1984 through 1991 he served as Marketing Director of Darien
Lake.
JANET PORTER has served as General Manager of Six Flags America (formerly
Adventure World) since February 1998. From November 1996 to February 1998, Ms.
Porter was Assistant General Manager at that park. From February 1995 to
November 1996, Ms. Porter was Adventure World's Revenue Director and from 1994
to February 1995, Ms. Porter served as Merchandising/Games Manager. Ms. Porter
was employed at Six Flags Great Adventure from 1980 through 1993.
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HANS VAN DRIEM has served as General Manager of Walibi Flevo since May
1993. From April 1988 to April 1993, he served as Commercial and Operational
Director for the World Horticultural Exposition Floriade 1992 in the Hague,
Netherlands. Prior to that, Mr. van Driem served as Vice President of Sales &
Marketing Europe for Crest Hotels International based in Frankfurt, Germany.
PAUL VAN HAVERE has served as General Manager of Bellewaerde Park since
January 1995. Prior to that, he served as General Manager and Operations Manager
of the "Sportpaleis" in Antwerp, Belgium.
STEFAAN VANSTEENKISTE has served as General Manager of Walibi Wavre and
Aqualibi water park since March 1999. From 1997 to March 1999, Mr. Vansteenkiste
served as Director Food Service of Six Flags Magic Mountain. From 1993 to 1997,
Mr. Vansteenkiste served in various capacities at Taco Bell Corporation, most
recently as Market Manager. From 1991 to 1993, he was Principal Director of
Finance for National Capital Associates, Ltd.
H.E. ("GENE") WEEKS has served as General Manager of Six Flags Over Georgia
since May 1998. From September 1997 until May 1998, he served as Vice President
of Facilities and Guest Management of Six Flags, with responsibilities for
operations, maintenance, engineering and capital planning & construction for all
of the Six Flags parks. Mr. Weeks served as Vice President of Maintenance and
Construction of Six Flags Fiesta Texas from January 1, 1996 to September 1997.
From 1986 to 1995, Mr. Weeks served as Vice President and, later,
President/Chief Operating Officer of Creative Entertainment Management, Inc., a
company he co-founded.
JAMES H. WINTRODE has served as General Manager of Six Flags Great America
since July 1987. From 1982 to 1987, Mr. Wintrode served as Vice President and
General Manager of Six Flags St Louis. Mr. Wintrode was Director of Finance at
Six Flags Over Georgia from 1976 to 1982, Director of Finance at Six Flags from
1974 to 1976 and Director of Finance at Japanese Village from 1972 to 1974.
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DESCRIPTION OF NOTES
You can find the definitions of certain terms used in this description under
the subheading "Certain Definitions." In this description, the term "Company"
refers only to Premier Parks Inc. and not to any of its subsidiaries. The term
"Notes" refers to the Premier senior notes being offered hereby.
The Company will issue the Notes under an Indenture (the "Indenture")
between itself and The Bank of New York, as trustee (the "Trustee"). The terms
of the Notes include those stated in the Indenture and those made part of the
Indenture by reference to the Trust Indenture Act of 1939 (the "Trust Indenture
Act").
The following description is a summary of the material provisions of the
Indenture. It does not restate that agreement in its entirety. We urge you to
read the Indenture because it, and not this description, defines your rights as
holders of these Notes. We have filed a copy of the Indenture as an exhibit to
the registration statement which includes this prospectus supplement and the
accompanying prospectus.
BRIEF DESCRIPTION OF THE NOTES
These Notes:
- are general unsecured obligations of the Company;
- are PARI PASSU in right of payment with all existing and future senior
indebtedness of the Company;
- are not guaranteed by the Company's Subsidiaries; and
- are effectively subordinated to all Indebtedness and other liabilities
(including trade payables) of the Company's Subsidiaries.
Assuming the full $375.0 million aggregate principal amount of outstanding
notes are tendered and purchased in the Premier Operations and SFTP tender
offers, and this offering is consummated, as of March 31, 1999 Premier on an
unconsolidated basis would have had total outstanding indebtedness with a
carrying value of $987.5 million (all of which is senior indebtedness) and
Premier's subsidiaries would have had total indebtedness of $1,119.6 million
(including $185.4 million of notes which we will repay on or prior to December
15, 1999 with funds already deposited in escrow) and approximately $209.6
million outstanding of other liabilities (other than deferred income taxes).
As of the date of the Indenture, all of the Company's Subsidiaries will be
"Restricted Subsidiaries." However, under the circumstances described below
under the caption "Certain Covenants--Designations of Restricted and
Unrestricted Subsidiaries," we will be able to designate certain of our
Subsidiaries as "Unrestricted Subsidiaries." Unrestricted Subsidiaries will not
be subject to many of the restrictive covenants set forth in the Indenture.
In the event of a bankruptcy, liquidation or reorganization of any of the
Company's Subsidiaries, the Subsidiaries will pay the holders of their debt and
their trade creditors before they will be able to distribute any of their assets
to us. The Company's Subsidiaries generated substantially all of our
consolidated revenues in the twelve-month period ended December 31, 1998 and
held substantially all of our consolidated assets as of December 31, 1998.
Pursuant to the Partnership Parks Agreements, the Company is required to:
- make minimum annual payments (approximately $47.3 million in 1999 with
annual cost of living adjustments) to its partners in the Co-Venture
Partnerships (of which we will be entitled to receive approximately $14.4
million due to our current ownership interest);
- make minimum capital expenditures at each of the Co-Venture Parks during
rolling 5-year periods generally equal to 6% or such park's revenues; and
- purchase a maximum number of 5% per year (accumulating to the extent not
purchased in any given year) of the total limited partnership units
(valued based upon the cash flow of the respective
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Co-Venture Parks) outstanding as of the date of the Partnership Parks
Agreements (to the extent tendered by unit holders).
We will use cash flow from the operations at these parks to satisfy the
first two obligations before we use any of our other funds. In addition, we have
deposited in escrow approximately $75.0 million which can be used to satisfy
these obligations.
Pursuant to the Subordinated Indemnity Agreement, the Company has agreed to
indemnify Time Warner in respect of its guarantee of the obligations of the
Company under the Partnership Parks Agreements set forth in the preceding
paragraph. The obligations of the Company pursuant to the Subordinated Indemnity
Agreement will not be subordinated to the obligations of the Company on the
Notes as they are to the Company's obligations on its Senior Discount Notes due
2008 and Senior Notes due 2006. In addition, pursuant to the terms of the
Subordinated Indemnity Agreement, other than with respect to the SFEC Notes, the
Company may not secure any Indebtedness of the Company, Premier Operations or
any of its subsidiaries with any of the assets of (or guarantees by) SFEC or any
of its subsidiaries.
PRINCIPAL, MATURITY AND INTEREST
The Company will issue Notes initially with a maximum aggregate principal
amount of $430 million. The Company will issue Notes in denominations of $1,000
and integral multiples of $1,000. The Notes will mature on , 2007. Subject
to compliance with the covenant described under "--Certain Covenants--Incurrence
of Indebtedness and Issuance of Preferred Stock," the Company is permitted to
issue more Notes under the Indenture in an unlimited principal amount (the
"Additional Notes"). Any such Additional Notes that are actually issued will be
treated as issued and outstanding Notes (and as the same class as the initial
Notes) for all purposes of the Indenture and this "Description of Notes," unless
the context clearly indicates otherwise.
Interest on the Notes will accrue at the rate of % per annum and will be
payable semi-annually in arrears on and , commencing on ,
1999. The Company will make each interest payment to holders of record of the
Notes ("Holders") on the immediately preceding and .
Interest on the Notes will accrue from the most recent date to which
interest has been paid or, if no interest has been paid, from the date of
original issuance. Interest will be computed on the basis of a 360-day year
comprised of twelve 30-day months.
METHODS OF RECEIVING PAYMENTS ON THE NOTES
If a Holder has given wire transfer instructions to the Company, the Company
will make all principal, premium and interest payments on the Notes in
accordance with those instructions. All other payments on the Notes will be made
at the office or agency of the Paying Agent and Registrar within the City and
State of New York unless the Company elects to make interest payments by check
mailed to the Holders at their address set forth in the register of Holders.
PAYING AGENT AND REGISTRAR FOR THE NOTES
The Trustee will initially act as Paying Agent and Registrar. The Company
may change the Paying Agent or Registrar without prior notice to the Holders of
the Notes, and the Company or any of its Subsidiaries may act as Paying Agent or
Registrar.
TRANSFER AND EXCHANGE
A Holder may transfer or exchange Notes in accordance with the Indenture.
The Registrar and the Trustee may require a Holder, among other things, to
furnish appropriate endorsements and transfer documents and the Company may
require a Holder to pay any taxes and fees required by law or permitted by the
Indenture. The Company is not required to transfer or exchange any Note selected
for redemption.
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Also, the Company is not required to transfer or exchange any Note for a period
of 15 days before a selection of Notes to be redeemed.
The registered Holder of a Note will be treated as the owner of it for all
purposes.
OPTIONAL REDEMPTION
During the first 36 months after the Issue Date, the Company may on any one
or more occasions redeem up to 35% of the aggregate principal amount of Notes
(which includes Additional Notes, if any) originally issued under the Indenture
at a redemption price of % of the principal amount thereof, plus accrued
and unpaid interest to the redemption date, with the net cash proceeds of one or
more Public Equity Offerings and/or the net cash proceeds of a Strategic Equity
Investment; PROVIDED that:
(1) at least 65% of the aggregate principal amount of Notes (which includes
Additional Notes, if any) originally issued remains outstanding immediately
after the occurrence of each such redemption (excluding Notes held by the
Company and its Subsidiaries); and
(2) any redemption must occur within 60 days of the date of the closing of such
Public Equity Offering and/or Strategic Equity Investment.
Except pursuant to the preceding paragraph, the Notes will not be redeemable
at the Company's option prior to , 2003. After , 2003, the
Company may redeem all or a part of the Notes upon not less than 30 nor more
than 60 days' notice, at the redemption prices (expressed as percentages of
principal amount) set forth below plus accrued and unpaid interest thereon to
the applicable redemption date, if redeemed during the twelve-month period
beginning on of the years indicated below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
- -------------------------------------------------------------------------------------- -----------
<S> <C>
2003.................................................................................. %
2004.................................................................................. %
2005.................................................................................. %
2006 and thereafter................................................................... 100.000%
</TABLE>
REPURCHASE AT THE OPTION OF HOLDERS
CHANGE OF CONTROL
If a Change of Control occurs, each Holder of Notes will have the right to
require the Company to repurchase all or any part (equal to $1,000 or an
integral multiple thereof) of that Holder's Notes pursuant to the Change of
Control Offer. In the Change of Control Offer, the Company will offer a Change
of Control Payment in cash equal to 101% of the aggregate principal amount of
Notes repurchased plus accrued and unpaid interest thereon, if any, to the date
of purchase. Within 30 days following any Change of Control, the Company will
mail a notice to each Holder describing the transaction or transactions that
constitute the Change of Control and offering to repurchase Notes pursuant to
the procedures required by the Indenture and described in such notice. The
Company will comply with the requirements of Rule 14e-1 under the Exchange Act
and any other securities laws and regulations thereunder to the extent such laws
and regulations are applicable in connection with the repurchase of Notes as a
result of a Change of Control.
On the Change of Control Payment Date, the Company will, to the extent
lawful:
(1) accept for payment all Notes or portions thereof properly tendered pursuant
to the Change of Control Offer;
(2) deposit with the Paying Agent an amount equal to the Change of Control
Payment in respect of all Notes or portions thereof so tendered; and
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(3) deliver or cause to be delivered to the Trustee the Notes so accepted
together with an Officers' Certificate stating the aggregate principal
amount of Notes or portions thereof being purchased by the Company.
The Paying Agent will promptly mail to each Holder of Notes so tendered the
Change of Control Payment for such Notes, and the Trustee will promptly
authenticate and mail (or cause to be transferred by book entry) to each Holder
a new Note equal in principal amount to any unpurchased portion of the Notes
surrendered, if any; PROVIDED that each such new Note will be in a principal
amount of $1,000 or an integral multiple thereof.
The Indenture will provide that the Company will fix the Change of Control
Payment Date no earlier than 30 days and no later than 60 days after the Change
of Control Offer is mailed as set forth above. Prior to complying with the
provisions of the preceding sentence, but in any event within 90 days following
a Change of Control, the Company will either repay all outstanding Indebtedness
of its Subsidiaries or obtain the requisite consents, if any, under all
agreements governing all such outstanding Indebtedness of its Subsidiaries to
permit the repurchase of Notes required by this covenant. The Company will
publicly announce the results of the Change of Control Offer on or as soon as
practicable after the Change of Control Payment Date.
Under the terms of the indentures governing the Premier Operations Notes,
the SFEC Notes, the Premier Credit Facility and the Six Flags Credit Facility,
the payment of dividends by Premier Operations, SFEC and SFTP are subject to
certain specified tests which will significantly restrict their ability to pay
dividends or make other distributions. If the Company does not obtain the
consent of the lenders under the agreements governing outstanding Indebtedness
of its Subsidiaries, including under the Credit Facilities and the indentures
governing the Premier Operations Notes and the SFEC Notes, to permit the
repurchase of Notes or does not refinance such Indebtedness, the Company will
likely not have the financial resources to purchase Notes and the Company's
Subsidiaries will be restricted by the terms of such Indebtedness from paying
dividends to the Company or otherwise lending funds to the Company for the
purpose of such purchase. In any event, there can be no assurance that the
Company's Subsidiaries will have the resources available to pay any such
dividend or make any such distribution. The Company's failure to make a Change
of Control Offer when required or to purchase tendered Notes when tendered would
constitute an Event of Default under the Indenture. See "Risk
Factors--Structural Subordination" and "--Restrictive Covenants" in the
accompanying prospectus and "Risk Factors--Change of Control Payment" and
"--Holding Company Structure" in this prospectus supplement.
The provisions described above that require the Company to make a Change of
Control Offer following a Change of Control will be applicable whether or not
any other provisions of the Indenture are applicable to such a Change of
Control. Except as described above with respect to a Change of Control, the
Indenture does not contain provisions that permit the Holders of the Notes to
require that the Company repurchase or redeem the Notes in the event of a
takeover, recapitalization or similar transaction.
The Company will not be required to make a Change of Control Offer upon a
Change of Control if a third party makes the Change of Control Offer in the
manner, at the times and otherwise in compliance with the requirements set forth
in the Indenture applicable to a Change of Control Offer made by the Company and
purchases all Notes validly tendered and not withdrawn under such Change of
Control Offer.
The definition of Change of Control includes a phrase relating to the sale,
lease, transfer, conveyance or other disposition of "all or substantially all"
of the assets of the Company and its Subsidiaries taken as a whole. Although
there is a developing body of case law interpreting the phrase "substantially
all," there is no precise established definition of the phrase under applicable
law. Accordingly, the ability of a Holder of Notes to require the Company to
repurchase such Notes as a result of a sale, lease, transfer, conveyance or
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other disposition of less than all of the assets of the Company and its
Subsidiaries taken as a whole to another Person or group may be uncertain.
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.
ASSET SALES
The Company will not, and will not permit any of its Restricted Subsidiaries
to, consummate an Asset Sale unless:
(1) the Company (or the Restricted Subsidiary, as the case may be) receives
consideration at the time of such Asset Sale at least equal to the fair
market value of the assets or Equity Interests issued or sold or otherwise
disposed of;
(2) such fair market value is determined by the Company's Board of Directors and
evidenced by a resolution of the Board of Directors set forth in an
Officers' Certificate delivered to the Trustee; and
(3) at least 75% of the consideration therefor received by the Company or such
Restricted Subsidiary is in the form of cash. For purposes of this
provision, each of the following shall be deemed to be cash:
(a) any liabilities (as shown on the Company's or such Restricted
Subsidiary's most recent balance sheet) of the Company or any Restricted
Subsidiary (other than contingent liabilities and liabilities that are by
their terms subordinate to the Notes) that are assumed by the transferee
of any such assets pursuant to a customary novation agreement that
releases the Company or such Restricted Subsidiary from further liability
or, in the case of the sale of Capital Stock, that are assumed by the
transferee by operation of law; and
(b) any securities, notes or other obligations received by the Company or
such Restricted Subsidiary from such transferee that are promptly
(subject to ordinary settlement periods) converted by the Company or such
Restricted Subsidiary into cash (to the extent of the cash received in
that conversion).
Within 365 days after the receipt of any Net Proceeds from an Asset Sale,
the Company or the applicable Restricted Subsidiary may apply such Net Proceeds:
(1) to repay or repurchase Indebtedness of a Restricted Subsidiary of the
Company (and to correspondingly reduce commitments with respect to such
Indebtedness in the case of revolving credit borrowings);
(2) to acquire all or substantially all of the assets of, or a majority of the
Voting Stock of, another Person (or business unit or division of such
Person); PROVIDED that the primary business of such Person (or unit or
division) is a Permitted Business;
(3) to fund obligations of the Company or any Restricted Subsidiary under the
Partnership Parks Agreements or the Subordinated Indemnity Agreement;
(4) to acquire Capital Stock of a Restricted Subsidiary of the Company held by
Persons other than the Company or any Restricted Subsidiary;
(5) to make a capital expenditure; or
(6) to acquire other long-term assets that are used or useful in a Permitted
Business.
Pending the final application of any such Net Proceeds, the Company or such
Restricted Subsidiary may temporarily reduce revolving credit borrowings or
otherwise invest such Net Proceeds in any manner that is not prohibited by the
Indenture.
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Any Net Proceeds from Asset Sales that are not applied or invested as
provided in the preceding paragraph will constitute "Excess Proceeds." When the
aggregate amount of Excess Proceeds exceeds $20.0 million, the Company will be
required to make an Asset Sale Offer to all Holders of Notes and all holders of
other Indebtedness of the Company that is PARI PASSU with the Notes containing
provisions similar to those set forth in the Indenture with respect to offers to
purchase or redemptions with the proceeds of sales of assets to purchase the
maximum principal amount of Notes and such other PARI PASSU Indebtedness of the
Company that may be purchased out of the Excess Proceeds. The offer price in any
Asset Sale Offer will be equal to 100% of the principal amount plus accrued and
unpaid interest, if any, to the date of repurchase and will be payable in cash.
If any Excess Proceeds remain after consummation of an Asset Sale Offer, the
Company may use such Excess Proceeds for any purpose not otherwise prohibited by
the Indenture. If the aggregate principal amount of Notes and such other
Indebtedness tendered into such Asset Sale Offer exceeds the amount of Excess
Proceeds, the Trustee shall select the Notes and such other Indebtedness to be
purchased on a pro rata basis. Upon completion of such Asset Sale Offer, the
amount of Excess Proceeds shall be reset at zero.
The Company will comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the
repurchase of Notes pursuant to an Asset Sale Offer.
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.
Under the terms of the indentures governing the Premier Operations Notes,
the SFEC Notes, the Premier Credit Facility and the Six Flags Credit Facility,
the payment of dividends by Premier Operations, SFEC and SFTP are subject to
certain specified financial tests which will significantly restrict their
ability to pay dividends or make other distributions. See "Risk
Factors--Substantial Leverage," "--Structural Subordination" and "--Restrictive
Covenants" in the accompanying prospectus.
SELECTION AND NOTICE
If less than all of the Notes are to be redeemed at any time, the Trustee
will select Notes for redemption as follows:
(1) if the Notes are listed, in compliance with the requirements of the
principal national securities exchange on which the Notes are listed; or
(2) if the Notes are not so listed, on a pro rata basis, by lot or by such
method that the Trustee shall deem fair and appropriate.
No Notes of $1,000 or less shall be redeemed in part. Notices of redemption
shall be mailed by first class mail at least 30 but not more than 60 days before
the redemption date to each Holder of Notes to be redeemed at its registered
address. Notices of redemption may not be conditional.
If any Note is to be redeemed in part only, the notice of redemption that
relates to that Note shall state the portion of the principal amount thereof to
be redeemed. A new Note in principal amount equal to the unredeemed portion of
the original Notes will be issued in the name of the Holder thereof upon
cancellation of the original Note. Notes called for redemption become due on the
date fixed for redemption. On and after the redemption date, interest ceases to
accrue on Notes or portions of them called for redemption.
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CERTAIN COVENANTS
RESTRICTED PAYMENTS
The Company will not, and will not permit any of its Restricted Subsidiaries
to, directly or indirectly:
(1) declare or pay any dividend or make any other payment or distribution on
account of any Equity Interests of the Company (including, without
limitation, any payment in connection with any merger or consolidation
involving the Company) or to the direct or indirect holders of any Equity
Interests of the Company in their capacity as such (other than dividends or
distributions payable in Equity Interests (other than Disqualified Stock) of
the Company);
(2) purchase, redeem or otherwise acquire or retire for value (including,
without limitation, in connection with any merger or consolidation involving
the Company) any Equity Interests of the Company or any direct or indirect
parent of the Company;
(3) make any payment on or with respect to, or purchase, redeem, defease or
otherwise acquire or retire for value any Indebtedness of the Company that
is subordinated to the Notes, except a payment of interest or principal at
Stated Maturity; or
(4) make any Restricted Investment (all such payments and other actions set
forth in clauses (1) through (4) above being collectively referred to as
"Restricted Payments"),
unless, at the time of and after giving effect to such Restricted Payment:
(1) no Default or Event of Default shall have occurred and be continuing or
would occur as a consequence thereof; and
(2) the Company would, at the time of such Restricted Payment and after giving
pro forma effect thereto as if such Restricted Payment had been made at the
beginning of the applicable four-quarter period, have been permitted to
incur at least $1.00 of additional Indebtedness pursuant to the Debt to Cash
Flow test set forth in the first paragraph of the covenant described below
under the caption "--Incurrence of Indebtedness and Issuance of Preferred
Stock;" and
(3) such Restricted Payment, together with the aggregate amount of all other
Restricted Payments declared or made after April 1, 1998 (excluding
Restricted Payments permitted by clauses (2) and (3) of the next succeeding
paragraph) shall not exceed, at the date of determination, the sum, without
duplication, of
(a) an amount equal to the Company's Consolidated Cash Flow for the period
(taken as one accounting period) from the beginning of the first fiscal
quarter commencing after April 1, 1998 to the end of the Company's most
recently ended full fiscal quarter for which financial statements have
been filed with the Commission (the "Basket Period") LESS the product of
1.4 times the Company's Consolidated Interest Expense for the Basket
Period, PLUS
(b) 100% of the aggregate net cash proceeds received by the Company after
April 1, 1998 as a contribution to its common equity capital or from the
issue or sale of Equity Interests of the Company (other than Disqualified
Stock) or from the issue or sale after April 1, 1998 of Disqualified
Stock or debt securities of the Company that have been converted into
such Equity Interests (other than (i) Equity Interests (or Disqualified
Stock or convertible debt securities) sold to a Subsidiary of the Company
and (ii) any sale of Equity Interests of the Company the net cash
proceeds of which are applied pursuant to clause (2) of the immediately
succeeding paragraph), PLUS
(c) to the extent that any Restricted Investment that was made after April
1, 1998 is sold for cash or otherwise liquidated or repaid for cash, the
lesser of (i) the cash return of capital with respect to
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such Restricted Investment (less the cost of disposition, if any) and
(ii) the initial amount of such Restricted Investment, PLUS
(d) to the extent that any Unrestricted Subsidiary is redesignated as a
Restricted Subsidiary after April 1, 1998, the fair market value of the
Company's or its Restricted Subsidiary's, as the case may be, Investment
in such Subsidiary as of the date of such redesignation.
The preceding provisions will not prohibit:
(1) the payment of any dividend within 60 days after the date of declaration
thereof, if at said date of declaration such payment would have complied
with the provisions of the Indenture;
(2) the redemption, repurchase, retirement, defeasance or other acquisition of
any subordinated Indebtedness or Equity Interests of the Company in exchange
for, or out of the net cash proceeds of the substantially concurrent sale
(other than to a Subsidiary of the Company) of Equity Interests of the
Company (other than Disqualified Stock); PROVIDED that the amount of any
such net cash proceeds that are utilized for any such redemption,
repurchase, retirement, defeasance or other acquisition shall be excluded
from clause (3)(b) of the preceding paragraph;
(3) the defeasance, redemption, repurchase or other acquisition of subordinated
Indebtedness with the net cash proceeds from an incurrence of Permitted
Refinancing Indebtedness;
(4) so long as no Default or Event of Default shall have occurred and be
continuing (or would result therefrom), the purchase, redemption, retirement
or other acquisition by the Company or any Restricted Subsidiary of the
Company of partnership interests held by the partners in the limited
partners of the Co-Venture Partnerships, the co-general partner of the
Co-Venture Partnerships or, in each case, their successors, in accordance
with and in the manner required or permitted by the terms of the Partnership
Parks Agreements;
(5) so long as no Default or Event of Default shall have occurred and be
continuing (or would result therefrom), any transactions pursuant to or
contemplated by, and payments made in connection with, and in accordance
with the terms of, the Partnership Parks Agreements and the Marine World
Agreements;
(6) so long as no Default or Event of Default shall have occurred and be
continuing (or would result therefrom), any transactions pursuant to or
contemplated by, and payments made in connection with, and in accordance
with the terms of, the Subordinated Indemnity Agreement;
(7) so long as no Default or Event of Default shall have occurred and be
continuing (or would result therefrom), the payment of dividends on the
Mandatorily Convertible Preferred Stock in accordance with the terms thereof
as in effect on the date of the Indenture;
(8) in the event the Company issues common stock in exchange for or upon
conversion of Mandatorily Convertible Preferred Stock, cash payments made in
lieu of the issuance of fractional shares of common stock, not to exceed
$250,000 in the aggregate in any fiscal year; and
(9) the repurchase, redemption or other acquisition or retirement for value of
any Equity Interests of the Company from employees, former employees,
directors or former directors of the Company or any of its Restricted
Subsidiaries (or permitted transferees of such employees, former employees,
directors or former directors); PROVIDED, HOWEVER, that the aggregate amount
of such repurchases shall not exceed $5.0 million in any twelve-month
period.
The amount of all Restricted Payments (other than cash) shall be the fair
market value on the date of the Restricted Payment of the asset(s) or securities
proposed to be transferred or issued by the Company or such Subsidiary, as the
case may be, pursuant to the Restricted Payment. The fair market value of any
assets or securities that are required to be valued by this covenant shall be
determined by the Board of Directors of the Company whose resolution with
respect thereto shall be delivered to the Trustee. The
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Board of Directors' determination shall be based upon an opinion or appraisal
issued by an accounting, appraisal or investment banking firm of national
standing if such fair market value exceeds $10.0 million. Not later than the
date of making any Restricted Payment (other than any Restricted Payment
permitted pursuant to clauses (1)-(9) of the immediately preceding paragraph),
the Company shall deliver to the Trustee an Officers' Certificate stating that
such Restricted Payment is permitted and setting forth the basis upon which the
calculations required by this "Restricted Payments" covenant were computed,
together with a copy of any fairness opinion or appraisal required by the
Indenture.
DESIGNATION OF RESTRICTED AND UNRESTRICTED SUBSIDIARIES
The Board of Directors may designate any Restricted Subsidiary to be an
Unrestricted Subsidiary if such designation would not cause a Default; PROVIDED
that in no event shall the business currently operated by Premier Operations or
SFTP be transferred to or held by an Unrestricted Subsidiary. If a Restricted
Subsidiary is designated as an Unrestricted Subsidiary, all outstanding
Investments owned by the Company and its Restricted Subsidiaries (except to the
extent repaid in cash) in the Subsidiary so designated will be deemed to be
Restricted Payments at the time of such designation and will reduce the amount
available for Restricted Payments under the first paragraph of the covenant
described above under the caption "--Restricted Payments." All such outstanding
Investments will be valued at their fair market value at the time of such
designation. That designation will only be permitted if such Restricted Payment
would be permitted at such time and if such Restricted Subsidiary otherwise
meets the definition of an Unrestricted Subsidiary.
INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF PREFERRED STOCK
The Company will not, and will not permit any of its Subsidiaries to,
directly or indirectly, create, incur, issue, assume, guarantee or otherwise
become directly or indirectly liable, contingently or otherwise, with respect to
(collectively, "incur") any Indebtedness (including Acquired Debt), and the
Company will not issue any Disqualified Stock and will not permit any of its
Subsidiaries to issue any shares of preferred stock; PROVIDED, HOWEVER, that the
Company may incur Indebtedness (including Acquired Debt) or issue shares of
Disqualified Stock and the Company's Subsidiaries may incur Indebtedness or
issue shares of preferred stock if the Company's Debt to Cash Flow Ratio at the
time of incurrence of such Indebtedness or the issuance of such Disqualified
Stock or such preferred stock, as the case may be, after giving pro forma effect
to such incurrence or issuance as of such date and to the use of the proceeds
therefrom as if the same had occurred at the beginning of the most recently
ended four full fiscal quarter period of the Company for which financial
statements have been furnished or are required to be furnished to Holders of the
Notes pursuant to the covenant described below under the caption "--Reports,"
would have been no greater than 6.0 to 1.
The Company also will not incur any Indebtedness that is contractually
subordinated in right of payment to any other Indebtedness of the Company unless
such Indebtedness is also contractually subordinated in right of payment to the
Notes on substantially identical terms; PROVIDED, HOWEVER, that no Indebtedness
of the Company shall be deemed to be contractually subordinated in right of
payment to any other Indebtedness of the Company solely by virtue of being
unsecured.
The first paragraph of this covenant will not apply to the incurrence of any
of the following items of Indebtedness (collectively, "Permitted Debt"):
(1) the incurrence by the Company and its Restricted Subsidiaries of additional
term Indebtedness under Credit Facilities, in an amount equal to $650.0
million (in addition to any Existing Indebtedness and any Permitted
Refinancing Indebtedness in respect thereof);
(2) the incurrence by the Company and its Restricted Subsidiaries of additional
revolving credit Indebtedness and letters of credit pursuant to Credit
Facilities in an aggregate principal amount (with letters of credit being
deemed to have a principal amount equal to the maximum potential liability
of the
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Company and its Restricted Subsidiaries thereunder) at any one time
outstanding not to exceed the Specified Amount as of such date of
incurrence; PROVIDED THAT, the aggregate principal amount of all
Indebtedness incurred pursuant to this clause (2) is reduced to an
outstanding balance of $1.0 million or less for at least 30 consecutive days
in each fiscal year;
(3) the incurrence by the Company and its Restricted Subsidiaries of the
Existing Indebtedness;
(4) the incurrence by the Company of Indebtedness represented by the Notes
(other than any Additional Notes);
(5) the incurrence by the Company or any of its Restricted Subsidiaries of
Indebtedness represented by Capital Lease Obligations, mortgage financings
or purchase money obligations, in each case incurred for the purpose of
financing all or any part of the purchase price or cost of construction or
improvement of property, plant or equipment used in the business of the
Company or such Restricted Subsidiary, in an aggregate principal amount not
to exceed $25.0 million at any time outstanding;
(6) the incurrence by the Company or any of its Restricted Subsidiaries of
Permitted Refinancing Indebtedness in exchange for, or the net proceeds of
which are used to refund, refinance or replace Indebtedness (other than
intercompany Indebtedness and Indebtedness incurred pursuant to clauses (1)
and (2) above) that was permitted by the Indenture to be incurred;
(7) the incurrence by the Company or any of its Restricted Subsidiaries of
intercompany Indebtedness between or among the Company and any of its
Restricted Subsidiaries; PROVIDED, HOWEVER, that:
(a) if the Company is the obligor on any such Indebtedness, such
Indebtedness is, if any Default or Event of Default with respect to the
Company occurs and is continuing, expressly subordinated to the prior
payment in full in cash of all Obligations with respect to the Notes; and
(b) (i) any subsequent issuance or transfer of Equity Interests that results
in any such Indebtedness being held by a Person other than the Company or
a Restricted Subsidiary thereof and (ii) any sale or other transfer of
any such Indebtedness to a Person that is not either the Company or a
Restricted Subsidiary thereof shall be deemed, in each case, to
constitute an incurrence of such Indebtedness by the Company or such
Restricted Subsidiary, as the case may be, that was not permitted by this
clause (7);
(8) the incurrence by the Company or any of its Restricted Subsidiaries of (a)
Hedging Obligations that are incurred for the purpose of fixing or hedging
interest rate risk with respect to any floating rate Indebtedness that is
permitted by the terms of the Indenture to be incurred and (b) Currency
Agreements that do not increase the Indebtedness of the Company and its
Restricted Subsidiaries outstanding at any time other than as a result of
fluctuations in foreign currency exchange rates or interest rates or by
reason of fees, indemnities and compensation payable thereunder;
(9) Indebtedness in respect of performance bonds, letters of credits, 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;
(10) the guarantee by the Company or any of its Restricted Subsidiaries of
Indebtedness of the Company or a Restricted Subsidiary of the Company that
was permitted to be incurred by another provision of this covenant
(including, without limiting the generality of the foregoing, the guarantee
by the Company or any Restricted Subsidiary of the Company of Existing
Indebtedness);
(11) the incurrence by the Company's Unrestricted Subsidiaries of Non-Recourse
Debt, PROVIDED, HOWEVER, that if any such Indebtedness ceases to be
Non-Recourse Debt of an Unrestricted Subsidiary, such event shall be deemed
to constitute an incurrence of Indebtedness by a Restricted Subsidiary of
the Company that was not permitted by this clause (11); and
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(12) the incurrence by the Company or any of its Restricted Subsidiaries of
additional Indebtedness in an aggregate principal amount (or accreted value,
as applicable) at any time outstanding, including all Permitted Refinancing
Indebtedness incurred to refund, refinance or replace any Indebtedness
incurred pursuant to this clause (12), not to exceed $75.0 million.
For purposes of determining compliance with this "Incurrence of Indebtedness
and Issuance of Preferred Stock" covenant, in the event that an item of
Indebtedness meets the criteria of more than one of the categories of Permitted
Debt described in clauses (1) through (12) above or is entitled to be incurred
pursuant to the first paragraph of this covenant, the Company shall, in its sole
discretion, classify (or later reclassify in whole or in part, in its sole
discretion) such item of Indebtedness in any manner that complies with this
covenant. Accrual of interest, accretion or amortization of original issue
discount, the payment of interest on any Indebtedness in the form of additional
Indebtedness with the same terms, and the payment of dividends on preferred
stock in the form of additional shares of the same class of preferred stock will
not be deemed to be an incurrence of Indebtedness or an issuance of preferred
stock for purposes of this covenant; PROVIDED, in each such case, that the
amount thereof is included in Consolidated Indebtedness of the Company as
accrued.
SALE AND LEASEBACK TRANSACTIONS
The Company will not, and will not permit any of its Restricted Subsidiaries
to, enter into any sale and leaseback transaction; PROVIDED that the Company or
a Restricted Subsidiary of the Company may enter into a sale and leaseback
transaction if:
(1) the Company could have (a) incurred Indebtedness in an amount equal to the
Attributable Debt relating to such sale and leaseback transaction pursuant
to the Debt to Cash Flow test set forth in the first paragraph of the
covenant described above under the caption "--Incurrence of Additional
Indebtedness and Issuance of Preferred Stock" or pursuant to clause (6) of
the second paragraph of such covenant and (b) incurred a Lien to secure such
Indebtedness pursuant to the covenant described below under the caption
"--Liens;"
(2) the gross cash proceeds of such sale and leaseback transaction are at least
equal to the fair market value (as determined in good faith by the Board of
Directors and set forth in an Officers' Certificate delivered to the
Trustee) of the property that is the subject of such sale and leaseback
transaction; and
(3) the transfer of assets in such sale and leaseback transaction is permitted
by, and the Company or such Restricted Subsidiary applies the proceeds of
such transaction in compliance with, the covenant described above under the
caption "--Asset Sales."
LIENS
The Company will not, and will not permit any of its Restricted Subsidiaries
to, directly or indirectly, create, incur, assume or suffer to exist any Lien
securing trade payables, Attributable Debt or Indebtedness on any asset now
owned or hereafter acquired, except Permitted Liens.
DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING SUBSIDIARIES
The Company will not, and will not permit any of its Restricted Subsidiaries
to, directly or indirectly, create or otherwise cause or suffer to exist or
become effective any encumbrance or restriction on the ability of any Restricted
Subsidiary to:
(1) (a) pay dividends or make any other distributions to the Company or any of
its Restricted Subsidiaries on its Capital Stock or with respect to any
other interest or participation in, or measured by, its profits, or (b) pay
any indebtedness owed to the Company or any of its Restricted Subsidiaries;
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(2) make loans or advances to the Company or any of its Restricted Subsidiaries;
or
(3) transfer any of its properties or assets to the Company or any of its
Restricted Subsidiaries.
However, the preceding restrictions will not apply to encumbrances or
restrictions existing under or by reason of:
(1) Existing Indebtedness;
(2) the Partnership Parks Agreements, the Marine World Agreements or the
Subordinated Indemnity Agreement;
(3) the terms of any Indebtedness permitted by the Indenture to be incurred by
any Restricted Subsidiary of the Company;
(4) the Indenture and the Notes;
(5) applicable law;
(6) any instrument governing Indebtedness or Capital Stock of a Person acquired
by the Company or any of its Restricted Subsidiaries as in effect at the
time of such acquisition (except to the extent such Indebtedness was
incurred in connection with or in contemplation of such acquisition), which
encumbrance or restriction is not applicable to any Person, or the
properties or assets of any Person, other than the Person, or the property
or assets of the Person, so acquired, PROVIDED that, in the case of
Indebtedness, such Indebtedness was permitted by the terms of the Indenture
to be incurred;
(7) customary non-assignment provisions in leases, licenses or other contracts
entered into in the ordinary course of business;
(8) purchase money obligations for property acquired in the ordinary course of
business that impose restrictions of the nature described in clause (3) of
the preceding paragraph on the property so acquired;
(9) any agreement for the sale of a Restricted Subsidiary that restricts
distributions by that Restricted Subsidiary pending its sale;
(10) obligations otherwise permitted to be incurred pursuant to the provisions
of the covenant described above under the caption "--Liens" that limit the
right of the obligee to dispose of the assets securing such obligations;
(11) provisions with respect to the disposition or distribution of assets or
property in joint venture agreements and other similar agreements entered
into in the ordinary course of business; and
(12) restrictions on cash or other deposits or net worth imposed by customers
under contracts entered into in the ordinary course of business.
MERGER, CONSOLIDATION, OR SALE OF ASSETS
The Company may not consolidate or merge with or into (whether or not the
Company is the surviving corporation), or sell, assign, transfer, convey or
otherwise dispose of all or substantially all of its properties or assets in one
or more related transactions, to another corporation, Person or entity unless:
(1) either: (a) the Company is the surviving corporation; or (b) the entity or
the Person formed by or surviving any such consolidation or merger (if other
than the Company) or to which such sale, assignment, transfer, conveyance or
other disposition shall have been made is a corporation organized or
existing under the laws of the United States, any state thereof or the
District of Columbia;
(2) the entity or Person formed by or surviving any such consolidation or merger
(if other than the Company) or the entity or Person to which such sale,
assignment, transfer, conveyance or other
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disposition shall have been made assumes all the obligations of the Company
under the Notes and the Indenture pursuant to supplemental indentures in
forms reasonably satisfactory to the Trustee;
(3) immediately after such transaction no Default or Event of Default exists;
and
(4) except in the case of a merger of the Company with or into a Wholly Owned
Restricted Subsidiary of the Company, the Company or the entity or Person
formed by or surviving any such consolidation or merger (if other than the
Company), or to which such sale, assignment, transfer, lease, conveyance or
other disposition shall have been made will, both at the time of such
transaction and after giving pro forma effect thereto as if such transaction
had occurred at the beginning of the applicable four-quarter period, be
permitted to incur at least $1.00 of additional Indebtedness pursuant to the
Debt to Cash Flow test set forth in the first paragraph of the covenant
described above under the caption "--Incurrence of Indebtedness and Issuance
of Preferred Stock."
LIMITATION ON LEASES
The Company will not, directly or indirectly, lease all or substantially all
of its properties and assets to any Person.
TRANSACTIONS WITH AFFILIATES
The Company will not, and will not permit any of its Restricted Subsidiaries
to, make any payment to, or sell, lease, transfer or otherwise dispose of any of
its properties or assets to, or purchase any property or assets from, or enter
into or make or amend any transaction, contract, agreement, understanding, loan,
advance or guarantee with, or for the benefit of, any Affiliate (each, an
"Affiliate Transaction"), unless:
(1) such Affiliate Transaction is on terms that are no less favorable to the
Company or the relevant Restricted Subsidiary than those that would have
been obtained in a comparable transaction by the Company or such Restricted
Subsidiary with an unrelated Person; and
(2) the Company delivers to the Trustee:
(a) with respect to any Affiliate Transaction or series of related Affiliate
Transactions involving aggregate consideration in excess of $2.5 million,
a resolution of the Board of Directors set forth in an Officers'
Certificate certifying that such Affiliate Transaction complies with
clause (1) above and that such Affiliate Transaction has been approved by
a majority of the disinterested members of the Board of Directors; and
(b) with respect to any Affiliate Transaction or series of related Affiliate
Transactions involving aggregate consideration in excess of $10.0
million, an opinion as to the fairness to the Holders of such Affiliate
Transaction from a financial point of view issued by an accounting,
appraisal or investment banking firm of national standing.
The following items shall not be deemed to be Affiliate Transactions and,
therefore, will not be subject to the provisions of the prior paragraph:
(1) any employment agreement entered into by the Company or any of its
Restricted Subsidiaries in the ordinary course of business, or 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, or the grant of stock options or similar rights to employees
and directors of the Company pursuant to plans approved by the Board of
Directors;
(2) transactions between or among the Company and/or its Restricted
Subsidiaries;
(3) payment of reasonable directors fees to Persons who are not otherwise
employees of the Company or its Restricted Subsidiaries;
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(4) loans or advances to employees in the ordinary course of business;
(5) Restricted Payments that are permitted by the provisions of the Indenture
described above under the caption "--Restricted Payments;"
(6) transactions pursuant to or contemplated by, and in accordance with, the
terms of the Subordinated Indemnity Agreement;
(7) transactions pursuant to or contemplated by and payments in connection with,
and, in each case, in accordance with, the terms of the Partnership Parks
Agreements; and
(8) transactions pursuant to or contemplated by, and in accordance with, the
Marine World Agreements.
LIMITATION ON ISSUANCES AND SALES OF EQUITY INTERESTS IN RESTRICTED
SUBSIDIARIES
The Company will not, and will not permit any Restricted Subsidiary of the
Company to, transfer, convey, sell, lease or otherwise dispose of any Equity
Interests in any Restricted Subsidiary of the Company to any Person (other than
the Company or a Restricted Subsidiary of the Company and other than
transactions contemplated by the Partnership Parks Agreements and the
Subordinated Indemnity Agreement), unless:
(1) (a) such transfer, conveyance, sale, lease or other disposition is of all
the Equity Interests in such Restricted Subsidiary or (b) after giving
effect thereto, such Restricted Subsidiary will still constitute a
Restricted Subsidiary; and
(2) the cash Net Proceeds from such transfer, conveyance, sale, lease or other
disposition are applied in accordance with the covenant described above
under the caption "--Repurchase at the Option of Holders--Asset Sales."
In addition, the Company will not permit any Restricted Subsidiary of the
Company to issue any of its Equity Interests (other than, if necessary, shares
of its Capital Stock constituting directors' qualifying shares) to any Person
other than to the Company or a Wholly Owned Restricted Subsidiary of the Company
if, after giving effect thereto, such Restricted Subsidiary will not be a direct
or indirect Subsidiary of the Company.
BUSINESS ACTIVITIES
The Company will not, and will not permit any Restricted Subsidiary to,
engage in any business other than Permitted Businesses, except to such extent as
would not be material to the Company and its Restricted Subsidiaries taken as a
whole.
PAYMENTS FOR CONSENT
The Company will not, and will not permit any of its Subsidiaries to,
directly or indirectly, pay or cause to be paid any consideration, whether by
way of interest, fee or otherwise, to any Holder of any Notes for or as an
inducement to any consent, waiver or amendment of any of the terms or provisions
of the Indenture or the Notes unless such consideration is offered to be paid or
is paid to all Holders of the Notes that consent, waive or agree to amend in the
time frame set forth in the solicitation documents relating to such consent,
waiver or agreement.
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REPORTS
Whether or not required by the rules and regulations of the Commission, so
long as any Notes are outstanding, the Company will furnish to the Holders of
Notes, within the time periods specified in the Commission's rules and
regulations:
(1) all quarterly and annual financial information that would be required to be
contained in a filing with the Commission on Forms 10-Q and 10-K if the
Company were required to file such Forms, including a "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
that describes the financial condition and results of operations of the
Company and its consolidated Subsidiaries (showing in reasonable detail,
either on the face of the financial statements or in the footnotes thereto
and in Management's Discussion and Analysis of Financial Condition and
Results of Operations, the financial condition and results of operations of
the Company and its Restricted Subsidiaries separate from the financial
condition and results of operations of the Unrestricted Subsidiaries of the
Company) and, with respect to the annual information only, a report thereon
by the Company's certified independent accountants; and
(2) all current reports that would be required to be filed with the Commission
on Form 8-K if the Company were required to file such reports.
In addition, whether or not required by the rules and regulations of the
Commission, the Company will file a copy of all of the information and reports
referred to in clauses (1) and (2) above with the Commission for public
availability within the time periods specified in the Commission's rules and
regulations (unless the Commission will not accept such a filing) and make such
information available to securities analysts and prospective investors upon
request.
EVENTS OF DEFAULT AND REMEDIES
Each of the following is an Event of Default with respect to the Notes:
(1) default for 30 days in the payment when due of interest on the Notes;
(2) default in payment when due of the principal of or premium, if any, on the
Notes;
(3) failure by the Company to comply for (a) 30 days with the provisions
described under the caption "--Repurchase at the Option of Holders" or (b)
30 days after notice with the provisions described under the caption
"--Certain Covenants" (in each case, other than a failure to purchase
Notes);
(4) failure by the Company for 60 days after notice to comply with any of the
Company's other agreements in the Indenture or the Notes;
(5) the failure by the Company or any Restricted Subsidiary to pay 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 at any time exceeds
$10.0 million;
(6) failure by the Company or any of its Restricted Subsidiaries to pay final
judgments aggregating at any time in excess of $10.0 million, which
judgments are not paid, discharged or stayed for a period of 60 days; and
(7) certain events of bankruptcy or insolvency with respect to the Company, any
Restricted Subsidiary that constitutes a Significant Subsidiary or any group
of Restricted Subsidiaries that, taken together, would constitute a
Significant Subsidiary.
In the case of an Event of Default arising from certain events of bankruptcy
or insolvency, with respect to the Company, any Restricted Subsidiary of the
Company that constitutes a Significant Subsidiary or any group of Restricted
Subsidiaries of the Company that, taken together, would constitute a Significant
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Subsidiary, all outstanding Notes will become due and payable without further
action or notice. If any other Event of Default occurs and is continuing, the
Trustee or the Holders of at least 25% in principal amount of the then
outstanding Notes may declare all the Notes to be due and payable immediately.
Holders of the Notes may not enforce the Indenture or the Notes except as
provided in the Indenture. Subject to certain limitations, Holders of a majority
in principal amount of the then outstanding Notes may direct the Trustee in its
exercise of any trust or power. The Trustee may withhold from Holders of the
Notes notice of any continuing Default or Event of Default (except a Default or
Event of Default relating to the payment of principal or interest) if it
determines that withholding notice is in their interest.
In the case of any Event of Default occurring by reason of any willful
action or inaction taken or not taken by or on behalf of the Company with the
intention of avoiding payment of the premium that the Company would have had to
pay if the Company then had elected to redeem the Notes pursuant to the optional
redemption provisions of the Indenture, an equivalent premium shall also become
and be immediately due and payable to the extent permitted by law upon the
acceleration of the Notes. If an Event of Default occurs prior to , 2003
by reason of any willful action or inaction taken or not taken by or on behalf
of the Company with the intention of avoiding the prohibition on redemption of
the Notes prior to , 2003, then the premium specified for the twelve
months commencing on such date in the Indenture shall also become immediately
due and payable to the extent permitted by law upon the acceleration of the
Notes.
The Holders of a majority in aggregate principal amount of the Notes then
outstanding by notice to the Trustee may on behalf of the Holders of all of the
Notes waive any existing Default or Event of Default and its consequences under
the Indenture except a continuing Default or Event of Default in the payment of
interest on, or the principal of, the Notes.
The Company is required to deliver to the Trustee annually a statement
regarding compliance with the Indenture. Upon becoming aware of any Default or
Event of Default, the Company is required to deliver to the Trustee a statement
specifying such Default or Event of Default.
NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND STOCKHOLDERS
No director, officer, employee, incorporator or stockholder of the Company,
as such, shall have any liability for any obligations of the Company under the
Notes, the Indenture or for any claim based on, in respect of, or by reason of,
such obligations or their creation. Each Holder of Notes by accepting a Note
waives and releases all such liability. The waiver and release are part of the
consideration for issuance of the Notes. Such waiver may not be effective to
waive liabilities under the federal securities laws and it is the view of the
Commission that such a waiver is against public policy.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
The Company may, at its option and at any time, elect to have all of its
obligations discharged with respect to the outstanding Notes ("Legal
Defeasance"), except for:
(1) the rights of Holders of outstanding Notes to receive payments in respect of
the principal of, premium, if any, and interest on such Notes when such
payments are due from the trust referred to below;
(2) the Company's obligations with respect to the Notes concerning issuing
temporary Notes, registration of Notes, mutilated, destroyed, lost or stolen
Notes and the maintenance of an office or agency for payment and money for
security payments held in trust;
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(3) the rights, powers, trusts, duties and immunities of the Trustee, and the
Company's obligations in connection therewith; and
(4) the Legal Defeasance provisions of the Indenture.
In addition, the Company may, at its option and at any time, elect to have
the obligations of the Company released with respect to certain covenants that
are described in the Indenture ("Covenant Defeasance") and thereafter any
omission to comply with those covenants shall not constitute a Default or Event
of Default with respect to the Notes. In the event Covenant Defeasance occurs,
certain events (not including non-payment, bankruptcy, receivership,
rehabilitation and insolvency events) described under "Events of Default" will
no longer constitute an Event of Default with respect to the Notes.
In order to exercise either Legal Defeasance or Covenant Defeasance:
(1) the Company must irrevocably deposit with the Trustee, in trust, for the
benefit of the Holders of the Notes, cash in U.S. dollars, non-callable
Government Securities, or a combination thereof, in such amounts as will be
sufficient, in the opinion of a nationally recognized firm of independent
public accountants, to pay the principal of, premium, if any, and interest
on the outstanding Notes on the stated maturity or on the applicable
redemption date, as the case may be, and the Company must specify whether
the Notes are being defeased to maturity or to a particular redemption date;
(2) in the case of Legal Defeasance, the Company shall have delivered to the
Trustee an opinion of counsel in the United States reasonably acceptable to
the Trustee confirming that (a) the Company has received from, or there has
been published by, the Internal Revenue Service a ruling or (b) since the
date of the Indenture, there has been a change in the applicable federal
income tax law, in either case to the effect that, and based thereon such
opinion of counsel shall confirm that, the Holders of the outstanding Notes
will not recognize income, gain or loss for federal income tax purposes as a
result of such Legal Defeasance and will be subject to federal income tax on
the same amounts, in the same manner and at the same times as would have
been the case if such Legal Defeasance had not occurred;
(3) in the case of Covenant Defeasance, the Company shall have delivered to the
Trustee an opinion of counsel in the United States reasonably acceptable to
the Trustee confirming that the Holders of the outstanding Notes will not
recognize income, gain or loss for federal income tax purposes as a result
of such Covenant Defeasance and will be subject to federal income tax on the
same amounts, in the same manner and at the same times as would have been
the case if such Covenant Defeasance had not occurred;
(4) no Default or Event of Default shall have occurred and be continuing either:
(a) on the date of such deposit (other than a Default or Event of Default
resulting from the borrowing of funds to be applied to such deposit); or (b)
insofar as Events of Default from bankruptcy or insolvency events are
concerned, at any time in the period ending on the 91st day after the date
of deposit;
(5) such Legal Defeasance or Covenant Defeasance will not result in a breach or
violation of, or constitute a default under any material agreement or
instrument (other than the Indenture) to which the Company or any of its
Restricted Subsidiaries is a party or by which the Company or any of its
Restricted Subsidiaries is bound;
(6) the Company must have delivered to the Trustee an opinion of counsel to the
effect that after the 91st day following the deposit, the trust funds will
not be subject to the effect of any applicable bankruptcy, insolvency,
reorganization or similar laws affecting creditors' rights generally;
(7) the Company must deliver to the Trustee an Officers' Certificate stating
that the deposit was not made by the Company with the intent of preferring
the Holders of Notes over the other creditors of the Company with the intent
of defeating, hindering, delaying or defrauding creditors of the Company or
others; and
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(8) the Company must deliver to the Trustee an Officers' Certificate and an
opinion of counsel, each stating that all conditions precedent provided for
relating to the Legal Defeasance or the Covenant Defeasance have been
complied with.
AMENDMENT, SUPPLEMENT AND WAIVER
Except as provided in the next two succeeding paragraphs, the Indenture or
the Notes may be amended or supplemented with the consent of the Holders of at
least a majority in principal amount of the Notes then outstanding (including,
without limitation, consents obtained in connection with a purchase of, or
tender offer or exchange offer, for such Notes), and any existing default or
compliance with any provision of the Indenture or the Notes may be waived with
the consent of the Holders of a majority in principal amount of the then
outstanding Notes (including, without limitation, consents obtained in
connection with a purchase of, or tender offer or exchange offer for, Notes).
Without the consent of each Holder affected, an amendment or waiver may not
(with respect to any Notes held by a non-consenting Holder):
(1) reduce the principal amount of Notes whose Holders must consent to an
amendment, supplement or waiver;
(2) reduce the principal of or change the fixed maturity of any Note or alter
the provisions with respect to the redemption of the Notes (other than
provisions relating to the covenants described above under the caption
"--Repurchase at the Option of Holders");
(3) reduce the rate of or change the time for payment of interest on any Note;
(4) waive a Default or Event of Default in the payment of principal of or
premium, if any, or interest on the Notes (except a rescission of
acceleration of the Notes by the Holders of at least a majority in aggregate
principal amount thereof and a waiver of the payment default that resulted
from such acceleration);
(5) make any Note payable in money other than that stated in the Notes;
(6) make any change in the provisions of the Indenture relating to waivers of
past Defaults or the rights of Holders of Notes to receive payments of
principal of or premium, if any, or interest on the Notes;
(7) waive a redemption payment with respect to any Note (other than a payment
required by one of the covenants described above under the caption
"--Repurchase at the Option of Holders"); or
(8) make any change in the foregoing amendment and waiver provisions.
Notwithstanding the preceding, without the consent of any Holder of Notes,
the Company and the Trustee may amend or supplement the Indenture or the Notes:
(1) to cure any ambiguity, defect or inconsistency;
(2) to provide for uncertificated Notes in addition to or in place of
certificated Notes;
(3) to provide for the assumption of the Company's obligations to Holders of
Notes in the case of a merger or consolidation or sale of all or
substantially all of the Company's assets;
(4) to make any change that would provide any additional rights or benefits to
the Holders of Notes or that does not adversely affect the legal rights
under the Indenture of any such Holder; or
(5) to comply with requirements of the Commission in order to effect or maintain
the qualification of the Indenture under the Trust Indenture Act.
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CONCERNING THE TRUSTEE
If the Trustee becomes a creditor of the Company, the Indenture limits its
right to obtain payment of claims in certain cases, or to realize on certain
property received in respect of any such claim as security or otherwise. The
Trustee will be permitted to engage in other transactions; however, if the
Trustee acquires any conflicting interest it must eliminate such conflict within
90 days, apply to the Commission for permission to continue or resign.
The Holders of a majority in principal amount of the then 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 in case an Event of Default
shall occur (which shall not be cured), the Trustee will be required, in the
exercise of its power, to use the degree of care of a prudent man in the conduct
of his own affairs. Subject to such provisions, the Trustee will not be under an
obligation to exercise any of its rights or powers under the Indenture at the
request of any Holder of Notes, unless such Holder shall have offered to the
Trustee security and indemnity satisfactory to it against any loss, liability or
expense.
ADDITIONAL INFORMATION
Anyone who receives this prospectus supplement may obtain a copy of the
Indenture without charge by writing to Premier Parks Inc., 11501 Northeast
Expressway, Oklahoma City, Oklahoma 73131, Attention: Corporate Secretary.
BOOK-ENTRY, DELIVERY AND FORM
Except as set forth in the next paragraph, the Notes will initially be
issued in the form of one or more Global Notes (the "Global Notes"). The Global
Notes will be deposited on the date of the closing of the sale of the Notes
offered hereby (the "Closing Date") with, or on behalf of, The Depository Trust
Company (the "Depositary") and registered in the name of Cede & Co., as nominee
of the Depositary (such nominee being referred to herein as the "Global Note
Holder").
Notes that are issued as described below under "--Certificated Securities"
will be issued in the form of registered definitive certificates (the
"Certificated Securities"). Upon the transfer of Certificated Securities, such
Certificated Securities may, unless all Global Notes have previously been
exchanged for Certificated Securities, be exchanged for an interest in the
Global Note representing the principal amount of Notes being transferred,
subject to the transfer restrictions set forth in the Indenture.
The Depositary is a limited-purpose trust company that was created to hold
securities for its participating organizations (collectively, the "Participants"
or the "Depositary's Participants") and to facilitate the clearance and
settlement of transactions in such securities between Participants through
electronic book-entry changes in accounts of its Participants. The Depositary's
Participants include securities brokers and dealers (including the
Underwriters), banks and trust companies, clearing corporations and certain
other organizations. Access to the Depositary's system is also available to
other entities such as banks, brokers, dealers and trust companies
(collectively, the "Indirect Participants" or the "Depositary's Indirect
Participants") that clear through or maintain a custodial relationship with a
Participant, either directly or indirectly. Persons who are not Participants may
beneficially own securities held by or on behalf of the Depositary only thorough
the Depositary's Participants or the Depositary's Indirect Participants.
The Company expects that pursuant to procedures established by the
Depositary (i) upon deposit of the Global Notes, the Depositary will credit the
accounts of Participants designated by the Underwriters with portions of the
principal amount of the Global Notes and (ii) ownership of the Notes evidenced
by the Global Notes will be shown on, and the transfer of ownership thereof will
be effected only through, records
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maintained by the Depositary (with respect to the interests of the Depositary's
Participants), the Depositary's Participants and the Depositary's Indirect
Participants. Prospective purchasers are advised that the laws of some states
require that certain persons take physical delivery in definitive form of
securities that they own. Consequently, the ability to transfer Notes evidenced
by the Global Note will be limited to such extent.
So long as the Global Note Holder is the registered owner of any Notes, the
Global Note Holder will be considered the sole Holder under the Indenture of any
Notes evidenced by the Global Notes. Beneficial owners of Notes evidenced by the
Global Notes will not be considered the owners or Holders thereof under the
Indenture for any purpose, including with respect to the giving of any
directions, instructions or approvals to the Trustee. Neither the Company nor
the Trustee will have any responsibility or liability for any aspect of the
records of the Depositary or for maintaining, supervising or reviewing any
records of the Depositary relating to the Notes.
The Company understands that under existing industry practice, in the event
a beneficial owner of the Notes desires to take any action that the Depositary,
as the Global Note Holder, is entitled to take, the Depositary would authorize
the relevant Participants to take such action, and that such Participants would
authorize the beneficial owners owning through such Participants to take such
action or would otherwise act upon the instructions of the beneficial owners
owning through them.
Payments in respect of the principal of, premium, if any, interest on any
Notes registered in the name of the Global Note Holder on the applicable record
date will be payable by the Trustee to or at the direction of the Global Note
Holder in its capacity as the registered Holder under the Indenture. Under the
terms of the Indenture, the Company and the Trustee may treat the persons in
whose names Notes, including the Global Notes, are registered as the owners
thereof for the purpose of receiving such payments. 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. The Company believes,
however, that it is currently the policy of the Depositary to immediately credit
the accounts of the relevant Participants with such payments, in amounts
proportionate to their respective holdings of beneficial interests in the
relevant security as shown on the records of the Depositary. Payments by the
Depositary's Participants and the Depositary's Indirect Participants to the
beneficial owners of Notes will be governed by standing instructions and
customary practice and will be the responsibility of the Depositary's
Participants or the Depositary's Indirect Participants.
CERTIFICATED SECURITIES
If (i) the Company notifies the Trustee in writing that the Depositary is no
longer willing or able to act as a depositary 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
the form of Certificated Securities under the Indenture, then, upon surrender by
the Global Note Holder of its Global Note, Notes in such form will be issued to
each person that the Global Note Holder and the Depositary identify as being the
beneficial owner of the related Notes.
Neither the Company nor the Trustee will be liable for any delay by the
Global Note Holder or the Depositary in identifying the beneficial owners of
Notes and the Company and the Trustee may conclusively rely on, and will be
protected in relying on, instructions from the Global Note Holder or the
Depositary for all purposes.
SAME DAY SETTLEMENT AND PAYMENT
Payments in respect of the Notes represented by the Global Note (including
principal, premium, if any, interest, if any) will be made by wire transfer of
immediately available next day funds to the accounts specified by the Global
Note Holder. With respect to Certificated Securities, if a Holder has given wire
transfer instructions to the Company, the Company will make all payments of
principal, premium, if any,
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and interest by wire transfer of immediately available funds to the accounts
specified by the Holders thereof. All other payments will be made at the office
or agency of the Paying Agent and Registrar within the City and State of New
York unless the Company elects to make interest payments by mailing a check to
each such Holder's registered address. The Company expects that secondary
trading, if any, in the Certificated Securities will also be settled in
immediately available funds.
CERTAIN DEFINITIONS
Set forth below are certain defined terms used in the Indenture. Reference
is made to the Indenture for a full disclosure of all such terms, as well as any
other capitalized terms used herein for which no definition is provided.
"ACQUIRED DEBT" means, with respect to any specified Person:
(1) Indebtedness of any other Person existing at the time such other Person is
merged with or into or becomes a Subsidiary of such specified Person,
including, without limitation, Indebtedness incurred in connection with, or
in contemplation of, such other Person merging with or into or becoming a
Subsidiary of such specified Person; and
(2) Indebtedness secured by a Lien encumbering any asset acquired by such
specified Person.
"AFFILIATE" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise; PROVIDED that
beneficial ownership of 10% or more of the Voting Stock of a Person shall be
deemed to be control.
"ASSET SALE" means:
(1) the sale, conveyance or other disposition of any assets or rights
(including, without limitation, by way of a sale and leaseback) other than
sales of inventory in the ordinary course of business; PROVIDED that the
sale, conveyance or other disposition of all or substantially all of the
assets of the Company and its Restricted Subsidiaries taken as a whole will
be governed by the provisions of the Indenture described above under the
caption "--Certain Covenants--Change of Control" and/or the provisions
described above under the caption "--Certain Covenants--Merger,
Consolidation or Sale of Assets" and not by the provisions of the Asset Sale
covenant; and
(2) the issue or sale by the Company or any of its Restricted Subsidiaries of
Equity Interests of any of the Company's Restricted Subsidiaries;
in the case of either clause (1) or (2), whether in a single transaction or a
series of related transactions (a) that have a fair market value in excess of
$10.0 million or (b) for net proceeds in excess of $10.0 million.
Notwithstanding the preceding, the following items shall not be deemed to be
Asset Sales:
(1) a transfer of assets by the Company to a Restricted Subsidiary or by a
Restricted Subsidiary to the Company or to another Restricted Subsidiary;
(2) an issuance of Equity Interests by a Restricted Subsidiary to the Company or
to another Restricted Subsidiary;
(3) the transfer of Equity Interests in any Restricted Subsidiary pursuant to
the Subordinated Indemnity Agreement or the Partnership Parks Agreements;
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(4) the issuance of Equity Interests by a Restricted Subsidiary to any employee
thereof or as consideration for the acquisition of all or substantially all
of the assets of, or a majority of the Voting Stock of, any Person (or a
business unit or division of such Person), PROVIDED that the primary
business of such Person (or such unit or division) is a Permitted Business;
(5) the substitution of property in accordance with the terms of the Parcel
Lease, dated November 7, 1997, between Marine World and Park Management
Corp. as the same may be modified or amended from time to time after April
1, 1998, PROVIDED such modification or amendment does not adversely affect
the interests of the Holders in any material respect; and
(6) a Restricted Payment that is permitted by the covenant described above under
the caption "--Certain Covenants--Restricted Payments."
"ATTRIBUTABLE DEBT" in respect of a sale and leaseback transaction means, at
the time of determination, the present value (discounted at the rate of interest
implicit in such transaction, determined in accordance with GAAP) of the
obligation of the lessee for net rental payments during the remaining term of
the lease included in such sale and leaseback transaction (including any period
for which such lease has been extended or may, at the option of the lessor, be
extended).
"BENEFICIAL SHARE ASSIGNMENT AGREEMENT" means the Beneficial Share
Assignment Agreement, dated as of April 1, 1998, between TW-SPV Co. and the
Company.
"CAPITAL LEASE OBLIGATION" means, at the time any determination thereof is
to be made, the amount of the liability in respect of a capital lease that would
at such time be required to be capitalized on a balance sheet in accordance with
GAAP.
"CAPITAL STOCK" means:
(1) in the case of a corporation, corporate stock;
(2) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated)
of corporate stock;
(3) in the case of a partnership or limited liability company, partnership or
membership interests (whether general or limited); and
(4) any other interest or participation that confers on a Person the right to
receive a share of the profits and losses of, or distributions of assets of,
the issuing Person.
"CASH EQUIVALENTS" means:
(1) United States dollars or foreign currency;
(2) securities issued or directly and fully guaranteed or insured by the United
States government or any agency or instrumentality thereof (provided that
the full faith and credit of the United States is pledged in support
thereof) having maturities of not more than one year from the date of
acquisition;
(3) certificates of deposit and eurodollar time deposits with maturities of one
year or less from the date of acquisition, bankers' acceptances with
maturities not exceeding six months and overnight bank deposits, in each
case with any lender party to the Credit Facilities or with any commercial
bank having capital and surplus in excess of $500.0 million and a Thompson
Bank Watch Rating of "B" or better;
(4) repurchase obligations with a term of not more than thirty days for
underlying securities of the types described in clauses (2) and (3) above
entered into with any financial institution meeting the qualifications
specified in clause (3) above;
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(5) commercial paper having the highest rating obtainable from Moody's Investors
Service, Inc. or Standard & Poor's Corporation and in each case maturing
within one year after the date of acquisition;
(6) 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, by any political subdivision or taxing
authority of any such state, commonwealth or territory, the securities of
which state, commonwealth, territory, political subdivision or taxing
authority (as the case may be) are rated at least "A" by Standard & Poor's
Corporation or "A" by Moody's Investors Service, Inc.; and
(7) money market funds at least 95% of the assets of which constitute Cash
Equivalents of the kinds described in clauses (1) through (6) of this
definition.
"CHANGE OF CONTROL" means the occurrence of any of the following:
(1) the sale, lease, transfer, conveyance or other disposition (other than by
way of merger or consolidation), in one or a series of related transactions,
of all or substantially all of the assets of the Company and its
Subsidiaries taken as a whole to any "person" (as such term is used in
Section 13(d)(3) of the Exchange Act);
(2) the adoption of a plan relating to the liquidation or dissolution of the
Company;
(3) the consummation of any transaction (including, without limitation, any
merger or consolidation) the result of which is that any "person" becomes
the "beneficial owner" (as such terms are defined in Rule 13d-3 and Rule
13d-5 under the Exchange Act), directly or indirectly, of more than 35% of
the Voting Stock of the Company; or
(4) the first day on which a majority of the members of the Board of Directors
of the Company are not Continuing Directors.
"CONSOLIDATED CASH FLOW" means, with respect to any Person for any period,
the Consolidated Net Income of such Person for such period PLUS:
(1) provision for taxes based on income or profits of such Person and its
Restricted Subsidiaries for such period, to the extent that such provision
for taxes was included in computing such Consolidated Net Income; PLUS
(2) Consolidated Interest Expense of such Person and its Restricted Subsidiaries
for such period, to the extent that any such expense was deducted in
computing such Consolidated Net Income; PLUS
(3) depreciation, amortization (including any depreciation or amortization
arising out of purchases by the Company or any Restricted Subsidiary of
Equity Interests in the partners of the Co-Venture Partnerships and
amortization of goodwill and other intangibles but excluding amortization of
prepaid cash expenses that were paid in a prior period) and other non-cash
expenses (excluding any such non-cash expense to the extent that it
represents an accrual of or reserve for cash expenses in any future period
or amortization of a prepaid cash expense that was paid in a prior period)
of such Person and its Restricted Subsidiaries for such period to the extent
that such depreciation, amortization and other non-cash expenses were
deducted in computing such Consolidated Net Income; MINUS
(4) non-cash items increasing such Consolidated Net Income for such period, in
each case, on a consolidated basis and determined in accordance with GAAP
(other than accrual of income in the ordinary course of business in respect
of a future cash payment).
Notwithstanding any other provision of the Indenture to the contrary,
"Consolidated Cash Flow" of the Company for any period will be deemed to include
100% of the cash distributions to the Company or any of its Restricted
Subsidiaries in respect of such period from the Co-Venture Partnerships,
directly or indirectly, out of the Consolidated Cash Flow of the Co-Venture
Partnerships in respect of such period.
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"CONSOLIDATED INDEBTEDNESS" means, with respect to any Person as of any date
of determination, the sum, without duplication, of:
(1) the total amount of Indebtedness and Attributable Debt of such Person and
its Restricted Subsidiaries; PLUS
(2) the total amount of Indebtedness and Attributable Debt of any other Person,
to the extent that the same has been guaranteed by the referent Person or
one or more of its Restricted Subsidiaries; PLUS
(3) the aggregate liquidation value of all Disqualified Stock of such Person and
all preferred stock of Restricted Subsidiaries of such Person, in each case,
determined on a consolidated basis in accordance with GAAP.
"CONSOLIDATED INTEREST EXPENSE" means, with respect to any Person for any
period, the sum of:
(1) the consolidated interest expense of such Person and its Restricted
Subsidiaries for such period, whether paid or accrued (including, without
limitation, amortization of original issue discount, non-cash interest
payments, the interest component of any deferred payment obligations, the
interest component of all payments associated with Capital Lease
Obligations, imputed interest with respect to Attributable Debt,
commissions, discounts and other fees and charges incurred in respect of
letter of credit or bankers' acceptance financings, and net payments (if
any) pursuant to Hedging Obligations); and
(2) the consolidated interest expense of such Person and its Restricted
Subsidiaries that was capitalized during such period; and
(3) any interest expense on Indebtedness or Attributable Debt of another Person
that is guaranteed by such Person or one of its Restricted Subsidiaries or
secured by a Lien on assets of such Person or one of its Restricted
Subsidiaries (whether or not such guarantee or Lien is called upon).
The term "Consolidated Interest Expense" shall not include the consolidated
interest expense of any Person with respect to:
(1) (A) any obligations in respect of the SFEC Zero Coupon Notes so long as (a)
the SFEC Escrow Agreement is in full force and effect and the trustee under
the indenture governing the SFEC Notes holds thereunder an amount sufficient
to pay the aggregate principal amount at maturity of such SFEC Zero Coupon
Notes pursuant to the terms thereof; or (b) the SFEC Zero Coupon Notes shall
have been defeased in accordance with the indenture governing the SFEC Zero
Coupon Notes, or (B) Indebtedness of the Co-Venture Partnerships (or the
general partners thereof), except to the extent guaranteed by the Company or
any Restricted Subsidiary; or
(2) any obligations of the Company or any Restricted Subsidiary under the
Partnership Parks Agreements, the Marine World Agreements or the
Subordinated Indemnity Agreement.
"CONSOLIDATED NET INCOME" means, with respect to any Person for any period,
the aggregate of the Net Income of such Person and its Restricted Subsidiaries
for such period, on a consolidated basis, and prior to any deduction in respect
of dividends on any series of preferred stock of such Person, determined in
accordance with GAAP; PROVIDED that:
(1) the Net Income (but not loss) of any Person that is not a Restricted
Subsidiary or that is accounted for by the equity method of accounting shall
be included only to the extent of the amount of dividends or distributions
paid in cash to the referent Person or a Wholly Owned Restricted Subsidiary
thereof;
(2) the Net Income of any Person acquired in a pooling of interests transaction
for any period prior to the date of such acquisition shall be excluded; and
(3) the cumulative effect of a change in accounting principles shall be
excluded.
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"CONTINUING DIRECTORS" means, as of any date of determination, any member of
the Board of Directors of the Company who:
(1) was a member of such Board of Directors on the date of the Indenture; or
(2) was nominated for election or elected to such Board of Directors with the
approval of a majority of the Continuing Directors who were members of such
Board at the time of such nomination or election.
"CO-VENTURE PARKS" means Six Flags Over Georgia and Six Flags Over Texas.
"CO-VENTURE PARTNERSHIPS" means:
(1) Six Flags Over Georgia II, L.P., a Delaware Limited Partnership; and
(2) Texas Flags, Ltd., a Texas Limited Partnership.
"CREDIT FACILITIES" means, with respect to the Company or any of its
Restricted Subsidiaries, one or more debt facilities (including, without
limitation, the Premier Credit Facility and the Six Flags Credit Facility) or
commercial paper facilities with banks or other institutional lenders providing
for revolving credit loans, term loans, receivables financing (including through
the sale of receivables to such lenders or to special purpose entities formed to
borrow from such lenders against such receivables) or letters of credit, in each
case, as amended, restated, modified, renewed, refunded, replaced or refinanced
in whole or in part from time to time.
"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.
"DEBT TO CASH FLOW RATIO" means, as of any date of determination, the ratio
of:
(1) the Consolidated Indebtedness of the Company as of such date to
(2) the Consolidated Cash Flow of the Company for the four most recent full
fiscal quarters ending immediately prior to such date for which financial
statements have been filed with the Commission, determined on a pro forma
basis after giving effect to all acquisitions or Asset Sales made by the
Company and its Restricted Subsidiaries from the beginning of such
four-quarter period through and including such date of determination
(including any related financing transactions) as if such acquisitions and
dispositions had occurred at the beginning of such four-quarter period.
In addition, for purposes of calculating the Debt to Cash Flow Ratio:
(1) acquisitions that have been made by the Company or any of its Restricted
Subsidiaries, including through mergers or consolidations and including any
related financing transactions, during the four- quarter reference period or
subsequent to such reference period and on or prior to the calculation date
shall be deemed to have occurred on the first day of the four-quarter
reference period and Consolidated Cash Flow for such reference period shall
be calculated without giving effect to clause (2) of the proviso set forth
in the definition of Consolidated Net Income; and
(2) the Consolidated Cash Flow attributable to discontinued operations, as
determined in accordance with GAAP, and operations or businesses disposed of
prior to the calculation date, shall be excluded.
"DEFAULT" means any event that is or with the passage of time or the giving
of notice or both would be an Event of Default.
"DISQUALIFIED STOCK" means any Capital Stock that, by its terms (or by the
terms of any security into which it is convertible, or for which it is
exchangeable, at the option of the holder thereof), or upon the happening of any
event, matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or redeemable at the option of the holder thereof, in
whole or in part, on or prior to the date that is 91 days after the date on
which the Notes mature. Notwithstanding the preceding sentence, any
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Capital Stock that would constitute Disqualified Stock solely because the
holders thereof have the right to require the Company to repurchase such Capital
Stock upon the occurrence of a Change of Control or an Asset Sale shall not
constitute Disqualified Stock if the terms of such Capital Stock provide that
the Company may not repurchase or redeem any such Capital Stock pursuant to such
provisions unless such repurchase or redemption complies with the covenant
described above under the caption "--Certain Covenants--Restricted Payments."
"EQUITY INTERESTS" means Capital Stock and all warrants, options or other
rights to acquire Capital Stock (but, without limiting the generality of the
foregoing, excluding any debt security that is convertible into, or exchangeable
for, Capital Stock).
"EXISTING INDEBTEDNESS" means up to 1,830.1 million in aggregate principal
amount of Indebtedness (including Indebtedness under the Premier Credit Facility
and the Six Flags Credit Facility) of the Company and its Subsidiaries in
existence on the date of the Indenture, PLUS the principal amount, if any, of
SFTP and Premier Operations notes which are not tendered and purchased in the
tender offers, in each case, until such amounts are repaid.
"GAAP" means generally accepted accounting principles 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 have been approved by a significant segment of the accounting
profession, which are in effect from time to time.
"GOVERNMENT SECURITIES" means:
(1) direct obligations of, or obligations guaranteed by, the United States of
America for the payment of which guarantee or obligations the full faith and
credit of the United States of America is pledged; and
(2) money market funds at least 95% of the assets of which constitute Government
Securities of the kinds described in clause (1) of this definition.
"GUARANTEE" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, by way of a pledge of
assets or through letters of credit or reimbursement agreements in respect
thereof), of all or any part of any Indebtedness.
"HEDGING OBLIGATIONS" means, with respect to any Person, the obligations of
such Person under:
(1) interest rate swap agreements, interest rate cap agreements and interest
rate collar agreements; and
(2) other agreements or arrangements designed to protect such Person against
fluctuations in interest rates.
"INDEBTEDNESS" means, with respect to any Person, any indebtedness of such
Person, whether or not contingent, in respect of:
(1) borrowed money;
(2) evidenced by bonds, notes, debentures or similar instruments or letters of
credit (or reimbursement agreements in respect thereof);
(3) banker's acceptances;
(4) representing Capital Lease Obligations;
(5) the balance deferred and unpaid of the purchase price of any property,
except any such balance that constitutes an accrued expense or trade
payable; or
(6) representing any Hedging Obligations;
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if and to the extent any of the foregoing (other than letters of credit and
Hedging Obligations) would appear as a liability upon a balance sheet of such
Person prepared in accordance with GAAP, as well as all Indebtedness of others
secured by a Lien on any asset of such Person (whether or not such Indebtedness
is assumed by such Person) and, to the extent not otherwise included, the
guarantee by such Person of any indebtedness of any other Person.
The amount of any Indebtedness outstanding as of any date shall be:
(1) the accreted value thereof, in the case of any Indebtedness issued with
original issue discount; and
(2) the principal amount thereof, together with any interest thereon that is
more than 30 days past due, in the case of any other Indebtedness.
The term "Indebtedness" shall not include:
(1) any obligations in respect of the SFEC Zero Coupon Notes so long as (a) the
SFEC Escrow Agreement is in full force and effect and the trustee under the
indenture governing the SFEC Notes holds thereunder an amount sufficient to
pay the aggregate principal amount at maturity of such SFEC Zero Coupon
Notes pursuant to the terms thereof or (b) the SFEC Zero Coupon Notes shall
have been defeased in accordance with the indenture governing the SFEC Zero
Coupon Notes;
(2) any obligations of the Company or any Restricted Subsidiary under the
Partnership Parks Agreements, the Marine World Agreements or the
Subordinated Indemnity Agreement; or
(3) any indebtedness of the Co-Venture Partnerships (or the general partners
thereof), except to the extent guaranteed by the Company or any Restricted
Subsidiary.
"INVESTMENTS" means, with respect to any Person, all investments by such
Person in other Persons (including Affiliates) in the forms of direct or
indirect loans (including guarantees of Indebtedness or other obligations),
advances or capital contributions (excluding commission, travel and similar
advances to officers and employees and any deposit or advance made pursuant to
any contract entered into in the ordinary course of business), purchases or
other acquisitions for consideration of Indebtedness, Equity Interests or other
securities, together with all items that are or would be classified as
investments on a balance sheet prepared in accordance with GAAP. If the Company
or any Subsidiary of the Company sells or otherwise disposes of any Equity
Interests of any direct or indirect Subsidiary of the Company (other than
pursuant to the terms of the Partnership Parks Agreements or the Subordinated
Indemnity Agreement) such that, after giving effect to any such sale or
disposition, such Person is no longer a Subsidiary of the Company, the Company
shall be deemed to have made an Investment on the date of any such sale or
disposition equal to the fair market value of the Equity Interests of such
Subsidiary not sold or disposed of in an amount determined as provided in the
final paragraph of the covenant described above under the caption "--Certain
Covenants--Restricted Payments."
"ISSUE DATE" means , 1999.
"LIEN" means, with respect to any asset, any mortgage, lien, pledge, charge,
security interest or encumbrance of any kind in respect of such asset, whether
or not filed, recorded or otherwise perfected under applicable law (including
any conditional sale or other title retention agreement, any lease in the nature
thereof, any option or other agreement to sell or give a security interest in
and any filing of or agreement to give any financing statement under the Uniform
Commercial Code (or equivalent statutes) of any jurisdiction).
"MARINE WORLD" means the Marine World Joint Powers Authority or any
successor thereto.
"MARINE WORLD AGREEMENTS" means:
(1) the Parcel Lease, dated November 7, 1997, between Marine World and Park
Management Corp. ("PMC");
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(2) the Reciprocal Easement Agreement, dated November 7, 1997, between Marine
World and PMC;
(3) the Revenue Sharing Agreement, dated November 7, 1997, among Marine World,
PMC and the Redevelopment Agency of the City of Vallejo (the "Agency");
(4) the Purchase Option Agreement, dated as of August 29, 1997, among Marine
World, the Agency, the City of Vallejo and PMC; and
(5) the 1997 Management Agreement, dated as of February 1, 1997, between Marine
World and PMC, as amended;
in each case, as the same may be modified or amended from time to time after
April 1, 1998, PROVIDED such modification or amendment does not adversely affect
the interests of the Holders in any material respects.
"NET INCOME" means, with respect to any Person, the net income (loss) of
such Person, determined in accordance with GAAP and before any reduction in
respect of preferred stock dividends, excluding, however:
(1) any gain or loss, together with any related provision for taxes on such gain
or loss, realized in connection with any Asset Sale (including, without
limitation, dispositions pursuant to sale and leaseback transactions); and
(2) any extraordinary gain or loss, together with any related provision for
taxes on such extraordinary gain or loss.
"NET PROCEEDS" means the aggregate cash proceeds received by the Company or
any of its Restricted Subsidiaries in respect of any Asset Sale (including,
without limitation, any cash received upon the sale or other disposition of any
non-cash consideration received in any Asset Sale), net of the direct costs
relating to such Asset Sale (including, without limitation, legal, accounting
and investment banking fees, and sales commissions) and any relocation expenses
incurred as a result thereof, taxes paid or payable as a result thereof (after
taking into account any available tax credits or deductions and any tax sharing
arrangements), amounts required to be applied to the repayment of Indebtedness
secured by a Lien on the asset or assets that were the subject of such Asset
Sale and any reserve for adjustment in respect of the sale price of such asset
or assets established in accordance with GAAP.
"NON-RECOURSE DEBT" means Indebtedness:
(1) as to which neither the Company nor any of its Restricted Subsidiaries (a)
provides credit support of any kind (including any undertaking, agreement or
instrument that would constitute Indebtedness), (b) is directly or
indirectly liable (as a guarantor or otherwise), or (c) constitutes the
lender;
(2) no default with respect to which (including any rights that the holders
thereof may have to take enforcement action against an Unrestricted
Subsidiary) would permit (upon notice, lapse of time or both) any holder of
any other Indebtedness of the Company or any of its Restricted Subsidiaries
to declare a default on such other Indebtedness or cause the payment thereof
to be accelerated or payable prior to its stated maturity; and
(3) as to which the lenders have been notified in writing that they will not
have any recourse to the stock or assets of the Company or any of its
Restricted Subsidiaries.
"OBLIGATIONS" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"PARTNERSHIP PARKS AGREEMENTS" means:
(1) the Overall Agreement, dated as of February 15, 1997, among Six Flags Fund,
Ltd. (L.P.), Salkin Family Trust, SFG, Inc., SFG-I, LLC, SFG-II, LLC, Six
Flags Over Georgia, Ltd., SFOG II, Inc., SFOG II Employee, Inc., SFOG
Acquisition A, Inc., SFOG Acquisition B, L.L.C., Six Flags Over
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Georgia, Inc., Six Flags Services of Georgia, Inc., Six Flags Theme Parks
Inc. and Six Flags Entertainment Corporation and the Related Agreements (as
defined therein); and
(2) the Overall Agreement, dated as of November 24, 1997, among Six Flags Over
Texas Fund, Ltd., Flags' Directors, L.L.C., FD-II, L.L.C., Texas Flags,
Ltd., SFOT Employee, Inc., SFOT Acquisition I, Inc., SFOT Acquisition II,
Inc., Six Flags Over Texas, Inc., Six Flags Theme Parks Inc. and Six Flags
Entertainment Corporation and the Related Agreements (as defined therein);
in each case, as the same may be modified or amended from time to time after
April 1, 1998 provided such modification or amendment does not adversely affect
the interests of the Holders in any material respect.
"PERMITTED BUSINESS" means any business related, ancillary or complementary
to the businesses of the Company and its Restricted Subsidiaries on the date of
the Indenture.
"PERMITTED DISTRIBUTIONS" means:
(1) the purchase, redemption, retirement or other acquisition by the Company or
any Restricted Subsidiary of the Company of partnership interests in the
Co-Venture Partnerships or the limited partners thereof, or their
successors, in accordance with and in the manner required or permitted by
the terms of the Partnership Parks Agreements;
(2) the payment of any other obligation under the terms of the Partnership Parks
Agreements or the Subordinated Indemnity Agreement; and
(3) the payment of dividends on the Mandatorily Convertible Preferred Stock in
accordance with the terms thereof as in effect on the date of the Indenture.
"PERMITTED INVESTMENTS" means an Investment by the Company or any Restricted
Subsidiary in:
(1) cash or Cash Equivalents;
(2) the Company, 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 Permitted Business;
(3) 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 (or the assets of any business unit or division of such
Person) to, the Company or a Restricted Subsidiary; PROVIDED, HOWEVER, that
such Person's (or such unit's or division's) primary business is a Permitted
Business;
(4) another Person if the aggregate amount of all Investments in all such other
Persons does not exceed $25.0 million at any one time outstanding (with each
Investment being valued as of the date made and without giving effect to
subsequent changes in value); PROVIDED, HOWEVER, that such Person's primary
business is a Permitted Business;
(5) promissory notes received as consideration for an Asset Sale which are
secured by a Lien on the asset subject to such Asset Sale; PROVIDED that the
aggregate amount of all such promissory notes at any one time outstanding
does not exceed $5.0 million;
(6) non-cash consideration from an Asset Sale that was made pursuant to and in
compliance with the covenant described above under the caption "--Repurchase
at the Option of Holders--Asset Sales;"
(7) assets acquired solely in exchange for the issuance of Equity Interests
(other than Disqualified Stock) of the Company;
(8) receivables owing to the Company or any Restricted Subsidiary, if created or
acquired in the ordinary course of business;
(9) payroll, travel and similar advances that are made in the ordinary course of
business;
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(10) loans or advances to employees made in the ordinary course of business
consistent with past practices of the Company or such Restricted Subsidiary;
(11) 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
(12) other Investments in any Person at any time outstanding (each such
Investment being measured on the date each such Investment was made and
without giving effect to subsequent changes in value) not to exceed $150
million.
"PERMITTED LIENS" means:
(1) Liens to secure Indebtedness of a Restricted Subsidiary of the Company that
was permitted to be incurred under the Indenture;
(2) Liens existing on the Issue Date;
(3) Liens on property or shares of Capital Stock of another Person at the time
such other Person becomes a Restricted 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 Restricted
Subsidiary; PROVIDED FURTHER, HOWEVER, that such Lien may not extend to any
other property owned by such Person or any of its Restricted Subsidiaries;
(4) Liens on property at the time such Person or any of its Restricted
Subsidiaries acquires the property, including any acquisition by means of a
merger or consolidation with or into such Person or a Restricted 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 Restricted Subsidiaries;
(5) Liens securing Indebtedness or other obligations of a Restricted Subsidiary
of such Person owing to such Person or a Restricted Subsidiary of such
Person;
(6) 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
type of property securing such Hedging Obligations;
(7) Liens to secure any Permitted Refinancing Indebtedness; PROVIDED, HOWEVER,
that:
(a) such new Lien shall be limited to all or part of the same property that
secured the original Indebtedness (plus improvements on such property);
and
(b) the Indebtedness secured by such Lien at such time is not increased to
any amount greater than the sum of: (i) the outstanding principal amount
or, if greater, committed amount of the Indebtedness refinanced at the
time the original Lien became a Permitted Lien; and (ii) an amount
necessary to pay any fees and expenses, including premiums, related to
such refinancing, refunding, extension, renewal or replacement;
(8) (a) 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 or any
Restricted Subsidiary of the Company and subordination or similar agreements
relating thereto and (b) any condemnation or eminent domain proceedings
affecting any real property;
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(9) 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;
(10) Liens imposed by law, such as carriers', warehousemen's and mechanic's
Liens, in each case 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;
(11) 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;
(12) 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;
(13) Liens securing Purchase Money Indebtedness; PROVIDED, HOWEVER, that:
(a) the Indebtedness secured by such Liens is otherwise permitted to be
incurred under the Indenture;
(b) 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
(c) the amount of Indebtedness secured by any such Lien is not subsequently
increased;
(14) Liens arising out of the transactions contemplated by the Partnership Parks
Agreements, the Marine World Agreements, the Subordinated Indemnity
Agreement or the Six Flags Agreement; and
(15) Liens incurred in the ordinary course of business of the Company or any
Subsidiary of the Company with respect to obligations that do not exceed
$20.0 million at any one time outstanding.
"PERMITTED REFINANCING INDEBTEDNESS" means any Indebtedness of the Company
or any of its Restricted Subsidiaries issued in exchange for, or the net
proceeds of which are used to extend, refinance, renew, replace, defease or
refund other Indebtedness of the Company or any of its Restricted Subsidiaries
(other than intercompany Indebtedness); PROVIDED that:
(1) the principal amount (or accreted value, if applicable) of such Permitted
Refinancing Indebtedness does not exceed the principal amount of (or
accreted value, if applicable), plus accrued interest on, the Indebtedness
so extended, refinanced, renewed, replaced, defeased or refunded (plus the
amount of reasonable expenses, including premiums, incurred in connection
therewith);
(2) such Permitted Refinancing Indebtedness has a final maturity date later than
the final maturity date of, and has a Weighted Average Life to Maturity
equal to or greater than the Weighted Average Life to Maturity of, the
Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded;
(3) if the Indebtedness being extended, refinanced, renewed, replaced, defeased
or refunded is subordinated in right of payment to the Notes, such Permitted
Refinancing Indebtedness has a final maturity date later than the final
maturity date of, and is subordinated in right of payment to, the Notes on
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terms at least as favorable to the Holders of Notes as those contained in
the documentation governing the Indebtedness being extended, refinanced,
renewed, replaced, defeased or refunded; and
(4) such Indebtedness is incurred either by the Company or by a Restricted
Subsidiary.
"PREMIER CREDIT FACILITY" means the $300.0 million senior secured credit
facility dated as of March 13, 1998 among Premier Operations and certain of its
subsidiaries, The Bank of New York and the lenders named therein, as amended
from time to time.
"PREMIER OPERATIONS" means Premier Parks Operations Inc.
"PREMIER OPERATIONS NOTES" means Premier Operations' 9 3/4% Senior Notes due
2007.
"PUBLIC EQUITY OFFERING" means an underwritten primary public offering of
common stock of the Company pursuant to an effective registration statement
under the Securities Act.
"PURCHASE MONEY INDEBTEDNESS" means Indebtedness:
(1) 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
(2) incurred to finance the acquisition by the Company or a Restricted
Subsidiary of the Company 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.
"RESTRICTED INVESTMENT" means an Investment other than a Permitted
Investment.
"RESTRICTED SUBSIDIARY" of a Person means any Subsidiary of the referent
Person that is not an Unrestricted Subsidiary.
"SFEC NOTES" means SFEC's 8 7/8% Senior Notes due 2006.
"SFTP" means Six Flags Theme Parks Inc.
"SIGNIFICANT SUBSIDIARY" means any Subsidiary that would be a "significant
subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated
pursuant to the Securities Act, as such Regulation is in effect on the date of
the Indenture.
"SIX FLAGS CREDIT FACILITY" means the $472.0 million senior secured credit
facility dated as of April 1, 1998 among SFTP, S.F. Holdings, Inc., SFEC and
certain subsidiaries of SFTP, The Bank of New York and the lenders named
therein, as amended from time to time.
"SPECIFIED AMOUNT" means, as of any date, the product of:
(1) the Consolidated Cash Flow of the Company for the most recently ended
four-quarter period for which financial statements have been filed with the
Commission determined on a pro forma basis after giving effect to all
acquisitions or Asset Sales made by the Company and its Restricted
Subsidiaries from the beginning of such four-quarter period through and
including such date of determination (including any related financing
transactions) as if such acquisitions and dispositions had occurred at the
beginning of such four-quarter period; TIMES
(2) 0.75.
"STATED MATURITY" means, with respect to any installment of interest or
principal on any series of Indebtedness, the date on which such payment of
interest or principal was scheduled to be paid in the original documentation
governing such Indebtedness, and shall not include any contingent obligations to
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repay, redeem or repurchase any such interest or principal prior to the date
originally scheduled for the payment thereof.
"STRATEGIC EQUITY INVESTMENT" means a cash contribution to the common equity
capital of the Company or a purchase from the Company of common Equity Interests
(other than Disqualified Stock), in either case by or from a Strategic Equity
Investor and for aggregate cash consideration of at least $25.0 million.
"STRATEGIC EQUITY INVESTOR" means, as of any date, any Person (other than an
Affiliate of the Company) engaged in a Permitted Business which, as of the day
immediately before such date, had a Total Equity Market Capitalization of at
least $1.0 billion.
"SUBORDINATED INDEMNITY AGREEMENT" means the Subordinated Indemnity
Agreement, dated as of April 1, 1998, among the Company, SFEC and its
subsidiaries, Time Warner Inc., Time Warner Entertainment Company, L.P. and
TW-SPV Co., as the same may be modified or amended from time to time after April
1, 1998, provided such modification or amendment does not adversely affect the
interests of the Holders in any material fashion.
"SUBSIDIARY" means, with respect to any Person:
(1) any corporation, association or other business entity of which more than 50%
of the total voting power of shares of Capital Stock 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 such Person or one or more of the other
Subsidiaries of that Person (or a combination thereof); PROVIDED that,
notwithstanding the foregoing, each of SFOG A Holdings, SFOG B Holdings,
SFOT I Holdings and SFOT II Holdings shall be deemed to be a Subsidiary of
the Company for all purposes under the Indenture so long as the Subordinated
Indemnity Agreement and the Beneficial Share Assignment Agreement shall each
be in full force and effect and no default or event of default shall have
occurred thereunder, and
(2) any partnership or limited liability company (a) the sole general partner or
the managing general partner (or equivalent) of which is such Person or a
Subsidiary of such Person; or (b) the only general partners of which are
such Person or one or more Subsidiaries of such Person (or any combination
thereof).
"TOTAL EQUITY MARKET CAPITALIZATION" of any Person means, as of any day of
determination, the sum of:
(1) the product of (a) the aggregate number of outstanding primary shares of (i)
common stock of such Person on such day (which shall not include any options
or warrants on, or securities convertible or exchangeable into, shares of
common stock of such Person) and (ii) preferred stock of such Person on such
day (to the extent listed on a national securities exchange or the Nasdaq
National Market System) MULTIPLIED BY (b) the average closing price of such
common stock or such preferred stock, as the case may be, listed on a
national securities exchange or the Nasdaq National Market System over the
20 consecutive business days immediately preceding such day; PLUS
(2) the liquidation value of any outstanding shares of preferred stock of such
Person on such day not listed on a national securities exchange or the
Nasdaq National Market System.
"UNRESTRICTED SUBSIDIARY" means any Subsidiary (other than Premier
Operations or SFTP or any successor to either of them) that is designated by the
Board of Directors as an Unrestricted Subsidiary pursuant to a Board Resolution;
but only to the extent that such Subsidiary:
(1) has no Indebtedness other than Non-Recourse Debt;
(2) is not party to any agreement, contract, arrangement or understanding with
the Company or any Restricted Subsidiary of the Company unless the terms of
any such agreement, contract, arrangement or understanding are no less
favorable to the Company or such Restricted Subsidiary than those that might
be obtained at the time from Persons who are not Affiliates of the Company;
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(3) is a Person with respect to which neither the Company nor any of its
Restricted Subsidiaries has any direct or indirect obligation (a) to
subscribe for additional Equity Interests or (b) to maintain or preserve
such Person's financial condition or to cause such Person to achieve any
specified levels of operating results;
(4) has not guaranteed or otherwise directly or indirectly provided credit
support for any Indebtedness of the Company or any of its Restricted
Subsidiaries; and
(5) has at least one director on its board of directors that is not a director
or executive officer of the Company or any of its Restricted Subsidiaries
and has at least one executive officer that is not a director or executive
officer of the Company or any of its Restricted Subsidiaries.
Any such designation by the Board of Directors shall be evidenced to the
Trustee by filing with the Trustee a certified copy of the Board Resolution
giving effect to such designation and an Officers' Certificate certifying that
such designation complied with the foregoing conditions and was permitted by the
covenant described above under the caption "--Certain Covenants--Restricted
Payments." If, at any time, any Unrestricted Subsidiary would fail to meet the
foregoing requirements as an Unrestricted Subsidiary, it shall thereafter cease
to be an Unrestricted Subsidiary for purposes of the Indenture and any
Indebtedness of such Subsidiary shall be deemed to be incurred by a Restricted
Subsidiary of the Company as of such date (and, if such Indebtedness is not
permitted to be incurred as of such date under the covenant described under the
caption "--Certain Covenants--Incurrence of Indebtedness and Issuance of
Preferred Stock," the Company shall be in default of such covenant). The Board
of Directors of the Company may at any time designate any Unrestricted
Subsidiary to be a Restricted Subsidiary; PROVIDED that such designation shall
be deemed to be an incurrence of Indebtedness by a Restricted Subsidiary of the
Company of any outstanding Indebtedness of such Unrestricted Subsidiary and such
designation shall only be permitted if (1) such Indebtedness is permitted under
the covenant described under the caption "--Certain Covenants--Incurrence of
Indebtedness and Issuance of Preferred Stock," calculated on a pro forma basis
as if such designation had occurred at the beginning of the four-quarter
reference period, and (2) no Default or Event of Default would be in existence
following such designation.
"VOTING STOCK" of any Person as of any date means the Capital Stock of such
Person that is at the time entitled to vote by the holder thereof in the
election of the Board of Directors (or comparable body) of such Person.
"WEIGHTED AVERAGE LIFE TO MATURITY" means, when applied to any Indebtedness
at any date, the number of years obtained by dividing:
(1) the sum of the products obtained by multiplying (a) the amount of each then
remaining installment, sinking fund, serial maturity or other required
payments of principal, including payment at final maturity, in respect
thereof, by (b) the number of years (calculated to the nearest one-twelfth)
that will elapse between such date and the making of such payment; by
(2) the then outstanding principal amount of such Indebtedness.
"WHOLLY OWNED RESTRICTED SUBSIDIARY" of any Person means a Restricted
Subsidiary of such Person all of the outstanding Capital Stock or other
ownership interests of which (other than directors' qualifying shares) shall at
the time be owned by such Person or by one or more Wholly Owned Restricted
Subsidiaries of such Person or by such Person and one or more Wholly Owned
Restricted Subsidiaries of such Person.
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DESCRIPTION OF OTHER INDEBTEDNESS
PREMIER OPERATIONS CREDIT FACILITY
Borrowings under the Premier Operations credit facility (the "Premier Credit
Facility"), which was entered into in March 1998, are secured by substantially
all of the assets of Premier Operations and its domestic subsidiaries (other
than real estate), and are guaranteed by such subsidiaries. The Premier Credit
Facility has an aggregate availability of $275.0 million consisting of (i) a
five-year $75.0 million revolving credit facility for working capital and
general corporate purposes (the "Revolving Credit Facility"), of which $20.0
million was outstanding at March 31, 1999, (ii) a five-year $75.0 million term
loan facility ("Facility B"), and (iii) an eight-year $125.0 million term loan
facility ("Facility C" and, together with Facility B, the "Term Loan
Facilities"), in each case, to fund acquisitions and make capital improvements.
At March 31, 1999, $75.0 million and $124.0 million were outstanding under
Facility B and Facility C, respectively. Interest rates per annum under the
Premier Credit Facility are equal to either (a) a base rate equal to the higher
of the Federal Funds Rate plus 1/2% or the prime rate of Citibank, N.A., in each
case plus the Applicable Margin (as defined therein), or (b) the London
Interbank Offered Rate plus the Applicable Margin. The Revolving Credit Facility
terminates on March 31, 2003. Borrowings under Facility B mature on March 31,
2003 and borrowings under Facility C will mature on March 31, 2006; however,
aggregate principal payments and reductions of $10.0 million, $25.0 million,
$30.0 million and $10.0 million will be required during the second, third,
fourth and fifth years of Facility B, respectively, and aggregate principal
payments of $1.0 million each are required in each of the first six years of
Facility C in addition to a $25.0 million payment in year seven and a $94.0
million payment in year eight.
As a condition to the consummation of the tender offers by Premier
Operations and SFTP, the Premier Credit Facility has been amended to permit
Premier Operations to pay dividends to Premier to fund interest payments on up
to 24% of the principal amount of notes offered hereby.
SIX FLAGS CREDIT FACILITY
Borrowings under the Six Flags credit facility (the "Six Flags Credit
Facility), which was entered into simultaneous with the closing of the Six Flags
acquisition, are secured by substantially all of the assets of SFTP and its
subsidiaries and a pledge by SF Holdings (the sole stockholder of SFTP) of the
stock of SFTP, and are guaranteed by such subsidiaries, SFEC and SF Holdings.
The Six Flags Credit Facility has an aggregate availability of $472.0 million
consisting of (i) up to $100.0 million under a Revolving Credit Facility used to
refinance existing outstanding Six Flags bank indebtedness and for working
capital and other general corporate purpose, of which $38.0 million was
outstanding at March 31, 1999, and (ii) up to $372.0 million under a term loan
facility (the "Term Loan Facility") used to refinance existing outstanding Six
Flags bank indebtedness and fund acquisitions and make capital improvements, of
which $371.5 million was outstanding at March 31, 1999. Interest rates per annum
under the Six Flags Credit Facility are equal to either (a) a base rate equal to
the higher of the Federal Funds Rate plus 1/2% or the prime rate of Citibank,
N.A., in each case, plus the Applicable Margin (as defined therein), or (b) the
London Interbank Offered Rate plus the Applicable Margin. The Revolving Credit
Facility will terminate on April 1, 2003. Borrowings under the Term Loan
Facility will mature on November 30, 2004. However, for the Term Loan Facility,
aggregate principal payments and reductions of $1.0 million will be required
during each of the first, second, third and fourth years; aggregate principal
payments of $25.0 million and $40.0 million are required in years five and six,
respectively, and $303.0 million at maturity.
As a condition to the consummation of the tender offers by Premier
Operations and SFTP, the Six Flags Credit Facility has been amended to permit
Six Flags to pay dividends to Premier to fund interest payments on up to 76% of
the principal amount of notes offered hereby.
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PREMIER PARKS 10% SENIOR DISCOUNT NOTES DUE 2008
The Premier Parks 10% Senior Discount Notes due 2008 (the "Discount Notes")
are senior obligations of the Company in an aggregate principal amount at
maturity of $410.0 million. The Discount Notes will mature on April 1, 2008. The
Discount Notes accrete in value until April 1, 2003 at which time the accreted
value will equal 100% of their principal amount. The Discount Notes bear cash
interest at the rate of 10% per annum, commencing April 1, 2003, and are not
guaranteed by the Company's subsidiaries.
Approximately $75.0 million of net proceeds from the sale of the Discount
Notes has been deposited with the trustee to provide a fund until April 1, 2003
(the "Restricted Cash Account") to satisfy obligations under the Partnership
Parks Agreements and to pay dividends on our Mandatorily Convertible Preferred
Stock. The Company's obligations are secured pending disbursement by a pledge of
the Restricted Cash Account.
PREMIER PARKS 9 1/4% SENIOR NOTES DUE 2006
The Premier Parks 9 1/4% Senior Notes due 2006 (the "Senior Notes") are
senior obligations of the Company, in the aggregate principal amount of $280.0
million of which $70.7 million has been used to capitalize a three-year overfund
account (the "Interest Escrow Account") with respect to the Senior Notes. The
Senior Notes mature on April 1, 2006. The Senior Notes bear interest at the rate
9 1/4% per annum and are not guaranteed by the Company's subsidiaries.
PREMIER OPERATIONS 12% SENIOR NOTES DUE 2003
Concurrently with this offering, Premier Operations is tendering to
purchase, for cash, any and all of its outstanding 12% Senior Notes due 2003
(the "1995 Notes").
The 1995 Notes are senior, unsecured obligations of Premier Operations in
the aggregate principal amount of $90.0 million. The 1995 Notes mature on August
15, 2003. The 1995 Notes are guaranteed on a senior, unsecured basis by the
principal operating subsidiaries of Premier Operations.
The 1995 Notes are redeemable, at Premier Operations' option, in whole or in
part, at any time on or after August 15, 1999, at specified redemption prices,
together with accrued and unpaid interest, if any, to the date of redemption.
By virtue of consents obtained in connection with the tender offers, upon
consummation of this offering, the indenture relating to the 1995 Notes will not
contain any restrictive covenants.
PREMIER OPERATIONS 9 3/4% SENIOR NOTES DUE 2007
The Premier Operations 9 3/4% Senior Notes due 2007 (the "1997 Notes") are
senior, unsecured obligations of Premier Operations, in the aggregate principal
amount $125.0 million. The 1997 Notes mature on January 15, 2007. The 1997 Notes
are guaranteed on a senior, unsecured basis by the principal operating
subsidiaries of Premier Operations.
SFTP 12 1/4% SENIOR SUBORDINATED DISCOUNT NOTES DUE 2005
Concurrently with this offering, SFTP is tendering to purchase, for cash,
any and all of its outstanding 12 1/4% Senior Subordinated Discount Notes due
2005 (the "SFTP Notes").
The SFTP Notes are unsecured senior subordinated obligations of SFTP, in an
aggregate principal amount of $285.0 million and mature on June 15, 2005. The
SFTP Notes bear interest at the rate of 12 1/4% per annum, payable semi-annually
on June 15 and December 15 of each year, commencing December 15, 1998. The SFTP
Notes are guaranteed on a senior subordinated unsecured basis by the principal
operating subsidiaries of SFTP.
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The SFTP Notes are redeemable, at SFTP's option, in whole or in part, at any
time on or after June 15, 2000 at specified redemption prices, together with
accrued and unpaid interest, if any, to the date of redemption.
By virtue of consents obtained in connection with the tender offers, upon
consummation of this offering, the indenture pursuant to which the SFTP Notes
were issued will not contain any restrictive covenants.
SFEC ZERO COUPON SENIOR NOTES
The SFEC zero coupon senior notes are senior unsecured obligations of SFEC,
in an aggregate principal amount of $192.25 million and mature on December 15,
1999. The SFEC zero coupon senior notes accrete in value until December 15,
1999, at which time the accreted value will equal 100% of their principal
amount. There are no periodic payments on the SFEC zero coupon senior notes. The
proceeds of the SFEC Notes, together with other funds, have been deposited in
escrow to repay the SFEC zero coupon senior notes at or prior to maturity. The
SFEC zero coupon senior notes may not be redeemed prior to maturity.
SFEC 8 7/8% SENIOR NOTES DUE 2006
The SFEC 8 7/8% Senior Notes due 2006 (the "SFEC Notes") are senior,
unsecured obligations of SFEC, in the aggregate principal amount of $170.0
million. The SFEC Notes will mature on April 1, 2006. The SFEC Notes bear
interest at the rate of 8 7/8% per annum and are guaranteed by the Company on a
fully subordinated basis but are not guaranteed by SFEC's subsidiaries. All of
the net proceeds of the SFEC Notes were deposited, together with other funds, in
escrow to repay the SFEC Zero Coupon Senior Notes at or prior to their maturity.
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CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following is a summary of certain United States federal income tax
consequences of the purchase, ownership and disposition of the notes as of the
date hereof and represents the opinion of Thelen Reid & Priest LLP, counsel to
the Company, insofar as it relates to matters of law or legal conclusions. This
summary deals only with Notes held as capital assets within the meaning of
Section 1221 of the Internal Revenue Code of 1986, as amended (the "Code").
Moreover, it does not discuss all of the tax consequences that may be relevant
to a holder in light of his particular circumstances or to holders subject to
special rules, such as financial institutions, insurance companies,
partnerships, dealers in securities or currencies, individual retirement and tax
deferred accounts, persons who engage in a straddle, hedge or conversion
transaction relating to a Note or U.S. Holders (as defined below) whose
"functional currency" is not the U.S. dollar. In addition, this discussion does
not address the tax consequences to persons who purchase Notes other than
pursuant to their initial issuance and distribution at the initial public
offering price. This summary is based on the Code, existing and proposed
regulations promulgated thereunder, and applicable judicial and administrative
determinations now in effect, all of which are subject to change at any time,
possibly with retroactive effect.
ALL PROSPECTIVE PURCHASERS OF NOTES, INCLUDING PERSONS WHO PURCHASE NOTES IN
THE SECONDARY MARKET, ARE URGED TO CONSULT THEIR OWN TAX ADVISOR WITH RESPECT TO
THE TAX CONSEQUENCES OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE NOTES IN
THEIR PARTICULAR CIRCUMSTANCES, INCLUDING THE TAX CONSEQUENCES UNDER FOREIGN,
STATE, LOCAL OR OTHER TAX LAWS AND THE POSSIBLE EFFECTS OF ANY POTENTIAL CHANGES
IN U.S. FEDERAL OR OTHER TAX LAW.
As used herein, the term "U.S. Holder" means a beneficial owner of a Note
that for United States federal income tax purposes is (1) an individual citizen
or resident of the United States; (2) a corporation, or other entity that is
taxable as a corporation created or organized in or under the laws of the United
States or of any political subdivision thereof; (3) an estate the income of
which is subject to United States federal income taxation regardless of its
source; or (4) a trust if (a) a court within the United States is able to
exercise primary supervision over the administration of the trust and (b) one or
more U.S. persons have the authority to control all substantial decisions of the
trust. The term "Non-U.S. Holder" means a beneficial owner of a Note that is not
a U.S. Holder.
TAX CONSEQUENCES TO U.S. HOLDERS
PAYMENTS OF INTEREST
Stated interest on a Note will generally be taxable to a U.S. Holder as
ordinary income at the time it is paid or accrued in accordance with the U.S.
Holder's normal method of accounting for tax purposes.
SALE, EXCHANGE AND REDEMPTION OF THE NOTES
Upon the sale, exchange or redemption of a Note, a U.S. Holder will
recognize gain or loss equal to the difference between that holder's adjusted
tax basis in the Note and the amount realized upon the sale, exchange or
redemption, other than amounts, if any, attributable to accrued but unpaid
interest. A U.S. Holder's adjusted tax basis in a Note will be, in general, the
cost of the Note to the U.S. Holder. Such gain or loss will be capital gain or
loss and will be long-term capital gain or loss if, at the time of sale,
exchange or redemption, the Note has been held for more than one year. Under
current law, deductibility of capital losses is subject to certain limitations.
The net capital gains of non-corporate holders are taxed, under certain
circumstances, at a lower rate than ordinary income.
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INFORMATION REPORTING AND BACKUP WITHHOLDING
Payments of the interest on, or the proceeds from the sale, retirement or
other disposition of Notes are subject to information reporting unless the U.S.
Holder establishes an exemption.
Payments of the interest on, or the proceeds from the sale, retirement or
other disposition of Notes may be subject to "backup withholding" tax of 31% if
the U.S. Holder, among other things (1) fails to furnish his or her social
security number or other taxpayer identification number ("TIN") to the payor
responsible for backup withholding (for example, the U.S. Holder's securities
broker); (2) furnishes such payor an incorrect TIN; (3) fails to provide such
payor with a certified statement, signed under penalties of perjury, that the
TIN provided to the payor is correct and that the U.S. Holder is not subject to
backup withholding; or (4) fails to report properly interest and dividends on
his tax return. Backup withholding does not apply to certain payments made to
exempt recipients, such as corporations and tax-exempt organizations. Any
withheld amounts will be allowed as a refund or a credit against the U.S.
Holder's United States federal income tax liability, provided that certain
required information is furnished to the Internal Revenue Service (the "IRS").
TAX CONSEQUENCES TO NON-U.S. HOLDERS
PAYMENTS OF INTEREST
Subject to the discussion below concerning backup withholding, no
withholding of United States federal income tax will be required with respect to
the payment by the Company or any paying agent of principal or interest on a
Note held by a Non-U.S. Holder, provided that the beneficial owner (1) does not
actually or constructively own 10% or more of the total combined voting power of
all classes of stock of the Company entitled to vote within the meaning of
Section 871(h)(3) of the Code and the regulations thereunder; (2) is not a
controlled foreign corporation related, directly or indirectly, to the Company
through stock ownership; (3) is not a bank whose receipt of interest on a Note
is described in Section 881(c)(3)(A) of the Code; and (4) satisfies the
statement requirement, described generally below, set forth in Section 871(h)
and Section 881(c) of the Code and the regulations thereunder.
To satisfy the requirement referred to in clause (4) above, the beneficial
owner of a Note, or a financial institution holding the Note on behalf of such
owner, must provide, in accordance with specified procedures, the Company or its
paying agent with a statement to the effect that the beneficial owner is not a
U.S. person. These requirements will be met if (1) the beneficial owner provides
his name and address, and certifies, under penalties of perjury, that he is not
a U.S. person, which certification may be made on an IRS Form W-8 (or successor
form); or (2) a financial institution holding the Note on behalf of the
beneficial owner certifies, under penalties of perjury, that such statement has
been received by it and furnishes a paying agent with a copy thereof.
In the event that any of the above requirements are not satisfied, the
Company will nonetheless not withhold federal income tax on interest paid to a
Non-U.S. Holder if it receives either IRS Form 4224 or Form W-8 ECI (or, after
December 31, 2000, a Form W-8 ECI) from that Non-U.S. Holder, establishing that
such income is effectively connected with the conduct of a trade or business in
the United States, unless the Company has knowledge to the contrary. Interest
paid to a Non-U.S. Holder that is effectively connected with the conduct by the
holder of a trade or business in the United States is generally taxed at the
graduated rates that are applicable to U.S. persons. In the case of a Non-U.S.
Holder that is a corporation, such effectively connected income may also be
subject to the United States federal branch profits tax, which is generally
imposed on a foreign corporation on the deemed repatriation from the United
States of effectively connected earnings and profits, at a 30% rate, unless the
rate is reduced or eliminated by an applicable income tax treaty and the
Non-U.S. Holder is a qualified resident of the treaty country.
S-83
<PAGE>
SALE, EXCHANGE AND REDEMPTION OF THE NOTES
A Non-U.S. Holder will generally not be subject to United States federal
income tax with respect to gain recognized on a sale, exchange or redemption of
a Note unless (1) the gain is effectively connected with a trade or business of
the Non-U.S. Holder in the United States; (2) in the case of a Non-U.S. Holder
who is an individual and holds the Note as a capital asset, such holder is
present in the United States for 183 or more days in the taxable year of the
sale or other disposition and certain other conditions are met; or (3) the
Non-U.S. Holder is subject to tax pursuant to certain provisions of the Code
applicable to United States expatriates. However, any amount attributable to
accrued but unpaid interest on the Note will be treated in the same manner as
payments of interest made to such Non-U.S. Holder, as described above.
Gain derived by a Non-U.S. Holder from the sale or other disposition of a
Note that is effectively connected with the conduct by the holder of a trade or
business in the United States is generally taxed at the graduated rates that are
applicable to United States persons. In the case of a Non-U.S. Holder that is a
corporation, such effectively connected income may also be subject to the United
States branch profits tax. If any individual Non-U.S. Holder falls under clause
(2) of the preceding paragraph, such holder will be subject to a flat 30% tax on
the gain derived from the sale or other disposition, which may be offset by
certain United States source capital losses recognized within the same taxable
year as such sale or other disposition.
INFORMATION REPORTING AND BACKUP WITHHOLDING
No information reporting or backup withholding will be required with respect
to payments made by the Company or any paying agent to Non-U.S. Holders if a
statement described in clause (4) under "TAX CONSEQUENCES TO NON-U.S.
HOLDERS--PAYMENTS OF INTEREST" has been received and the payor does not have
actual knowledge that the beneficial owner is a U.S. person.
Information reporting and backup withholding will not apply to interest on a
Note paid or collected by a custodian, nominee, or agent on behalf of the
beneficial owner of such Note if such custodian, nominee, or agent has
documentary evidence in its records that the beneficial owner is not a U.S.
person and certain other conditions are met, or the beneficial owner otherwise
establishes an exemption.
Payments on the sale, exchange or other disposition of a Note made to or
through a foreign office of a broker generally will not be subject to backup
withholding. However, payments made by a broker that is a United States person,
a controlled foreign corporation for United States federal income tax purposes,
a foreign person 50 percent or more of whose gross income is effectively
connected with a United States trade or business for a specified three year
period, or (with respect to payments after December 31, 2000) a foreign
partnership with certain connections to the United States, will be subject to
information reporting unless the broker has in its records documentary evidence
that the beneficial owner is not a U.S. person and certain other conditions are
met, or the beneficial owner otherwise establishes an exemption. Backup
withholding may apply to any payment that such broker is required to report if
the broker has actual knowledge that the payee is a U.S. person. Payments made
to or through the United States office of a broker will be subject to
information reporting and backup withholding unless the Non-U.S. Holder
certifies, under penalties of perjury, that it is not a U.S. person or otherwise
establishes an exemption.
Non-U.S. Holders should consult their tax advisors regarding the application
of information reporting and backup withholding in their particular situations,
the availability of an exemption therefrom, and the procedures for obtaining
such an exemption, if available, as well as certain changes to these rules that
may apply to payments made after December 31, 2000. Any amounts withheld under
the backup withholding rules will be allowed as a refund or credit against the
Non-U.S. Holder's United States federal income tax liability, provided the
required information is furnished to the IRS.
S-84
<PAGE>
UNDERWRITING
Pursuant to an Underwriting Agreement (the "Underwriting Agreement"), the
underwriters named below (the "Underwriters") have agreed, severally and not
jointly, with the Company, subject to the satisfaction of certain conditions, to
purchase from us the aggregate principal amount of notes set forth opposite
their names below:
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
OF
UNDERWRITERS NOTES
- -------------------------------------------------------------------------- ------------------
<S> <C>
Lehman Brothers Inc.......................................................
Salomon Smith Barney Inc..................................................
Goldman, Sachs & Co.......................................................
Merrill Lynch, Pierce, Fenner & Smith Incorporated........................
Morgan Stanley & Co. Incorporated.........................................
ING Baring Furman Selz LLC................................................
Allen & Company Incorporated..............................................
BNY Capital Markets, Inc..................................................
------------------
Total..................................................................... $ 430,000,000
------------------
</TABLE>
The Underwriting Agreement provides that the obligation of each Underwriter
to pay for and accept delivery of the notes is subject to certain conditions,
including delivery of certain legal opinions by our and their counsel. Subject
to the terms and conditions of the Underwriting Agreement, the Underwriters are
committed to take and pay for all of the notes if any are taken. The closing of
the offering of the notes is conditioned upon the consummation of the Premier
Operations and SFTP tender offers.
We have been advised by the Underwriters that they propose to offer the
notes offered hereby initially at the public offering price set forth on the
cover page of this prospectus supplement and to certain selected dealers (who
may include the Underwriters) at such public offering price less a concession
not to exceed % of the aggregate principal amount of the notes. The
Underwriters or such selected dealers may reallow a commission to certain other
dealers not to exceed % of the aggregate principal amount of the notes. After
the initial public offering of the notes, the public offering price, the
concession to selected dealers and the reallowance to the other dealers may be
changed by the Underwriters.
The Underwriting Agreement provides that we will indemnify the Underwriters
against certain liabilities, including liabilities under the federal securities
acts, and will contribute to payments the Underwriters may be required to make
in respect hereof.
We do not intend to list the notes on any national securities exchange or to
seek the admission thereof to trading on the NASDAQ National Market System. We
have been advised by the Underwriters that following the completion of this
offering, the Underwriters currently intend to make a market in the notes.
However, the Underwriters are not obligated to do so. Any market making
activities with respect to the notes may be discontinued at any time without
notice. In addition, such market-making activity will be subject to the limits
imposed by the Securities Act of 1933, as amended, and the Securities Exchange
Act of 1934, as amended.
In connection with this offering, the Underwriters may engage in certain
transactions that stabilize the price of the notes. Such transactions may
consist of bids or purchases for the purpose of pegging, fixing or maintaining
the price of the notes. If the Underwriters create a short position in the notes
in connection with this offering (i.e., if they sell more notes than are set
forth on the cover page of this prospectus supplement) the Underwriters may
reduce that short position by purchasing notes in open market.
In general, purchases of a security for the purpose of stabilization or to
reduce a short position could cause the price of the security to be higher than
it might otherwise be in the absence of such purchases.
S-85
<PAGE>
Neither the Company nor any of the Underwriters makes any representation or
prediction as to the direction or magnitude of any effect that the transactions
described above may have on the price of the notes. In addition, neither the
Company nor any of the Underwriters makes any representation that anyone will
engage in such transactions or that such transactions, once commenced, will not
be discontinued without notice.
It is expected that delivery of the notes will be made against payment
therefor on or about the date specified in the last paragraph of the cover page
of this prospectus supplement.
Each of Lehman Brothers Inc., Salomon Smith Barney Inc., ING Baring Furman
Selz LLC and Allen & Company Incorporated has from time to time provided, and in
the future may provide, certain investment banking services to us and our
affiliates, for which they have received, and in the future would receive,
customary fees. In addition, each of Lehman Brothers Inc., Salomon Smith Barney
Inc. and ING Baring Furman Selz LLC acted as an underwriter of our 1996, 1997
and 1998 public offerings and received customary fees in connection therewith.
Furthermore, an affiliate of Lehman Brothers Inc. is a lender under each of our
two credit facilities. The Bank of New York, an affiliate of BNY Capital
Markets, Inc., serves as administrative agent and is a lender under each of our
two credit facilities. Further, The Bank of New York serves as trustee with
respect to the indentures governing certain of our and our subsidiaries
outstanding debt instruments and will serve as trustee with respect to the
indenture governing the notes offered hereby.
LEGAL MATTERS
The validity of the notes offered hereby and certain legal matters in
connection with this offering will be passed upon for us by Thelen Reid & Priest
LLP, New York, New York. The Underwriters are being represented by Cravath,
Swaine & Moore, New York, New York.
S-86
<PAGE>
PROSPECTUS
$1,000,000,000
[LOGO]
PREMIER PARKS INC.
DEBT SECURITIES, COMMON STOCK,
PREFERRED STOCK, WARRANTS, UNITS
---------------------
We will offer from time to time debt securities (including senior,
subordinated and convertible debt securities), common stock, preferred stock
(including convertible preferred stock), warrants or units. We will provide
specific terms of these securities in supplements to this prospectus. You should
read this prospectus and any prospectus supplement carefully before you invest.
------------------------
Our common stock is listed on the New York Stock Exchange under the trading
symbol "PKS". Any common stock sold pursuant to a prospectus supplement will be
listed on the New York Stock Exchange. We have not yet determined whether any of
the debt securities, preferred stock, warrants or units will be listed on any
exchange or the over-the-counter market. If we decide to seek listing of any
debt securities, preferred stock, warrants or units, the related prospectus
supplement will disclose such exchange or market.
------------------------
CONSIDER CAREFULLY THE RISK FACTORS BEGINNING ON PAGE 8 IN THIS PROSPECTUS.
---------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
------------------------
THE DATE OF THIS PROSPECTUS IS JUNE 18, 1999
<PAGE>
You should rely only on the information contained in or incorporated by
reference in this prospectus. We have not authorized anyone to provide you with
different information. We are not making an offer of these securities in any
state where the offer is not permitted. You should not assume that the
information contained in or incorporated by reference in this prospectus is
accurate as of any date other than the date on the front of this prospectus.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
About This Prospectus...................................................................................... 3
Where You Can Find More Information........................................................................ 3
Special Note on Forward-Looking Statements................................................................. 4
Premier Parks Inc.......................................................................................... 5
Risk Factors............................................................................................... 8
Consolidated Ratio of Earnings to Fixed Charges and Consolidated Ratio of Earnings to Combined Fixed
Charges and Preferred Stock Dividends.................................................................... 14
Use of Proceeds............................................................................................ 14
Unaudited Pro Forma Statement of Operations and Other Data................................................. 15
Description of Debt Securities............................................................................. 20
Description of Common Stock................................................................................ 26
Description of Preferred Stock............................................................................. 28
Description of Warrants.................................................................................... 33
Description of Units....................................................................................... 34
Plan of Distribution....................................................................................... 35
Legal Matters.............................................................................................. 36
Experts.................................................................................................... 36
</TABLE>
<PAGE>
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we filed with the
Securities and Exchange Commission utilizing a "shelf" registration process.
Under this shelf process, we may, over the next two years, sell any combination
of the securities described in this prospectus in one or more offerings up to a
total dollar amount of $1,000,000,000.
This prospectus provides you with a general description of the securities we
may offer. Each time we sell securities, we will provide a prospectus supplement
that will contain specific information about the terms of that offering. The
prospectus supplement may also add, update or change information contained in
this prospectus. You should read both this prospectus and any prospectus
supplement together with additional information described immediately below
under the heading "Where You Can Find More Information."
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the Securities and Exchange Commission. You may read and copy
any document we file at the SEC's public reference rooms in Washington, D.C.,
New York, New York and Chicago, Illinois. Please call the SEC at 1-800-SEC-0330
for further information on the public reference rooms. Our SEC filings are also
available to the public at the SEC's web site at http://www.sec.gov. Our Common
Stock is listed on the New York Stock Exchange. Our reports, proxy statements
and other information can also be inspected at the offices of the New York Stock
Exchange, 20 Broad Street, New York, New York 10005.
This prospectus is part of a Registration Statement on Form S-3 filed with
the SEC under the Securities Act of 1933. This prospectus omits some of the
information contained in the Registration Statement. You should refer to the
Registration Statement for further information with respect to Premier Parks
Inc. and the securities offered by this prospectus. Any statement contained in
this prospectus concerning the provisions of any document filed as an exhibit to
the Registration Statement or otherwise filed with the SEC is not necessarily
complete, and in each case you should refer to the copy of the document filed
for complete information.
The SEC allows us to "incorporate by reference" the information we file with
it, which means we can disclose important information to you by referring you to
those documents. The information incorporated by reference is considered to be a
part of this prospectus, and later information that we file with the SEC will
automatically update and supersede this information. We incorporate by reference
the documents listed below and any future filings made with the SEC under
Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 until
we sell all of the securities.
1. Our Annual Report on Form 10-K for the fiscal year ended December 31, 1998.
2. Our Quarterly Report on Form 10-Q for the fiscal quarter ended March 31,
1999.
3. The audited financial statements of Six Flags Entertainment Corporation as
of December 28, 1997 and December 29, 1996 and for each of the three years
in the period ended December 28, 1997 contained in our registration
statement on Form S-3 (Registration No. 333-46897) declared effective March
26, 1998.
4. The description of our Common Stock contained in our registration statement
on Form 8-A filed pursuant to Section 12 of the Securities Exchange Act.
5. The description of the Rights relating to the shares of Common Stock
contained in our registration statement on Form 8-A filed pursuant to
Section 12 of the Securities Exchange Act.
3
<PAGE>
You may request a copy of these filings, at no cost, by writing or
telephoning us at the following address:
Premier Parks Inc.
11501 Northeast Expressway
Oklahoma City, Oklahoma 73131
Attention: Richard Kipf, Corporate Secretary
Telephone: (405) 475-2500
LOONEY TUNES, BUGS BUNNY, DAFFY DUCK, TWEETY BIRD and YOSEMITE SAM are
copyrights and trademarks of Warner Bros., a division of Time Warner
Entertainment Company, L.P. ("TWE"). BATMAN AND SUPERMAN are copyrights and
trademarks of DC Comics, a partnership between TWE and a subsidiary of Time
Warner Inc.
SPECIAL NOTE ON FORWARD-LOOKING STATEMENTS
Some of the statements contained in or incorporated by reference in this
prospectus discuss our plans and strategies for our business or state other
forward-looking statements, as this term is defined in the Private Securities
Litigation Reform Act. The words "anticipates," "believes," "estimates,"
"expects," "plans," "intends" and similar expressions are intended to identify
these forward-looking statements, but are not the exclusive means of identifying
them. These forward-looking statements reflect the current views of our
management; however, various risks, uncertainties and contingencies could cause
our actual results, performance or achievements to differ materially from those
expressed in, or implied by, these statements, including the following:
- the success or failure of our efforts to implement our business strategy
- the other factors discussed under the heading "Risk Factors" and elsewhere
in this prospectus
We assume no obligation to update publicly any forward-looking statements,
whether as a result of new information, future events or otherwise. For a
discussion of important risks of an investment in our securities, including
factors that could cause actual results to differ materially from results
referred to in the forward-looking statements, see "Risk Factors." You should
carefully consider the information set forth under the caption "Risk Factors."
In light of these risks, uncertainties and assumptions, the forward-looking
events discussed in or incorporated by reference in this prospectus might not
occur.
4
<PAGE>
PREMIER PARKS INC.
GENERAL DESCRIPTION OF OUR BUSINESS
We are the largest regional theme park operator and the second largest theme
park company in the world, based on 1998 attendance of approximately 38.7
million. We operate 34 regional parks, located in geographically diverse markets
with concentrated populations across the United States, as well as in Mexico,
France, Belgium and The Netherlands. Our parks include 16 of the 50 most highly
attended theme parks in North America. Our theme parks serve 9 of the 10 largest
metropolitan areas in the United States. We estimate that approximately
two-thirds of the population of the continental United States live within a
150-mile radius of one of our theme parks.
Since 1992, we have made numerous acquisitions of theme parks and have
achieved significant internal growth. In April 1998, we acquired all of the Six
Flags parks, consisting of eight regional theme parks, as well as three
separately gated water parks and a wildlife safari park (each of which is
located near one of the Six Flags theme parks). In March 1998, we expanded our
operations internationally by acquiring the European-based Walibi theme park
operations, which included three parks located in France, two in Belgium and one
in The Netherlands. We have continued our expansion in 1999 by acquiring Reino
Aventura, a theme park in Mexico City, Mexico, White Water Atlanta, a water park
located near Atlanta, Georgia, and Splashtown, a water park located near
Houston, Texas. These 1998 and 1999 park acquisitions have greatly expanded our
operations, which previously consisted of nine regional theme parks (seven of
which include a water park component) and four water parks at locations across
the United States.
During the 1998 operating season, the U.S. parks we owned or operated drew,
on average, approximately 75% of their patrons from within a 100-mile radius,
with approximately 36% of visitors utilizing group and other pre-sold tickets
and approximately 23% utilizing season passes. Our parks are individually themed
and provide a complete family-oriented entertainment experience. Our theme parks
generally offer 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. Our theme parks offer more than 800 rides,
including over 90 roller coasters, making us the leading operator of thrill
rides in the industry.
Six Flags has operated regional theme parks under the Six Flags name for
over thirty years and has established a nationally recognized brand name. We
have worldwide ownership of the "Six Flags" brand name. To capitalize on this
name recognition, in the 1998 season we commenced use of the Six Flags name at
one of our other parks (Six Flags Kentucky Kingdom) and we are adding the name
to four additional parks for the 1999 season (Six Flags Elitch Gardens, Six
Flags America (formerly Adventure World), Six Flags Darien Lake and Six Flags
Marine World).
As part of our Six Flags acquisition, we obtained the exclusive license for
theme park usage throughout the United States (except the Las Vegas metropolitan
area) and Canada of certain Warner Bros. and DC Comics characters. These
characters include BUGS BUNNY, DAFFY DUCK, TWEETY BIRD, YOSEMITE SAM, BATMAN,
SUPERMAN and others. Since 1991, these characters have been used to market the
Six Flags parks and to provide visitors with an enhanced family entertainment
experience. Our license, which applies to all of our current U.S. theme parks,
as well as parks we may acquire that meet certain criteria, includes the right
to sell merchandise featuring the characters at our parks, and to use the
characters in our advertising, as walk-around characters, in theming for rides
and attractions and in retail outlets. Since the Six Flags acquisition, we have
continued making extensive use of these characters at the Six Flags parks and,
commencing in 1999, we will add the characters at many of our other U.S. parks.
We believe using these characters promotes increased attendance, supports higher
ticket prices, increases lengths-of-stay and enhances in-park spending.
5
<PAGE>
Since 1989, under our current management we have assumed control of 33 parks
and have achieved significant internal growth. For example, during 1998, the 13
parks which we controlled prior to the acquisitions of Six Flags, Walibi, Reino
Aventura, White Water Atlanta and Splashtown achieved same park growth in
attendance, revenue and park-level operating cash flow (representing all park
operating revenues and expenses without depreciation and amortization or
allocation of corporate overhead or interest expense) of 14.4%, 20.3% and 35.0%,
respectively, as compared to 1997.
We believe that our parks benefit from limited direct competition, since the
combination of a limited supply of real estate appropriate for theme park
development, high initial capital investment, long development lead-time and
zoning restrictions provides each of our parks with a significant degree of
protection from competitive new theme park openings. Based on our knowledge of
the development of other theme parks in the United States, we estimate that it
would cost at least $200 million and would take a minimum of two years to
construct a new regional theme park comparable to our largest parks.
Our senior and operating management team has extensive experience in the
theme park industry. Our nine senior executive officers have over 150 years
aggregate experience in the industry and our twenty-five general managers have
an aggregate of in excess of 440 years experience in the industry, including in
excess of 320 years at parks we operate.
STRATEGY
Our strategy for achieving continued growth includes pursuing growth
opportunities at our existing parks, expanding our parks, and making selective
acquisitions.
We believe there are substantial opportunities for continued growth at our
parks. We seek to increase revenue by increasing attendance and per capita
spending, while also maintaining strict control of operating expenses. The
primary elements we use to achieve these objectives are:
- adding rides and attractions and improving overall park quality
- adding the Six Flags brand name and the characters licensed from Warner
Bros. and DC Comics at selected parks
- enhancing marketing and sponsorship programs
- increasing group sales, season passes and other pre-sold tickets
- using ticket pricing strategies to maximize ticket revenues and park
utilization
- adding and enhancing restaurants and merchandise and other revenue outlets
- adding special events
Our approach is designed to exploit the operating leverage inherent in the
theme park business. Once parks achieve certain critical attendance levels,
operating cash flow margins increase because revenue growth through incremental
attendance gains and increased in-park spending is not offset by a comparable
increase in operating expenses, because a large portion of these expenses is
relatively fixed during any given year.
We have expanded several of our parks by adding complementary attractions,
such as campgrounds, lodging facilities, new water parks and concert venues, in
order to increase attendance and per capita spending. For example, for the 1998
season we constructed a hotel at our Darien Lake park to supplement the existing
campgrounds, and in 1998 we purchased campgrounds and a hotel adjacent to Geauga
Lake. Further, we are adding a water park to Six Flags St. Louis for the 1999
season and plan to add a water park to Six Flags Great Adventure (located
between New York City and Philadelphia) for the 2000 season. We own additional
acreage which is suitable for development at many of our parks. For example, we
own over
6
<PAGE>
1,500 undeveloped acres adjacent to Six Flags Great Adventure and 400 acres
adjacent to Six Flags America (formerly Adventure World) suitable for additional
complementary purposes.
The regional theme park industry is highly fragmented. We believe that there
are numerous acquisition opportunities, both in the U.S. and abroad, through
which we can expand our business. While we will continue to pursue acquisitions
of regional parks with annual attendance between 300,000 and 1.5 million, we
will also consider acquisitions of larger parks or park chains.
We believe we have a number of competitive advantages in acquiring theme
parks. Operators of destination or large regional park chains, other than Cedar
Fair L.P., have generally not been actively seeking to acquire parks in recent
years. Additionally, as a multi-park operator with a track record of
successfully acquiring, improving and repositioning parks, we believe we have
numerous competitive advantages over single-park operators in pursuing
acquisitions and improving the operating results at acquired parks. These
advantages include our ability to:
- exercise group purchasing power (for both operating expenses and capital
assets)
- use the Six Flags brand name and the characters licensed from Warner Bros.
and DC Comics
- attract greater sponsorship revenue and support from sponsors with
nationally-recognized brands and marketing partners
- achieve administrative economies of scale
- recruit and retain superior management
- use our access to capital markets as well as our common stock as all or a
portion of future acquisition consideration
ADDRESS
Our executive offices are located at 11501 Northeast Expressway, Oklahoma
City, Oklahoma 73131, (405) 475-2500 and at 122 East 42nd Street, New York, New
York 10168, (212) 599-4690.
7
<PAGE>
RISK FACTORS
YOU SHOULD CAREFULLY CONSIDER EACH OF THE FOLLOWING RISKS AND ALL OF THE
OTHER INFORMATION SET FORTH IN THIS PROSPECTUS BEFORE DECIDING TO INVEST IN OUR
SECURITIES. SOME OF THE FOLLOWING RISKS RELATE PRINCIPALLY TO OUR BUSINESS IN
GENERAL AND THE INDUSTRY IN WHICH WE OPERATE. OTHER RISKS RELATE PRINCIPALLY TO
THE SECURITIES MARKETS AND OWNERSHIP OF OUR SECURITIES. THE RISKS AND
UNCERTAINTIES DESCRIBED BELOW ARE NOT THE ONLY ONES FACING OUR COMPANY.
ADDITIONAL RISKS AND UNCERTAINTIES NOT PRESENTLY KNOWN TO US OR THAT WE
CURRENTLY BELIEVE TO BE IMMATERIAL MAY ALSO ADVERSELY AFFECT OUR BUSINESS. IF
ANY OF THE FOLLOWING RISKS AND UNCERTAINTIES DEVELOP INTO ACTUAL EVENTS, OUR
BUSINESS, FINANCIAL CONDITION OR RESULTS OF OPERATIONS COULD BE MATERIALLY
ADVERSELY AFFECTED.
SUBSTANTIAL LEVERAGE--OUR HIGH LEVEL OF INDEBTEDNESS AND OTHER MONETARY
OBLIGATIONS REQUIRE THAT A SIGNIFICANT PART OF OUR CASH FLOW BE USED TO PAY
INTEREST AND FUND THESE OTHER OBLIGATIONS.
We have a high level of debt. As of December 31, 1998, Premier and its
subsidiaries owed a combined total of approximately $2,060.9 million (including
$182.9 million carrying value of notes which we will repay on or prior to
December 15, 1999 with funds already deposited in escrow). We have to pay total
interest on our debt in 1999 of approximately $145.9 million ($25.9 million of
which we will pay with funds already deposited in escrow). We also have to pay
annual dividends of $23.3 million on our mandatorily convertible preferred
stock, although we can pay these dividends either in cash or shares of common
stock. At December 31, 1998, we had approximately $400.6 million of cash and
cash equivalents to help meet our obligations.
In addition to making interest payments on debt and dividend payments on our
preferred stock, we must satisfy the following obligations with respect to Six
Flags Over Georgia and Six Flags Over Texas:
- We must make annual distributions to our partners in such parks, which
will amount to approximately $47.3 million in 1999 (of which we will be
entitled to receive $14.1 million due to our current ownership interest in
such parks) with similar amounts (adjusted for changes in cost of living)
payable in future years.
- We must spend a minimum of approximately 6% of each park's annual revenues
over specified periods for capital expenditures, which in 1999 is expected
to be approximately $14.6 million.
- Each year we must offer to purchase partnership units from our partners in
such parks, which in 1999 would, if accepted in full, amount to
approximately $43.75 million.
We will use cash flow from the operations at these parks to satisfy the
first two obligations before we use any of our other funds. In addition, we have
deposited in escrow approximately $75.0 million which can be used to satisfy
these obligations. The obligations relating to Six Flags Over Georgia continue
until 2027 and those relating to Six Flags Over Texas continue until 2028.
Further, as a result of our purchase of Walibi, S.A., we have agreed to
invest approximately $38.0 million from 1999 through 2001 to expand the six
Walibi parks.
Our high level of debt and other obligations could have important negative
consequences to us and investors in the securities. These include:
- We may not be able to satisfy all of our obligations.
- We could have problems obtaining necessary financing in the future for
working capital, capital expenditures, debt service requirements,
refinancing or other purposes.
- We will have to use a significant part of our cash flow to make payments
on our debt, to pay the dividends on preferred stock (if we choose to pay
them in cash), and to satisfy the other obligations set forth above, which
may reduce the capital available for operations and expansion.
- Adverse economic or industry conditions may have more of a negative impact
on us.
We expect to be able to meet all of our obligations with existing cash, cash
generated from the parks, and our current lines of credit. We believe that funds
from these sources will be sufficient to meet our
8
<PAGE>
obligations and operating needs for the next several years and beyond. However,
our business is subject to factors beyond our control, such as economic
conditions, weather and competition. We cannot be sure that income from our
parks will be as high as we expect. We may have to refinance all or some of our
debt or secure new financing. We can not be sure that we will be able to obtain
such refinancing or new loans on reasonable terms or at all. We have agreed in
our loan agreements and the indentures covering certain of our outstanding notes
to limit the amount of additional debt we will incur.
If we can not meet all of our obligations, the market value and
marketability of our common stock will likely be adversely affected. In
addition, if we become the subject of bankruptcy proceedings, our creditors and
preferred stockholders will be entitled to our assets before any distributions
are made to common stockholders.
STRUCTURAL SUBORDINATION--OUR HOLDING COMPANY STRUCTURE SUBORDINATES OUR
CREDITORS INCLUDING HOLDERS OF OUR DEBT SECURITIES.
Premier Parks Inc. is a holding company with limited assets, and we conduct
substantially all of our operations through our subsidiaries. Almost all of our
income is from our subsidiaries. The securities offered by this prospectus will
be solely the obligations of Premier Parks Inc. and no other entity will have
any obligation, contingent or otherwise, to make any payments in respect of the
securities. Accordingly, we will be dependent on dividends and other
distributions from subsidiaries to generate the funds necessary to meet our
obligations, including the payment of principal and interest on the debt
securities.
The ability of our subsidiaries to pay dividends to us is subject to, among
other things, the terms of the various debt instruments already issued by our
subsidiaries and which may in the future be issued by them, as well as by
applicable law. In particular, in order for us to receive cash flow from our
original thirteen Premier parks, we must obtain the consent of our senior bank
lenders, and distributions of cash flow from our Six Flags parks is
significantly restricted by covenants in debt instruments.
Claims of holders of the debt securities will be effectively subordinated to
the notes and other credit facility obligations of our subsidiaries
(approximately $1,326.9 million at December 31, 1998, excluding $182.9 million
carrying value of notes which we will repay on or prior to December 15, 1999
with funds already deposited in escrow). Consequently, in the event of any
insolvency, liquidation, reorganization, dissolution or other winding up of our
subsidiaries, the ability of our creditors, including holders of the debt
securities, to be repaid will be subject to the prior claims of those entities'
creditors, including trade creditors.
RESTRICTIVE COVENANTS--OUR FINANCIAL AND OPERATING ACTIVITIES ARE LIMITED BY
RESTRICTIONS CONTAINED IN THE TERMS OF OUR PRIOR FINANCINGS.
The terms governing our and our subsidiaries' indebtedness impose
significant operating and financial restrictions on us. These restrictions may
significantly limit or prohibit us from engaging in certain transactions,
including the following:
- incurring additional indebtedness
- creating liens on our assets
- paying dividends
- selling assets
- engaging in mergers or acquisitions
- making investments
Our failure to comply with the terms and covenants in our and our
subsidiaries' indebtedness could lead to a default under the terms of those
documents, which would entitle the lenders to accelerate the indebtedness and
declare all amounts owed due and payable. Moreover, the instruments governing
our indebtedness contain cross-default provisions so that a default under any of
our indebtedness will be
9
<PAGE>
considered a default under all other indebtedness. If a cross-default occurs,
the maturity of almost all of our indebtedness could be accelerated and become
immediately due and payable. If that happens, we would not be able to satisfy
all of our debt obligations, which would have a substantial material adverse
effect on the value of our common stock and our ability to continue as a going
concern. We cannot assure you that we will be able to comply with these
restrictions in the future or that our compliance would not cause us to forego
opportunities that might otherwise be beneficial to us.
Further, certain of our subsidiaries are required to comply with specified
financial ratios and tests, including:
- interest expense
- fixed charges
- debt service
- total debt
We are currently in compliance with all of these financial covenants and
restrictions. However, events beyond our control, such as weather and economic,
financial and industry conditions, may affect our ability to continue meeting
these financial tests and ratios. The need to comply with these financial
covenants and restrictions could limit our ability to expand our business or
prevent us from borrowing more money when necessary.
MANAGEMENT OF GROWTH STRATEGY--WE MAY NOT BE ABLE TO MANAGE OUR RAPID GROWTH
OR INTEGRATE ACQUISITIONS.
We have experienced significant growth through acquisitions and will
continue to consider acquisition opportunities that arise. Such acquisitions
could place a future strain on our operations. Our ability to manage future
acquisitions will depend on our ability to evaluate new markets and investments,
monitor operations, control costs, maintain effective quality controls and
expand our internal management and technical and accounting systems.
To fund future acquisitions, we may need to borrow more money or assume the
debts of acquired companies. In taking on any debt, we must comply with the
restrictions described above with respect to our existing indebtedness. If we do
not receive necessary consents or waivers of such restrictions, we may be unable
to make additional acquisitions.
In the past, in certain circumstances we have used shares of our common
stock to fund a portion of the price of acquisitions. In the future, we may
again fund all or part of acquisitions by issuing new shares of our common stock
or other securities which can be converted into common stock. Issuing such
additional shares or convertible securities may cause a decrease in the per
share market price of our common stock.
If we do purchase additional businesses, it may negatively affect our
earnings, at least in the short term. Further, we cannot guarantee that any
future acquisition will generate the earnings or cash flow we expect. As with
any expansion, unexpected liabilities might arise and the planned benefits may
not be realized.
RISK OF ACCIDENTS--THERE IS THE RISK OF ACCIDENTS OCCURRING AT OUR PARKS
WHICH MAY REDUCE ATTENDANCE AND EARNINGS.
Almost all of our parks feature "thrill rides." While we carefully maintain
the safety of our rides, there are inherent risks involved with these
attractions. An accident or an injury at any of our parks may reduce attendance
at that and other parks, causing a drop in revenues.
On March 21, 1999, a raft capsized in the river rapids ride at Six Flags
Over Texas, resulting in one fatality and injuries to ten others. While the park
is covered by our existing insurance, the impact of this incident on our
financial position, operations or attendance at the park has not yet been
determined.
10
<PAGE>
We maintain insurance of the type and in amounts that we believe is
commercially reasonable and that are available to businesses in our industry. We
maintain multi-layered general liability policies that provide for excess
liability coverage of up to $100.0 million per occurrence. We have no
self-insured retention, except that the self-insurance portion of claims arising
out of occurrences prior to July 1, 1998 at our U.S. parks owned prior to the
Six Flags acquisition is $50,000 per occurrence.
FACTORS IMPACTING ATTENDANCE--LOCAL CONDITIONS, DISTURBANCES, EVENTS AND
NATURAL DISASTERS CAN ADVERSELY IMPACT PARK ATTENDANCE.
Lower attendance may also be caused by other local conditions or events. For
example:
- In 1994, fewer people attended our Six Flags Magic Mountain park because
of the Los Angeles County earthquake, and the earthquake also
significantly interrupted operation of the park.
- Six Flags Over Georgia suffered a drop in attendance in 1996 as a result
of the 1996 Summer Olympics.
In addition, since some of our parks are near major urban areas and appeal
to teenagers and young adults, there may be disturbances at one or more parks
which negatively affect our image. This may result in lower attendance at the
affected parks. We work with local police authorities on security-related
precautions to prevent such occurrences. We can make no assurance, however, that
these precautions will be able to prevent any such disturbances. We believe that
our ownership of many parks in different geographic locations reduces the
effects of such occurrences on our consolidated results.
ADVERSE WEATHER CONDITIONS--BAD WEATHER CAN ADVERSELY IMPACT ATTENDANCE AT
OUR PARKS; OUR OPERATIONS ARE SEASONAL.
Because most of the attractions at our theme parks are outdoors, attendance
at our parks is adversely affected by bad weather. The effects of bad weather on
attendance are more pronounced at our water parks. Bad weather and forecasts of
bad or mixed weather conditions can reduce the number of people who come to our
parks, which negatively affects our revenues. However, we believe that our
ownership of many parks in different geographic locations reduces the effect
that adverse weather can have on our consolidated results.
Our operations are seasonal. More than 90% of our annual park attendance
occurs during the spring, summer and early autumn months. By comparison, most of
our expenses for maintenance and adding new attractions are incurred when the
parks are closed in the mid to late autumn and winter months. For this reason, a
quarter to quarter comparison is not a good indication of our performance or of
how we will perform in the future. However, the market price of our common stock
may still fluctuate significantly in response to changes in our quarterly
results of operations.
COMPETITION--THE THEME PARK INDUSTRY COMPETES WITH NUMEROUS ENTERTAINMENT
ALTERNATIVES.
Our parks compete with other theme, water and amusement parks and with other
types of recreational facilities and forms of entertainment, including movies,
sports attractions and vacation travel. Our business is also subject to factors
that affect the recreation and leisure industries generally, such as general
economic conditions and changes in consumer spending habits. The principal
competitive factors of a park include location, price, the uniqueness and
perceived quality of the rides and attractions, the atmosphere and cleanliness
of the park and the quality of its food and entertainment.
KEY PERSONNEL--THE LOSS OF KEY PERSONNEL COULD HURT OUR OPERATIONS.
Our success depends upon the continuing contributions of our executive
officers and other key operating personnel, including Kieran E. Burke, our
Chairman and Chief Executive Officer, and Gary Story, our President and Chief
Operating Officer. The complete or partial loss of their services or the
services of other key personnel could adversely affect our business. Although we
have entered into employment agreements with Mr. Burke and Mr. Story (which end
on December 31, 1999), we cannot be
11
<PAGE>
certain that we will be able to retain their services during that or any
extension period. If we were to lose the services of both Messrs. Burke and
Story and are unable to replace them within a specified period of time we would
be in default under our credit facilities.
INTERNATIONAL OPERATIONS--OUR INTERNATIONAL OPERATIONS HAVE ADDITIONAL
RISKS.
Through our Walibi parks, we conduct some of our operations in Europe. We
also may make further acquisitions of parks in other international locations.
There are risks to which we are subject that are inherent in operating abroad.
Some examples of these risks can include:
- problems in staffing and managing foreign operations
- fluctuations in currency exchange rates
- political risks
- unexpected changes in regulatory requirements
- potentially detrimental tax consequences in many locations with different
tax laws
SHARES ELIGIBLE FOR FUTURE SALE--THE PRICE OF OUR COMMON STOCK MAY DECLINE
DUE TO POSSIBLE SALES OF SHARES.
As of March 1, 1999, there were 76,513,796 shares of our common stock
outstanding, all of which are transferable without restriction or further
registration under the Securities Act of 1933, except for any shares held by our
affiliates. In addition, we have reserved and registered under the Securities
Act approximately 5,000,000 shares for currently outstanding management-held
options, 5,550,000 shares for future option issuances, 9,550,000 shares issuable
pursuant to our mandatorily convertible preferred stock, and approximately
70,000 shares for currently outstanding consultant-held options.
Our officers, directors and their affiliates together hold approximately
17.9 million shares of common stock (including shares issuable upon exercise of
outstanding options and warrants and shares of outstanding restricted stock, in
each case subject to vesting). They can sell these securities in the public
market (subject, in certain cases, to the resale conditions imposed by Rule
144). In addition, other stockholders who own approximately 7.5 million shares
of common stock have the right to require us to register their shares for sale
under the Securities Act. If future revenues at Kentucky Kingdom and Walibi
reach certain levels, we are required to issue additional shares of common
stock. In that connection in 1999, as a result of 1998 revenue levels at that
park, we issued approximately 211,065 shares of common stock to the former
owners of Kentucky Kingdom (excluding certain escrowed shares). We may also
issue additional shares of common stock to pay quarterly dividend payments on
our mandatorily convertible preferred stock (which dividends total $46.6 million
over two years). The sale or expectation of sales of a large number of shares of
common stock or securities convertible into common stock in the public market at
any time after the date of this prospectus might negatively affect the market
price of the common stock.
ANTI-TAKEOVER PROVISIONS--ANTI-TAKEOVER PROVISIONS LIMIT THE ABILITY OF
STOCKHOLDERS TO EFFECT A CHANGE IN CONTROL OF PREMIER.
Certain provisions in our Certificate of Incorporation and in our debt
instruments and those of our subsidiaries may have the effect of deterring
transactions involving a change in control of Premier, including transactions in
which stockholders might receive a premium for their shares.
Our Certificate of Incorporation provides for the issuance of up to
5,000,000 shares of preferred stock with such designations, rights and
preferences as may be determined from time to time by our board of directors.
The authorization of preferred shares empowers our board of directors, without
further stockholder approval, to issue preferred shares with dividend,
liquidation, conversion, voting or other rights which could adversely affect the
voting power or other rights of the holders of our common stock. If issued, the
preferred stock could be used to discourage, delay or prevent a change of
control of Premier.
12
<PAGE>
We have no current plans to issue any preferred stock, except to the extent we
may determine to do so under this prospectus.
In addition, we have a rights plan which gives each holder of our common
stock the right to purchase a share of junior preferred stock in certain events
which would constitute a change of control. The rights plan is designed to deter
third parties from attempting to take control of Premier.
In addition, we are subject to the anti-takeover provisions of the Delaware
General Corporation Law, which could have the effect of delaying or preventing a
change of control of Premier. Furthermore, upon a change of control, the holders
of substantially all of our outstanding indebtedness are entitled at their
option to be repaid in cash. These provisions may have the effect of delaying or
preventing changes in control or management of Premier. All of these factors
could materially adversely affect the price of our common stock.
As part of the Six Flags acquisition, we obtained the exclusive right to use
certain Warner Bros. and DC Comics characters in our theme parks in the United
States (except in the Las Vegas metropolitan area) and Canada. Warner Bros. can
terminate this license under certain circumstances, including the acquisition of
Premier by persons engaged in the movie or television industries. This could
deter certain parties from seeking to acquire Premier.
DIVIDENDS--WE ARE NOT LIKELY TO PAY CASH DIVIDENDS ON OUR COMMON STOCK.
We have not paid dividends on our common stock during the last three years,
and we do not anticipate paying any cash dividends on such stock in the
foreseeable future. Our ability to pay cash dividends is restricted under the
indentures relating to our notes.
YEAR 2000 ISSUE--OUR OPERATIONS COULD BE ADVERSELY AFFECTED BY DATA
PROCESSING FAILURES AFTER DECEMBER 31, 1999.
Many computer systems, software applications and other electronics currently
in use worldwide are programmed to accept only two digits in the portion of the
date field which designates the year. The "Year 2000 problem" arises because
these systems and products cannot properly distinguish between a year that
begins with "20" and the familiar "19." If these systems and products are not
modified or replaced, many will fail or create erroneous results and/or may
cause other related systems to fail. Our failure to correct a material Year 2000
problem could result in an interruption in or failure of certain of our normal
business operations or activities. This could result in a system failure or
miscalculations causing disruptions of operations, including, but not limited
to, a temporary inability to process transactions.
Our Year 2000 Project (the "Project") is in process. We have undertaken
various initiatives intended to ensure that our computer equipment and software
will function properly with respect to dates in the Year 2000 and thereafter. In
planning and developing the Project, we have considered both our information
technology ("IT") and our non-IT systems. The term "computer equipment and
software" includes systems that are commonly thought of as IT systems, including
accounting, data processing, telephone systems, scanning equipment and other
miscellaneous systems. Those items not to be considered as IT systems include
alarm systems, fax machines, monitors for park operations or other miscellaneous
systems. Both IT and non-IT systems may contain embedded technology, which
complicates our Year 2000 identification, assessment, remediation and testing
efforts. Based upon our identification and assessment efforts to date, we are in
the process of replacing the computer equipment and upgrading the software it
currently uses to become Year 2000 complaint. In addition, in the ordinary
course of replacing computer equipment and software, we plan to obtain
replacements that are in compliance with Year 2000.
We have initiated correspondence with our significant vendors and service
providers to determine the extent such entries are vulnerable to Year 2000
issues and whether the products and services purchased from such entities are
Year 2000 compliant. We expect to receive a favorable response from such third
parties and it is anticipated that their significant Year 2000 issues will be
addressed on a timely basis.
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<PAGE>
We anticipate that the Project will be completed in November 1999.
As noted above, we are in the process of replacing certain computer
equipment and software because of the Year 2000 issue. We estimate that the
total cost of such replacements will be no more than $1.5 million. Substantially
all of the personnel being used on the Project are our employees. Therefore, the
labor costs of our Year 2000 identification, assessment, remediation and testing
efforts, as well as currently anticipated labor costs to be incurred by with
respect to Year 2000 issues of third parties, are expected to be less than $0.8
million.
We have not yet developed a most reasonably likely worst case scenario with
respect to Year 2000 issues, but instead have focused our efforts on reducing
uncertainties through the review described above. We have not developed Year
2000 contingency plans other than as described above, and do not expect to do so
unless merited by the results of our continuing review.
We presently do not expect to incur significant operational problems due to
the Year 2000 issue. However, if all Year 2000 issues are not properly and
timely identified, assessed, fixed and tested, there can be no assurance that
the Year 2000 issue will not materially impact our results of operations or
adversely affect our relationships with vendors or others. Additionally, there
can be no assurance that the Year 2000 issues of other entities will not have a
material impact on our systems or results of operations.
CONSOLIDATED RATIO OF EARNINGS TO FIXED CHARGES AND
CONSOLIDATED RATIO OF EARNINGS TO COMBINED
FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
The following table sets forth our consolidated ratio of earnings to fixed
charges and our consolidated ratio of earnings to combined fixed charges and
preferred stock dividends for the periods indicated.
<TABLE>
<CAPTION>
YEARS ENDED
DECEMBER 31,
--------------------------------------------
<S> <C> <C> <C> <C>
1998 1997 1996 1995
--------- --------- --------- -----
Ratio of earnings to fixed charges............................................. 1.5x 2.3x 1.3x --
Ratio of earnings to combined fixed charges.................................... 1.2x 2.3x 1.2x --
and preferred stock dividends
<CAPTION>
<S> <C>
1994
---------
Ratio of earnings to fixed charges............................................. 1.1x
Ratio of earnings to combined fixed charges.................................... 1.1x
and preferred stock dividends
</TABLE>
For the purpose of calculating the consolidated ratios of earnings to fixed
charges and of earnings to combined fixed charges and preferred stock dividends,
earnings consist of income (loss) before extraordinary loss and before income
taxes, minority interest in earnings, equity in operations of theme park
partnerships not distributed to Premier and fixed charges. Fixed charges consist
of interest expense, amortization of deferred financing costs and discount or
premium relating to indebtedness and the portion (approximately one-third) of
rental expense that management believes represents the interest component of
rent expense. Preferred Stock dividend requirements have been increased to an
amount representing the before-tax earnings which would have been required to
cover such dividend requirements. For the year ended December 31, 1995,
Premier's earnings were insufficient to cover fixed charges by $1,738,000 and
were insufficient to cover combined fixed charges and preferred stock dividends
by $2,620,000.
USE OF PROCEEDS
We will use the net proceeds from the sale of the securities for our general
corporate purposes, which may include, repaying indebtedness, making additions
to our working capital, funding future acquisitions or for any other purpose we
describe in the applicable prospectus supplement.
14
<PAGE>
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS AND OTHER DATA
The following unaudited pro forma statement of operations and other data of
Premier is based upon and should be read in conjunction with the historical
financial statements of Premier and Six Flags, which are incorporated herein by
reference.
The unaudited pro forma statement of operations and other data for the year
ended December 31, 1998 gives effect to the acquisitions of Six Flags and Walibi
and the financings associated with the transactions (including the issuance of
mandatorily convertible preferred stock and common stock) as if they had
occurred on January 1, 1998 (except in the case of Six Flags, which was treated
as if it occurred December 29, 1997, the first day of the 1998 fiscal year of
Six Flags).
The pro forma statement of operations and other data is for informational
purposes only, has been prepared based upon estimates and assumptions deemed by
Premier to be appropriate and does not purport to be indicative of the results
of operations which would actually have been attained if the acquisitions had
occurred as presented in the statement or which could be achieved in the future.
15
<PAGE>
PREMIER PARKS INC.
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS AND OTHER DATA
YEAR ENDED DECEMBER 31, 1998
(ALL AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
HISTORICAL
SIX FLAGS FOR HISTORICAL
PERIOD PRIOR WALIBI FOR
TO PERIOD PRIOR TO
HISTORICAL APRIL 1, MARCH 26, COMBINED PRO FORMA COMPANY
PREMIER 1998(1) 1998(2) COMPANY ADJUSTMENTS PRO FORMA
---------- -------------- --------------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
REVENUE:
Theme park admissions....... $ 423,461 $ 15,047 $ 883 $ 439,391 $ -- $ 439,391
Theme park food, merchandise
and other................. 390,166 8,356 624 399,146 -- 399,146
---------- -------------- ------- ----------- ----------- ----------
Total revenue............. 813,627 23,403 1,507 838,537 -- 838,537
---------- -------------- ------- ----------- ----------- ----------
OPERATING COSTS AND EXPENSES:
Operating expenses.......... 297,266 56,307 4,626 358,199 (10,628)(3) 347,571
Selling, general and
administrative............ 126,985 54,711 3,407 185,103 (35,433)(3) 149,670
Noncash compensation........ 6,362 -- -- 6,362 -- 6,362
Costs of products sold...... 103,051 2,757 248 106,056 -- 106,056
Depreciation and
amortization.............. 109,841 17,629 3,214 130,684 6,440(4) 137,124
---------- -------------- ------- ----------- ----------- ----------
Total operating costs and
expenses................ 643,505 131,404 11,495 786,404 (39,621) 746,783
---------- -------------- ------- ----------- ----------- ----------
Income (loss) from
operations................ 170,122 (108,001) (9,988) 52,133 39,621 91,754
---------- -------------- ------- ----------- ----------- ----------
OTHER INCOME (EXPENSE):
Interest expense, net....... (115,849) (22,508) (889) (139,246) (16,655)(5) (155,901)
Equity in operations of
theme park partnerships... 24,054 (13,152) -- 10,902 -- 10,902
Minority interest........... (960) -- -- (960) -- (960)
Other expense............... (1,023) -- (1) (1,024) -- (1,024)
---------- -------------- ------- ----------- ----------- ----------
Total other income
(expense)............... (93,778) (35,660) (890) (130,328) (16,655) (146,983)
---------- -------------- ------- ----------- ----------- ----------
Income (loss) before income
taxes..................... 76,344 (143,661) (10,878) (78,195) 22,966 (55,229)
Income tax expense
(benefit)................. 40,716 -- (4,786) 35,930 (38,038)(6) (2,108)
---------- -------------- ------- ----------- ----------- ----------
Income (loss) before
extraordinary loss........ $ 35,628 $ (143,661) $ (6,092) $(114,125) $ 61,004 $ (53,121)
---------- -------------- ------- ----------- ----------- ----------
---------- -------------- ------- ----------- ----------- ----------
Net income (loss) applicable
to common stock........... $ 18,162 (7) (7) (7) $ (76,409)(7)
---------- ----------
---------- ----------
Net income (loss) per common
share..................... $ 0.27 (7) (7) (7) $ (1.01)(7)
---------- ----------
---------- ----------
Weighted average shares..... 66,430,000 75,617,000(7)
---------- ----------
---------- ----------
OTHER DATA:
EBITDA(8)..................... $ 286,325 $ (90,372) $ (6,774) $ 189,179 $ 46,061 $ 235,240
---------- -------------- ------- ----------- ----------- ----------
---------- -------------- ------- ----------- ----------- ----------
Adjusted EBITDA(9)............ $ 321,733 $ (102,077) $ (6,774) $ 212,882 $ 46,061 $ 258,943
---------- -------------- ------- ----------- ----------- ----------
---------- -------------- ------- ----------- ----------- ----------
Net cash provided by (used in)
operating activities........ $ 119,010 $ (54,779) $ (7,663) $ 56,568 $ 38,478 $ 95,046
---------- -------------- ------- ----------- ----------- ----------
---------- -------------- ------- ----------- ----------- ----------
</TABLE>
16
<PAGE>
PREMIER PARKS INC.
NOTES TO UNAUDITED PRO FORMA STATEMENT OF OPERATIONS AND OTHER DATA
YEAR ENDED DECEMBER 31, 1998
(ALL AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)
BASIS OF PRESENTATION
The accompanying unaudited pro forma statement of operations and other data
for the year ended December 31, 1998 has been prepared based upon certain pro
forma adjustments to historical financial information of Premier and the
pre-acquisition historical financial information of Six Flags and Walibi.
Premier acquired Six Flags on April 1, 1998 and Walibi on March 26, 1998.
The unaudited pro forma statement of operations and other data for the year
ended December 31, 1998 has been prepared assuming the acquisitions and the
related financings (including the issuance of mandatorily convertible preferred
stock and common stock) occurred on January 1, 1998 (except in the case of the
acquisition of Six Flags, which was treated as if it was acquired on December
29, 1997, the first day of the 1998 fiscal year of Six Flags). The unaudited pro
forma statement of operations should be read in conjunction with the financial
statements of Premier, which are incorporated herein by reference.
PRO FORMA ADJUSTMENTS
1. The results of Six Flags included herein represent the operations of Six
Flags for the period from December 29, 1997 to March 31, 1998, prior to
Premier's acquisition of Six Flags.
2. The results of Walibi included herein represent the operations of Walibi for
the period from January 1, 1998 to March 26, 1998, prior to Premier's
acquisition of Walibi. The results of Walibi are in Belgium Francs ("BEF")
and are accounted for using generally accepted accounting principles of
Belgium. The following table reflects the adjustment of the Walibi statement
of operations for the period January 1, 1998 to March 26, 1998 to conform to
U.S. generally accepted accounting principles and U.S. dollars (using an
average exchange rate for the period of 37.500 BEF to US$1):
<TABLE>
<CAPTION>
AMOUNT ACCOUNTING ADJUSTED AMOUNT
(IN BEF) ADJUSTMENTS AMOUNT (IN US $)
---------- ----------- ---------- ----------
<S> <C> <C> <C> <C>
Revenue:
Theme park admissions........................................... 33,122 -- 33,122 $ 883
Theme park food, merchandise and other.......................... 23,296 112 23,408 624
---------- ----------- ---------- ----------
Total revenue................................................... 56,418 112 56,530 1,507
---------- ----------- ---------- ----------
Operating costs and expenses:
Operating expenses.............................................. 184,288 (10,800) 173,488 4,626
Selling, general and administrative............................. 127,774 -- 127,774 3,407
Costs of products sold.......................................... 9,310 -- 9,310 248
Depreciation and amortization................................... 120,678 (149) 120,529 3,214
---------- ----------- ---------- ----------
Total operating costs and expenses.............................. 442,050 (10,949) 431,101 11,495
---------- ----------- ---------- ----------
Income (loss) from operations................................... (385,632) 11,061 (374,571) (9,988)
---------- ----------- ---------- ----------
Other income (expense):
Interest expense, net........................................... (33,324) -- (33,324) (889)
Other expense................................................... (14) -- (14) (1)
---------- ----------- ---------- ----------
Total other expense............................................. (33,338) -- (33,338) (890)
---------- ----------- ---------- ----------
Income (loss) before taxes...................................... (418,970) 11,061 (407,909) (10,878)
Income tax expense (benefit).................................... (175,066) (4,398) (179,464) (4,786)
---------- ----------- ---------- ----------
Net income (loss)............................................... (243,904) 15,459 (228,445) $ (6,092)
---------- ----------- ---------- ----------
---------- ----------- ---------- ----------
</TABLE>
17
<PAGE>
PREMIER PARKS INC.
NOTES TO UNAUDITED PRO FORMA STATEMENT OF OPERATIONS AND OTHER DATA
YEAR ENDED DECEMBER 31, 1998
(ALL AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)
3. Adjustments reflect the elimination of compensation expense associated with
stock option payments resulting from the acquisition of Six Flags that were
recognized during the pre-acquisition period from December 28, 1997 to March
31, 1998.
4. Adjustment reflects the elimination of historical depreciation and
amortization of $20,819 for Six Flags and Walibi and the inclusion of
estimated pro forma depreciation of $14,647 and amortization of $12,612.
5. Adjustment reflects additional interest expense associated with debt
incurred by Premier in connection with the acquisitions, net of (a) the
elimination of the historical interest expense associated with Premier and
Six Flags credit facilities previously outstanding and the long term debt of
Walibi, and (b) the amortization of the fair value adjustments for Six Flags
long-term debt assumed as a result of the Six Flags acquisition. Issuance
costs associated with the borrowings are being amortized over their
respective terms. The components of the adjustments are as follows:
<TABLE>
<S> <C>
Interest expense on Premier credit facility for the period prior
to April 1, 1998 (at an 8.0% interest rate)..................... $ (4,400)
Interest expense on Six Flags credit facility for the period prior
to April 1, 1998 (at an 8.0% interest rate)..................... (8,200)
Interest expense on the Six Flags zero coupon notes for the period
prior to April 1, 1998 (at a 6.5% interest rate)................ (2,600)
Interest expense on the Six Flags Theme Parks Inc. 12 1/4% senior
subordinated notes (at a 10.3% interest rate)................... (7,337)
Interest expense on the Six Flags 8 7/8% senior notes for the
period prior to April 1, 1998 (at an 8 7/8% interest rate)...... (3,772)
Interest expense on Premier 10% senior discount notes prior to
April 1, 1998 (at a 10% interest rate).......................... (6,293)
Interest expense on Premier 9 1/4% senior notes prior to April 1,
1998 (at a 9 1/4% interest rate)................................ (6,475)
Interest expense from the amortization of issuance costs.......... (1,570)
Interest expense from commitment fees on Premier and Six Flags
credit facilities............................................... (773)
Interest expense on Walibi indebtedness........................... (1,570)
Elimination of historical interest expense--Premier............... 2,785
Elimination of historical interest expense--Six Flags............. 22,661
Elimination of historical interest expense--Walibi................ 889
---------
$ (16,655)
---------
---------
</TABLE>
6. Adjustment reflects the application of income taxes to the pro forma
adjustments and to the pre-acquisition operations of Six Flags and Walibi,
after consideration of permanent differences, at a rate of 38%.
7. Net income (loss) applicable to common stockholders is adjusted to reflect
$5,822 of additional dividends payable to the holders of Premier's 7 1/2%
mandatorily convertible preferred stock for the period prior to issuance on
April 1, 1998.
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<PAGE>
PREMIER PARKS INC.
NOTES TO UNAUDITED PRO FORMA STATEMENT OF OPERATIONS AND OTHER DATA
YEAR ENDED DECEMBER 31, 1998
(ALL AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)
Net income (loss) per common share and weighted average common share data
are not presented for Six Flags and Walibi as the information is not
meaningful.
The calculation of pro forma weighted average shares outstanding for the
year ended December 31, 1998 is as follows:
<TABLE>
<S> <C>
Pro forma weighted average number of common shares outstanding
excluding Premier's April 1, 1998 common stock offering and
the Walibi acquisition........................................ 38,020,000
Common shares issued in Premier's April 1, 1998 common stock
offering, as if issued on January 1, 1998..................... 36,800,000
Common shares issued as partial consideration for the Walibi
acquisition, as if issued on January 1, 1998.................. 797,000
---------
Pro forma weighted average number of common shares
outstanding................................................... 75,617,000
---------
---------
</TABLE>
8. EBITDA is defined as earnings before interest expense, net, income tax
expense (benefit), depreciation and amortization, equity in operations of
theme park partnerships, minority interest, and noncash compensation.
Premier has included information concerning EBITDA because it is used by
certain investors as a measure of Premier's ability to service and/or incur
debt. EBITDA is not required by GAAP and should not be considered in
isolation or as an alternative to net income, net cash provided by
operating, investing and financing activities or other financial data
prepared in accordance with GAAP or as an indicator of Premier's operating
performance. This information should be read in conjunction with the
Statement of Cash Flows contained in the financial statements incorporated
by reference.
9. Adjusted EBITDA includes Premier's share of the EBITDA from the three
partnership parks which are not consolidated--Six Flags Over Texas, Six
Flags Over Georgia and Six Flags Marine World.
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<PAGE>
DESCRIPTION OF DEBT SECURITIES
This section describes the general terms and provisions of the debt
securities (the "Debt Securities"). The prospectus supplement will describe the
specific terms of the Debt Securities offered through that prospectus supplement
and any differences in such Debt Securities from the terms described below. The
Debt Securities will be issued under an indenture (the "Indenture") between
Premier and one or more commercial banks to be selected as trustees
(collectively, the "Trustee").
We have summarized certain terms and provisions of the Indenture. The
summary is not complete. If we refer to particular provisions of the Indenture,
the provisions, including definitions of certain terms, are incorporated by
reference as a part of this summary. A copy of the form of Indenture is filed as
an exhibit to the registration statement of which this prospectus is a part, and
is incorporated by reference. You should refer to the Indenture for the
provisions which may be important to you. The Indenture is subject to and
governed by the Trust Indenture Act of 1939, as amended (the "Trust Indenture
Act").
GENERAL
The Indenture will not limit the amount of Debt Securities which we may
issue. We may issue Debt Securities up to an aggregate principal amount as we
may authorize from time to time. The applicable prospectus supplement will
describe the terms of any Debt Securities being offered, including:
- the designation, aggregate principal amount and authorized denominations;
- the maturity date;
- the interest rate, if any, and the method for calculating the interest
rate;
- the interest payment dates and the record dates for the interest payments;
- any mandatory or optional redemption terms or prepayment, conversion,
sinking fund or exchangeability or convertability provisions;
- the place where principal and interest will be payable;
- if other than denominations of $1,000 or multiples of $1,000, the
denominations the Debt Securities will be issued in;
- whether the Debt Securities will be issued in the form of Global
Securities (as defined below) or certificates;
- additional provisions, if any, relating to the defeasance of the Debt
Securities;
- the currency or currencies, if other than the currency of the United
States, in which principal and interest will be payable;
- whether the Debt Securities will be issuable in registered form or bearer
form ("Bearer Securities") or both and, if Bearer Securities are issuable,
any restrictions applicable to the exchange of one form for another and
the offer, sale and delivery of Bearer Securities;
- any applicable United States federal income tax consequences;
- the dates on which premium, if any, will be payable;
- the right, if any, of Premier to defer payment of interest and the maximum
length of such deferral period;
- any listing on a securities exchange;
- the initial public offering price; and
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<PAGE>
- other specific terms, including any additional events of default or
covenants provided for with respect to the Debt Securities.
As described in each prospectus supplement relating to any particular series
of Debt Securities being offered, the Indenture may contain covenants limiting:
- the incurrence of additional debt (including guarantees) by Premier and
certain of its subsidiaries and affiliates;
- the making of certain payments by Premier and certain of its subsidiaries
and affiliates;
- business activities of Premier and certain of its subsidiaries and
affiliates;
- the issuance of preferred stock of certain of its subsidiaries and
affiliates;
- certain asset dispositions;
- certain transactions with affiliates;
- a change of control of Premier;
- the incurrence of liens; and
- certain mergers and consolidations involving Premier and its subsidiaries.
BOOK-ENTRY SYSTEM
Unless otherwise specified in a prospectus supplement, Debt Securities of
any series may be issued under a book-entry system in the form of one or more
global securities (each, a "Global Security"). Each Global Security will be
deposited with, or on behalf of, a depositary, which will be The Depository
Trust Company, New York, New York (the "Depositary"). The Global Securities will
be registered in the name of the Depositary or its nominee.
The Depositary has advised Premier that it is a limited purpose trust
company organized under the laws of the State of New York, a "banking
organization" within the meaning of the New York banking law, a member of the
Federal Reserve System, a "clearing corporation" within the meaning of the New
York Uniform Commercial Code, and a "clearing agency" registered pursuant to the
provisions of Section 17A of the Securities Exchange Act of 1934. The Depositary
was created to hold securities of its participants ("Direct Participants") and
to facilitate the clearance and settlement of securities transactions among its
Direct Participants through electronic book-entry changes in accounts of the
Direct Participants, thereby eliminating the need for physical movement of
securities certificates. The Depositary's Direct Participants include securities
brokers and dealers, banks, trust companies, clearing corporations and certain
other organizations, a number of which (and/or their representatives) own the
Depositary, together with the New York Stock Exchange, Inc., the American Stock
Exchange, Inc. and the National Association of Securities Dealers, Inc. Access
to the Depositary's book-entry system is also available to others, such as
banks, brokers, dealers and trust companies that clear through or maintain a
custodial relationship with a Direct Participant, either directly or indirectly
("Indirect Participants" and, together with Direct Participants, the
"Participants").
When a Global Security is issued in registered form, the Depositary will
credit, on its book-entry registration and transfer system, the respective
principal amounts of the Debt Securities represented by each Global Security to
the accounts of Direct Participants. The underwriters, dealers or agents, if
any, will designate the accounts to be credited, or Premier, if Debt Securities
are offered and sold directly by Premier. Ownership of beneficial interests in
the Global Security will be limited to Participants or persons that may hold
interests through Participants. Ownership of beneficial interests in the Global
Security will be shown on, and the transfer of that ownership interest will be
effected only through, records maintained by Participants. The laws of some
jurisdictions may require that certain purchasers of securities take
21
<PAGE>
physical delivery of such securities in definitive form, which may impair the
ability to transfer beneficial interests in a Global Security.
So long as the Depositary or its nominee is the owner of record of a Global
Security, the Depositary or its nominee will be considered the sole owner or
holder of the Debt Securities represented by such Global Security for all
purposes under the Indenture. Except as set forth below, owners of beneficial
interests in a Global Security will not be entitled to have the Debt Security
represented by a Global Security registered in their names, and will not receive
or be entitled to receive physical delivery of Debt Securities in definitive
form and will not be considered the owners or holders of the Debt Securities.
Accordingly, each person owning a beneficial interest in a Global Security must
rely on the procedures of the Depositary. Beneficial owners must rely on the
procedures of the Participant through which it owns its interest in order to
exercise any rights of a holder of record of the Debt Securities. Premier
understands that under existing industry practices, if Premier requests any
action of holders or if any owner of a beneficial interest in a Global Security
desires to give or take any action which a holder is entitled to give or take
under the Indenture, the Depositary would authorize the Direct Participants
holding the relevant beneficial interests to give or take such action, and the
Direct Participants would in turn authorize beneficial owners owning through
them to give or take such action or would otherwise act upon the instruction of
beneficial owners holding through them.
Payments of principal of, premium, if any, and interest on Debt Securities
represented by a Global Security registered in the name of the Depositary or its
nominee will be made to the Depositary or nominee as the registered owner of
such Global Security. None of Premier, the Trustee or any other agent of Premier
or agent of the Trustee will have any responsibility or liability for any aspect
of the records relating to or payments made on account of beneficial ownership
interests in such Global Security or for maintaining, supervising or reviewing
any records relating to such beneficial ownership interests.
Premier has been advised by the Depositary that the Depositary will credit
Direct Participants' accounts with payments of principal, premium, if any, or
interest on the payment date thereof in amounts proportionate to their
respective beneficial interests in the principal amount of the Global Security
as shown on the records of the Depositary. Premier expects that payments by
Participants to owners of beneficial interests in the Global security held
through such Participants will be governed by standing instructions and
customary practices, as is now the case with securities held for the accounts of
customers registered in "street name," and will be the responsibility of such
Participants.
A Global Security may not be transferred except as a whole by the Depositary
to a nominee or successor of the Depositary or by a nominee of the Depositary to
another nominee of the Depositary. A Global Security representing all but not
part of an offering of Debt Securities is exchangeable for Debt Securities in
definitive form of like tenor and terms if:
- the Depositary notifies Premier that it is unwilling or unable to continue
as depositary for the Global Security or if at any time the Depositary is
no longer eligible to be or in good standing as a clearing agency
registered under the Exchange Act, and a successor depositary is not
appointed by Premier within 90 days after Premier receives notice; or
- Premier in its sole discretion at any time determines not to have all of
the Debt Securities represented in an by a Global Security and notifies
the Trustee.
If a Global Security is exchangeable, then it is exchangeable for Debt
Securities registered in the names and in authorized denominations as the
Depositary directs.
PAYMENTS OF PRINCIPAL AND INTEREST
The applicable prospectus supplement will describe how the payment of
principal of, premium, if any, and interest on the Debt Securities will rank
with respect to outstanding indebtedness of Premier.
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<PAGE>
EVENTS OF DEFAULT
The Indenture will provide that each of the following constitutes an Event
of Default with respect to any series of Debt Securities: (i) default for 30
days in the payment when due of interest on the Debt Securities; (ii) default in
payment when due of the principal of or premium, if any, on the Debt Securities;
(iii) default in the performance or breach of certain covenants after any notice
or applicable grace period; (iv) the failure by Premier or any Restricted
Subsidiary (as defined in the Indenture) to pay Indebtedness (as defined in the
Indenture) 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 at any time exceeds
$10.0 million; (v) failure by Premier or any of its Restricted Subsidiaries to
pay final judgments aggregating at any time in excess of $10.0 million, which
judgments are not paid, discharged or stayed for a period of 60 days; and (vi)
certain events of bankruptcy or insolvency with respect to Premier, any
Restricted Subsidiary that constitutes a Significant Subsidiary (as defined in
the Indenture) or any group of Restricted Subsidiaries that, taken together,
would constitute a Significant Subsidiary.
The applicable prospectus supplement will describe any additional Events of
Default.
If any Event of Default occurs and is continuing, the Trustee or the holders
of at least 25% in principal amount of the then outstanding Debt Securities of a
series may declare all Debt Securities of such series to be due and payable
immediately. Notwithstanding the foregoing, in the case of an Event of Default
arising from certain events of bankruptcy or insolvency with respect to Premier,
any Restricted Subsidiary of Premier that constitutes a Significant Subsidiary
or any group of Restricted Subsidiaries of Premier that, taken together, would
constitute a Significant Subsidiary, all outstanding Debt Securities will become
due and payable without further action or notice. Holders of the Debt Securities
may not enforce the Indenture or the Debt Securities except as provided in the
Indenture. Subject to certain limitations, holders of a majority in principal
amount of the then outstanding Debt Securities may direct the Trustee in its
exercise of any trust or power. The Trustee may withhold from holders of the
Debt Securities notice of any continuing Default or Event of Default (except a
Default or Event of Default relating to the payment of principal or interest) if
it determines that withholding notice is in their interest.
The holders of a majority in aggregate principal amount of the Debt
Securities then outstanding by notice to the Trustee may on behalf of the
holders of all of the Debt Securities of such series waive any existing Default
or Event of Default and its consequences under the Indenture, except a
continuing Default or Event of Default in the payment of interest on, or the
principal of, the Debt Securities.
MODIFICATION AND WAIVER
From time to time, Premier, when authorized by resolutions of its Board of
Directors, and the Trustee, without the consent of the holders of Debt
Securities of any series, may amend, waive or supplement the Indenture and the
Debt Securities of such series for certain specified purposes, including, among
other things:
- curing ambiguities, defects or inconsistencies,
- to provide for the assumption of Premier's obligations to holders of the
Debt Securities of such series in the case of a merger or consolidation,
- to make any change that would provide any additional rights or benefits to
the holders of the Debt Securities of such series,
- to add Guarantors with respect to the Debt Securities of such series,
- to secure the Debt Securities of such series,
- to maintain the qualification of the Indenture under the Trust Indenture
Act, or
- to make any change that does not adversely affect the rights of any
holder.
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<PAGE>
Other amendments and modifications of the Indenture or the Debt Securities
issued thereunder may be made by Premier and the Trustee with the consent of the
holders of not less than a majority of the aggregate principal amount of the
outstanding Debt Securities of each series affected thereby (each series voting
as a separate class); PROVIDED, THAT no such modification or amendment may,
without the consent of the holder of each outstanding Debt Security affected
thereby:
(1) reduce the principal amount of, or extend the fixed maturity of the Debt
Securities, or alter or waive the redemption provisions of the Debt
Securities (other than, subject to clause (7) below, provisions relating to
repurchase of Debt Securities upon the occurrence of an Asset Sale (as
defined in the Indenture) or a Change of Control (as defined in the
Indenture));
(2) change the currency in which any Debt Securities or any premium or the
accrued interest thereon is payable;
(3) reduce the percentage in principal amount outstanding of Debt Securities of
any series which must consent to an amendment, supplement or waiver or
consent to take any action under the Indenture or the Debt Securities of
such series;
(4) impair the right to institute suit for the enforcement of any payment on or
with respect to the Debt Securities;
(5) waive a default in payment with respect to the Debt Securities or any
Guarantee;
(6) reduce the rate or extend the time for payment of interest on the Debt
Securities;
(7) following the occurrence of an Asset Sale or a Change of Control, alter the
obligation to purchase the Debt Securities of any series as a result thereof
in accordance with the Indenture or waive any default in the performance
thereof;
(8) adversely affect the ranking of the Debt Securities of any series; or
(9) release any Guarantor from any of its obligations under its guarantee or the
Indenture, except in compliance with the terms of the Indenture.
MERGER, CONSOLIDATION OR SALE OF ASSETS
The Indenture will provide that Premier may not consolidate or merge with or
into (whether or not Premier is the surviving corporation), or sell, assign,
transfer, convey or otherwise dispose of all or substantially all of its
properties or assets in one or more related transactions, to another
corporation, Person or entity unless (i) Premier is the surviving corporation or
the entity or the Person formed by or surviving any such consolidation or merger
(if other than Premier) or to which such sale, assignment, transfer, conveyance
or other disposition shall have been made is a corporation organized or existing
under the law of the United States, any state thereof or the District of
Columbia; (ii) the entity or Person formed by or surviving any such
consolidation or merger (if other than Premier) or the entity or Person to which
such sale, assignment, transfer, conveyance or other disposition shall have been
made assumes all the obligations of Premier under the Debt Securities and the
Indenture pursuant to supplemental indentures in forms reasonably satisfactory
to the Trustee; (iii) immediately after such transaction no Default or Event of
Default exists; and (iv) except in the case of a merger of Premier with or into
a Wholly Owned Restricted Subsidiary (as defined in the Indenture) of Premier,
Premier or the entity or Person formed by or surviving any such consolidation or
merger (if other than Premier), or to which such sale, assignment, transfer,
lease conveyance or other disposition shall have been made (A) will have
Consolidated Net Worth (as defined in the Indenture) immediately after the
transaction equal to or greater than the Consolidated Net Worth of Premier
immediately preceding the transaction and (B) will, both at the time of such
transaction and after giving pro forma effect thereto as if such transaction had
occurred at the beginning of the applicable four-quarter period, be permitted to
incur at least $1.00 of additional Indebtedness pursuant to the applicable debt
incurrence test.
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<PAGE>
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Premier may, at its option and at any time, elect to have all of its
obligations discharged with respect to the outstanding Debt Securities ("Legal
Defeasance"), except for (i) the rights of Holders of outstanding Debt
Securities to receive payments in respect of the principal of, premium, if any,
and interest on such when such payments are due from the trust referred to
below, (ii) Premier's obligations with respect to the Debt Securities concerning
issuing temporary Debt Securities, registration of Debt Securities, mutilated,
destroyed, lost or stolen Debt Securities and the maintenance of an office or
agency for payment and money for security payments held in trust, (iii) the
rights, powers, trusts, duties and immunities of the Trustee, and Premier's
obligations in connection therewith, and (iv) the Legal Defeasance provisions of
the Indenture. In addition, Premier may, at its option and at any time, elect to
have the obligations of Premier released with respect to certain covenants that
are described in the Indenture ("Covenant Defeasance") and thereafter any
failure to comply with such obligations shall not constitute a Default or Event
of Default with respect to the Debt Securities. In the event Covenant Defeasance
occurs, certain events (not including non-payment, bankruptcy, receivership,
rehabilitation and insolvency events) described under "Events of Default" will
no longer constitute an Event of Default with respect to the Debt Securities.
In order to exercise either Legal Defeasance or Covenant Defeasance, (i)
Premier must irrevocably deposit with the Trustee, in trust, for the benefit of
the holders of the Debt Securities, cash in U.S. dollars, non-callable
Government Securities (as defined in the Indenture), or a combination thereof,
in such amounts as will be sufficient, in the opinion of a nationally recognized
firm of independent public accountants, to pay the principal of, premium, if
any, and interest on the outstanding Debt Securities, on the stated maturity
date, and Premier must specify whether the Debt Securities are being defeased to
maturity or to a particular redemption date; (ii) in the case of Legal
Defeasance, Premier shall have delivered to the Trustee an opinion of counsel in
the United States reasonably acceptable to such Trustee confirming that (A)
Premier has received from, or there has been published by, the Internal Revenue
Service a ruling, or (B) since the date of the Indenture, there has been a
change in the applicable federal income tax law, in either case to the effect
that, and based thereon such opinion of counsel shall confirm that, the holders
of the outstanding Debt Securities will not recognize income, gain or loss for
federal income tax purposes as a result of such Legal Defeasance and will be
subject to federal income tax on the same amounts, in the same manner and at the
same times as would have been the case if such Legal Defeasance had not
occurred; (iii) in the case of Covenant Defeasance, Premier shall have delivered
to the Trustee an opinion of counsel in the United States reasonably acceptable
to the Trustee confirming that the holders of the outstanding Debt Securities,
will not recognize income, gain or loss for federal income tax purposes as a
result of such Covenant Defeasance and will be subject to federal income tax on
the same amounts, in the same manner and at the same times as would have been
the case if such Covenant Defeasance had not occurred; (iv) no Default or Event
of Default shall have occurred and be continuing on the date of such deposit
(other than a Default or Event of Default resulting from the borrowing of funds
to be applied to such deposit) or insofar as Events of Default from bankruptcy
or insolvency events are concerned, at any time in the period ending on the 91st
day after the date of deposit; (v) such Legal Defeasance or Covenant Defeasance
will not result in a breach or violation of, or constitute a default under any
material agreement or instrument (other than the Indenture) to which Premier or
any of its Restricted Subsidiaries is a party or by which Premier or any of its
Restricted Subsidiaries is bound; (vi) Premier must have delivered to the
Trustee an opinion of counsel to the effect that after the 91st day following
the deposit, the trust funds will not be subject to the effect of any applicable
bankruptcy, insolvency, reorganization or similar laws affecting creditors'
rights generally; (vii) Premier must deliver to the Trustee an Officers'
Certificate stating that the deposit was not made by Premier with the intent of
preferring the holders of Debt Securities over the other creditors of Premier
with the intent of defeating, hindering, delaying or defrauding creditors of
Premier or others; and (viii) Premier must deliver to the Trustee an Officers'
Certificate and an opinion of counsel, each stating that all conditions
precedent provided for relating to the Legal Defeasance or the Covenant
Defeasance have been complied with.
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<PAGE>
DESCRIPTION OF COMMON STOCK
GENERAL
The following summary of certain provisions of Premier's common stock (the
"Common Stock") does not purport to be complete and is subject to, and qualified
in its entirety by the provisions of Premier's Certificate of Incorporation,
which is included as an exhibit to the registration statement of which this
prospectus is a part, and by the provisions of applicable law.
COMMON STOCK
Premier's authorized capital stock includes 150,000,000 shares of Common
Stock, par value $0.025 per share. As of March 1, 1999, there were 76,513,796 of
Common Stock outstanding. 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 Premier available for distribution to holders of Common Stock upon the
liquidation, dissolution or winding up of the affairs of Premier. Holders of
Common Stock do not have preemptive, subscription or conversion rights. However,
each outstanding share of Common Stock currently has attached to it one right (a
"Right") issued pursuant to an Amended and Restated Rights Agreement (the
"Rights Agreement"). Each Right entitles its registered holder to purchase
one-thousandth of a share of a junior participating series of Preferred Stock
designated to have economic and voting terms similar to those of one share of
Common Stock, as described under "--Rights Plan" below.
The outstanding shares of Common Stock are listed on the New York Stock
Exchange under the symbol "PKS". Bank One Trust Company, N.A., Oklahoma City,
Oklahoma, is the transfer agent and registrar for the Common Stock.
RIGHTS PLAN
Each outstanding share of Common Stock currently has attached to it one
Right issued pursuant to the Rights Agreement. Each Right entitles its
registered holder to purchase one one-thousandth of a share of a junior
participating series of Preferred Stock designated to have economic and voting
terms similar to those of one share of Common Stock, for $250.00, subject to
adjustment (the "Rights Exercise Price"), but only after the earlier to occur of
(i) the tenth day following a public announcement that a person or group of
affiliated or associated persons has acquired beneficial ownership of 15% or
more of the outstanding voting stock of Premier (an "Acquiring Person"), or (ii)
the tenth business day (or such later date as may be determined by the Board of
Directors prior to such time as any person becomes an Acquiring Person) after
the date (the "Flip-in Date") of the commencement or announcement of a person's
or group's intention to commence a tender or exchange offer whose consummation
will result in the ownership of 15% or more of Premier's outstanding voting
stock (even if no shares are actually purchased pursuant to such offer) (in
either case, the "Separation Time"). The Rights will not trade separately from
the shares of Common Stock unless and until the Separation Time occurs.
The Rights Agreement provides that an Acquiring Person does not include (A)
Premier, (B) any subsidiary of Premier, (C) any employee benefit plan or
employee stock plan of Premier, or any trust or other entity organized,
appointed, established or holding Common Stock for or pursuant to the terms of
any such plan, or (D) any person whose ownership of 15% or more of the shares of
voting stock of Premier then outstanding results solely from (i) any action or
transaction approved by the Board of Directors before such person acquires such
15% beneficial ownership, or (ii) a reduction in the number of issued and
outstanding shares of voting stock of Premier pursuant to a transaction or
transactions approved by the Board of Directors; PROVIDED, HOWEVER, that any
person that does not become an Acquiring Person by reason of clause (i) or (ii)
above shall become an Acquiring Person upon his acquisition of any additional
26
<PAGE>
1% of Premier's voting stock unless such acquisition of additional voting stock
will not result in such person becoming an Acquiring Person by reason of such
clause (i) or (ii).
The Rights will not be exercisable until the business day following the
Separation Time. The Rights will expire on the earlier of (i) the close of
business on December 10, 2007, and (ii) the date on which the Rights are
redeemed or terminated as described below. The Rights Exercise Price and the
number of Rights outstanding, or in certain circumstances the securities
purchasable upon exercise of the Rights, are subject to adjustment upon the
occurrence of certain events.
Once any person becomes an Acquiring Person, unless the Rights are earlier
redeemed or exchanged as described below, if
(i) Premier were to be merged into or consolidated with another entity
(whether or not related to a 15% stockholder),
(ii) Premier were to merge with another entity (whether or not related to a
15% stockholder) and be the surviving corporation, but any shares of
Premier's Common Stock were changed into or exchanged for other
securities or assets, or
(iii) more than 50% of Premier's assets or earning power were to be sold in
one or a series of related transactions,
each Right then outstanding would "flip-over" and would require that its
holder be entitled to buy, at the Rights Exercise Price, that number of shares
of common stock of the acquiring company which at the time of the merger or sale
would have a market value of two times the Exercise Price of the Right (I.E., a
discount of 50%). Any business combination not providing for the issuance of
common stock of the acquiring company in compliance with such provisions would
be prohibited.
Unless the Rights are earlier redeemed or exchanged as described below, if a
person or group becomes the beneficial owner of 15% or more of Premier's voting
stock, each Right not owned by such stockholder would become exercisable, at the
Rights Exercise Price, for that number of shares of Preferred Stock which at the
time of such transaction would have a market value of two times the Rights
Exercise Price.
At any time after the acquisition by a person or group of affiliated or
associated persons of beneficial ownership of 15% or more of the outstanding
voting stock of Premier and before the acquisition by a person or group of 50%
or more of the outstanding voting stock of Premier, the Board of Directors may
elect to cause Premier to exchange the Rights (other than Rights owned by such
person or group which have become void), in whole or in part, at an exchange
ratio of one share of Premier's Common Stock per Right, subject to adjustment.
The Rights are redeemable by Premier by a vote of a majority of the Board of
Directors at a price of $0.01 per Right at any time prior to the close of
business on the Flip-in Date (or at such later date as may be authorized by the
Board of Directors and a majority of the Continuing Directors (as defined in the
Rights Agreement)). The Rights may be redeemed after the time that any person
has become an Acquiring Person only if approved by a majority of the Continuing
Directors. The Rights have no voting rights, and they are not entitled to
dividends.
The Rights will not prevent a takeover of Premier. The Rights, however, may
cause substantial dilution to a person or group that acquires 15% or more of the
Common Stock unless the Rights are first redeemed or terminated by the Board of
Directors of Premier. Nevertheless, the Rights should not interfere with a
transaction that, in the judgment of the Board of Directors, is in the best
interests of Premier and its stockholders because the Rights can be redeemed, as
hereinabove described, before the consummation of such transaction.
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The complete terms of the Rights are set forth in the Rights Agreement. The
Rights Agreement is incorporated by reference as an exhibit to the registration
statement of which this prospectus is a part, and the foregoing description is
qualified in its entirety by reference thereto. A copy of the Rights Agreement
can be obtained upon written request to the Company.
DESCRIPTION OF PREFERRED STOCK
GENERAL
The following description of the terms of the Preferred Stock sets forth
certain general terms and provisions of the Preferred Stock to which any
prospectus supplement may relate. Certain other terms of any series of the
Preferred Stock offered by any prospectus supplement will be described in such
prospectus supplement. The description of certain provisions of the Preferred
Stock set forth below and in any prospectus supplement does not purport to be
complete and is subject to and qualified in its entirety by reference to
Premier's Certificate of Incorporation and the certificate of designations
relating to each series of the Preferred Stock which will be filed with the
Securities and Exchange Commission and incorporated by reference in the
registration statement of which this prospectus is a part at or prior to the
time of the issuance of such series of the Preferred Stock.
Premier has authority to issue 5,000,000 shares of Preferred Stock, $1.00
par value per share. As of December 31, 1998, Premier had 11,500 shares of
Preferred Stock outstanding.
PREFERRED STOCK
Prior to issuance of shares of each series, the Board of Directors is
required by the Delaware General Corporation Law (the "GCL") and the Certificate
of Incorporation to adopt resolutions and file a certificate of designation with
the Secretary of State of the State of Delaware, fixing for each such class or
series the designations, powers, preferences and rights of the shares of such
class or series and the qualifications, limitations or restrictions thereon,
including, but not limited to, dividend rights, dividend rate or rates,
conversion rights, voting rights, rights and terms of redemption (including
sinking fund provisions), the redemption price or prices, and the liquidation
preferences as are permitted by the GCL. The Board of Directors could authorize
the issuance of shares of Preferred Stock with terms and conditions which could
have the effect of discouraging a takeover or other transaction which holders of
some, or a majority, of such shares might believe to be in their best interests
or in which holders of some, or a majority, of such shares might receive a
premium for their shares over the then-market price of such shares.
Subject to limitation prescribed by the GCL, the Certificate of
Incorporation and the Bylaws of Premier, the Board of Directors is authorized
without further stockholder action to provide for the issuance of up to
5,000,000 shares of Preferred Stock of Premier, in one or more series, with such
voting powers, full or limited, and with such designations, preferences and
relative participating, optional or other special rights, and qualifications,
limitations or restrictions thereof, as shall be stated in the resolution or
resolutions providing for the issuance of a series of such stock adopted, at any
time or from time to time, by the Board of Directors (as used herein the term
"Board of Directors" includes any duly authorized committee thereof).
The Preferred Stock shall have the dividend, liquidation, redemption and
voting rights set forth below unless otherwise provided in a prospectus
supplement relating to a particular series of the Preferred Stock. Reference is
made to the prospectus supplement relating to the particular series of the
Preferred Stock offered thereby for specific terms, including (i) the
designation and stated value per share of such Preferred Stock and the number of
shares offered; (ii) the amount of liquidation preference per share; (iii) the
initial public offering price at which such Preferred Stock will be issued; (iv)
the dividend rate (or method of calculation), the dates on which dividends shall
be payable, the form of dividend payment and the dates from which dividends
shall commence to cumulate, if any; (v) any redemption or sinking fund
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provisions; (vi) any conversion or exchange rights; and (vii) any additional
voting, dividend, liquidation, redemption, sinking fund and other rights,
preferences, privileges, limitations and restrictions.
The Preferred Stock will, when issued, be fully paid and nonassessable and
will have no preemptive rights. The rights of the holders of each series of the
Preferred Stock will be subordinate to those of Premier's general creditors.
DIVIDEND RIGHTS
Holders of the Preferred Stock of each series will be entitled to receive,
when, as and if declared by the Board of Directors, out of funds of Premier
legally available therefor, cash or payment in kind dividends on such dates and
at such rates as set forth in, or as are determined by the method described in,
the prospectus supplement relating to such series of the Preferred Stock. Such
rate may be fixed or variable or both. Each such dividend will be payable to the
holders of record as they appear on the stock books of Premier on such record
dates, fixed by the Board of Directors, as specified in the prospectus
supplement relating to such series of Preferred Stock.
Such dividends may be cumulative or noncumulative, as provided in the
prospectus supplement relating to such series of Preferred Stock. If the Board
of Directors fails to declare a dividend payable on a dividend payment date on
any series of Preferred Stock for which dividends are noncumulative, then the
right to receive a dividend in respect of the dividend period ending on such
dividend payment date will be lost, and Premier will have no obligation to pay
any dividend for such period, whether or not dividends on such series are
declared payable on any future dividend payment dates. Dividends on the shares
of each series of Preferred Stock for which dividends are cumulative will accrue
from the date on which Premier initially issues shares of such series.
Unless otherwise specified in the applicable prospectus supplement, so long
as the shares of any series of the Preferred Stock are outstanding, unless (i)
full dividends (including if such Preferred Stock is cumulative, dividends for
prior dividend periods) have been paid or declared and set apart for payment on
all outstanding shares of the Preferred Stock of such series and all other
classes and series of preferred stock of Premier (other than Junior Stock (as
defined below)), and (ii) Premier is not in default or in arrears with respect
to any mandatory or optional redemption or mandatory repurchase or other
mandatory retirement of, or with respect to any sinking or other analogous funds
for, any shares of Preferred Stock of such series or any shares of any other
preferred stock of Premier of any class or series (other than Junior Stock),
Premier may not declare any dividends on any shares of Common Stock of Premier
or any other stock of Premier ranking as to dividends or distributions of assets
junior to such series of Preferred Stock (the Common Stock and any such other
stock being herein referred to as "Junior Stock"), or make any payment on
account of, or set apart money for, the purchase, redemption or other retirement
of, or for a sinking or other analogous fund for, any shares of Junior Stock or
make any distribution in respect thereof, whether in cash or property or in
obligations of stock of Premier, other than in Junior Stock which is neither
convertible into, nor exchangeable or exercisable for, any securities of Premier
other than Junior Stock.
LIQUIDATION PREFERENCES
Unless otherwise specified in the applicable prospectus supplement, in the
event of any liquidation, dissolution or winding up of Premier, whether
voluntary or involuntary, the holders of each series of the Preferred Stock will
be entitled to receive out of the assets of Premier available for distribution
to stockholders, before any distribution of assets is made to the holders of
Common Stock or any other shares of stock of Premier ranking junior as to such
distribution to such series of the Preferred Stock, the amount set forth in the
prospectus supplement relating to such series of the Preferred Stock. If, upon
any voluntary or involuntary liquidation, dissolution or winding up of Premier,
the amounts payable with respect to the Preferred Stock of any series and any
other shares of Preferred Stock of Premier (including any other
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series of the Preferred Stock) ranking as to any such distribution on a parity
with such series of the Preferred Stock are not paid in full, the holders of the
Preferred Stock of such series and of such other shares of preferred stock of
Premier will share ratably in any such distribution of assets of Premier in
proportion to the full respective preferential amounts to which they are
entitled. After payment to the holders of the Preferred Stock of each series of
the full preferential amounts of the liquidating distribution to which they are
entitled, unless otherwise provided in the applicable prospectus supplement, the
holders of each such series of the Preferred Stock will be entitled to no
further participation in any distribution of assets by Premier.
REDEMPTION
A series of the Preferred Stock may be redeemable, in whole or from time to
time in part, at the option of Premier, and may be subject to mandatory
redemption pursuant to a sinking fund or otherwise, in each case upon terms, at
the times and at the redemption prices set forth in the prospectus supplement
relating to such series. Shares of the Preferred Stock redeemed by Premier will
be restored to the status of authorized but unissued shares of Preferred Stock
of Premier.
In the event that fewer than all of the outstanding shares of a series of
the Preferred Stock are to be redeemed, whether by mandatory or optional
redemption, the number of shares to be redeemed will be determined by lot or pro
rata (subject to rounding to avoid fractional shares) or by any other method as
may be determined by Premier in its sole discretion to be equitable. From and
after the redemption date (unless default is made by Premier in providing for
the payment of the redemption price plus accumulated and unpaid dividends, if
any) dividends will cease to accumulate on the shares of the Preferred Stock
called for redemption and all rights of the holders thereof (except the right to
receive the redemption price plus accumulated and unpaid dividends, if any) will
cease.
Unless otherwise specified in the applicable prospectus supplement, so long
as any dividends on shares of any series of the Preferred Stock or any other
series of preferred stock of Premier ranking on a parity as to dividends and
distribution of assets with such series of the Preferred Stock are in arrears,
no shares of any such series of the Preferred Stock or such other series of
preferred stock of Premier will be redeemed (whether by mandatory or optional
redemption) unless all such shares are simultaneously redeemed, and Premier will
not purchase or otherwise acquire any such shares; PROVIDED, HOWEVER, that the
foregoing will not prevent the purchase or acquisition of such shares pursuant
to a purchase or exchange offer made on the same terms to holders of all such
shares outstanding.
CONVERSION AND EXCHANGE RIGHTS
The terms, if any, on which shares of Preferred Stock of any series may be
exchanged for or converted into shares of Common Stock, another series of
Preferred Stock or any other security of Premier will be set forth in the
prospectus supplement relating thereto. Such terms may include provisions for
conversion, either mandatory, or at the option of the holder or at the option of
Premier, in which case the number of shares of Common Stock, the shares of
another series of Preferred Stock or the amount of any other securities to be
received by the holders of Preferred Stock would be calculated as of a time and
in the manner stated in the prospectus supplement.
VOTING RIGHTS
Except as indicated below or in the prospectus supplement relating to a
particular series of Preferred Stock, or except as expressly required by the
laws of the State of Delaware or other applicable law, the holders of the
Preferred Stock will not be entitled to vote. Except as indicated in the
prospectus supplement relating to a particular series of Preferred Stock, each
such share will be entitled to one vote on matters on which holders of such
series of the Preferred Stock are entitled to vote. However, as more fully
described below under "Depositary Shares," if Premier elects to issue Depositary
Shares representing
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a fraction of a share of a series of Preferred Stock, each such Depositary Share
will, in effect, be entitled to such fraction of a vote, rather than a full
vote. Because each full share of any series of Preferred Stock shall be entitled
to one vote, the voting power of such series, on matters on which holders of
such series and holders of other series of preferred stock are entitled to vote
as a single class, shall depend on the number of shares in such series, not the
aggregate liquidation preference or initial offering price of the shares of such
series of Preferred Stock.
DEPOSITARY SHARES
GENERAL. Premier may, at its option, elect to offer fractional shares of
Preferred Stock, rather than full shares of Preferred Stock. In the event such
option is exercised, Premier will issue to the public receipts for Depositary
Shares, each of which will represent a fraction (to be set forth in the
prospectus supplement relating to a particular series of Preferred Stock) of a
share of a particular series of Preferred Stock as described below.
The shares of any series of Preferred Stock represented by Depositary Shares
will be deposited under a Deposit Agreement (the "Deposit Agreement") between
Premier and a bank or trust company selected by Premier having its principal
office in the United States and having a combined capital and surplus of at
least $50,000,000 (the "Depositary Bank"). Subject to the terms of the Deposit
Agreement, each owner of a Depositary Share will be entitled, in proportion to
the applicable fraction of a share of Preferred Stock represented by such
Depositary Share, to all the rights and preferences of the Preferred Stock
represented thereby (including dividend, voting, redemption and liquidation
rights).
The Depositary Shares will be evidenced by depositary receipts issued
pursuant to the Deposit Agreement ("Depositary Receipts"). Depositary Receipts
will be distributed to those persons purchasing the fractional shares of
Preferred Stock in accordance with the terms of the offering. If Depositary
Shares are issued, copies of the forms of Deposit Agreement and Depositary
Receipt will be incorporated by reference in the Registration Statement of which
this prospectus is a part, and the following summary is qualified in its
entirety by reference to such documents.
Pending the preparation of definitive engraved Depositary Receipts, the
Depositary Bank may, upon the written order of Premier, issue temporary
Depositary Receipts substantially identical to (and entitling the holders
thereof to all the rights pertaining to) the definitive Depositary Receipts but
not in definitive form. Definitive Depositary Receipts will be prepared
thereafter without unreasonable delay, and temporary Depositary Receipts,will be
exchangeable for definitive Depositary Receipts at Premier's expense.
WITHDRAWAL OF PREFERRED STOCK. Upon surrender of the Depositary Receipts to
the Depositary Bank, the owner of the Depositary Shares evidenced thereby is
entitled to delivery at such office of the number of whole shares of Preferred
Stock represented by such Depositary Shares. If the Depositary Receipts
delivered by the holder evidence a number of Depositary Shares in excess of the
number of Depositary Shares representing the number of whole shares of Preferred
Stock to be withdrawn, the Depositary Bank will deliver to such holder at the
same time a new Depositary Receipt evidencing such excess number of Depositary
Shares. Owners of Depositary Shares will be entitled to receive only whole
shares of Preferred Stock. In no event will fractional shares of Preferred Stock
(or cash in lieu thereof) be distributed by the Depositary Bank. Consequently, a
holder of a Depositary Receipt representing a fractional share of Preferred
Stock would be able to liquidate his position only by sale to a third party (in
a public trading market transaction or otherwise), unless the Depositary Shares
are redeemed by Premier or converted by the holder.
DIVIDENDS AND OTHER DISTRIBUTIONS. The Depositary Bank will distribute all
cash dividends or other cash distributions received in respect of the Preferred
Stock to the record holders of Depositary Shares relating to such Preferred
Stock in proportion to the number of such Depositary Shares owned by such
holders.
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In the event of a distribution other than in cash, the Depositary Bank will
distribute property received by it to the record holders of Depositary Shares
entitled thereto, unless the Depositary Bank determines that it is not feasible
to make such distribution, in which case the Depositary Bank may, with the
approval of Premier, sell such property and distribute the net proceeds from
such sale to such holders.
REDEMPTION OF DEPOSITARY SHARES. If a series of Preferred Stock represented
by Depositary Shares is subject to redemption, the Depositary Shares will be
redeemed from the proceeds received by the Depositary Bank resulting from the
redemption, in whole or in part, of such series of Preferred Stock held by the
Depositary Bank. The redemption price per Depositary Share will be equal to the
applicable fraction of the redemption price per share payable with respect to
such series of Preferred Stock. Whenever Premier redeems shares of Preferred
Stock held by the Depositary Bank, the Depositary Bank will redeem as of the
same redemption date the number of Depositary Shares representing the shares of
Preferred Stock so redeemed. If fewer than all the Depositary Shares are to be
redeemed, the Depositary Shares to be redeemed will be selected by lot or pro
rata as may be determined by the Depositary Bank.
VOTING THE PREFERRED STOCK. Upon receipt of notice of any meeting at which
the holders of Preferred Stock are entitled to vote, the Depositary Bank will
mail the information contained in such notice of meeting to the record holders
of the Depositary Shares relating to such Preferred Stock. Each record holder of
such Depositary Shares on the record date (which will be the same date as the
record date for the Preferred Stock) will be entitled to instruct the Depositary
Bank as to the exercise of the voting rights pertaining to the amount of
Preferred Stock represented by such holder's Depositary Shares. The Depositary
Bank will endeavor, insofar as practicable, to vote the amount of Preferred
Stock represented by such Depositary Shares in accordance with such
instructions, and Premier will agree to take all action that may be deemed
necessary by the Depositary Bank in order to enable the Depositary Bank to do
so. The Depositary Bank may abstain from voting shares of Preferred Stock to the
extent it does not receive specific instructions from the holders of Depositary
Shares representing such Preferred Stock.
AMENDMENT AND TERMINATION OF THE DEPOSITARY AGREEMENT. The form of
Depositary Receipt evidencing the Depositary Shares and any provision of the
Deposit Agreement may at any time be amended by agreement between Premier and
the Depositary Bank. However, any amendment that materially and adversely alters
the rights of the holders of Depositary Shares will not be effective unless such
amendment has been approved by the holders of at least a majority of the
Depositary Shares then outstanding. The Deposit Agreement may be terminated by
Premier or the Depositary Bank only if (i) all outstanding Depositary Shares
have been redeemed, or (ii) there has been a final distribution in respect of
the Preferred Stock in connection with any liquidation, dissolution or winding
up of Premier and such distribution has been distributed to the holders of
Depositary Receipts.
CHARGES OF DEPOSITARY BANK. Premier will pay all transfer and other taxes
and governmental charges arising solely from the existence of the depositary
arrangements. Premier will pay charges of the Depositary Bank in connection with
the initial deposit of the Preferred Stock and any redemption of the Preferred
Stock. Holders of Depositary Receipts will pay other transfer and other taxes
and governmental charges and such other charges, including any fee for the
withdrawal of shares of Preferred Stock upon surrender of Depositary Receipts,
as are expressly provided in the Deposit Agreement to be for their accounts.
MISCELLANEOUS. The Depositary Bank will forward to holders of Depository
Receipts all reports and communications from Premier that are delivered to the
Depositary Bank and that Premier is required to furnish to the holders of
Preferred Stock.
Neither the Depositary Bank nor Premier will be liable if it is prevented or
delayed by law or any circumstance beyond its control in performing its
obligations under the Deposit Agreement. The obligations of Premier and the
Depositary Bank under the Deposit Agreement will be limited to performance in
good faith of their duties thereunder and they will not be obligated to
prosecute or defend
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any legal proceeding in respect of any Depositary Shares or Preferred Stock
unless satisfactory indemnity is furnished. They may rely upon written advice of
counsel or accountants, or upon information provided by persons presenting
Preferred Stock for deposit, holders of Depositary Receipts or other persons
believed to be competent and on documents believed to be genuine.
RESIGNATION AND REMOVAL OF DEPOSITARY BANK. The Depositary Bank may resign
at any time by delivering to Premier notice of its election to do so, and
Premier may at any time remove the Depositary Bank, any such resignation or
removal to take effect upon the appointment of a successor Depositary Bank and
its acceptance of such appointment. Such successor Depositary Bank must be
appointed within 60 days after delivery of the notice of resignation or removal
and must be a bank or trust company having its principal office in the United
States and having a combined capital and surplus of at least $50,000,000.
DESCRIPTION OF WARRANTS
GENERAL
Premier may issue Warrants to purchase Debt Securities ("Debt Warrants")
and/or Warrants to purchase Preferred Stock or Common Stock ("Equity Warrants")
(together, the "Warrants"). Warrants may be issued independently or together
with any securities and may be attached to or separate from such Securities. The
Warrants are to be issued under warrant agreements (each, a "Warrant Agreement")
to be entered into between Premier and a bank or trust company, as warrant agent
(the "Warrant Agent"), all as shall be set forth in the prospectus supplement
relating to Warrants being offered pursuant thereto. A copy of the proposed form
of Warrant Agreement has been filed as an exhibit to the registration statement
of which this prospectus is a part.
DEBT WARRANTS
The applicable prospectus supplement will describe the terms of Debt
Warrants offered thereby, the Warrant Agreement relating to such Debt Warrants
and the Debt Warrant certificates representing such Debt Warrants ("Debt Warrant
Certificates"), including the following: (1) the title of such Debt Warrants;
(2) the aggregate number of such Debt Warrants; (3) the price or prices at which
such Debt Warrants will be issued; (4) the designation, aggregate principal
amount and terms of the Debt Securities purchasable upon exercise of such Debt
Warrants, and the procedures and conditions relating to the exercise of such
Debt Warrants; (5) the designation and terms of any related Debt Securities with
which such Debt Warrants are issued, and the number of such Debt Warrants issued
with each such Debt Security; (6) the date, if any, on and after which such Debt
Warrants and the related Debt Securities will be separately transferable; (7)
the principal amount of Debt Securities purchasable upon exercise of each Debt
Warrant; (8) the date on which the right to exercise such Debt Warrants will
commence, and the date on which such right will expire; (9) the maximum or
minimum number of such Debt Warrants which may be exercised at any time; (10)
information with respect to book-entry procedures, if any; (11) a discussion of
any material federal income tax considerations; and (12) any other terms of such
Debt Warrants and terms, procedures and limitations relating to the exercise of
such Debt Warrants.
Debt Warrant Certificates will be exchangeable for new Debt Warrant
Certificates of different denominations, and Debt Warrants may be exercised at
the corporate trust office of the Warrant Agent or any other office indicated in
the prospectus supplement. Prior to the exercise of their Debt Warrants, holders
of Debt Warrants will not have any of the rights of holders of the Debt
Securities purchasable upon such exercise and will not be entitled to payment of
principal of or any premium, if any, or interest on the Debt Securities
purchasable upon such exercise.
EQUITY WARRANTS
The applicable prospectus supplement will describe the following terms of
Equity Warrants offered thereby: (1) the title of such Equity Warrants; (2) the
securities (I.E., Preferred Stock or Common Stock)
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for which such Equity Warrants are exercisable; (3) the price or prices at which
such Equity Warrants will be issued; (4) if applicable, the designation and
terms of the Preferred Stock or Common Stock with which such Equity Warrants are
issued, and the number of such Equity Warrants issued with each such share of
Preferred Stock or Common Stock; (5) if applicable, the date on and after which
such Equity Warrants and the related Preferred Stock or Common Stock will be
separately transferable; (6) if applicable, a discussion of any material federal
income tax considerations; and (7) any other terms of such Equity Warrants,
including terms, procedures and limitations relating to the exchange and
exercise of such Equity Warrants.
Holders of Equity Warrants will not be entitled, by virtue of being such
holders, to vote, consent, receive dividends, receive notice as stockholders
with respect to any meeting of stockholders for the election of directors of
Premier, or any other matter, or to exercise any rights whatsoever as
stockholders of Premier.
The exercise price payable and the number of shares of Common Stock or
Preferred Stock purchasable upon the exercise of each Equity Warrant will be
subject to adjustment in certain events, including the issuance of a stock
dividend to holders of Common Stock or Preferred Stock or a stock split, reverse
stock split, combination, subdivision or reclassification of Common Stock or
Preferred Stock. In lieu of adjusting the number of shares of Common Stock or
Preferred Stock purchasable upon exercise of each Equity Warrant, Premier may
elect to adjust the number of Equity Warrants. No adjustments in the number of
shares purchasable upon exercise of the Equity Warrants will be required until
cumulative adjustments require an adjustment of at least 1% thereof. Premier
may, at its option, reduce the exercise price of the Equity Warrants at any
time. No fractional shares will be issued upon exercise of Equity Warrants, but
Premier will pay the cash value of any fractional shares otherwise issuable.
Notwithstanding the foregoing, in case of any consolidation, merger, or sale or
conveyance of the property of Premier as an entirety or substantially as an
entirety, the holder of each outstanding Equity Warrant shall have the right to
the kind and amount of shares of stock and other securities and property
(including cash) receivable by a holder of the number of shares of Common Stock
of Preferred Stock into which such Equity Warrant was exercisable immediately
prior thereto.
EXERCISE OF WARRANTS
Each Warrant will entitle the holder to purchase such principal amount of
the underlying securities at such exercise price as shall in each case be set
forth in, or be determinable as set forth in, the prospectus supplement relating
to the Warrants offered thereby. Warrants may be exercised at any time up to the
close of business on the expiration date set forth in the prospectus supplement
relating to the Warrants offered thereby. After the close of business on the
expiration date, unexercised Warrants will become void.
Warrants may be exercised as set forth in the prospectus supplement relating
to the Warrants offered thereby. Upon receipt of payment and the warrant
certificate properly completed and duly executed at the corporate trust office
of the Warrant Agent or any other office indicated in the prospectus supplement,
Premier will, as soon as practicable, forward the Securities purchasable upon
such exercise. If less than all of the Warrants represented by such warrant
certificate are exercised, a new warrant certificate will be issued for the
remaining Warrants.
DESCRIPTION OF UNITS
Premier may issue Units consisting of two or more other constituent
securities, which Units may be issuable as, and for the period of time specified
therein may be transferable as, a single security only, as distinguished from
the separate constituent securities comprising such Units. Any such Units will
be offered pursuant to a prospectus supplement which will (i) identify and
designate the title of any series of Units; (ii) identify and describe the
separate constituent securities comprising such Units; (iii) set forth the price
or prices at which such Units will be issued; (iv) describe, if applicable, the
date on and after which the constituent securities comprising the Units will
become separately transferable; (v) provide
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information with respect to book-entry procedures, if any; (vi) discuss
applicable United States Federal income tax considerations relating to the
Units; and (vii) set forth any other terms of the Units and their constituent
securities.
PLAN OF DISTRIBUTION
Premier may sell the securities in or outside the United States in any of
three ways (or in any combination thereof): (i) through underwriters or dealers;
(ii) directly to a limited number of purchasers or to a single purchaser; or
(iii) through agents. The prospectus supplement with respect to any securities
will set forth the terms of the offering of such securities, including (a) the
name or names of any underwriters, dealers or agents and the respective amounts
of such securities underwritten or purchased by each of them, (b) the initial
public offering price of such securities and the proceeds to Premier and any
discounts, commissions or concessions allowed or reallowed or paid to dealers,
and (c) any securities exchanges on which such securities may be listed. Any
initial public offering price and any discounts or concessions allowed or
reallowed or paid to dealers may be changed from time to time.
If underwriters are used in the sale of any securities, such securities will
be acquired by the underwriters for their own account and may be resold from
time to time in one or more transactions, including negotiated transactions, at
a fixed public offering price or at varying prices determined at the time of
sale. Such securities may be either offered to the public through underwriting
syndicates represented by managing underwriters, or directly by underwriters.
Unless otherwise set forth in the applicable prospectus supplement, the
obligations of the underwriters to purchase such securities will be subject to
certain conditions precedent and the underwriters will be obligated to purchase
all of such securities if any are purchased.
The securities may be sold directly by Premier or through agents designated
by Premier from time to time. Any agent involved in the offer or sale of the
securities in respect of which a prospectus supplement is delivered will be
named, and any commissions payable by Premier to such agent will be set forth,
in the prospectus supplement. Unless otherwise indicated in the prospectus
supplement, any such agent will be acting on a best effort basis for the period
of its appointment.
If so indicated in the applicable prospectus supplement, Premier will
authorize underwriters, dealers or agents to solicit offers by certain
purchasers to purchase the securities from Premier at the public offering price
set forth in the prospectus supplement pursuant to delayed delivery contracts
providing for payment and delivery on a specified date in the future. Such
contracts will be subject only to those conditions set forth in the prospectus
supplement, and the prospectus supplement will set forth the commission payable
for solicitation of such contracts.
Some or all of the securities may be new issues of securities with no
established trading market. Any underwriters to whom securities are sold by
Premier for public offering and sale may make a market in such securities, but
such underwriters will not be obligated to do so and may discontinue any market
making at any time without notice. No assurance can be given as to the liquidity
of or the trading markets for any securities.
In order to facilitate the offering of the securities, any underwriters or
agents, as the case may be, involved in the offering of such securities may
engage in transactions that stabilize, maintain or otherwise affect the price of
such securities or any other securities the prices of which may be used to
determine payments on such securities. Specifically, the underwriters or agents,
as the case may be, may overallot in connection with the offering, creating a
short position in such securities for their own account. In addition, to cover
overallotments or to stabilize the price of such securities or any such other
securities, the underwriters or agents, as the case may be, may bid for, and
purchase, such securities or any such other securities in the open market.
Finally, in any offering of such securities through a syndicate of underwriters,
the underwriting syndicate may reclaim selling concessions allotted to an
underwriter or a dealer for distributing such securities in the offering if the
syndicate repurchases previously distributed
35
<PAGE>
securities in transactions to cover syndicate short positions, in stabilization
transactions or otherwise. Any of these activities may stabilize or maintain the
market price of the securities above independent market levels. The underwriters
or agents, as the case may be, are not required to engage in these activities,
and may end any of these activities at any time.
Agents and underwriters may be entitled under agreements entered into with
Premier to indemnification by Premier against certain civil liabilities,
including liabilities under the Securities Act, or to contribution with respect
to payments which the agents or underwriters may be required to make in respect
thereof. Certain agents and underwriters may be customers of, engage in
transactions with, or perform services for Premier in the ordinary course of
business.
LEGAL MATTERS
Our counsel, Thelen Reid & Priest LLP of New York, New York, will issue an
opinion to us on certain legal matters relating to the securities.
EXPERTS
The consolidated financial statements of Premier Parks Inc. and subsidiaries
as of December 31, 1998 and 1997 and for each of the years in the three-year
period ended December 31, 1998, have been incorporated by reference herein in
reliance upon the report of KPMG LLP, independent certified public accountants,
incorporated by reference herein, and upon authority of said firm as experts in
accounting and auditing.
Ernst & Young LLP, independent auditors, have audited the financial
statements of Six Flags Entertainment Corporation as of December 28, 1997 and
December 29, 1996 and for each of the three years in the period ended December
28, 1997 included in our Registration Statement on Form S-3 (File No.
333-46897), as set forth in their report, which is incorporated by reference in
this prospectus and elsewhere in the registration statement. Six Flags
Entertainment Corporation's financial statements are incorporated by reference
in reliance on Ernst & Young LLP's report, given on their authority as experts
in accounting and auditing.
36
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$430,000,000
[LOGO]
PREMIER PARKS INC.
% SENIOR NOTES
DUE 2007
---------------
PROSPECTUS SUPPLEMENT
JUNE , 1999
(INCLUDING PROSPECTUS DATED JUNE 18, 1999)
---------------------
LEHMAN BROTHERS
SALOMON SMITH BARNEY
GOLDMAN, SACHS & CO.
MERRILL LYNCH & CO.
MORGAN STANLEY DEAN WITTER
ING BARINGS
ALLEN & COMPANY INCORPORATED
BNY CAPITAL MARKETS, INC.
