Six Flags Entertainment CorporationNEW

To the Shareholders and the Board of Directors of

Six Flags Entertainment Corporation

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheets of Six Flags Entertainment Corporation and subsidiaries (the "Company") as of December 31, 2024 and 2023, the related consolidated statements of operations and comprehensive (loss) income, equity, and cash flows for each of the three years in the period ended December 31, 2024, and the related notes (collectively referred to as the “financial statements”). We also have audited the Company's internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control - Integrated Framework (2013) issued by COSO.

As described in Management’s Report on Internal Control Over Financial Reporting, management excluded from its assessment the internal control over financial reporting at Former Six Flags, which was acquired through the Mergers on July 1, 2024, and whose financial statements constitute 75% of total assets, and 33% of net revenues of the consolidated financial statement amounts as of and for the year ended December 31, 2024. Accordingly, our audit did not include the internal control over financial reporting at Former Six Flags.

Basis for Opinions

The Company's management is responsible for these financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on these financial statements and an opinion on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the financial statements included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures to respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of the critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Merger - Valuation of intangible asset - Trade names - Refer to Notes 2 and 5 in the consolidated financial statements

On July 1, 2024, the merger of equals transaction by and among the Combined Company, Cedar Fair, Former Six Flags, and Copper Merger Sub, was completed. Upon consummation of the mergers, the separate legal existences of each Copper Merger Sub, Cedar Fair and Former Six Flags ceased, and the Combined company changed its name to “Six Flags Entertainment Corporation.” The Six Flags Merger has been accounted for as a business combination under Accounting Standards Codification 805, Business Combinations, using the acquisition method of accounting, and Cedar Fair has been determined to be the accounting acquirer. Accordingly, the Company allocated the purchase price, on a preliminary basis, to the assets acquired and liabilities assumed based on their estimated fair value and recorded $850 million of intangible asset attributed to the Six Flags trade name. Management estimated the fair value of the intangible asset utilizing an income approach. The determination of the fair value using the income approach requires management to make significant assumptions related to the forecasts of future revenues, terminal growth rate, discount rate and royalty rate.

We identified the acquired Six Flags trade name intangible asset as a critical audit matter because of the significant estimates and assumptions made by management in determining the fair value of the Six Flags trade name. This required a high degree of auditor judgment and an increased extent of effort, including the need to involve our fair value specialists, when performing audit procedures to evaluate the reasonableness of management’s forecasts of future revenues and the selection of the terminal growth rate, discount rate, and royalty rate for the Six Flags trade name intangible asset.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the forecasts of future revenues and the selection of the terminal growth rate, discount rate, and royalty rate for the Six Flags trade name intangible asset included the following, among others:

•We tested the effectiveness of controls over the valuation of the Six Flags trade name intangible asset acquired, including management's controls over forecasts of future revenues and selection of the terminal growth rate, discount rate, and royalty rate.

•We evaluated the reasonableness of management's forecasts of future revenues by comparing the projections to historical results and certain peer companies.

•With the assistance of our fair value specialists, we evaluated the reasonableness of the terminal growth rate, discount rate, and royalty rate, including testing the underlying source information and the mathematical accuracy of the calculations, and developing ranges of independent estimates and comparing those to the terminal growth rate, discount rate, and royalty rate selected by management.

Deferred Revenues - Revenue Recognition of Multi-Use Season Long Products for Admission - Refer to Notes 1 and 3 in the consolidated financial statements

The Company defers revenue for its multi-use products, including season-long products for admissions products and recognizes revenues over the estimated number of uses expected for each type of product. The Company estimates a redemption rate for each multi-use season long product for admission using historical and forecasted uses at each park. Revenue is then recognized on a pro-rated basis based on the estimated allocated selling price of the multi-use season long products for admission and the estimated uses of that product. During the third quarter of 2024, management began selling multi-use season long products for admission for the 2025 operating season. These products include providing the customer park access for the remainder of the 2024 operating season, while also providing the customer with admission for the 2025 operating season.

We identified the evaluation of the estimated redemption rate used to determine the multi-use season long products for admission for selected parks as a critical audit matter because of significant judgments made by management in estimating the amount of revenue that should be recognized in each fiscal year, which in turn led to a high degree of auditor judgment and increased extent of effort.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the amount of deferred revenue associated with the multi-use season long products for admission for selected parks that should be recognized in each fiscal year included the following, among others:

•We tested the effectiveness of controls over deferred revenue and revenue recognition related to multi-use season long products for admission for selected parks.

•We performed transaction testing for deferred revenue associated with the multi-use season long products for admission for selected parks by agreeing the amounts recorded as deferred revenue to source documents and determined that products sold related to items that are deferred in nature.

•We tested the completeness of deferred revenue associated with the multi-use season long products for admission for selected parks by making selections from a reciprocal attendance population from selected days and determined whether the multi-use attendance product was appropriately recorded as deferred revenue in the general ledger at period end.

•We developed an independent expectation of the total deferred revenue balances for selected parks and compared such expectation to the recorded amount for reasonableness.

•We compared actual guest visits in the current year to the estimated redemption rates.

Goodwill - Schlitterbahn Reporting Unit - Refer to Notes 1 and 5 to the consolidated financial statements

The Company's evaluation of goodwill for impairment involves the comparison of the fair value of each reporting unit to its carrying value. The Company determines the fair value of its reporting units using a combination of an income (discounted cash flow) approach and the market approach. The determination of the fair value using the income approach requires management to make significant estimates and assumptions related to forecasts of future revenues, earnings before interest, taxes, depreciation, and amortization (EBITDA) margins, terminal growth rate and weighted-average cost of capital. The determination of the fair value using the market approach requires management to make significant assumptions related to the selection of comparable publicly traded companies and cash flow multiples to determine the fair value. The Company determined that the fair value of the Schlitterbahn Waterpark & Resort New Braunfels and the Schlitterbahn Waterpark Galveston Reporting Unit ("Schlitterbahn") was less than its carrying amount. As a result, the Company recorded an impairment charge of $42.5 million to reduce the carrying amount to be equivalent to the estimated fair value as of September 29, 2024. As of December 31, 2024, the goodwill balance was $3,296.5 million of which $50.7 million was allocated to the Schlitterbahn Reporting Unit.

We identified the goodwill impairment evaluation for Schlitterbahn as a critical audit matter because of the significant estimates and assumptions made by management when determining the fair value of Schlitterbahn. This required a high degree of auditor judgment and an increased extent of effort, including the need to include our fair value specialists, when performing audit procedures to evaluate the reasonableness of management's estimates and assumptions related to forecasts of future revenues and EBITDA margins, and the selection of the terminal growth rate, weighted-average cost of capital, comparable publicly traded companies, and cash flow multiples.

How the Critical Audit Matter was Addressed in the Audit

Our audit procedures for the Schlitterbahn reporting unit related to the forecasts of future revenues and EBITDA margins and the selection of the terminal growth rate, weighted-average cost of capital, comparable publicly traded companies and cash flow multiples included the following, among others:

•We tested the effectiveness of controls over management's goodwill impairment evaluation, including those over the determination of the fair value of Schlitterbahn, such as controls related to management's forecasts of future revenues and EBITDA margins and the selection of the terminal growth rate, weighted-average cost of capital, comparable publicly traded companies, and cash flow multiples.

•We evaluated the reasonableness of management's forecasts of future revenues and EBITDA margins by comparing the projections to historical results and certain peer companies.

•With the assistance of our fair value specialists, we evaluated the terminal growth rate and weighted-average cost of capital, including testing the underlying source information and the mathematical accuracy of the calculations, and developing ranges of independent estimates and comparing those to the terminal growth rate and weighted-average cost of capital selected by management.

•With the assistance of our fair value specialists, we evaluated the selected comparable publicly traded companies and cash flow multiples, including testing the underlying source information and mathematical accuracy of the calculations, and comparing the multiples selected by management to its comparable publicly traded companies.

/s/DELOITTE & TOUCHE LLP

Cleveland, Ohio

March 3, 2025

We have served as the Company's auditor since 2004.