-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, H9W1sL+VOEbvmomSa1ds8uVjFJ3pITO7v/laE4S+sYfKITB7ik9PB+5V0jI40qjV BtnfAf2tIpy3D/gW5Ob8gA== /in/edgar/work/20000811/0000912057-00-036705/0000912057-00-036705.txt : 20000921 0000912057-00-036705.hdr.sgml : 20000921 ACCESSION NUMBER: 0000912057-00-036705 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20000630 FILED AS OF DATE: 20000811 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SIX FLAGS INC CENTRAL INDEX KEY: 0000701374 STANDARD INDUSTRIAL CLASSIFICATION: [7990 ] IRS NUMBER: 736137714 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-13703 FILM NUMBER: 695097 BUSINESS ADDRESS: STREET 1: 11501 NE EXPWY CITY: OKLAHOMA CITY STATE: OK ZIP: 73131 BUSINESS PHONE: 4054752500 MAIL ADDRESS: STREET 1: 122 EAST 42ND STREET 49TH STREET CITY: NEW YORK STATE: NY ZIP: 10168 FORMER COMPANY: FORMER CONFORMED NAME: TIERCO GROUP INC/DE/ DATE OF NAME CHANGE: 19920703 10-Q 1 a10-q.txt 10-Q ================================================================================ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ----------- FORM 10-Q |X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR QUARTERLY PERIOD ENDED JUNE 30, 2000 OR |_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ________________ TO ________________ COMMISSION FILE NUMBER: 0-9789 ----------- SIX FLAGS, INC. (formerly Premier Parks Inc.) (Exact name of Registrant as specified in its charter) DELAWARE 13-3995059 (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 11501 NORTHEAST EXPRESSWAY, OKLAHOMA CITY, OKLAHOMA 73131 (Address of principal executive offices, including zip code) (405) 475-2500 (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes |X| No |_| Indicate the number of shares outstanding of each of the issuer's classes of common stock as of the latest practicable date: At August 1, 2000, Six Flags, Inc. had outstanding 78,700,603 shares of Common Stock, par value $.025 per share. ================================================================================ PART I -- FINANCIAL INFORMATION ITEM 1 -- FINANCIAL STATEMENTS SIX FLAGS, INC. CONSOLIDATED BALANCE SHEETS
JUNE 30, 2000 DECEMBER 31, 1999 ------------- ----------------- (UNAUDITED) ASSETS Current assets: Cash and cash equivalents.................... $88,620,000 $138,131,000 Accounts receivable.......................... 74,220,000 29,208,000 Inventories.................................. 44,582,000 23,590,000 Prepaid expenses and other current assets.... 31,503,000 32,793,000 Restricted-use investment securities......... 25,197,000 24,430,000 --------------------- -------------------- Total current assets...................... 264,122,000 248,152,000 Other assets: Debt issuance costs.......................... 51,148,000 55,540,000 Restricted-use investment securities......... 70,215,000 84,464,000 Deposits and other assets.................... 60,398,000 64,472,000 --------------------- -------------------- Total other assets........................ 181,761,000 204,476,000 Property and equipment, at cost................. 2,508,003,000 2,272,419,000 Less accumulated depreciation................ 263,184,000 207,680,000 --------------------- -------------------- Total property and equipment.............. 2,244,819,000 2,064,739,000 Investment in theme park partnerships........... 388,721,000 384,637,000 Intangible assets, principally goodwill......... 1,351,440,000 1,352,732,000 Less accumulated amortization................ 120,489,000 93,164,000 --------------------- -------------------- 1,230,951,000 1,259,568,000 --------------------- -------------------- Total assets.............................. $4,310,374,000 $4,161,572,000 ===================== ====================
See accompanying notes to consolidated financial statements -2- ITEM 1 -- FINANCIAL STATEMENTS (CONTINUED) SIX FLAGS, INC. CONSOLIDATED BALANCE SHEETS
JUNE 30, 2000 DECEMBER 31, 1999 ------------- ----------------- (UNAUDITED) LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable.................................. $107,575,000 $37,918,000 Accrued liabilities............................... 71,702,000 89,726,000 Accrued interest payable.......................... 26,411,000 23,566,000 Deferred income................................... 51,653,000 6,037,000 Current maturities of long-term debt.............. 211,958,000 2,055,000 ---------------------- ---------------------- Total current liabilities...................... 469,299,000 159,302,000 Long-term debt ...................................... 2,216,480,000 2,202,933,000 Other long-term liabilities and minority interest.... 35,832,000 41,761,000 Deferred income taxes................................ 89,804,000 141,960,000 ---------------------- ---------------------- Total liabilities.............................. 2,811,415,000 2,545,956,000 Stockholders' equity: Preferred stock of $1.00 par value ............... 12,000 12,000 Common stock of $0.025 par value ................. 1,967,000 1,958,000 Capital in excess of par value.................... 1,705,158,000 1,700,305,000 Accumulated deficit .............................. (163,463,000) (53,681,000) Deferred compensation............................. (10,327,000) (15,255,000) Accumulated other comprehensive income (loss) -foreign currency translation adjustments...... (34,388,000) (17,723,000) ---------------------- ---------------------- Total stockholders' equity..................... 1,498,959,000 1,615,616,000 ---------------------- ---------------------- Total liabilities and stockholders' equity..... $4,310,374,000 $4,161,572,000 ====================== ======================
See accompanying notes to consolidated financial statements -3- ITEM 1 -- FINANCIAL STATEMENTS (CONTINUED) SIX FLAGS, INC. CONSOLIDATED STATEMENTS OF OPERATIONS THREE MONTHS ENDED JUNE 30, 2000 AND 1999 (UNAUDITED)
2000 1999 ---- ---- Revenue: Theme park admissions......................................... $188,526,000 $173,910,000 Theme park food, merchandise and other........................ 152,553,000 140,232,000 ---------------------- -------------------- Total revenue............................................ 341,079,000 314,142,000 ---------------------- -------------------- Operating costs and expenses: Operating expenses............................................ 117,875,000 104,743,000 Selling, general and administrative........................... 61,986,000 54,651,000 Noncash compensation.......................................... 3,145,000 4,201,000 Costs of products sold........................................ 32,355,000 31,078,000 Depreciation and amortization................................. 44,627,000 38,257,000 ---------------------- -------------------- Total operating costs and expenses....................... 259,988,000 232,930,000 ---------------------- -------------------- Income from operations................................... 81,091,000 81,212,000 ---------------------- -------------------- Other income (expense): Interest expense.............................................. (60,791,000) (47,253,000) Interest income............................................... 1,804,000 6,100,000 Equity in operations of theme park partnerships............... 9,075,000 6,261,000 Other income (expense), including minority interest........... (122,000) 41,000 ---------------------- -------------------- Total other income (expense)............................. (50,034,000) (34,851,000) ---------------------- -------------------- Income before income taxes............................... 31,057,000 46,361,000 Income tax expense............................................... 15,303,000 22,109,000 ---------------------- -------------------- Income before extraordinary loss......................... 15,754,000 24,252,000 Extraordinary loss on extinguishment of debt, net of income tax benefit of $4,104,000 in 1999................................. -- (6,157,000) ---------------------- -------------------- Net income............................................... $15,754,000 $18,095,000 ====================== ==================== Net income applicable to common stock.................... $9,932,000 $12,273,000 ====================== ==================== Per share amounts: Net income per average common share-- basic:.................. $0.13 $0.16 Net income per average common share--diluted:................. $0.12 $0.15 ====================== ==================== Weighted average number of common shares outstanding -- basic.... 78,677,000 77,372,000 ====================== ==================== Weighted average number of common shares outstanding -- diluted.. 79,849,000 80,160,000 ====================== ====================
See accompanying notes to consolidated financial statements -4- ITEM 1 -- FINANCIAL STATEMENTS (CONTINUED) SIX FLAGS, INC. CONSOLIDATED STATEMENTS OF OPERATIONS SIX MONTHS ENDED JUNE 30, 2000 AND 1999 (UNAUDITED)
2000 1999 ---- ---- Revenue: Theme park admissions.................................................. $ 200,875,000 $ 188,228,000 Theme park food, merchandise and other................................. 171,097,000 164,494,000 ---------------------- -------------------- Total revenue..................................................... 371,972,000 352,722,000 ---------------------- -------------------- Operating costs and expenses: Operating expenses..................................................... 177,068,000 157,523,000 Selling, general and administrative.................................... 95,994,000 89,703,000 Noncash compensation................................................... 6,292,000 9,236,000 Costs of products sold................................................. 34,823,000 34,271,000 Depreciation and amortization.......................................... 86,759,000 73,986,000 ---------------------- -------------------- Total operating costs and expenses................................ 400,936,000 364,719,000 ---------------------- -------------------- Loss from operations.............................................. (28,964,000) (11,997,000) ---------------------- -------------------- Other income (expense): Interest expense....................................................... (116,151,000) (93,560,000) Interest income........................................................ 4,109,000 13,534,000 Equity (loss) in operations of theme park partnerships................. (5,080,000) (3,651,000) Other income (expense), including minority interest.................... 135,000 (198,000) ---------------------- -------------------- Total other income (expense)...................................... (116,987,000) (83,875,000) ---------------------- -------------------- Loss before income taxes.......................................... (145,951,000) (95,872,000) Income tax benefit ....................................................... 47,813,000 26,724,000 ---------------------- -------------------- Loss before extraordinary loss ................................... (98,138,000) (69,148,000) Extraordinary loss on extinguishment of debt, net of income tax benefit of $4,104,000 in 1999.......................................... -- (6,157,000) ---------------------- -------------------- Net loss ......................................................... $(98,138,000) $(75,305,000) ====================== ==================== Net loss applicable to common stock............................... $(109,782,000) $(86,949,000) ====================== ==================== Per share amounts: Net loss per average common share--basic and diluted:.................. $(1.40) $(1.13) ====================== ==================== Weighted average number of common shares outstanding - basic and diluted.. 78,583,000 77,052,000 ====================== ====================
See accompanying notes to consolidated financial statements -5- ITEM 1 -- FINANCIAL STATEMENTS (CONTINUED) SIX FLAGS, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED)
THREE MONTHS ENDED SIX MONTHS ENDED JUNE 30, JUNE 30, ------------------------------------- ------------------------------------- 2000 1999 2000 1999 ------------------ ----------------- ------------------ ---------------- Net income (loss)................................ $15,754,000 $18,095,000 $(98,138,000) $(75,305,000) Other comprehensive income (loss)-- Foreign currency translation adjustment....... (6,194,000) (7,265,000) (16,665,000) (18,797,000) ------------------ ----------------- ------------------ ---------------- Comprehensive income (loss)...................... $9,560,000 $10,830,000 $(114,803,000) $(94,102,000) ================== ================= ================== ================
See accompanying notes to consolidated financial statements -6- ITEM 1 -- FINANCIAL STATEMENTS (CONTINUED) SIX FLAGS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS SIX MONTHS ENDED JUNE 30, 2000 AND 1999 (UNAUDITED)
2000 1999 ---- ---- Cash flows from operating activities: Net loss.................................................................. $ (98,138,000) $ (75,305,000) Adjustments to reconcile net loss to net cash (used in) provided by operating activities: Depreciation and amortization.......................................... 86,759,000 73,986,000 Equity (loss) in operations of theme park partnerships................. 5,080,000 3,651,000 Minority interest...................................................... 132,000 198,000 Noncash compensation................................................... 6,292,000 9,236,000 Interest accretion on notes payable.................................... 14,992,000 16,646,000 Interest accretion on restricted-use investments....................... (1,656,000) (3,481,000) Extraordinary loss on early extinguishment of debt .................... -- 10,261,000 Amortization of debt issuance costs.................................... 4,392,000 3,542,000 Deferred income taxes.................................................. (48,156,000) (37,772,000) Increase in accounts receivable........................................ (45,012,000) (36,680,000) Increase in inventories and prepaid expenses........................... (19,702,000) (10,192,000) Decrease in deposits and other assets.................................. 4,074,000 17,916,000 Increase in accounts payable, accrued expenses, and other liabilities.. 83,482,000 81,933,000 Increase (decrease) in accrued interest payable........................ 2,845,000 (9,910,000) --------------------- --------------------- Total adjustments...................................................... 93,522,000 119,334,000 --------------------- --------------------- Net cash (used in) provided by operating activities.................... (4,616,000) 44,029,000 --------------------- --------------------- Cash flows from investing activities: Additions to property and equipment....................................... (250,121,000) (251,315,000) Investment in theme park partnerships..................................... (9,164,000) (27,975,000) Acquisition of theme park companies, net of cash acquired................. -- (82,432,000) Maturities of restricted-use investments ................................. 15,138,000 11,170,000 ---------------------- -------------------- Net cash used in investing activities.................................. (244,147,000) (350,552,000) ---------------------- -------------------- Cash flows from financing activities: Repayment of long-term debt............................................... (92,542,000) (427,621,000) Proceeds from borrowings.................................................. 301,000,000 499,024,000 Net cash proceeds from issuance of common stock........................... 3,498,000 1,510,000 Payment of cash dividends................................................. (11,644,000) (11,644,000) Payment of debt issuance costs............................................ -- (9,964,000) ---------------------- -------------------- Net cash provided by financing activities.............................. 200,312,000 51,305,000 ---------------------- -------------------- Effect of exchange rate changes on cash ............................... (1,060,000) (3,326,000) ---------------------- -------------------- Decrease in cash and cash equivalents.................................. (49,511,000) (258,544,000) Cash and cash equivalents at beginning of period............................. 138,131,000 400,578,000 ====================== ==================== Cash and cash equivalents at end of period................................... $ 88,620,000 $ 142,034,000 ====================== ==================== Supplementary cash flow information: Cash paid for interest.................................................... $ 93,922,000 $ 83,282,000 ====================== ====================
See accompanying notes to consolidated financial statements -7- SIX FLAGS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. GENERAL -- BASIS OF PRESENTATIOn Six Flags, Inc. ("Six Flags" or the "Company") owns and operates regional theme amusement and water parks. As of June 30, 2000, the Company and its subsidiaries own or operate 36 parks, including 28 domestic parks, one park in Mexico and seven parks in Europe. The Company is also managing the construction and development of a theme park in Europe. On June 30, 2000, the Company changed its name from Premier Parks Inc. to Six Flags, Inc. As used herein, Holdings refers only to Six Flags, Inc., without regard to its subsidiaries. During May 1999, in separate transactions, the Company purchased 100% of the capital stock of the companies that own Reino Aventura, a theme park located in Mexico City, and purchased the assets used in the operation of Splashtown, a water park near Houston. In addition, during May 1999, the limited partnership that owns Six Flags Over Georgia purchased the assets used in the operation of White Water Atlanta, a water park and related entertainment facility. The Company is the managing general partner of the limited partnership and owns approximately 25% of the limited partnership units. On November 15, 1999, the Company purchased Warner Bros. Movie World Germany, near Dusseldorf, Germany, and entered into a joint venture with Warner Bros. to develop and manage a new Warner Bros. Movie World theme park scheduled to open in Madrid, Spain in 2002. (See Note 2.) The accompanying consolidated financial statements for the three months and six months ended June 30, 1999 include the results of the parks acquired in May 1999 only from the respective dates of their acquisition and do not include the results of Movie World Germany, which was acquired in November 1999. (See Note 2.) Management's Discussion and Analysis of Financial Condition and Results of Operations which follows these notes contains additional information on the results of operations and the financial position of the Company. Those comments should be read in conjunction with these notes. The Company's annual report on Form 10-K for the year ended December 31, 1999 includes additional information about the Company, its operations and its financial position, and should be referred to in conjunction with this quarterly report on Form 10-Q. The information furnished in this report 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 periods presented. Results of operations for the three-month and six-month periods ended June 30, 2000 are not indicative of the results expected for the full year. In particular, the Company's theme park operations contribute most of their annual revenue during the period from Memorial Day to Labor Day each year. START-UP COSTS As of January 1, 1999, the Company adopted the provisions of AICPA Statement of Position No. 98-5, "Accounting for Start-Up Activities." Generally, the statement required the write-off of previously capitalized start-up costs and precludes the future capitalization of these types of costs. Start-up costs include pre-opening costs and professional fees and other costs associated with incorporating or otherwise starting a business. The effect of the adoption of the provisions of the statement was not material to the financial position, operations or cash flow of the Company and is included in depreciation and amortization. INCOME (LOSS) PER SHARE The following table reconciles the weighted average number of common shares outstanding used in -8- SIX FLAGS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) the calculations of basic and diluted income (loss) per share for the three and six-month periods ended June 30, 2000 and 1999, respectively. The effect of potential common shares issuable upon the exercise of employee stock options on the weighted average number of shares on a diluted basis was antidilutive to the diluted loss per share calculation for each six-month period. Additionally, the weighted average number of shares of Common Stock for each period does not include the effect of the potential conversion of the Company's mandatorily convertible preferred stock into a maximum of 11,500,000 shares of common stock and a minimum of 9,554,000 shares of common stock as the effects of such conversion and the resulting decrease in preferred stock dividends is antidilutive.
THREE MONTHS ENDED SIX MONTHS ENDED JUNE 30, JUNE 30, ------------------------------------ ---------------------------------- 2000 1999 2000 1999 ----------------- ----------------- ----------------- --------------- Weighted average number of common shares outstanding - basic................................ 78,677,000 77,372,000 78,583,000 77,052,000 Effect of potential common shares issuable upon the exercise of employee stock options ................ 1,172,000 2,788,000 -- -- ----------------- ----------------- ----------------- --------------- Weighted average number of common shares outstanding - diluted.............................. 79,849,000 80,160,000 78,583,000 77,052,000 ================= ================= ================= ===============
REVENUE RECOGNITION In December 1999, the Securities and Exchange Commission issued Staff Accounting Bulletin (SAB) No. 101, "Revenue Recognition." SAB No. 101 was amended in March 2000 to delay the effective date until periods beginning after April 1, 2000. The Company has elected to adopt the provisions of SAB 101 as of January 1, 2000. The provisions of SAB No. 101 do not have an impact on the accounting policies that the Company utilizes to prepare its annual financial statements and therefore, the adoption did not have an impact on the Company's annual financial statements. However, the provisions of SAB No. 101 did change the accounting policies that the Company uses to recognize revenue from multi-admission tickets and season passes during the year. The Company's accounting policy as of January 1, 2000 recognizes the revenue for multi-admission tickets and season passes over the operating season on a usage basis rather than upon receipt. -9- SIX FLAGS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) The provisions of SAB No. 101 allow companies to either restate results or account for the change as a cumulative effect. The Company has elected to restate its 1999 interim results of operations. The following sets forth the results for the three months and six months ended June 30, 1999 as originally reported and as restated.
THREE MONTHS ENDED JUNE 30, 1999 SIX MONTHS ENDED JUNE 30, 1999 --------------------------------------- -------------------------------------- (IN THOUSANDS EXCEPT FOR PER SHARE DATA) AS ORIGINALLY AS ORIGINALLY REPORTED: AS RESTATED: REPORTED: AS RESTATED: ------------------ ----------------- ----------------- ----------------- Revenues......................................... $333,515 $314,142 $387,164 $352,722 Net income (loss) applicable to common stock..... 24,464 12,273 (64,172) (86,949) Net income (loss) per average common share ...... outstanding - basic.......................... 0.32 0.16 (0.83) (1.13) Net income (loss) per average common share ...... outstanding - diluted........................ 0.31 0.15 (0.83) (1.13)
2. ACQUISITION OF THEME PARKS On May 4, 1999, the Company acquired all of the capital stock of the companies that own and operate Reino Aventura (subsequently renamed Six Flags Mexico), a theme park located in Mexico City, for a cash purchase price of approximately $59,600,000. The Company funded the acquisition from existing cash. Approximately $14,575,000 of costs in excess of the fair value of the net assets acquired were recorded as goodwill. The transaction was accounted for as a purchase. On May 13, 1999, the Company acquired the assets of Splashtown water park located in Houston, Texas for a cash purchase price of approximately $20,400,000. The Company funded the acquisition from existing cash. Approximately $10,530,000 of costs in excess of the fair value of the net assets acquired were recorded as goodwill. The transaction was accounted for as a purchase. On May 25, 1999, the limited partnership that owns Six Flags Over Georgia acquired the assets of White Water Atlanta water park and the adjacent American Adventures entertainment facility located near Atlanta, Georgia. In connection with the acquisition, the Company issued a $40,700,000 note that was converted into 1,080,000 shares of the Company's common stock. The transaction was accounted for by the limited partnership as a purchase. The Company has reflected the additional investment in the limited partnership as investment in theme park partnerships. On November 15, 1999, the Company purchased the partnership that owns Warner Bros. Movie World Germany, near Dusseldorf, Germany, and entered into a joint venture with Warner Bros. to design, develop and manage a new Warner Bros. Movie World theme park scheduled to open in Madrid, Spain in 2002. At the same time, the Company entered into a long-term license agreement for exclusive theme park usage in Europe, Mexico, South America and Central America of the Looney Tunes, Hanna-Barbera, Cartoon Network and D.C. Comics characters. The aggregate cost of the transactions was $180,269,000, which was funded by borrowings under the Company's 1999 credit facility (the "Credit Facility"). See Note 3(d). Approximately $42,800,000 of the aggregate costs were allocated to goodwill and intangible assets. The transaction was accounted for as a purchase. -10- SIX FLAGS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) In June 2000, the Company acquired the remaining minority interest in Walibi S.A. held by third parties for an aggregate cost of approximately $1,023,000. The purchase price was allocated primarily to goodwill. 3. LONG-TERM INDEBTEDNESS (a) On January 31, 1997, Six Flags Operations Inc. (formerly known as Premier Operations Inc.), the predecessor to and currently a wholly-owned subsidiary of Holdings ("SF Operations"), issued $125,000,000 of senior notes due January 2007 (the "1997 Notes"). The 1997 Notes are senior unsecured obligations of SF Operations. The 1997 Notes bear interest at 9 3/4% per annum payable semiannually and, except in the event of a change of control of SF Operations and certain other circumstances, do not require any principal payments prior to their maturity in 2007. The 1997 Notes are redeemable, at SF Operations' option, in whole or in part, at any time on or after January 15, 2002, at varying redemption prices. The 1997 Notes are guaranteed on a senior, unsecured, joint and several basis by all of SF Operations' principal domestic subsidiaries. The indenture limits the ability of SF Operations and its subsidiaries to dispose of assets; incur additional indebtedness or liens; pay dividends; engage in mergers or consolidations; and engage in certain transactions with affiliates. (b) On April 1, 1998, Holdings issued at a discount $410,000,000 principal amount at maturity ($313,595,000 and $298,664,000 carrying value as of June 30, 2000 and December 31, 1999, respectively) of Senior Discount Notes and $280,000,000 principal amount of 9 1/4% Senior Notes (the "1998 Senior Notes"). The notes are senior unsecured obligations of Holdings, and are not guaranteed by Holdings' subsidiaries. The Senior Discount Notes do not require any interest payments prior to October 1, 2003 and, except in the event of a change of control of the Company and certain other circumstances, any principal payments prior to their maturity in 2008. The Senior Discount Notes have an interest rate of 10% per annum. The 1998 Senior Notes require annual interest payments of approximately $25,900,000 (9 1/4% per annum) and, except in the event of a change of control of the Company and certain other circumstances, do not require any principal payments prior to their maturity in 2006. The notes are redeemable, at the Company's option, in whole or in part, at any time on or after April 1, 2002 (in the case of the 1998 Senior Notes) and April 1, 2003 (in the case of the Senior Discount Notes), at varying redemption prices. Approximately $70,700,000 of the net proceeds of the 1998 Senior Notes were deposited in escrow to prefund the first six semi-annual interest payments thereon, and $75,000,000 of the net proceeds of the Senior Discount Notes were invested in restricted-use securities, until April 1, 2003, to provide funds to pay certain of the Company's obligations to the limited partners of Six Flags Over Georgia and Six Flags Over Texas (the "Partnership Parks") and to pay cash dividends on the Company's mandatorily convertible preferred stock. The indentures under which the Senior Discount Notes and the 1998 Senior Notes were issued limit the ability of Holdings and its subsidiaries to dispose of assets; incur additional indebtedness or liens; pay dividends; engage in mergers or consolidations; and engage in certain transactions with affiliates. (c) On April 1, 1998, Six Flags Entertainment Corporation ("SFEC"), which was subsequently merged into SF Operations, issued $170,000,000 principal amount of 8 7/8% Senior Notes (the "SFEC Notes"). The SFEC Notes are guaranteed on a fully subordinated basis by Holdings. The SFEC Notes require annual interest payments of approximately $15,100,000 (8 7/8% per annum) and, except in the event of a change of control of SF Operations and certain other circumstances, do not require any principal payments prior to their maturity in 2006. The SFEC Notes are redeemable, at SF Operation's option, in whole or in part, at any time on or after April 1, 2002, at varying redemption -11- SIX FLAGS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) prices. The net proceeds of the SFEC Notes, together with other funds, were invested in restricted-use securities, which were used to repay in full on December 15, 1999 pre-existing notes of SFEC in a principal amount of $192,250,000 at that date. The indenture under which the SFEC Notes were issued limits the ability of SF Operations and its subsidiaries to dispose of assets; incur additional indebtedness or liens; pay dividends; engage in mergers or consolidations; and engage in certain transactions with affiliates. (d) On November 5, 1999, Six Flags Theme Parks Inc., an indirect wholly-owned subsidiary of the Company ("SFTP"), entered into the Credit Facility and, in connection therewith, SFEC merged into SF Operations and SFTP became a subsidiary of SF Operations. The Credit Facility includes a $300,000,000 five-year revolving credit facility ($210,000,000 of which was outstanding at June 30, 2000), a $300,000,000 five-and-one-half-year multicurrency reducing revolver facility (of which $291,000,000 was outstanding at June 30, 2000) and a $600,000,000 six-year term loan (all of which was outstanding at June 30, 2000). Borrowings under the five-year revolving credit facility must be repaid in full for thirty consecutive days each year. The interest rate on borrowings under the Credit Facility can be fixed for periods ranging from one to six months. At the Company's option the interest rate is based upon specified levels in excess of the applicable base rate or LIBOR. In February 2000, the Company entered into interest rate swap agreements that effectively convert the term loan component of the Credit Facility into a fixed rate obligation through the term of the swap agreements, ranging from December 2001 to March 2002. Giving effect to such agreements, the effective rate on the term loan borrowings at June 30, 2000 was 9.93%. The multicurrency facility, which permits optional prepayments and reborrowings, requires quarterly mandatory repayments of 2.5% of the outstanding amount thereof commencing on December 31, 2001, 5.0% commencing on December 31, 2002, 7.5% commencing on December 31, 2003 and 20.0% commencing on December 31, 2004. The term loan facility requires quarterly repayments of 0.25% of the outstanding amount thereof commencing on December 31, 2001 and 24.25% commencing on December 31, 2004. A commitment fee of .50% of the unused credit of the facility is due quarterly in arrears. The principal borrower under the facility is SFTP, and borrowings under the Credit Facility are guaranteed by Holdings, SF Operations and all of SF Operations' domestic subsidiaries and are secured by substantially all of SF Operations' domestic assets. The Credit Facility contains restrictive covenants that, among other things, limit the ability of SF Operations and its subsidiaries to dispose of assets; incur additional indebtedness or liens; repurchase stock; make investments; engage in mergers or consolidations; pay dividends, except that (subject to covenant compliance) dividends will be permitted to allow Holdings to meet cash interest obligations with respect to its 1998 Senior Notes, Senior Discount Notes and 1999 Senior Notes, cash dividend payments on its Premium Income Equity Securities ("PIES") and its obligations to the limited partners in the Partnership Parks, and engage in certain transactions with subsidiaries and affiliates. In addition, the Credit Facility requires that SF Operations comply with certain specified financial ratios and tests. On November 5, 1999, the Company borrowed $892,000,000 under the Credit Facility principally to repay all amounts outstanding under the Company's then existing credit facilities and to provide funds to consummate the November 1999 transactions with Warner Bros. described in Note 2. (e) On June 30, 1999, Holdings issued $430,000,000 principal amount of 9 3/4% Senior Notes (the "1999 Senior Notes"). The 1999 Senior Notes are senior unsecured obligations of Holdings, are not guaranteed by subsidiaries and rank equal to the 1998 Senior Notes and the Senior Discount Notes. The 1999 Senior Notes require annual interest payments of approximately $41,900,000 and, except in the event of a change of control of the Company and certain other circumstances, do not require any principal payments prior to their maturity in 2007. The 1999 Senior Notes are redeemable, at Holding's -12- SIX FLAGS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) option, in whole or in part, at any time on or after June 15, 2003, at varying redemption prices. The indenture under which the 1999 Senior Notes were issued contains covenants substantially similar to those relating to the 1998 Senior Notes and the Senior Discount Notes. The net proceeds of the 1999 Senior Notes were used to retire notes of SF Operations and SFTP. 4. COMMITMENTS AND CONTINGENCIES On March 21, 1999, a raft capsized in the river rapids ride at Six Flags Over Texas, one of the Company's Partnership Parks, resulting in one fatality and injuries to ten others. As a result, a case entitled JERRY L. CARTWRIGHT, ET AL VS. PREMIER PARKS, INC. D/B/A SIX FLAGS OVER TEXAS, INC. was commenced seeking unspecified damages. The Partnership Park is covered by the Company's multi-layered general liability insurance coverage of up to $100,000,000 per occurrence, with no self-insured retention. The Company does not believe that the impact of this incident or the resulting lawsuit will have a material adverse effect on the Company's consolidated financial position, operations or liquidity. In December 1998, a final judgment of $197,300,000 in compensatory damages was entered against SFEC, SFTP, Six Flags Over Georgia, Inc. and Time Warner Entertainment Company, L.P. (TWE), and a final judgment of $245,000,000 in punitive damages was entered against TWE and $12,000,000 in punitive damages was entered against the Six Flags entities. In July 2000 the judgments were upheld by the Georgia Court of Appeals. TWE has indicated that it intends to appeal the judgments to the Georgia Supreme Court. The judgments arose out of a case entitled SIX FLAGS OVER GEORGIA, LLC ET AL V. TIME WARNER ENTERTAINMENT COMPANY, LP ET AL based on certain disputed partnership affairs prior to the Company's acquisition of Six Flags at Six Flags Over Georgia, including alleged breaches of fiduciary duty. The sellers in the Six Flags acquisition, including Time Warner, Inc., have agreed to indemnify the Company from any and all liabilities arising out of this litigation. The Company is party to various legal actions arising in the normal course of business. Matters that are probable of unfavorable outcome to the Company and which can be reasonably estimated are accrued. Such accruals are based on information known about the matters, the Company's estimates of the outcomes of such matters and its experience in contesting, litigating and settling similar matters. None of the actions are believed by management to involve amounts that would be material to consolidated financial position, operations, or liquidity after consideration of recorded accruals. 5. INVESTMENT IN THEME PARK PARTNERSHIPS The following reflects the summarized results of the four parks managed by the Company during the three and six months ended June 30, 2000 and June 30, 1999. Results for White Water Atlanta and the related outdoor entertainment complex, which were acquired by the limited partnership that owns Six Flags Over Georgia on May 25, 1999, are included in the 1999 periods only from the acquisition date. -13- SIX FLAGS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
THREE MONTHS ENDED SIX MONTHS ENDED JUNE 30, JUNE 30, ---------------------------------- --------------------------------------- 2000 1999 2000 1999 ---------------- -------------- ----------------- ------------------- (IN THOUSANDS) Revenue.......................................... $83,105 $86,302 $94,855 $97,853 Expenses: Operating expenses.............................. 23,576 30,210 43,053 45,444 Selling, general and administrative............. 12,930 14,548 21,489 21,111 Costs of products sold.......................... 6,766 8,738 8,198 9,858 Depreciation and amortization................... 3,082 4,306 7,462 7,522 Interest expense, net........................... 4,429 2,360 7,213 4,207 Other expense................................... 171 132 393 194 ---------------- -------------- ----------------- ------------------- Total......................................... 50,954 60,294 87,808 88,336 ---------------- -------------- ----------------- ------------------- Net income ...................................... $32,151 $26,008 $7,047 $9,517 ================ ============== ================= ===================
The Company's share of income from operations of the four theme parks for the three and six months ended June 30, 2000 was $14,076,000 and $4,795,000, respectively, prior to depreciation and amortization charges of $4,767,000 and $9,534,000, respectively, and third-party interest and other non-operating expenses of $234,000 and $341,000, respectively. The Company's share of income from operations of the four theme parks for the three and six months ended June 30, 1999 was $8,788,000 and $2,988,000, respectively, prior to depreciation and amortization charges of $2,527,000 and $6,639,000, respectively. There is a substantial difference between the carrying value of the Company's investment in the theme parks and the net book value of the theme parks. The difference is being amortized over 20 years for the Partnership Parks and over the expected useful life of the rides and equipment installed by the Company at Six Flags Marine World. 6. BUSINESS SEGMENTS The Company manages its operations on an individual park location basis. Discrete financial information is maintained for each park and provided to the Company's management for review and as a basis for decision making. The primary performance measure used to allocate resources is earnings before interest, tax expense, depreciation and amortization ("EBITDA"). All of the Company's parks provide similar products and services through a similar process to the same class of customer through a consistent method. As such, the Company has only one reportable segment--operation of theme parks. The following tables present segment financial information, a reconciliation of the primary segment performance measure to income (loss) before income taxes and a reconciliation of theme park revenues to consolidated total revenues. Park level expenses exclude all noncash operating expenses, principally depreciation and amortization, and all non-operating expenses. -14- SIX FLAGS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
THREE MONTHS ENDED SIX MONTHS ENDED JUNE 30, JUNE 30, ------------------------------------- ----------------------------------- 2000 1999 2000 1999 ----------------- ------------------ ------------------ --------------- (IN THOUSANDS) Theme park revenue.................................. $424,184 $400,444 $466,827 $450,575 Theme park cash expenses............................ 252,636 238,537 370,420 347,207 ----------------- ------------------ ------------------ --------------- Aggregate park EBITDA............................... 171,548 161,907 96,407 103,368 Third-party share of EBITDA from parks accounted for under the equity method............ (24,804) (19,452) (17,626) (15,096) Amortization of investment in theme park Partnerships................................... (4,767) (2,527) (9,534) (6,639) Unallocated net expenses, including corporate and other expenses................................. (7,306) (14,157) (16,397) (23,493) Depreciation and amortization....................... (44,627) (38,257) (86,759) (73,986) Interest expense.................................... (60,791) (47,253) (116,151) (93,560) Interest income..................................... 1,804 6,100 4,109 13,534 ----------------- ------------------ ------------------ --------------- Income (loss) before income taxes................... $ 31,057 $ 46,361 $(145,951) $(95,872) ================= ================== ================== =============== Theme park revenue.................................. $424,184 $400,444 $ 466,827 $450,575 Theme park revenue from parks accounted for under the equity method...................... (83,105) (86,302) (94,855) (97,853) ================= ================== ================== =============== Consolidated total revenue.......................... $341,079 $314,142 $371,972 $352,722 ================= ================== ================== ===============
Seven of the Company's parks are located in Europe and one is located in Mexico. The Mexico park was acquired in May 1999 and one of the European parks was acquired in November 1999. The following information reflects the Company's long-lived assets and revenue by domestic and foreign categories as of and for the six months ended June 30, 2000 and 1999, respectively:
2000: (In thousands) -------------------------------------------------------------- Domestic International Total -------- ------------- ----- Long-lived assets................................ $3,361,733 $502,758 3,864,491 Revenue.......................................... 313,466 58,506 371,972 1999: (In thousands) -------------------------------------------------------------- Domestic International Total -------- ------------- ----- Long-lived assets................................ $3,201,293 $230,471 $3,431,764 Revenue.......................................... 323,721 29,001 352,722
-15- ITEM 2 -- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS GENERAL Results of operations for the three-month and six-month periods ended June 30, 2000 are not indicative of the results expected for the full year. In particular, the Company's theme park operations contribute most of their annual revenue during the period from Memorial Day to Labor Day each year. Results of operations for the three and six months ended June 30, 2000 include the results of the four parks acquired in 1999. Results for the three and six months ended June 30, 1999 include the results of three of the acquired parks from their respective dates of acquisition in May 1999 and do not include the results of the Movie World Germany park acquired in November 1999. THREE MONTHS ENDED JUNE 30, 2000 VS. THREE MONTHS ENDED JUNE 30, 1999 Revenue in the second quarter of 2000 totaled $341.1 million compared to $314.1 million for the second quarter of 1999. Revenues in the second quarter of 2000 increased 8.6% over the prior year period due in part to the inclusion of the results of the parks acquired in 1999. The Company believes that revenues in the 2000 quarter were adversely affected by unusually difficult weather, particularly on weekends, in a large number of its major markets. In addition, revenues at the Company's European parks were adversely impacted by a decline in European currencies during the quarter. Revenue growth would have been approximately $4.5 million higher had European currency exchange rates remained at 1999 levels. Operating expenses for the second quarter of 2000 increased $13.1 million compared to expenses for the second quarter of 1999. The 12.5% increase resulted primarily from the inclusion in the 2000 period of two consolidated parks acquired in May 1999 and one acquired in November 1999. Excluding the acquired parks from both periods, operating expenses in the 2000 period increased $4.7 million (4.6%) as compared to the prior-year period as a result of increased compensation expense and increased show expenses. Selling, general and administrative expenses for the second quarter of 2000 increased $7.3 million compared to comparable expenses for the second quarter of 1999. Excluding the acquired parks from both periods, selling, general and administrative expenses are constant as compared to the prior year period. Noncash compensation expense was $1.1 million less than the prior-year period, reflecting the lower value associated with prior year conditional option grants which have now become unconditional. Costs of products sold in the 2000 period increased $1.3 million compared to costs for the second quarter of 1999. As a percentage of theme park food, merchandise and other revenue, costs of good sold represented 21.2% in the 2000 period as compared to 22.2% in the 1999 quarter. Depreciation and amortization expense for the second quarter of 2000 increased $6.4 million compared to the second quarter of 1999. The increase compared to the 1999 level was attributable to the Company's on-going capital program and from additional depreciation and amortization expense ($2.7 million) associated with the consolidated parks acquired in 1999. Interest expense, net increased $17.8 million compared to the second quarter of 1999. The increase compared to interest expense, net for the 1999 quarter resulted from higher average interest rates on a higher average debt and reduced interest income from lower average cash and cash equivalents and restricted-use investment balances during 2000. -16- For the 2000 period, equity (loss) in operations of theme park partnerships reflects the Company's share of the income or loss of Six Flags Over Texas (34% effective Company ownership) and Six Flags Over Georgia, including White Water Atlanta (25% effective Company ownership), the lease of Six Flags Marine World and the management of all four parks. The partnership that owns Six Flags Over Georgia acquired White Water Atlanta in May 1999. The $2.8 million increase in the income from equity in operations of theme park partnerships compared to the second quarter of 1999 was attributable in part to inclusion of the results of White Water Atlanta for the full 2000 period. Income tax expense was $15.3 million for the second quarter of 2000 compared to $22.1 million for the second quarter of 1999. The effective tax rate for the second quarter of 2000 was 49.3% compared to a rate of 47.7% for the second quarter of 1999. The Company's 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 statement purposes and the deductible portion of the amortization for tax purposes. SIX MONTHS ENDED JUNE 30, 2000 VS. SIX MONTHS ENDED JUNE 30, 1999 Revenue in the first six months of 2000 totaled $372.0 million compared to $352.7 million for the comparable period of 1999. Revenues in the 2000 period increased 5.5% over the prior year period due to the inclusion of the results of the parks acquired in 1999. The Company believes that revenues in the 2000 period were adversely affected by unusually difficult weather, particularly on weekends, in a large number of its major markets. In addition, revenues at the Company's European parks were adversely impacted by a decline in European currencies during the period. Revenue growth would have been approximately $4.5 million higher had European currency exchange rates remained at 1999 levels. Operating expenses for the six months ended June 30, 2000 increased $19.5 million compared to expenses for the first half of 1999. The 12.4% increase resulted primarily from the inclusion in the 2000 period of two consolidated parks acquired in May 1999 and one acquired in November 1999. Excluding the acquired parks from both periods, operating expenses in the 2000 period increased $5.5 million (3.6%) as compared to the prior-year period as a result of increased compensation expense and increased show expenses. Selling, general and administrative expenses for the first six months of 2000 increased $6.3 million compared to similar expenses for the first six months of 1999. Excluding the acquired parks from both periods, selling, general and administrative expenses decreased $5.0 million as compared to the prior year period due in large measure to lower corporate expenses. Noncash compensation expense was $2.9 million less than the prior-year period, reflecting the lower value associated with prior year conditional option grants which have now become unconditional. Costs of products sold in the 2000 period increased $0.6 million compared to costs for the first six months of 1999. As a percentage of theme park food, merchandise and other revenue, costs of good sold represented 20.4% in the 2000 period as compared to 20.8% in the 1999 period. Depreciation and amortization expense for the first six months of 2000 increased $12.8 million compared to the comparable period of 1999. The increase compared to the 1999 level was attributable to the Company's on-going capital program and from additional depreciation and amortization expense ($6.5 million) associated with the consolidated parks acquired in 1999. Interest expense, net increased $32.0 million compared to the first six months of 1999. The increase compared to interest expense, net for the 1999 quarter resulted from higher average interest rates on a higher average debt and reduced interest income from lower average cash and cash equivalents and restricted-use investment balances during 2000. -17- For the 2000 period, equity (loss) in operations of theme park partnerships reflects the Company's share of the income or loss of Six Flags Over Texas (34% effective Company ownership) and Six Flags Over Georgia, including White Water Atlanta (25% effective Company ownership), the lease of Six Flags Marine World and the management of all four parks. The partnership that owns Six Flags Over Georgia acquired White Water Atlanta in May 1999. The loss from equity in operations of theme park partnerships compared to the first six months of 1999 increased by $1.4 million, primarily as result of the ownership of White Water Atlanta for the full period in 2000. Income tax benefit was $47.8 million for the six months ended June 30, 2000 compared to $26.7 million for the first six months of 1999. The effective tax rate for the 2000 period was 32.8% compared to a rate of 27.9% for the comparable period of 1999. The Company's 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 statement purposes and the deductible portion of the amortization for tax purposes. LIQUIDITY, CAPITAL COMMITMENTS AND RESOURCES At June 30, 2000, the Company's indebtedness aggregated $2,428.4 million, of which approximately $212.0 million matures prior to June 30, 2001. Substantially all of the short-term debt represents borrowings under the revolving credit component of the Credit Facility, which the Company expects to pay down in full during the third quarter. See Note 3 to the Company's Consolidated Financial Statements for additional information regarding the Company's indebtedness. During the six months ended June 30, 2000, net cash used in operating activities was $4.6 million. Net cash used in investing activities in the first six months of 2000 totaled $244.1 million, consisting primarily of capital expenditures and investments in theme park partnerships. Net cash provided by financing activities in the first six months of 2000 was $200.3 million, representing net proceeds of borrowings under the Credit Facility described in Note 3(d) to the Company's Consolidated Financial Statements, net of cash dividends paid. In addition to its obligations under its outstanding indebtedness, the Company has guaranteed the obligations of certain of its subsidiaries to (i) make minimum annual distributions of approximately $48.6 million (subject to annual cost of living adjustments) to the limited partners in the Partnership Parks, (ii) make minimum capital expenditures at each of the Partnership Parks during rolling five-year periods, based generally on 6% of such park's revenues, and (iii) purchase at specified prices a maximum number of 5% per year (accumulating to the extent not purchased in any given year) of limited partnership units outstanding (to the extent tendered by the unit holders). Cash flows from operations at those two Partnership Parks will be used to satisfy the obligations described in clauses (i) and (ii) above before any funds are required from the Company. In addition, at June 30, 2000, the Company had $70.2 million in a dedicated escrow account available to fund these obligations. The degree to which the Company is leveraged could adversely affect its liquidity. The Company's liquidity could also be adversely affected by unfavorable weather, accidents or the occurrence of an event or condition, including negative publicity or significant local competitive events, that significantly reduce paid attendance and, therefore, revenue at any of its theme parks. The Company believes that, based on historical and anticipated operating results, cash flows from operations, available cash and available amounts under the Credit Facility will be adequate to meet the Company's future liquidity needs, including anticipated requirements for working capital, capital expenditures, scheduled debt and PIES requirements and obligations under arrangements relating to the Partnership Parks, for at least the next several years. The Company may, however, need to refinance all or a portion of its existing debt on or prior to maturity or to seek additional financing. -18- To minimize the Company's exposure to changing foreign currency rates on ride purchases, in the past the Company has entered into foreign exchange forward contracts. The Company has not entered into any new foreign exchange forward contracts in 2000 related to ride purchase contracts from foreign vendors. Additionally, the Company has not hedged its exposure to changes in foreign currency rates related to its international parks. 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" and in June 2000 issued SFAS No. 138, which amended certain provisions of SFAS 133. SFAS No. 133, as amended, 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 for accounting purposes. 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. It is expected that the Company will adopt the provisions of SFAS No. 133 and SFAS No. 138 as of January 1, 2001. The Company has had limited involvement with derivative financial instruments. The Company is currently evaluating the provisions of SFAS No. 133, as amended. Based upon the Company's limited use of derivative financial instruments, the Company does not believe that the adoption of SFAS No. 133 will have a material impact on its consolidated financial position or future results of operations. In March 2000, the Financial Accounting Standards Board issued FASB Interpretation No. 44, "Accounting for Certain Transactions Involving Stock Compensation - An Interpretation of APB Opinion No. 25." The Interpretation clarifies the application of Opinion 25 for certain issues. The Company accounts for stock based arrangements with employees based on Opinion 25. Among other issues, the Interpretation clarifies (a) the definition of employee for purposes of applying Opinion 25, (b) the criteria for determining whether a plan qualifies as a noncompensatory plan, (c) the accounting consequence of modifications to the terms of a previously fixed stock option or award, and (d) the accounting for an exchange of stock compensation awards in a business combination. The Interpretation is effective July 1, 2000, but certain conclusions cover specific events that occur either after December 15, 1998 or January 12, 2000. The Company does not believe that the Interpretation will have a material impact on its consolidated financial position or future results of operations. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The information included in "Quantitative and Qualitative Disclosures About Market Risk" in Item 7A of the Company's 1999 Annual Report on Form 10-K is incorporated herein by reference. Such information includes a description of the Company's potential exposure to market risks, including interest rate risk and foreign currency risk. During the period January 1, 2000 through June 30, 2000, the value of the Euro has declined approximately 5.5% in relation to the dollar. This decline to date is less than the hypothetical 10% decline described and evaluated in the 1999 Form 10-K. Although the Company may in the future enter into transactions to hedge currency exchange risks in respect of specific purchase contracts with foreign vendors, the Company has no current plans to enter into hedging transactions with respect to its foreign operations generally. During the first six months, interest rates (as measured by LIBOR) have increased by approximately 12%. As previously disclosed, the Company has entered into interest swap arrangements with respect to its $600.0 million term loan. At June 30, 2000, the balance of the Company's other indebtedness represented fixed rate debt, other than $501.0 million outstanding under the Credit Facility, of which $210.0 million represented debt under the revolving credit facility which the Company intends to repay in full during the third quarter of 2000. Except as described above, there have been no material changes in the Company's market risk exposure from that disclosed in the 1999 Form 10-K. -19- PART II -- OTHER INFORMATION ITEMS 1-3 AND 5 Not applicable. ITEMS 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITYHOLDERS On June 15, 2000, the Company held its Annual Meeting of Stockholders. The number of shares of Common Stock represented at the Meeting either in person or by proxy, was 68,122,279 shares (86.57% of the outstanding shares of common stock). Five proposals were voted upon at the Meeting. The proposals and voting results were as follows: 1. Proposal 1 - Election of Directors The following persons were elected as directors as follows:
NAME FOR AGAINST ---- --- ------- Paul A. Biddelman...................... 67,927,825 194,454 Kieran E. Burke........................ 67,927,043 195,236 James F. Dannhauser.................... 67,927,060 195,219 Michael E. Gellert..................... 67,927,935 194,344 Francois Letaconnoux................... 67,835,164 287,115 Stanley S. Shuman...................... 67,927,955 194,324 Gary Story............................. 67,925,960 196,319
2. Proposal 2 - Approval of Amendment to the Company's Certificate of Incorporation to Effect a name change from Premier Parks Inc. to Six Flags, Inc. FOR AGAINST WITHHELD 68,109,769 3,577 8,933 3. Proposal 3 - Approval of Amendment to Premier Parks Operations Inc.'s Certificate of Incorporation to effect a name change from Premier Parks Operations Inc. to Six Flags Operations Inc. FOR AGAINST WITHHELD 68,045,126 3,693 73,260 4. Proposal 4 - Transfer of Ownership of International Operations to Six Flags Theme Parks, Inc. FOR AGAINST WITHHELD 67,929,712 2,387 190,180 5. Proposal 5 - Ratification of selection by the Company's Board of Directors of KPMG LLP as independent public accountants of the Company for the year ending December 31, 2000 FOR AGAINST WITHHELD 68,108,207 3,665 10,407 -20- ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits 3.1 Certificate of Amendment of the Company's Certificate of Incorporation dated June 23, 2000. 3.2 Amended and Restated By-Laws of the Company 27.1 Financial Data Schedule - June 30, 2000 (b) Reports on Form 8-K None. -21- SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. SIX FLAGS, INC. (Registrant) Kieran E. Burke CHAIRMAN AND CHIEF EXECUTIVE OFFICER James F. Dannhauser CHIEF FINANCIAL OFFICER Date: August 11, 2000 -22- EX-3.1 2 ex-3_1.txt EXHIBIT 3.1 Exhibit 3.1 CERTIFICATE OF AMENDMENT OF CERTIFICATE OF INCORPORATION OF PREMIER PARKS INC. It is hereby certified that: 1. The name of the corporation (hereinafter called the "CORPORATION") is Premier Parks Inc. 2. The certificate of incorporation of the Corporation is hereby amended by striking out Article I thereof and by substituting in lieu of said Article I the following new Article I: "I. The name of the corporation is Six Flags, Inc. (hereinafter called the "Corporation")." 3. The amendment of the certificate of incorporation herein certified has been duly adopted in accordance with the provisions of Section 242 of the General Corporation Law of the State of Delaware. 4. The effective time of the amendment herein certified shall be 5:00 p.m., June 30, 2000. Signed on June 23, 2000 /s/ KIERAN E. BURKE -------------------------------------- Kieran E. Burke, Chairman of the Board EX-3.2 3 ex-3_2.txt EXHIBIT 3.2 Exhibit 3.2 AMENDED AND RESTATED BY-LAWS OF SIX FLAGS, INC. ARTICLE I OFFICES Section 1.1. The principal offices of Six Flags, Inc., a Delaware corporation (the "Company"), shall be located at 11501 Northeast Expressway, Oklahoma City, Oklahoma 73131 and 122 East 42nd Street, New York, New York 10168. Section 1.2. The Company may also have offices at such other places as the Board of Directors from time to time appoint or the business of the Company may require. ARTICLE II CORPORATE SEAL Section 2.1. The seal of the Company shall have inscribed thereon the name of the Company. ARTICLE III STOCKHOLDERS' MEETING Section 3.1. The annual stockholders' meeting shall be held, unless otherwise determined by the Board of Directors, in the office of the Company. Section 3.2. The annual meeting of the stockholders shall be held on or before six (6) months after the end of each full fiscal year (as established by the Board of Directors), when they shall elect a Board of Directors and transact such other business as may properly be brought before the meeting. Section 3.3. The holders of a majority of the shares issued and outstanding and entitled to vote thereat, present in person, or represented by proxy, shall be requisite and shall constitute a quorum at all meetings of the stockholders for the transaction of business, except as otherwise provided by law, or by these bylaws. Any meeting of stockholders, whether or not a quorum is present, may be adjourned from day to day or from time to time by the vote of a majority of the stockholders present at the meeting or represented by proxy. It shall not be necessary to give any notice of the time and place of any adjourned meeting or of the business to be transacted thereat other than by announcement at the meeting at which such adjournment is taken, except that when a meeting is adjourned for thirty (30) days or more, notice of the adjourned meeting shall be given as in the case of an original meeting. At such adjourned meetings, any business may be transacted which might have been transacted at the meeting as originally notified. Section 3.4. At each meeting of the stockholders every stockholder having the right to vote shall be entitled to vote in person, or by proxy appointed by an instrument in writing subscribed by such stockholder and bearing a date not more than six (6) months prior to said meeting. Each stockholder shall have one (1) vote for each share of stock having voting power, registered in his name on the books of the Company, except that no share shall be voted on at any election for Directors which has been transferred on the books of the Company within twenty (20) days next preceding such election. Unless demanded by a majority of the number of shares present in person or by proxy, no vote need be by ballot, and voting need not be conducted by inspectors. All elections shall be had and all questions decided by a majority vote, except as otherwise provided by law, or by these by-laws. Section 3.5. Written notice of the annual meeting shall be mailed to each stockholder entitled to vote thereat at such address as appears on the stock book of the Company, at least ten (10) days but not more than sixty (60) days prior to the meeting. Section 3.6. A complete list of the stockholders entitled to vote at the ensuing election, arranged in alphabetical order, with residence of each and number of voting shares held by each, shall be prepared by the Secretary and filed in the office of the Company at least ten (10) days prior to the day of the annual meeting and on the day of the annual meeting where the election is to be held, and shall at all times during the usual hours of business, at such places and on such days, be open for examination of any stockholder. Section 3.7. Special meetings of the stockholders may be held at such places as the Chairman or President, or the Secretary, from time to time or at any time, may designate. Section 3.8. Special meetings of the stockholders, for any purpose, or purposes, unless otherwise provided by law, may be called by the Chairman or President, and shall be called by the Chairman or President or Secretary at the request in writing of a majority of the Board of Directors, or at the request in writing of stockholders owning not less than twenty percent (20%) in amount of the entire number of shares of the Company issued and outstanding, and entitled to vote. Any such request shall state the purpose or purposes of the proposed meeting. Section 3.9. Business transacted at all special meetings shall be confined to the objects stated in the call, provided that any other business may be transacted upon written waiver and to authorize or take such action as required by the General Corporation Law of Delaware. Section 3.10. Written notice of all special meetings of the stockholders, stating the time, place and objects thereof, shall be mailed, postage prepaid, at least ten (10) days before such meeting, to each stockholder entitled to vote thereat at such address as appears on the books of the Company, provided that such notice may be waived in writing, signed by the requisite number of stockholders as provided by the General Corporation Law of Delaware. ARTICLE IV DIRECTORS Section 4.1. The property and business of the Company shall be managed by its Board of Directors, consisting of not less than three (3) nor more than fifteen (15) in number. They shall be elected at the annual meetings or special meetings of the stockholders, and each Director shall be elected to serve until his successor shall be elected and shall qualify. Section 4.2. The Directors (who shall be 21 years of age) may hold their meetings and have one or more offices, and keep the books of the Company at the office of the Company. Directors need not be shareholders. Section 4.3. In addition to the powers and authorities by these by-laws expressly conferred upon them, the Board may exercise all such powers of the Company and do all such lawful acts and things as are not by law or by these bylaws directed or required to be exercised or done by the holders of the issued and outstanding shares entitled to vote. Section 4.4. If the office of any Director shall become vacant by reason of death, resignation, disqualification, removal or otherwise, such vacancy may be filled by the remaining Directors, and the successor or successors shall hold office for the unexpired term. In the event of any increase in the number of Directors, pursuant to Section 1 of this Article IV, the vacancy or vacancies so resulting shall be filled by a majority vote of the Directors then in office or by written designation of all Directors then in office except for the Director to be removed. Directors elected to fill vacancies hereunder shall hold office until the next annual or special meeting of the stockholders. Section 4.5. Any Director may be removed from office with or without cause by the holders of a majority of the shares then entitled to vote at an election of Directors, except as provided by the General Corporation Law of Delaware. ARTICLE V EXECUTIVE COMMITTEE Section 5.1. There may be an executive committee of three (3) Directors designated by resolution passed by a majority of the whole Board. Said committee may meet at stated time, or on notice to all or any one of their own number. During the intervals between meetings of the Board, such committee shall advise with and aid the officers of the Company in all matters concerning its interests and the management of its business, and generally perform such duties and exercise such powers as may be directed or delegated by the Board of Directors from time to time. The Board may delegate to such committee authority while the Board is not in session to exercise all of the powers of the Board, excepting power to: amend the by-laws; declare dividends or distributions; adopt an agreement of merger or consolidation; amend the Certificate of Incorporation; recommend to the stockholders the sale, lease or exchange of all or substantially all of the Company's property and assets; recommend to the stockholders a dissolution or a revocation of a dissolution of the Company; authorize the issuance of stock; or adopt a certificate of ownership and merger. Vacancies in the membership of the committee may be filled by the Board of Directors at any regular or special meeting of the Board. Section 5.2. The executive committee shall keep regular minutes of its proceedings and report the same to the Board. ARTICLE VI COMPENSATION OF DIRECTORS AND MEMBERS OF THE EXECUTIVE COMMITTEE Section 6.1. Directors, as such, shall not receive any stated salary for their services, but by resolution of the Board, a fixed sum and expenses of attendance, if any, may be allowed for attendance at such meeting of the Board; provided that nothing herein contained shall be construed to preclude any Director from serving the Company in any other capacity and receiving compensation therefor. Section 6.2. Members of the executive committee may be allowed like compensation for attending committee meetings; provided that nothing herein contained shall be construed to preclude any member thereof from serving the Company in any other capacity and receiving compensation therefor. ARTICLE VII MEETINGS OF THE BOARD OF DIRECTORS Section 7.1. The annual meeting of the Directors shall be held on the same day and immediately after the adjournment of the stockholders' annual meeting. Regular meetings, if any, shall be held at such other times as shall be fixed by the Directors. No notice shall be required of an annual or a regular meeting. Section 7.2. Special meetings of the Board may be called by the Chairman or President on three days' notice to each Director, either personally or by mail or by telegram; special meetings shall be called by the Chairman or President or Secretary in like manner and on like notice on the written request of two Directors; provided that notice of any special meeting of the Directors may be waived in writing signed by all of the Directors. Section 7.3. At all meetings of the Board a majority of the Directors shall be necessary and sufficient to constitute a quorum for the transaction of business, and the act of a majority of the Directors present at any meeting at which there is a quorum, shall be the act of the Board, except as may be otherwise specifically provided by law, the Certificate of Incorporation or by these by-laws. ARTICLE VIII OFFICERS Section 8.1. The officers of the Company shall be chosen by the Directors, and shall be a president, vice president, secretary, chief financial officer or treasurer and as many vice presidents, assistant secretaries and assistant treasurers as the Directors shall from time to time deem advisable. Any two or more offices, except those of president and secretary, or president and vice president may, at the same time, be held by the same person. The Directors may also designate from among their number a Chairman of the Board. Section 8.2. The Board of Directors, after each annual meeting of stockholders, shall choose a president from their own number, at least one vice president, and a secretary and a treasurer who need not be members of the Board. Section 8.3. The Board may appoint such other officers and agents as it shall deem necessary, who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time the Board. Section 8.4. The salaries of all officers of the Company shall be fixed by the Board of Directors. Section 8.5. The officers of the Company shall hold office until their successors are chosen and qualified in their stead. Section 8.6. Any officer elected or appointed by the Board of Directors may be removed from office, with or without cause, at any time by the affirmative vote of a majority of the Directors present at any meeting of the Board at which a quorum is present. ARTICLE IX CHAIRMAN OF THE BOARD Section 9.1. The Chairman of the Board of Directors shall he the chief executive officer of the Company and shall preside at all meetings of the Directors and Stockholders of the Company and shall perform such other functions as may be directed by the Board of Directors. ARTICLE X THE PRESIDENT Section 10.1. The President shall be the chief operating officer of the Company. In the absence of a duly appointed Chairman at meetings of the Board of Directors and Shareholders of the Company, he shall act in the Chairman's stead at such meetings and shall perform such other duties as the Board shall prescribe. ARTICLE XI CHIEF FINANCIAL OFFICER, VICE PRESIDENTS Section 11.1. The Chief Financial Officer shall, in the absence or disability of the President, perform the duties and exercise the power of the President, and shall perform such other duties as the Board of Directors, the Chairman or the President may prescribe. Section 11.2. Any of the vice presidents who may be available shall perform such other duties as the Board of Directors, the Chairman or the President shall prescribe. ARTICLE XII THE TREASURER Section 12.1. The treasurer shall have the custody of the funds and securities of the Company and shall keep full and accurate accounts of receipts and disbursements in books belonging to the Company and shall deposit all monies and other valuable effects in the name and to the credit of the Company in such depositories as may be designated by the Board of Directors. Section 12.2. He shall disburse the funds of the Company as may be ordered by the Chairman, the President or the Board taking proper vouchers for such disbursements, and shall render to the President and Directors, at the annual meetings of the Board, or whenever they may require it, an account of all his transactions as treasurer and of the financial condition of the Company. Section 12.3. He shall give the Company a bond, if required by the Board of Directors, in a sum, and with one or more securities satisfactory to the Board for the faithful performance of the duties of his office, and for the restoration to the Company, in case of his death, resignation, retirement or removal from office, of all books, papers, vouchers, money and other property of whatever kind in his possession or under his control belonging to the Company. ARTICLE XIII THE SECRETARY Section 13.1. The secretary shall attend all sessions of the Board and all meetings of the stockholders and record all votes and the minutes of all proceedings in a book to be kept for that purpose; and shall perform like duties for the executive committee when required. He shall give or cause to be given, notice of all meetings of the stockholders and of the Board of Directors, and shall perform such other duties as may be prescribed by the Board of Directors or President, all subject to the supervision of the President. ARTICLE XIV VACANCIES AND DELEGATION OF DUTIES OF OFFICERS Section 14.1. If the office of any officer or agent, one or more, becomes vacant by reason of death, resignation, retirement, disqualification, removal from office, or otherwise the Directors by a majority vote of the Directors present any meeting at which there is present a quorum, may choose or appoint a successor or successors who shall hold office for the unexpired term in respect of which such vacancy occurred, unless otherwise prescribed by the Board. Section 14.2. In case of the absence of any officer of the Company, or for any other reason that the Board may deem sufficient, the Board may delegate, for the time being, the powers or duties, or any of them of such officer to any other officer or to any Director, provided a majority of the entire Board concur therein. ARTICLE XV SHARES Section 15.1. Every stockholder shall be entitled to a certificate signed by the president or a vice president and the secretary or an assistant secretary, certifying the number of shares represented by such certificate, which certificate shall state on the reverse thereof the rights, duties, limitations and privileges of stockholders. When such certificate is signed by a Transfer Agent or by a Registrar, the signature of any such president, vice president, secretary or assistant secretary may be facsimile. All certificates for shares shall be consecutively numbered or otherwise identified. ARTICLE XVI TRANSFER AGENT AND REGISTRAR Section 16.1. The Directors may appoint one (1) or more Transfer Agents and one (1) or more Registrars of transfers and may require all certificates of Shares to bear the signature of a Transfer Agent and a Registrar, or as the Directors may otherwise direct. Transfers of stock shall be made on the books of the Company only by the person named in the certificate or by attorney, lawfully constituted in writing, and upon surrender of the certificate therefor and a full and complete compliance with all of the terms and conditions set forth on such certificates. Section 16.2. The Directors shall have power and authority to make all such rules and regulations as they may deem expedient concerning the issue, transfer and registration of certificates for shares of the Company. ARTICLE XVII CLOSING OF TRANSFER BOOKS Section 17.1. The Board of Directors may close the transfer books, in their discretion, for a period not exceeding twenty (20) days preceding any meeting, annual or special, of the stockholders, or the day appointed for the payment of a dividend. ARTICLE XVIII REGISTERED SHAREHOLDERS Section 18.1. The Company shall be entitled to treat the holder of record of any share or shares as the holder and owner in fact thereof, and accordingly, shall not be bound to recognize any equitable or other claim to or interest in such share on the part of any other person, whether or not it shall have express or other notice thereof, except as may be otherwise expressly provided by law. ARTICLE XIX LOST CERTIFICATES OF SHARES Section 19.1. Any person claiming a certificate of shares to be lost or destroyed shall make an affidavit or affirmation of that fact and advertise the same in such manner as the Board of Directors may require, but the Board of Directors may waive advertising, and such person shall, if the Directors so require, give the Company a bond of indemnity, in form and with one or more sureties satisfactory to the Board, in at least double the value of the shares represented by said certificates, whereupon a new certificate may be issued of the same tenor and for the same number of shares as the one alleged to be lost or destroyed. ARTICLE XX INSPECTION OF BOOKS AND RECORDS Section 20.1. The Directors shall determine from time to time whether, and, if allowed when and under what conditions and regulations, the accounts and books of the Company (except as may be required by law), or any of them, shall be open to the inspection of the stockholders, and the stockholders' rights in this respect are and shall be restricted and limited accordingly. ARTICLE XXI CHECKS Section 21.1. All checks or demands for money and notes of the Company shall be signed by the president, vice president, secretary or treasurer but the Board of Directors may from time to time, or at any time, otherwise direct and designate. ARTICLE XXII FISCAL YEAR Section 22.1. The fiscal year shall be subject to determination by the Board of Directors. ARTICLE XXIII DIVIDENDS Section 23.1. Dividends upon the shares of the Company, when earned, may be declared by the Board of Directors at any meeting of the Board. ARTICLE XXIV NOTICES Section 24.1. Whenever under any of the provisions of these by-laws notice is required to be given to any Director, officer, or stockholder, it shall not be construed to mean personal notice, but such notice may be given in writing, by depositing the same in the post office or letter box, in a postpaid sealed wrapper, addressed to such stockholder, officer or Director at such address as appears on the books of the Company, or, in the absence of other address, to such Director, officer or stockholder at the general post office in the City of Oklahoma City, Oklahoma and such notice shall be deemed to be given at the time when the same shall be thus mailed. Section 24.2. Any stockholder, Director or officer may waive any notice required to be given under these by-laws. ARTICLE XXV INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS Section 25.1. LIMITATIONS ON LIABILITY OF DIRECTORS. In accordance with the Corporation's certificate of incorporation, a director of the Corporation shall not be personally liable either to the Corporation or to any stockholder for monetary damages for breach of fiduciary duty as a director, except for any liability which a director may otherwise have (i) for any breach of the director's duty of loyalty to the Corporation or its stockholders or (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law or (iii) under Section 174 of the Delaware General Corporation Law, as in effect at the time of the act or omission giving rise to such liability, or any successor provision of law, or (iv) for any transaction from which the director derived an improper personal benefit. Section 25.2. INDEMNIFICATION OF DIRECTORS AND OFFICERS AGAINST THIRD PARTY CLAIMS. The Corporation shall, as further provided in this Article, indemnify to the fullest extent permitted by law any person who is or was a director or officer of the Corporation and who is or was made a party to or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative in nature.(including any proceeding or investigation by any legislative, regulatory or professional or other self-regulatory body), other than a proceeding by or in the right of the Corporation or a subsidiary of the Corporation as referred to in Section 25.3 of this Article or a proceeding by such person as referred to in Section 25.8 of this Article, by reason of the fact that such person (i) is or was a director or officer of the Corporation or (ii) is or was or is alleged to be or to have been serving at the request or for the benefit of the Corporation as a director, officer, partner, member, trustee or in any similar capacity of or for (A) any corporation, partnership, limited liability company, joint venture, trust or other enterprise in which the Corporation has any direct or indirect interest or (B) any employee benefit plan or trust of the Corporation or any such other enterprise or (C) any trade association or civic or charitable organization (collectively, a "Related Entity"), against expenses (including attorneys' fees and disbursements and court costs), judgments (including consequential and punitive damages), fines (including excise taxes assessed in connection with an employee benefit plan) and amounts paid in settlement actually sustained or reasonably incurred in connection with the investigation of, response to or defense (including any appeal) or settlement of such action, suit or proceeding, if in connection with the matter the person acted in accordance with the standard of conduct required by Section 25.5 of this Article; provided, however, that with respect to any amount paid in settlement the Corporation consented to such settlement or such consent was unreasonably denied or withheld. Any person who, while a director or officer of the Corporation, served in any capacity referred to in the immediately preceding sentence for (i) a corporation of which at least one-third of the shares entitled to vote in the election of its directors is owned, directly or indirectly, by the Corporation or (ii) a partnership, limited liability company, or joint venture of which at least one-third of the equity is owned, directly or indirectly, by the Corporation shall be deemed to have done so at the request of the Corporation, absent written notice to such individual to the contrary signed by the Corporation and delivered before the act or omission giving risk to the claim against such individual as to which indemnity is sought. Any person whose service to the Corporation as a director or officer of the Corporation imposed on such person duties to, or involved the provision by such person of services to, an employee benefit plan or trust of the Corporation or any Related Entity shall be deemed to have acted in respect of such plan or trust at the request of the Corporation. Section 25.3. INDEMNIFICATION OF DIRECTORS AND OFFICERS AGAINST CLAIMS BY OR IN THE RIGHT OF THE CORPORATION. In the case of any action or suit by or in the right of the Corporation or any subsidiary of the Corporation (as defined below) to procure a judgment in its favor, the Corporation shall, as further provided in this Article 25, indemnify to the fullest extent permitted by law any person who is or was a director or officer of the Corporation and who is or was made a party to or is threatened to be made a party to any such threatened, pending or completed action or suit by reason of the fact that such person (i) is or was a director or officer of the Corporation or (ii) is or was or is alleged to be or to have been serving at the request or for the direct or indirect benefit of the Corporation as a director, officer, member, trustee or in any similar capacity of or for any Related Entity against expenses (including attorneys' fees and disbursements and court costs) actually sustained or reasonably incurred in connection with the investigation of, response to, defense (including any appeal) or settlement of such action or suit, if such person acted in accordance with the standard of conduct required by Article 25.5 of this Article, except that no such indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the Corporation or such subsidiary unless and only to the extent that the Court of Chancery of the State of Delaware or the court in which such action or suit was brought shall determine upon application that, despite such adjudication of liability but in light of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which such court shall deem proper. For purposes of this Article 25, (i) a corporation of which at least one-third of the shares entitled to vote in the election of its directors is owned, directly or indirectly, by the Corporation or (ii) a partnership, limited liability company or joint venture of which at least one-third of the equity is owned, directly or indirectly, by the Corporation shall be considered a subsidiary of the Corporation. Section 25.4. INDEMNIFICATION OF DIRECTORS AND OFFICERS FOR SERVICE AS A WITNESS The Corporation shall, as further provided in this Article, indemnify to the fullest extent permitted by law any person who is or was a director or officer of the Corporation and who appears or was required or requested to appear and prepares to appear as a non-party witness in any action, suit or proceeding, whether civil, criminal, administrative or investigative in nature.(including any proceeding or investigation by any legislative, regulatory or professional or other self-regulatory body), by reason of the fact that such person (i) is or was a director or officer of the Corporation or (ii) is or was or is alleged to be or to have been serving at the request of or for the benefit of the Corporation as a director, officer, partner, member, trustee or in any similar capacity of or for any Related Entity against expenses (including attorneys fees and disbursements) actually and reasonably incurred in connection with such appearance. Section 25.5. INDEMNIFICATION OF EMPLOYEES AND AGENTS. Persons who are not directors or officers of the Corporation may be indemnified to the same extent as directors or officers of the Corporation, or any lesser extent, in respect of their service to the Corporation or to any Related Entity as the Board of Directors of the Corporation may at any time direct. By resolution adopted by affirmative vote of a majority of the Board of Directors, the Board of Directors may delegate to the appropriate officers of the Corporation the decision to indemnify against expenses any person who is not a director or officer of the Corporation. Section 25.6. STANDARD OF CONDUCT REQUIRED FOR INDEMNIFICATION. A person shall be provided indemnification in accordance with this Article against any liability arising in connection with a matter if in connection with such matter such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the Corporation and, with respect to any criminal proceeding, had no reasonable cause to believe that his conduct was unlawful. In the case of any individual who acts in any fiduciary capacity on behalf of any employee benefit plan or trust of the Corporation or of any Related Entity, action taken in good faith and in a manner such person reasonably believed to be in the interest of the participants and beneficiaries of such plan or trust shall be deemed to have been taken in a manner "not opposed to the best interest of the Corporation" as referred to in this Article. The termination of any action, suit or proceeding by judgment, order, settlement or conviction or upon a plea of nolo contendere or its equivalent shall not, of itself, create a presumption that a person did not act in good faith and in a manner which the person reasonably believed to be in or not opposed to the best interests of the Corporation or, with respect to any criminal action or proceeding, had reasonable clause to believe that the person's conduct was unlawful. Section 25.7. REIMBURSEMENT AND ADVANCEMENT OF EXPENSES. The Corporation shall, from time to time, reimburse or advance to any person who is or was a director or officer of the Corporation funds sufficient for the payment of all expenses (including attorney's fees and disbursements and court costs) actually and reasonably incurred by such person in connection with the investigation of, response to, defense (including any appeal) of or settlement of any civil, criminal, administrative or investigative action, suit or proceeding to which such person is made or threatened to be made a party by reason of the fact that such person (i) is or was a director or officer of the Corporation or (ii) is or was or is alleged to be or to have been serving at the request or for the benefit of the Corporation as a director, officer, partner, member, trustee or in any similar capacity of or for any Related Entity, in the case of each such proceeding upon receipt of an undertaking by or on behalf of such person to repay such amount if it shall ultimately be determined that such person is not entitled to be indemnified by the Corporation against such expenses. No collateral securing or other assurance of performance of such undertaking shall be required of such person by the Corporation. The Corporation may, as directed by the Board of Directors, reimburse or advance to any person who is not and was not a director or officer of the Corporation funds sufficient in whole or in part for the payment of all expenses (including attorney's fees and disbursements and court costs) actually and reasonably incurred by such person in defending any civil, criminal, administrative or investigative action, suit or other proceeding to which such person is made or threatened to be made a party by reason of such person's association with the Corporation or any Related Entity, in the case of each such proceeding upon receipt of an undertaking by or on behalf of such person to repay such amount if it shall ultimately be determined that such person is not entitled to be indemnified by the Corporation against such expenses as provided by this Article and upon such other terms and conditions as the Corporation may determine to apply. By resolution adopted by affirmative vote of a majority of the Board of Directors, the Board of Directors may delegate to the appropriate officers of the Corporation the decision to advance or reimburse expenses to any person who is not a director or officer of the Corporation. Section 25.8. EXCLUSION OF CLAIMS AGAINST THE CORPORATION, SUBSIDIARIES AND CURRENT AND FORMER DIRECTORS AND OFFICERS. No current or former director or officer of the Corporation shall be entitled to any advance or reimbursement by the Corporation of expenses, or to indemnification from the Corporation against expenses, incurred by him in asserting any claim or commencing or prosecuting any suit, action or proceeding against the Corporation (except as provided in Section 25.11 of this Article) or any subsidiary of the Corporation or any current or former director, officer, employee or agent of the Corporation or of any subsidiary of the Corporation, but such indemnification may be provided by the Corporation in any specific instance as permitted by Sections 25.12 or 25.13 of this Article. Section 25.9. DETERMINATION OF ENTITLEMENT TO INDEMNIFICATION. Unless ordered by a court, indemnification shall be provided to a person pursuant to Sections 25.2, 25.3, 25.4 or 25.5 of this Article only as authorized in a specific case upon a determination that indemnification is proper under the circumstances because the person satisfied the applicable standard of conduct. Such determination shall be made with respect to a person who is a director or officer of the Corporation at the time when such determination is made(i) by the Board of Directors by a majority vote of the directors who are not parties to the action, suit or proceeding in respect of which indemnification is sought, even if such directors are not sufficient to constitute a quorum, or by a majority vote of a committee of the Board of Directors designated by vote of a majority of such directors, each of the members of which is not a party to the action, suit or proceeding in respect of which indemnification is sought, or (ii) if there are no such directors or if directed by majority vote of such directors, by independent legal counsel in a written opinion delivered to the Board of Directors or (iii) by the stockholders. In the event a request for indemnification is made pursuant to Section 25.2 or 25.3 of this Article, the Corporation shall use its best efforts to cause such determination to be made not later than 90 days after such request is made. A determination of the entitlement to indemnification of a person other than a current director or officer of the Corporation shall be made as the Board of Directors of the Corporation shall determine. Neither the failure by the Corporation to make in a timely manner a determination as to the entitlement of a current or former director or officer to indemnification nor the making of a negative determination shall preclude such person from seeking a determination from any court of competent jurisdiction as to such person's entitlement to indemnification under this Article and in any such proceeding for a judicial determination of a person's entitlement to indemnification no presumption shall arise that the person is not entitled to indemnification by reason of any such failure or negative determination. Section 25.10. PREDECESSOR ENTITIES. For purposes of this Article, references to the Corporation shall include, in addition to any resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger with the Corporation to the extent that such constituent corporation, if its separate existence had continued, would have had been obligated to indemnify a person who was a director or officer of such constituent corporation, so that any person who at the effective time of the merger or consolidation or previously was a director or officer of such constituent corporation shall have the same entitlement to indemnification and advancement or reimbursement of expenses from the Corporation as such person would have had from such constituent corporation, assuming that, in lieu of such constituent corporation, the Corporation acted for purposes of determining in accordance with this Article such person's entitlement to indemnification. Section 25.11. INDEMNIFICATION TO BE PROVIDED UPON SUCCESSFUL DEFENSE. Notwithstanding the foregoing provisions of this Article, to the extent that a present or former director or officer of the Corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding of the kind referred to in Sections 25.2 or 25.3 of this Article, or in the defense of any claim, issue or matter therein, such person shall be indemnified against expenses actually and reasonably incurred by such person in connection therewith. Section 25.12. OTHER AGREEMENTS REGARDING INDEMNIFICATION; INSURANCE. Nothing contained in this Article shall prevent the Corporation from entering into with any person who is or was a director, officer, employee or agent of the Corporation or who is or was serving any Related Entity as a director, officer, partner, member, trustee, employee or agent or in any like capacity any agreement that provides indemnification to such person or further regulates the terms on which indemnification is to be provided to such person or provides assurance of the Corporation's obligation to indemnify such person, whether or not such indemnification is on the same or different terms than provided for by this Article or is in respect of such person acting in any other capacity, and nothing contained herein shall be exclusive of any right to indemnification or to advancement or reimbursement of expenses to which any person is otherwise entitled. The Corporation, further, shall have the power to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the Corporation or is or was serving any Related Entity as a director, officer, partner, member, trustee, employee or agent or in any like capacity against any liability asserted against such person or incurred by such person in any such capacity, or arising out of such person's status as such, whether or not the Corporation would have the power to indemnify such person against such liability under the provisions of this Article or otherwise. Section 25.13. PRESERVATION OF OTHER RIGHTS. The rights to indemnification and reimbursement or advancement of expenses provided by, or granted pursuant to, this Article shall not be deemed exclusive of any other rights to which a person seeking indemnification or reimbursement or advancement of expenses may have or hereafter be entitled under any statute, the certificate of incorporation or by-laws of the Corporation, any agreement, any vote of stockholders or disinterested directors or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office. Section 25.14. CONTRACTUAL RIGHTS; SURVIVAL; ENFORCEMENT. The provisions of this Article shall constitute a contract between the Corporation, on the one hand, and, on the other hand, each individual who serves or has served as a director and officer of the Corporation (whether before or after the adoption of this Article), in consideration of such person's past or current and any future performance of services for the Corporation, and also between the Corporation and any other person entitled to indemnity hereunder, and pursuant to this Article the Corporation intends to be legally bound to each such current or former director or officer of the Corporation or other person. Neither amendment nor repeal of any provision of this Article nor the adoption of any provision of the bylaws of the Corporation inconsistent with this Article shall eliminate or reduce the effect of this Article in respect of any act or omission occurring, or any cause of action or claim that accrues or arises or any state of facts existing, at the time of or before such amendment, repeal or adoption of an inconsistent provision (even in the case of a proceeding based on such a state of facts that is commenced after such time). The rights to indemnification and reimbursement or advancement of expenses provided by, or granted pursuant to, this Article shall continue notwithstanding that the person has ceased to be a director or officer of the Corporation (or in the case of any other person entitled to indemnity hereunder, has ceased to serve the Corporation) and shall inure to the benefit of the estate, executors, administrators, legatees and distributees of such person. The rights to indemnification and reimbursement or advancement of expenses provided by, or granted pursuant to, this Article shall be enforceable by any person entitled to such indemnification or reimbursement or advancement of expenses in any court of competent jurisdiction. Notwithstanding Section 25.8 of this Article, all expenses reasonably incurred by a current or former director or officer of the Corporation in connection with any action or suit to obtain indemnification hereunder as to which such person was determined to be entitled to indemnification shall be reimbursed by the Corporation. ARTICLE XXVI AMENDMENTS Section 26.1. These by-laws may be altered, amended or repealed or new bylaws may be adopted by the stockholders at any regular or special meeting (or by written consent in lieu thereof by stockholders having the minimum number of votes that would be necessary to authorize such action at a meeting) of the stockholders or by the Board of Directors at any regular or special meeting (or by unanimous written consent in lieu thereof), subject however to the power of the stockholders to adopt, amend or repeal the same. EX-27 4 ex-27.txt EXHIBIT 27
5 6-MOS DEC-31-1999 JUN-30-2000 88,620 0 74,220 0 44,582 264,122 2,508,003 263,184 4,310,374 469,299 2,216,480 0 12 1,967 1,496,980 4,310,374 371,972 371,972 34,823 34,823 177,068 0 116,151 (145,951) (47,813) (98,138) 0 0 0 (98,138) (1.40) (1.40)
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