Six Flags Entertainment CorporationNEW

Current report

There have been no material changes to the risk factors previously disclosed in Part II, Item 1A of the Combined Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2024, which is incorporated herein by reference.

Previous report

The Combined Company's operations and financial results are subject to various risks and uncertainties, including those described below, that could adversely affect its business, financial condition, results of operations, cash flows, and the trading price of its common stock. The following information provides an update to the previously disclosed risk factors in the SEC filings of Cedar Fair and Former Six Flags prior to the consummation of the Mergers.

Previous report

Risks Related to the Integration of the Combined Company

Previous report

The Combined Company may be unable to integrate the businesses of Former Six Flags and Cedar Fair successfully or realize the anticipated benefits of the Mergers.

Previous report

On July 1, 2024, the previously announced Mergers between Former Six Flags and Cedar Fair as contemplated by the Merger Agreement were completed. The combination of two independent companies and businesses is complex, costly and time consuming, and will require significant management attention and resources to integrate the business practices and operations of Former Six Flags and Cedar Fair. Potential difficulties that the Combined Company may encounter as part of the integration process include the following:

Previous report

•the inability to successfully combine the businesses of Former Six Flags and Cedar Fair in a manner that permits the Combined Company to achieve, on a timely basis, or at all, the enhanced growth opportunities and cost savings and other benefits anticipated to result from the Mergers;

Previous report

•complexities associated with managing the combined businesses, including difficulty addressing possible differences in operational philosophies and the challenge of integrating complex systems, technology, networks and other assets of each of the companies in a seamless manner that minimizes any adverse impact on guests, employees, suppliers, concessionaires, vendors, other third-party business partners and other constituencies;

Previous report

•difficulties in achieving anticipated cost savings, synergies, business opportunities and growth prospects from combining the businesses of Former Six Flags and Cedar Fair in the highly competitive out-of-home entertainment industry;

Previous report

•difficulties in the integration of operations, standards, systems, controls, procedures and/or personnel;

Previous report

•difficulties in managing the expanded operations of a larger and more complex company, including continuing to retain and attract guests to the Combined Company’s amusement and water parks;

Previous report

•the disruption of, or the loss of momentum in, ongoing businesses;

Previous report

•potential unknown liabilities and unforeseen increased expenses resulting from the Mergers.

Previous report

Any of these issues could adversely affect the Combined Company’s ability to maintain relationships with guests, employees, suppliers, concessionaires, vendors, other third-party business partners and other constituencies or achieve the anticipated benefits of the Mergers, or could adversely affect the Combined Company’s results of operation or cash flows, decrease or delay any accretive effect of the transactions and negatively impact the price of the Combined Company’s common stock.

Previous report

Further, many of the aforementioned issues are outside of the Combined Company’s control and any of them could result in increased costs, decreases in the amount of expected revenues and diversion of management’s time and energy, which could materially impact the business, financial condition and results of operations of the Combined Company. In addition, even if the operations of the businesses of Former Six Flags and Cedar Fair are integrated successfully, the Combined Company may not realize the full benefits of the Mergers, including the targeted cost savings, workforce efficiencies, scale, or sales and growth opportunities. Some of the anticipated synergies are also not expected to occur for a period of time following the closing of the Mergers and may involve unanticipated costs and require significant capital expenditures in the near term to be fully realized. Even if the Combined Company is able to integrate the two previous companies successfully, the anticipated benefits of the Mergers, including the expected synergies, may not be realized fully or at all and may take longer to realize than expected. If the Combined Company is not able to realize the anticipated benefits and synergies expected from the Mergers within the anticipated timeframe or at all, it could adversely affect the Combined Company’s earnings or otherwise adversely affect its business and financial results.

Previous report

Due to the Mergers, the Combined Company’s future ability to use net operating losses to offset future taxable income may be restricted and these net operating losses could expire or otherwise be unavailable.

Previous report

As a result of the Mergers, the Combined Company’s ability to use net operating losses to offset future taxable income may be restricted and these net operating losses (“NOLs”) could expire or otherwise be unavailable. In general, under Section 382 of the Internal Revenue Code and corresponding provisions of state law, a corporation that undergoes an “ownership change” is subject to limitations on its ability to utilize its pre-change NOLs to offset future taxable income. For these purposes, an ownership change generally occurs where the aggregate stock ownership of one or more stockholders or groups of stockholders who owns at least 5% of a corporation’s stock increases its ownership by more than 50 percentage points over its lowest ownership percentage within a specified testing period. Prior to the Mergers, some of Former Six Flags’ existing NOLs were subject to limitations. Following the Mergers, the Combined Company’s ability to use NOLs may be subject to further limitations and the Combined Company may not be able to fully use these NOLs to offset future taxable income. There is also a risk that, due to regulatory changes or for other unforeseen reasons, existing NOLs could expire or otherwise be unavailable to offset future income tax liabilities. In addition, the U.S. Tax Cuts and Jobs Act of 2017 (the “Tax Act”) resulted in a reduction in the economic benefit of the NOLs and other deferred tax assets available to us. Under the Tax Act, U.S. federal NOLs generated after December 31, 2017 will not be subject to expiration.

Previous report

Risks Related to the Business

Previous report

Instability in economic conditions could impact the business, including its results of operations and financial condition.

Previous report

Uncertain or deteriorating economic conditions, including during inflationary and recessionary periods, may adversely impact attendance figures and guest spending patterns at the Combined Company's parks ("the parks") as uncertain economic conditions affect guests’ levels of discretionary spending. Both attendance and in-park spending at the parks are key drivers of revenues and profitability, and reductions in either can directly and negatively affect revenues and profitability. A decrease in discretionary spending due to a decline in consumer confidence in the economy, an economic slowdown or deterioration in the economy could adversely affect the frequency with which guests choose to attend the parks and the amount that guests spend on products when they visit.

Previous report

Periods of inflation or economic downturn could also impact the Combined Company's ability to obtain supplies and services and increase its operating costs. Inflationary effects and supply chain disruptions may continue or worsen. In addition, the existence of unfavorable general economic conditions may also hinder the ability of those with which the Combined Company does business, including vendors, concessionaires, customers, manufacturers of rides and other third parties, to satisfy their obligations. Changes in exchange rates for foreign currencies could also reduce international demand for the Combined Company's products, increase its labor and supply costs in non-U.S. markets or reduce the U.S. dollar value of revenue earned in other markets. The materialization of these risks could lead to a decrease in revenues, operating income and cash flows.

Previous report

Public health concerns or a future pandemic could adversely impact the business, as well as intensify certain risks.

Previous report

Consumer behavior and preferences changed in response to the effects of the COVID-19 pandemic, including impacts on discretionary consumer spending due to economic uncertainty and changing risk tolerances of employees and guests regarding health matters. Future significant volatility or reductions in demand for, or interest in, the parks could materially adversely impact attendance, in-park per capita spending and revenue. In addition, the Combined Company could experience damage to its brand and reputation due to actual or perceived health risks associated with the parks or the amusement park industry which could have a similar material adverse effect on attendance, in-park per capita spending and revenue. The Combined Company may also experience operational risks, including limitations on its ability to recruit and train employees in sufficient numbers to fully staff the parks as a result of changing risk tolerances.

Previous report

Because amusement and water parks and complementary resort facilities are the primary sources of net income and operating cash flows, any future mandated or voluntary closures or other operating restrictions related to a future pandemic could adversely impact the Combined Company's business and financial results. The parks are geographically located throughout North America. The duration and severity of a pandemic and the related restrictions at any one location could result in a potentially disproportionate amount of risk if concentrated amongst the Combined Company's largest properties.

Previous report

The high fixed cost structure of amusement park operations can result in significantly lower margins, profitability and cash flows if attendance levels do not meet expectations.

Previous report

A significant portion of the Combined Company's expenses are relatively fixed because the costs for full-time employees, maintenance, utilities, advertising and insurance do not vary significantly with attendance. These fixed costs may increase and may not be able to be reduced at a rate proportional with ongoing attendance levels. If cost-cutting efforts are insufficient or are impractical, the Combined Company could experience a material decline in margins, profitability and cash flows. Such effects can be especially pronounced during periods of economic contraction or slow economic growth.

Previous report

Bad or extreme weather conditions can adversely impact attendance at the parks, which in turn would reduce revenues.

Previous report

Because most of the attractions at the parks are outdoors, attendance at the parks can be adversely affected by continuous bad or extreme weather and by forecasts of bad or mixed weather conditions, which would negatively affect revenues. The ownership of many parks in different geographic locations reduces, but does not completely eliminate, the effect that adverse weather can have on consolidated results. This risk could be magnified by the effects of climate change, including more extreme temperatures, excessive precipitation or wind, wildfires and hurricanes.

Previous report

Insurance coverage may not be adequate to cover all possible losses that the Combined Company could suffer, and insurance costs may increase.

Previous report

Although the Combined Company carries liability insurance to cover possible incidents, coverage may not be adequate to cover liabilities, the Combined Company may not be able to obtain coverage at commercially reasonable rates, and the Combined Company may not be able to obtain adequate coverage should a catastrophic incident occur at its parks or at other parks. Companies engaged in the amusement park business may be sued for substantial damages in the event of an actual or alleged incident. An incident occurring at the parks or at competing parks could reduce attendance, increase insurance premiums, and negatively impact operating results.

Previous report

Unanticipated construction delays in completing capital improvement projects at the parks and resort facilities, significant ride downtime, or other unplanned park closures could adversely affect revenues.

Previous report

A meaningful marketing factor for an amusement or water park is the uniqueness and perceived quality of its rides and attractions in a particular market area. Accordingly, the regular addition of new rides and attractions is important, and a key element of revenue growth is strategic capital spending on new rides and attractions. Any construction delays could adversely affect attendance and the ability to realize revenue growth. Further, when rides, attractions, or an entire park, have unplanned downtime and/or closures, revenue could be adversely affected.

Previous report

There is a risk of accidents or other incidents occurring at amusement and water parks, which may reduce attendance and negatively impact revenues.

Previous report

The safety of guests and employees is one of the Combined Company's top priorities. Amusement and water parks feature thrill rides. There are inherent risks involved with these attractions, and an accident or a serious injury at any of the parks could result in negative publicity and could reduce attendance and result in decreased revenues. In addition, accidents or injuries at facilities operated by competitors, including other amusement and water parks, could influence the general attitudes of patrons and adversely affect attendance at the parks. Other types of incidents such as food borne illnesses, product recalls on items sold, and disruptive, negative guest behavior which have either been alleged or proved to be attributable to the parks or competitors could adversely affect attendance and revenues.

Previous report

Extended disruptions to technology platforms may adversely impact sales and revenues.

Previous report

A large portion of the Combined Company's sales are processed online and utilize third party technology platforms. Increased dependence on these technology platforms may adversely impact sales, and therefore revenues, if key systems are disrupted for an extended period of time.

Previous report

Failure to keep pace with developments in technology could adversely affect operations or competitive position.

Previous report

The amusement and water park industry demands the use of sophisticated technology and systems for operation of the parks, ticket, membership and season pass sales and management, and labor and inventory management. Information technology systems continue to evolve and, in order to remain competitive, the Combined Company must implement new technologies and systems in a timely and efficient manner. The development and maintenance of these technologies may require significant investment and may not achieve the anticipated benefits from such new developments or upgrades.

Previous report

Risks Related to Strategy

Previous report

The Combined Company's growth strategy may not achieve the anticipated results.

Previous report

The Combined Company's future success will depend on its ability to grow the business. The Combined Company grows the business through acquisitions and capital investments to improve its parks through new rides and attractions, as well as in-park product offerings and product offerings outside of the parks. Growth and innovation strategies require significant commitments of management resources and investments may not grow revenues at the rate expected or at all. As a result, the Combined Company may not be able to recover the costs incurred in developing new projects and initiatives, or to realize their intended or projected benefits, which could have a material adverse effect on its business, financial condition or results of operations.

Previous report

The Combined Company competes for discretionary spending and discretionary free time with many other entertainment alternatives and is subject to factors that generally affect the recreation and leisure industry, including general economic conditions.