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Team Square AlphaResearch Industry Sector, Entertainment Facilities Date: 11/12/2016 New York Stock Exchange (NYSE) This report is published for Global Markets Investments Club Annual IBS Stock Pitch Challenge purposes. Ticker: SIX NYSE Current Price: 53.90 USD Target Price: 60.19 USD Recommendation: BUY (11.70% Upside) SIX: Riding Higher We issue a BUY recommendation on Six Flags Entertainment Corporation (SIX) with a one-year target price of $60.19, which offers a 11.70% upside from its closing price of $53.90 as of 10/26/2016. SIX has a stable historical performance and enjoys robust growth potential driven by consumer confidence level and healthy consumer base. However, market concerns about quarterly earnings led to over 20% drop of its 52-week high of $62.7 in 3Q2015, though recovering to $53.90 in late October. We believe SIX’s season pass (introduced in 2010) and membership (introduced in 2013) strategy will continue to generate stable revenue each year, with in-sight revenue from global expansion starting 2019. Strong Support by Prospect Industry Performance Amusement park industry has been growing steadily in the past few years due to stronger consumer confidence and spending after 2008 financial crisis. Over 400 enterprises operate in the industry and five major players take over more than 98% of market share. Over the next five years, the industry is expected to grow at a CAGR of 2.4% from $16 billion in 2016 to $17.9 billion in 2020E. Robust Growth Potential from Season Pass and Membership SIX’s season pass and membership have been one of consumers’ favorites due to deep discounts and affordability (up to 72% savings compared to single-ticket). Thanks to this strategy, each pass holder spends 2x compared to single-ticket holder. And we expect its penetration rate (season pass & membership attendance to total attendance) to grow from 56.80% in 2016E to 60.00% in 2020E, implying a five-year CAGR of 4.51% in attendance numbers. Besides, given slow growth of U.S. population, SIX shows strong, unaffected and growing demand for season pass and membership. Marginal-Cost Revenue Contributed by Global Expansion SIX started its global expansion in early 2014 and has entered licensing partnership with companies from emerging markets, such as China, Vietnam and Dubai. Its licensing strategy requires no capital expenditure from SIX and generates revenue from both licensing fees and earnings allocation. We expect three parks to open in 2019 (two in China and one in Dubai) and another two parks (in Vietnam) open in 2020, contributing to premium of 4.8% and 5.8% of domestic revenue in 2019E and 2020E respectively. Attractive Profitability and Reliable Liquidity Sources Due to increasing operating efficiency, SIX enjoys higher EBITDA margin of 36.75% in 2016E, compared to industry average of 25.69% TTM, with consistently positive cash flows from operating activities (CFO) from $501 million to $582 million during 2016E-2020E. Besides solid CFO, SIX has the option of $250 million revolving loan to satisfy any anticipated liquidity needs, such as working capital, capital expenditure, stock dividends and discretionary common stock repurchases. Six Flag's Key Financial Ratios Key Ratios 2015 2016E 2017E 2018E 2019E 2020E EBITDA margin 35.35% 36.75% 36.83% 37.09% 37.16% 37.22% Net profit margin 15.26% 16.58% 16.89% 17.33% 17.61% 17.93% ROA 7.77% 9.26% 9.98% 10.79% 11.54% 12.36% Current ratio 0.84 0.97 1.04 1.16 1.27 1.40 Quick ratio 0.72 0.71 0.72 0.74 0.75 0.75 Cash conversion cycle 14 4.54 5.33 4.42 3.55 2.64 Cash turnover 13 12.80 12.61 11.16 10.59 9.78 CFO/EBIT 1.40 1.29 1.28 1.23 1.20 1.17 CFO/CapEX 4.15 4.11 4.11 3.96 3.91 3.84 Long-term debt to assets 0.62 0.61 0.61 0.61 0.60 0.60 Interest coverage 4.45 5.11 5.42 5.79 6.14 6.53 EPS (in $) 1.65 2.00 2.18 2.39 2.60 2.83 Dividends (in $) 2.14 2.29 2.44 2.59 2.74 2.89 Source: Company report, Team estimates Market Profile Closing Price $53.90 52-Week Price Range $45.2-$62.7 Average Daily Volume 654,284 Shares Outstanding 92.1M Market Cap 4986.7M Dividend Yield (TTM) 4.3% P/E (TTM) 41.6 EV/EBITDA (TTM) 16.8 Source: Bloomberg Valuation Breakdown DCF $63.17 Weight 50.00% Multiple $57.22 Weight 50.00% Target Price $60.19 Source: Bloomberg, Team estimates Six Flags Entertainment Corporation 85 95 105 115 Stock Price Movement SIX US Equity SPX Index FUN US Equity Source: Bloomberg 1.65 2.00 2.18 2.39 2.60 2.83 0 500 1,000 1,500 2,000 0.0 1.0 2.0 3.0 2015 2016E 2017E 2018E 2019E 2020E SIX's EPS and Revenue Forecast EPS (in $) Revenue - RHS (in mn $) Source: Company report, Team estimates

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  • Team Square Alpha Research Industry Sector, Entertainment Facilities

    Date: 11/12/2016 New York Stock Exchange (NYSE)

    This report is published for Global Markets Investments Club Annual IBS Stock

    Pitch Challenge purposes.

    Ticker: SIX NYSE Current Price: 53.90 USD Target Price: 60.19 USD Recommendation: BUY (11.70% Upside)

    SIX: Riding Higher

    We issue a BUY recommendation on Six Flags Entertainment Corporation (SIX) with a one-year

    target price of $60.19, which offers a 11.70% upside from its closing price of $53.90 as of

    10/26/2016. SIX has a stable historical performance and enjoys robust growth potential driven by

    consumer confidence level and healthy consumer base. However, market concerns about quarterly

    earnings led to over 20% drop of its 52-week high of $62.7 in 3Q2015, though recovering to $53.90

    in late October. We believe SIXs season pass (introduced in 2010) and membership (introduced in

    2013) strategy will continue to generate stable revenue each year, with in-sight revenue from global

    expansion starting 2019.

    Strong Support by Prospect Industry Performance

    Amusement park industry has been growing steadily in the past few years due to stronger consumer

    confidence and spending after 2008 financial crisis. Over 400 enterprises operate in the industry and

    five major players take over more than 98% of market share. Over the next five years, the industry

    is expected to grow at a CAGR of 2.4% from $16 billion in 2016 to $17.9 billion in 2020E.

    Robust Growth Potential from Season Pass and Membership

    SIXs season pass and membership have been one of consumers favorites due to deep discounts

    and affordability (up to 72% savings compared to single-ticket). Thanks to this strategy, each pass

    holder spends 2x compared to single-ticket holder. And we expect its penetration rate (season pass

    & membership attendance to total attendance) to grow from 56.80% in 2016E to 60.00% in 2020E,

    implying a five-year CAGR of 4.51% in attendance numbers. Besides, given slow growth of U.S.

    population, SIX shows strong, unaffected and growing demand for season pass and membership.

    Marginal-Cost Revenue Contributed by Global Expansion

    SIX started its global expansion in early 2014 and has entered licensing partnership with companies

    from emerging markets, such as China, Vietnam and Dubai. Its licensing strategy requires no capital

    expenditure from SIX and generates revenue from both licensing fees and earnings allocation. We

    expect three parks to open in 2019 (two in China and one in Dubai) and another two parks (in

    Vietnam) open in 2020, contributing to premium of 4.8% and 5.8% of domestic revenue in 2019E

    and 2020E respectively.

    Attractive Profitability and Reliable Liquidity Sources

    Due to increasing operating efficiency, SIX enjoys higher EBITDA margin of 36.75% in 2016E,

    compared to industry average of 25.69% TTM, with consistently positive cash flows from operating

    activities (CFO) from $501 million to $582 million during 2016E-2020E. Besides solid CFO, SIX

    has the option of $250 million revolving loan to satisfy any anticipated liquidity needs, such as

    working capital, capital expenditure, stock dividends and discretionary common stock repurchases.

    Six Flag's Key Financial Ratios

    Key Ratios 2015 2016E 2017E 2018E 2019E 2020E

    EBITDA margin 35.35% 36.75% 36.83% 37.09% 37.16% 37.22%

    Net profit margin 15.26% 16.58% 16.89% 17.33% 17.61% 17.93% ROA 7.77% 9.26% 9.98% 10.79% 11.54% 12.36%

    Current ratio 0.84 0.97 1.04 1.16 1.27 1.40

    Quick ratio 0.72 0.71 0.72 0.74 0.75 0.75

    Cash conversion cycle 14 4.54 5.33 4.42 3.55 2.64

    Cash turnover 13 12.80 12.61 11.16 10.59 9.78

    CFO/EBIT 1.40 1.29 1.28 1.23 1.20 1.17 CFO/CapEX 4.15 4.11 4.11 3.96 3.91 3.84

    Long-term debt to assets 0.62 0.61 0.61 0.61 0.60 0.60

    Interest coverage 4.45 5.11 5.42 5.79 6.14 6.53 EPS (in $) 1.65 2.00 2.18 2.39 2.60 2.83

    Dividends (in $) 2.14 2.29 2.44 2.59 2.74 2.89 Source: Company report, Team estimates

    Market Profile

    Closing Price $53.90

    52-Week Price Range $45.2-$62.7

    Average Daily Volume 654,284

    Shares Outstanding 92.1M

    Market Cap 4986.7M

    Dividend Yield (TTM) 4.3%

    P/E (TTM) 41.6

    EV/EBITDA (TTM) 16.8

    Source: Bloomberg

    Valuation Breakdown

    DCF $63.17

    Weight 50.00%

    Multiple $57.22

    Weight 50.00%

    Target Price $60.19

    Source: Bloomberg, Team estimates

    Six Flags Entertainment Corporation

    85

    95

    105

    115

    Stock Price Movement

    SIX US Equity SPX Index

    FUN US Equity

    Source: Bloomberg

    1.65 2.00 2.18

    2.39 2.60 2.83

    0

    500

    1,000

    1,500

    2,000

    0.0

    1.0

    2.0

    3.0

    2015 2016E 2017E 2018E 2019E 2020E

    SIX's EPS and Revenue Forecast

    EPS (in $) Revenue - RHS (in mn $)

    Source: Company report, Team estimates

  • Business Description

    Six Flags Entertainment Corporation is the largest roller coaster theme park in the world per number

    of parks it operates and achieved $688 million revenue in 2015, with a) 57.1% from theme park

    admissions; b) 41.5% from theme park food, merchandise and other; c) 1.4% from accommodations

    and d) 4.68% from sponsorship, licensing and other fees. (Table 1)

    There are 16 theme parks in United States, and two parks in Mexico and Canada (Exhibit 1). Given

    effective coverage radius of 50 miles and 100 miles, each domestic park generally serves 100 million

    people and 175 million people respectively. Besides, all parks are featured with unique roller coaster

    rides combination and placed within regions with high population density, such as Vallejo, Los

    Angeles, Atlanta, New Jersey, Chicago, Washington DC and New England.

    Different from regular amusement parks, SIX attracts consumers by offering thrilling and exciting

    roller coaster rides while maintaining some regular rides for non-roller-coaster riders. Thus,

    continuous introduction of new rides facilitates its consumer base, with ages ranging from 15-year-

    old to 40-year old. Besides regular-themed roller coaster rides, SIX also holds exclusive long-term

    licenses of characters from Warner Bros. and DC Comics, such as Batman, Suicide Squad and

    Superman, which are currently used for marketing purpose.

    Company Strategy

    Global Expansion: Compared to domestic amusement park peers (excluding Walt Disney and Universal Studios), SIX has taken a lead in global expansion using no-CapEx licensing strategy,

    which provides revenue premium but requires no further investments apart from operation

    assistance and brand licenses.

    Active Pass Base: Leveraging on season pass and membership strategy, SIX provides affordable pass tickets and thus can attract and retain a larger consumer base. Meanwhile, SIX is planning to

    introduce other passes to attract more customers. And thanks to big-data driven marketing

    strategies, SIX can better target potential consumers. (Table 2)

    Cutting-Edge Innovation: SIX has been leading the roller coaster industry with featured thrilling rides and recently introduced new Virtual Reality (VR) technology to enhance multi-dimensional

    and interactive riding experience, such as Superman and Batman rides. With VR headsets, riders

    can choose different specially-designed storylines and even use weapons by moving headsets.

    Industry Overview and Competitive Positioning

    Amusement park industry, featuring with high entry barriers, has been growing steadily in the past

    few years due to stronger consumer confidence and spending after 2008 financial crisis. The industry

    revenue heavily relies on leisure time and disposable income of consumers. Over 400 enterprises

    operate in the industry and five major players take over more than 98% of market share. Over the

    next five years, the industry is expected to grow at a CAGR of 2.4% from $16 billion in 2016E to

    $17.9 billion in 2020E.

    Consumer Base Overview

    Slow Population Growth & Large Young Population: Per U.S. Census Bureau, population

    between 0 and 44 years old is expected to grow by 2.5% from 2016E to 2020E while total population

    by 5%, showing a mild and slow growth (Exhibit 2). Regarding amusement park industrys

    consumer base, it is majorly teenagers and younger (under 18), occupying 22% of total attendances,

    while adults (18-44 years old) accompanying kids, taking up 36%, in 2016.

    Geographic Competition Overview

    Fierce Competition in Populated Areas: Five major players in the market are Walt Disney,

    Universal Studios, Six Flags, Cedar Fair, and Sea World (Appendix 7), with the first two taking up

    75% of total industry earnings utilizing only two locations of Orlando and Los Angeles. Sea World

    is mainly targeting at five locations while Six Flags and Cedar Fair are operating parks located in

    many populated areas across U.S., showing diversity in geographic strategies and stronger

    competition between each other.

    China and Dubai Potential Outlook

    Attractive Asian and Middle-East tourism & entertainment market: Operators in U.S. are

    expanding into international markets, especially Asia and Middle East, due to high growth potential

    in the coming years. Specifically, booming tourism in China and Dubai offers attractive prospects

    for amusement park industry.

    (in '000 $) 2013 2014 2015

    Theme

    park

    admissions

    602,204 641,535 687,819

    Share 56.4% 57.4% 57.1%

    Theme park

    food,

    merchandise

    and other

    448,547 460,131 500,190

    Share 42.0% 41.1% 41.5%

    Accommo-

    dations

    revenue

    17,000 16,877 16,796

    Share 1.6% 1.5% 1.4%

    Sponsorship,

    licensing and

    other fees

    42,179 57,250 59,133

    Share 3.8% 4.9% 4.7%

    Revenue 1,109,930 1,175,793 1,263,938

    Category Type Discount

    Daily

    Ticket Fright Fest 15%

    Season

    Pass

    Regular

    4+

    Purchases

    Each 18%

    Membership

    (Monthly) 72%

    Gold

    1-3

    Purchases

    Each 34%

    Membership

    (Monthly) 34%

    Regular

    1-3

    Purchases

    Each 59%

    Membership

    (Monthly) 59%

    Source: Company report

    Table 1. Historical Revenue by Segment

    Source: Company report

    Exhibit 1. SIXs Parks Across U.S.

    Source: Company report, US Census Bureau

    Population Density Six Flags

    22%

    36%

    25%

    17%

    under 18 18-44 45-64 over 65

    Exhibit 2. 2020E U.S. Age Distribution

    Source: US Census Bureau

    Table 2. Discounts Portfolio of Six Flags

  • Valuation

    We considered two standard valuation models to value SIX Discounted Cash Flow (DCF) model

    and comparable company multiple pricing, with one-year target prices at $63.17 using DCF model

    and $57.22 using multiple pricing method. Given equal weights to value-based valuation and

    market-based valuation, we arrived at our final target price of $60.19 (upside 11.70% to $53.90 as

    of 10/26/2016).

    DCF Valuation Given amusement park industry is currently in growth stage of its life cycle, we expect Six Flags

    revenue to continue growth and applied the Three-Stage Growth Free Cash Flow model, which

    considers its high growth prospects and long-term values. Our DCF model implies a one-year target

    price of $63.17 per share in base case projection and $75.04 in premium case projection. (Exhibit 3)

    In applying the three-stage growth model, we forecasted five-year pro forma statements and

    assumed explicit growth in first stage (2016E-2020E), semi-explicit growth of 5.00% in second

    stage (2021-2025), and terminal growth of 2.0% in third stage (from 2026). The following factors

    are material when assessing companys performance and calculating the DCF model.

    Revenue

    Per Six Flags business, its revenue is divided into four segments: Theme park admission, Theme

    park merchandise and other, Accommodations revenue & Sponsorship, licensing and other fees.

    Based on nature of business, we categorize first three segments revenue as direct operation revenue

    and the fourth segment as indirect operation revenue, which is composed of domestic and

    international sponsorship, licensing and other incomes.

    Direct Operation Revenue: The direct operation revenue depends on total attendance and adjusted revenue (revenue minus indirect operation revenue) per capita and is calculated as below:

    In summary, we forecast total attendance to grow at 3.08% CAGR in 2016E-2020E, adjusted

    revenue per capita to grow at 3.08% CAGR for premium group and at 1.20% CAGR for regular

    group in 2016E-2020E. (Exhibit 4)

    Indirect Operation Revenue: We forecast indirect operation revenue to grow at 4.8% annually in 2016E-2020E as our base case projection. Besides, given that new parks will start operation in

    2019E and 2010E, we developed a premium case projection by adding up 5.0% in 2019E and 6.0%

    in 2010E of corresponding direct operation revenue.

    Operating Expenses

    Per improving management efficiency, we forecast all expenses to stay stable as fixed portion of

    revenue, with operating margin at 64.0%, SG&A (selling, general & administration, excluding

    stock-based compensation - SBC) at 14.0%, SBC at 5.0% and COGS (cost of goods sold) at 8.0%.

    Also, we forecast depreciation rate to stay at 5.0% of total PPE (property, plant and equipment) and

    amortization to stay in line with managements forecast.

    Tax Rate, Terminal Growth Rate & Weighted Average Cost of Capital

    We assume tax rate to be 28.0% based on US Federal income rate of 35.0% and further adjustments.

    Terminal growth rate is set as 2.0% using industry standards. Weighted average cost of capital

    (WACC) is 7.11% using formula: WACC = + (1 ) and = + ( ).

    (Table 3)

    Multiple Valuation Besides DCF method, we used multiple analysis to calculate market-justified price range by

    comparing SIX and its peers public amusement park companies. To find the optimal-comparable

    companies, we then filtered the list by identifying the ones that have the closest revenue and positive

    earnings and finally arrived at four public companies for multiple valuation.

    Considering valuation common practices and proximity to intrinsic value, we chose P/E (price to

    earnings), EV/EBIT (enterprise value to earnings before interest and tax expense) and EV/EBITDA

    (enterprise value to earnings before interest, tax depreciation and amortization expense) ratios for

    valuation purpose. Applying the mean of the three ratios, we arrived at $67.03 (33.59x P/E), $69.72

    (21.54x EV/EBIT) and $34.9 (10.23x EV/EBITDA), with the average of $57.22 as our one-year

    target price. (Table 4)

    Direct

    Operation Revenue

    =

    Group attendance + Season pass & Membership attendance

    Adjusted revenue per capita

    (Premium group)

    Single-ticket attendance Adjusted revenue per capita

    (Regular group)

    Table 3. WACC Computation

    Risk free rate 1.85%

    Beta 0.80

    Equity risk premium 8.74%

    Cost of equity 8.84%

    Equity % 74.90%

    Cost of debt 2.68%

    Debt % 25.10%

    Effective tax rate 27.37%

    WACC 7.11%

    Source: Bloomberg, Team estimates

    Table 4. Multiple Valuation

    Ratio Mean Median Price

    P/E 33.59x 31.49x $ 67.03

    EV/EBIT 21.54x 17.89x 69.72

    EV/EBITDA 10.23x 10.49x 34.90

    Target Price (Multiple) $ 57.22

    Source: Bloomberg, Team estimates

    1,296 1,378

    1,901 2,204

    4,549 5,274

    0

    2,500

    5,000

    7,500

    10,000

    Base Premium

    Exhibit 3. Projected Firm Value by DCF

    (in mn $)

    Explicit stage Semi-explicit stage Terminal Value

    Source: Team estimates

    28,557

    29,713

    30,573

    31,437

    32,321

    33,231

    42

    44

    45

    46

    47

    49

    25,000

    28,000

    31,000

    34,000

    40

    42

    44

    46

    48

    50

    Exhibit 4. Projected Attendance

    and Revenue Per Capita

    Attendance

    Revenue per capita - RHS (in $)

    Source: Team estimates

  • Financial Analysis

    Key Ratios 2015 2016E 2017E 2018E 2019E 2020E

    Profitability

    Net profit margin 15.26% 16.58% 16.89% 17.33% 17.61% 17.93% EBITDA margin 35.35% 36.75% 36.83% 37.09% 37.16% 37.22%

    EBIT margin 26.85% 28.63% 28.77% 29.09% 29.21% 29.41%

    ROE 155.46% 628.49% 431.95% 369.35% 324.43% 279.68% ROA 7.77% 9.26% 9.98% 10.79% 11.54% 12.36%

    Liquidity

    Current ratio 0.84 0.97 1.04 1.16 1.27 1.40

    Quick ratio 0.72 0.71 0.72 0.74 0.75 0.75 Cash ratio 0.44 0.43 0.44 0.47 0.49 0.50

    Efficiency

    Cash conversion cycle 13.63 4.54 5.33 4.42 3.55 2.64 Cash turnover 12.67 12.80 12.61 11.16 10.59 9.78

    Fixed asset turnover 1.05 1.15 1.23 1.31 1.41 1.51

    Total asset turnover 0.51 0.56 0.59 0.62 0.66 0.69 CFO/EBIT 1.40 1.29 1.28 1.23 1.20 1.17

    CFO/CapEx 4.15 4.11 4.11 3.96 3.91 3.84

    Solvency

    Long-term debt to assets 0.62 0.61 0.61 0.61 0.60 0.60

    Debt ratio 0.81 0.80 0.79 0.79 0.78 0.77 Interest coverage 4.45 5.11 5.42 5.79 6.14 6.53 Source: Company report, Team estimates

    Competitive Margins Indicate Strong Profitability

    The robust margins are expected to stay stable in the future considering possible growth in revenue

    and rising operating efficiency. During 2016E-2020E, we forecast EBIT margin to be at a range of

    28.63% to 29.41%. (Exhibit 5)

    Robust Cash Generating Ability and High Efficiency

    We expect SIX to continually produce increasing positive Operating Cash Flows due to solid

    performance. A strong indicator of the companys favorable cash position is its ability to finance

    most of its capital expenditures from internally generated funds, which is reflected by its favorable

    CFO/CapEx ratios. Also, the cash conversion cycle of the company shows high efficiency. And we

    anticipate decreasing cash conversion cycle in 2016E-2020E. (Exhibit 6)

    Revolving Loan Provides Additional Support for Liquidity

    The principle sources of liquidity of SIX are generated from operations, funds from borrowings and

    existing cash in hand. Although cash decreased significantly due to stock repurchase activities, SIX entered the Amended and Restated Credit Facility in 2015, which promises to provide a 250 million

    revolving loan. Based on historical and anticipated operating results, we believe the future operating

    cash flow and the revolving loan will cover the liquidity needs of the company.

    Stock Repurchase Plans Suggest Higher Intrinsic Value

    SIX started several stock repurchase programs in 2012 and 2013, allowing the company to buy back

    over 1,000 million common stocks in the following four years. This action indicates a higher

    intrinsic value evaluated by the management of the company comparing with the current market

    value, and therefore can be considered as a signal of an undervalued stock price in the market.

    Investment Risks

    Impact and likelihood of the following risks are presented in Exhibit 7.

    Economic Risk (ER1): Worsening U.S., China and Middle East economy adversely affects SIXs revenue growth and may even lead to liquidity problems.

    Environmental Risk (ER2): The second and third quarter take up 76% of total revenue, indicating high sensitivity to weathers. In case of extreme weathers, SIX must shut down operation.

    Safety Risk (SR): Lack of necessary safety control harms SIXs reputation and causes injuries or deaths, resulting in expensive litigations.

    Equity Risk (ER3): Continuing stock repurchase in large amount leads to liquidity problems in extreme cases and facilitates concerns about being taken private.

    Cyber Risk (CR): Breach of private information discourages purchase of season pass and memberships, leading to litigation costs and possible downturn of active pass base.

    10%

    20%

    30%

    40%

    2015 2016E 2017E 2018E 2019E 2020E

    Exhibit 5. Projected Stable Margin

    Source: Team estimates

    EBITDA Margin

    EBIT Margin

    Net Profit Margin

    122,026

    128,906

    136,120

    143,757

    151,864

    214,298

    228,335

    242,372

    256,409

    270,446

    165,243

    172,172

    160,549

    161,857

    160,264

    2016E

    2017E

    2018E

    2019E

    2020E

    Exhibit 6. Cash Surplus from CFO

    in '000$

    CapEx Dividends Surplus

    Source: Team estimates

    Source: Team analysis

    Exhibit 7. Risk Matrix

  • Appendix 1. SIX Statement of Financial Position

    (in '000 dollars) 2013 2014 2015 2016E 2017E 2018E 2019E 2020E

    ASSETS

    Cash and cash equivalents 169,310 73,884 99,760 105,953 113,596 135,508 150,867 172,518

    Accounts receivable 51,609 58,823 63,803 67,792 71,615 75,622 79,865 84,369

    Inventories 22,172 21,099 21,535 23,321 24,635 26,014 27,474 29,023

    Prepaid expenses and other current assets 39,006 44,705 42,879 47,349 46,742 48,411 51,117 55,919

    Deferred income taxes 71,761 102,413 0 - - - - -

    Total current assets 353,858 300,924 227,977 244,415 256,588 285,556 309,322 341,830

    Debt issuance costs 23,821 19,062 5,386 5,386 5,386 5,386 5,386 5,386

    Restricted-use investment securities 1,823 2,471 3,036 3,601 4,166 4,731 5,296 5,861

    Deposits and other assets 4,268 4,750 7,211 5,714 6,196 6,678 7,160 7,642

    Sub-sum of other assets 29,912 26,283 15,633 14,701 15,748 16,795 17,842 18,889

    Property and equipment, at cost 1,716,975 1,797,617 1,862,764 1,955,902 2,053,697 2,156,382 2,264,201 2,377,411

    Accumulated depreciation -485,292 -579,511 -664,610 -772,185 -885,138 -1,003,739 -1,128,270 -1,259,028

    Total property and equipment 1,231,683 1,218,106 1,198,154 1,183,718 1,168,559 1,152,643 1,135,931 1,118,384

    Goodwill 630,248 630,248 630,248 630,248 630,248 630,248 630,248 630,248

    Intangible assets, net 362,113 359,358 356,428 353,822 351,337 348,901 346,471 345,429

    Total assets 2,607,814 2,534,919 2,428,440 2,426,903 2,422,481 2,434,143 2,439,814 2,454,779

    Current liabilities:

    Accounts payable 24,464 19,315 25,570 27,117 28,646 30,854 32,585 35,097

    Accrued compensation, payroll taxes and

    benefits 29,277 37,463 46,583 35,000 35,000 35,000 35,000 35,000

    Accrued insurance reserves 50,771 41,276 40,796 41,796 40,796 40,796 40,796 40,796

    Accrued interest payable 19,598 19,542 19,555 19,377 17,796 17,712 16,159 16,082

    Other accrued liabilities 25,988 36,176 34,714 25,000 25,000 25,000 25,000 25,000

    Deferred income 60,443 71,598 97,334 94,909 93,099 90,747 87,851 84,369

    Current portion of long-term debt 6,269 6,301 7,506 7,506 7,506 7,000 7,000 7,000

    Total current liabilities 216,810 231,671 272,058 250,705 247,843 247,109 244,391 243,345

    Long-term debt 1,394,334 1,389,215 1,498,022 1,490,516 1,483,010 1,476,010 1,469,010 1,462,010

    Other long-term liabilities 39,934 65,396 58,150 67,073 62,286 61,992 58,760 58,480

    Deferred income taxes 145,830 187,197 140,273 135,585 128,906 136,120 135,770 134,990

    Total liabilities 1,796,908 1,873,479 1,968,503 1,943,879 1,922,046 1,921,231 1,907,932 1,898,825

    Redeemable noncontrolling interests 437,569 437,545 435,721 435,721 435,721 435,721 435,721 435,721

    Stockholders' equity:

    Preferred stock, $1.00 par value - - - - - - - -

    Common stock 2,371 2,323 2,289 2,419 2,549 2,679 2,809 2,939

    Capital in excess of par value 842,488 983,317 1,041,710 1,099,710 1,149,137 1,187,895 1,228,515 1,267,485

    Retained earnings (accumulated deficit) -438,825 -702,116 -953,225 -980,776 -1,005,181 -1,023,493 -1,036,695 -1,042,537

    Accumulated other comprehensive loss

    net -32,697 -59,629 -66,558 -74,049 -81,791 -89,891 -98,468 -107,654

    Total Six Flag's SE 373,337 223,895 24,216 47,304 64,714 77,191 96,161 120,233

    Noncontrolling interests - - - - - - - -

    Total equity 373,337 223,895 24,216 47,304 64,714 77,191 96,161 120,233

    Total liabilities and equity 2,607,814 2,534,919 2,428,440 2,426,903 2,422,481 2,434,143 2,439,814 2,454,779

  • Appendix 2. SIX Statement of Comprehensive Income

    (in '000 dollars) 2013 2014 2015 2016E 2017E 2018E 2019E 2020E

    Theme park admissions 602,204 641,535 687,819 737,508 779,388 823,298 869,801 919,196

    Theme park food, merchandise and other 448,547 460,131 500,190

    536,958

    567,449

    599,419

    633,276

    669,239

    Accommodations revenue 17,000 16,877 16,796

    19,408

    20,510

    21,666

    22,890

    24,189

    Sponsorship, licensing and other fees 42,179 57,250 59,133 61,971 64,946 68,063 71,330 74,754

    International expansion contribution

    - - - - - - 76,298 96,758

    Revenue - Base 1,109,930 1,175,793 1,263,938 1,355,846 1,432,293 1,512,447 1,597,297 1,687,380

    Revenue - Premium 1,109,930 1,175,793 1,263,938 1,355,846 1,432,293 1,512,447 1,673,596 1,784,137

    Operating expenses 417,482 437,431 465,219 490,816 518,490 544,481 575,027 607,457

    SG&A (involve stock-based

    compensation), total 189,218 310,955 234,810 248,863 262,518 276,839 291,973 308,002

    - Stock-based compensation 27,034 140,038 56,233 59,045 61,997 65,097 68,352 71,769

    - Net SG&A 162,184 170,917 178,577 189,818 200,521 211,743 223,622 236,233

    COGS 86,663 90,515 100,709 108,468 114,583 120,996 127,784 134,990

    Depreciation 113,682 105,449 104,788

    107,575

    112,953

    118,601

    124,531

    130,758

    Amortization 14,393 2,658 2,623

    2,606

    2,485

    2,436

    2,430

    1,042

    Loss on disposal of assets 8,579 5,860 9,882

    9,470

    9,348

    9,221

    9,087

    8,947

    Equity in loss (income) of investee/

    Gain on sale of investee

    - (10,031) - - - - - -

    Interest expense 75,044 73,057 76,205

    76,000

    76,000

    76,000

    76,000

    76,000

    Interest income (899) (468) (302) (300) (300) (300) (300) (300)

    Other expense (income), net 1,234 356 223

    200

    200

    200

    200

    200

    Loss on debt extinguishment 789 - 6,557 - - - - -

    Income before reorganization 203,745 160,011 263,224 312,148 336,015 363,973 390,565 420,284

    Reorganization items, net (180) - - - - - - -

    Income before tax and discontinued

    operations 203,925 160,011 263,224 312,148 336,015 363,973 390,565 420,284

    Income tax expense/benefit 47,601 46,522 70,369 87,402 94,084 101,912 109,358 117,679

    Income before discontinued operations 156,324 113,489 192,855 224,747 241,931 262,060 281,207 302,604

    (Loss) income from discontinued

    operations 549 545 - - - - - -

    Net income 156,873 114,034 192,855 224,747 241,931 262,060 281,207 302,604

    Less: Net (income) loss attributable to noncontrolling

    (38,321) (38,012) (38,165) (38,000) (38,000) (38,000) (38,000) (38,000)

    Net income attributable to SIX 118,552 76,022 154,690 186,747 203,931 224,060 243,207 264,604

    Foreign currency translation adjustment (1,341) (6,803) (8,195) (9,491) (10,742) (12,100) (13,577) (15,186)

    Defined benefit retirement plan 17,427 (19,872) 1,769 2,000 3,000 4,000 5,000 6,000

    Change in cash flow hedging 318 (257) (503) - - - - -

    Comprehensive income/loss 173,277 87,102 185,926 217,256 234,188 253,961 272,630 293,418

    Comprehensive loss contributes to SIX 134,956 49,090 147,761 179,256 196,188 215,961 234,630 255,418

    EPS basic (in $) 1.22 0.80 1.65 2.00 2.18 2.39 2.60 2.83

    Cash dividends (in $) 1.82 1.93 2.14 2.29 2.44 2.59 2.74 2.89

  • Appendix 3. SIX Statement of Cash Flow

    (in '000 dollars) 2013 2014 2015 2016E 2017E 2018E 2019E 2020E

    Cash flow from operations

    Net income/loss 156,873 114,034 192,855 224,747 241,931 262,060 281,207 302,604

    Adjustments before reorganization activities:

    Depreciation and Amortization 128,075 108,107 107,411 110,181 115,438 121,037 126,961 131,800

    Reorganization items, net (180) - - - - - - -

    Stock-based compensation 27,034 140,038 56,233 59,045 61,997 65,097 68,352 71,769

    Interest accretion on notes payable 1,252 1,221 856 1,200 1,200 1,200 1,200 1,200

    Loss on debt extinguishment 789 - 6,557 - - - - -

    Gain on discontinued operations - - - - - - - -

    Amortization of debt issuance costs 4,285 4,748 4,518 4,518 4,518 5,237 4,518 4,518

    Other, including loss on disposal of assets 10,320 1,672 17,278 9,470 9,348 9,221 9,087 8,947

    Gain on sale of investees - (10,031) - - - - - -

    Decrease (increase) in accounts receivable (22,146) (7,764) (6,072) (3,989) (3,822) (4,008) (4,243) (4,504)

    (Increase) decrease in inventories, prepaid

    expenses and other current assets (2,062) (5,744) 306 (6,255) (709) (3,047) (4,165) (6,352)

    Decrease (increase) in deposits and other assets

    473 (486) (2,465) 1,497 (482) (482) (482) (482)

    Increase (decrease) in accounts payable,

    deferred income, accrued liabilities and other long-term liabilities

    12,147 13,293 41,775 42,147 43,147 25,178 24,344 28,416

    (Decrease) increase in accrued interest payable 17,239 (56) 13 (178) (1,581) (84) (1,553) (77)

    Deferred income tax (benefit) expense 34,915 33,291 54,496 59,186 58,428 57,632 56,797 44,735

    Net CFO before reorganization 369,014 392,323 473,761 501,567 529,414 539,042 562,023 582,575

    Net cash used in reorganization activities (332) - - - - - - -

    Total CFO 368,682 392,323 473,761 501,567 529,414 539,042 562,023 582,575

    Cash flow from investing activities

    Additions to property and equipment (101,853) (108,660) (114,370) (91,149) (91,149) (84,149) (91,149) (91,149)

    Property insurance recovery - 850 173 - - - - -

    Purchase of identifiable intangible assets (75) (49) (29) - - - - -

    Purchase of restricted-use investments (605) (648) (565) (565) (565) (565) (565) (565)

    Proceeds from sale of DCP - 10,031 - - - - - -

    Proceeds from sale of assets 230 148 5,123 1,500 2,000 2,000 2,000 2,000

    Net CFI (102,303) (98,328) (109,668) (90,214) (89,714) (82,714) (89,714) (89,714)

    Cash flow from financing activities

    Repayment of borrowings (6,276) (6,308) (710,565) (7,506) (7,506) (7,506) (7,000) (7,000)

    Proceeds from borrowings - - 834,250 - - - - -

    Payment of debt issuance costs (2,660) - (11,916) - - - - -

    Net proceeds from issuance of common stock 30,860 38,840 40,531 48,783 40,000 52,000 51,000 48,000

    Stock repurchase (523,589) (195,353) (245,114) (189,639) (197,016) (197,537) (201,741) (199,263)

    Payment of cash dividends (176,171) (184,300) (200,957) (214,298) (228,335) (242,372) (256,409) (270,446)

    Purchase of HWP ownership interests (9,554) - - - - - - -

    Purchase of redeemable noncontrolling interest (288) (19) (1,552) - - - - -

    Noncontrolling interest distributions (37,452) (38,012) (38,165) (38,000) (38,000) (38,000) (38,000) (38,000)

    Net CFF (725,130) (385,152) (333,488) (400,660) (430,857) (433,415) (452,150) (466,709)

    Effect of exchange rate on cash (1,147) (4,269) (4,729) (4,500) (1,200) (1,000) (4,800) (4,500)

    Increase/decrease in cash and cash equivalents (459,898) (95,426) 25,876 6,193 7,643 21,912 15,358 21,652

    Beginning Cash 629,208 169,310 73,884 99,760 105,953 113,596 135,508 150,867

    Ending Cash 169,310 73,884 99,760 105,953 113,596 135,508 150,867 172,518

  • Appendix 4. SIX DCF Assumptions & Computations

    Assumptions - WACC

    Variable Value Basis

    Risk free rate 1.85% US generic government 10-year yield

    Beta 0.80 Using SPX Index, 10/28/2014 - 10/28/2016

    Equity risk premium 8.74% SPX Index 5-year annual growth

    Cost of equity 8.84% Calculated using CAPM model

    Equity % 74.90% Bloomberg

    Cost of debt 2.68% Bloomberg

    Debt % 25.10% Bloomberg

    Effective tax rate 27.37% TTM effective tax rate

    WACC 7.11% Team Calculation

    DCF Result Base Case Premium Case

    (in '000 $) Value Proportion Value Proportion

    Explicit stage 1,295,647 16.73% 1,378,071 15.56%

    Semi-explicit stage 1,900,567 24.54% 2,203,768 24.88%

    Terminal Value 4,548,818 58.73% 5,274,499 59.56%

    Core firm value 7,745,031 100.00% 8,856,338 100.00%

    Add: Cash 99,760 99,760

    Minus: Minority interest 435,721 435,721

    Minus: Long-term debt 1,498,022 1,498,022

    Equity Value 5,911,048 7,022,355

    Shares outstanding 93,580 93,580

    Share price $ 63.17 $ 75.04

    Upside 17.21% 39.25%

    Sensitivity Test

    (in '000

    dollars) Historical Stage Stage 1 - Explicit Growth

    Stage 2

    Semi-Explicit

    Stage 3

    Eternal

    2013 2014 2015 2016E 2017E 2018E 2019E 2020E 2021E 2025E 2026E EBIT 279,518 233,613 339,429 388,148 412,015 439,973 466,565 496,284

    Effective Tax Rate

    17.03% 19.91% 20.73% 22.52% 22.84% 23.16% 23.44% 23.71%

    NOPLAT 231,917 187,091 269,060 300,747 317,931 338,060 357,207 378,604

    Add:

    Depreciation 113,682 105,449 104,788 107,575 112,953 118,601 124,531 130,758

    Amortization 14,393 2,658 2,623 2,606 2,485 2,436 2,430 1,042

    Minus:

    CapEx 101,900 107,800 114,200 122,026 128,906 136,120 143,757 151,864

    Change in

    NWC 21,094 11,290 (839) 4,228 3,608 3,178 3,971 3,541

    FCFF 236,998 176,108 263,110 284,673 300,854 319,799 336,440 354,999 372,749 453,078 9,041,666

    One-year target price

    (in USD)

    WACC 6.11% 6.61% 7.11% 7.61% 8.11%

    Terminal

    Growth

    1.00% 69.14 61.82 55.75 50.65 46.31

    1.50% 75.25 66.62 59.59 53.79 48.90

    2.00% 82.83 72.47 63.17 57.48 51.91

    2.50% 92.42 79.75 69.80 61.90 55.45

    3.00% 105.33 89.04 76.77 67.28 59.69

  • Appendix 5. Comparable Company Analysis

    Company Ticker Country

    Marekt

    Cap

    (mn

    USD)

    Profitability Multiples

    Revenue EBITDA Net

    Margin P/E EV/Revenue EV/EBITDA EV/EBIT

    Walt Disney Company

    DIS US 150,248 56,002 16,908 16.5% 16.09 3.03 10.02 11.71

    SeaWorld

    Entertainment Iinc.

    SEAS US 1,260 1,356 287 1.5% 37.66 2.11 9.96 34.67

    Cedar Fair,

    L.P. FUN US 3,203 1,258 429 11.8% 19.62 3.76 11.01 15.70

    Merlin

    Entertainments

    PLC

    MERL UK 5,632 1,942 602 13.9% 25.33 3.63 11.73 16.10

    Euro Disney

    S.C.A. EDL FR 974 1,530 89 -9.9%

    - 1.38 23.63

    (15.73)

    Village

    Roadshow

    Limited

    VRL AU 620 756 125 1.5% 51.75 1.36 8.24 19.67

    Six SIX US 4,961 1,298 409 9.14% 41.43 5.32 16.88 22.95

    Source: Bloomberg, as of 10/26/2016

    Appendix 6. Porters Five Forces Analysis

    Threat of Substitutes - INSIGNIFICANT: Substitutes of roller coaster are rare, and any other entertainments that can provide thrilling

    experience which makes visitors want to scream may end up in a few extreme sports. Some extreme sports dont have safety measures

    to make a guarantee for security of visitors. Some may be too expensive for people in middle income to afford. Therefore, the substitutes

    for roller coasters are hard to find, and thus providing score 1.

    Threat of New Entrants - INSIGNIFICANT: barriers to entry of the amusement parks industry are high, especially for entrants

    interested in opening roller coaster theme parks. The industry has more than 98% of revenue shared by five major players, presenting

    another strong obstacle for new entrants.

    Existing Rivalries - MEDIUM: SIX accounts for 7.5% of total market share and ranks four among five. Even though the ranking shows

    SIX has a disadvantageous position, SIX is a competitor for Cedar and all the others. SIX has operated 16 theme parks in grand area of

    the United States. All of them are in places with large population density. Moreover, SIX revenue has grown stronger than Cedar Fair

    and its over financial condition is healthy compared to its peers like Cedar and SeaWorld.

    Power of Suppliers - MEDIUM: SIX needs to renovate its roller coaster construction every few years and it has partnerships with Coca

    Cola and any other food & drink wholesalers to provide visitor things to eat. Since SIX needs to cooperate with them to provide food

    and drinks consumers want, these contractors and partners have some bargaining power. However, the long-term relationships with

    these partners may help ease the pricing power of suppliers a bit.

    Power of Customers - LOW: SIX adopts pricing strategy on its season passes and memberships by using complex marketing analysis

    on consumer data. Since consumers are only the price takers for these ticket packages offered by SIX and since there is asymmetric

    information between consumers and SIX, the bargaining power of consumers is not strong enough to make an impact on SIX sales.

    0

    1

    2

    3

    4

    5Existing Rivalries

    Power of Suppliers

    Power of CustomersThreat of New Entrants

    Threat of Substitues

  • Appendix 7. SWOT Analysis

    Appendix 8. Amusement Parks Distributions by Company

    STRENGTHS WEAKNESSES

    Comparatively high market shares Comparatively low international

    brand name awareness

    Wide geographic reach in the US

    Global expansion ability Dependence on general economic

    conditions

    Strong cash generating ability

    Industry-leading Innovation Sensitive to bad or extreme

    weathers

    License agreement with Warner

    Bros. and DC Comics OPPOTUNITIES SO WO

    Prosperous tourism industry Utilize the investment ability to

    international expansion

    Cooperate with local well-known

    property developers

    Increasing personal consumption Emerging markets in Asia and

    Middle East

    Sustain market shares in domestic

    market

    THREATS WT WT

    High population penetration rate

    in domestic market

    Explore new rides and attractions

    to attract visitors Increase international influence

    Competitions from other

    entertainment industries Cultivate customer loyalty

  • Appendix 9. SIXs Park Description

    # Name Location Area

    (in acres) Themes

    Designated Market

    Area and Rank

    Population coverage (in mn)

    50 miles 100 miles

    1 Six Flags America

    (owned) Largo, MD 515 + 300 Theme + Water

    Washington, D.C. (7) Baltimore (26)

    8.3 13.9

    2

    Six Flags Discovery

    Kingdom (owned)

    Vallejo, CA 135

    Theme + Marine

    + Land animal exhibits

    San Francisco / Oakland

    (6) Sacramento (20)

    6.3 11.9

    3 Six Flags Fiesta Texas

    (owned)

    San Antonio,

    TX 220 Theme + Water

    Houston (10) San Antonio (32)

    Austin (39)

    2.5 4.6

    4

    Six Flags Great Adventure

    & Safari (owned)

    Jackson, NJ 2200 + 456

    Separately-gated Theme park +

    Safari

    + Water park

    New York City (1)

    Philadelphia (4) 13.8 29.4

    5

    Six Flags Hurricane

    Harbor (owned)

    6 Six Flags Great America

    (owned) Gurnee, IL 304 + 30 Theme + Water

    Chicago (3) Milwaukee (35)

    8.8 13.9

    7 Six Flags St. Louis

    (owned) Eureka, MO 323 + 40 Theme + Water St. Louis (21) 2.8 4

    8 Six Flags Magic Mountain

    (owned)

    Valencia, CA

    250 Separately-gated

    Theme + Water Los Angeles (2) 10.4 18.7

    9

    Six Flags Hurricane

    Harbor

    (owned)

    12

    10 Six Flags Mexico

    (occupied pursuant to a

    permit agreement)

    Mexico City,

    Mexico 110 Theme N/A 24.5 33

    11 Six Flags New England

    (substantially all owned) Agawam, MA 262 Theme + Water

    Boston (8)

    Hartford / New Haven (30)

    Providence (52)

    Springfield (116)

    3.4 16.5

    12 Six Flags Over Georgia

    (leasehold interest) Austell, GA 283 Theme + Water Atlanta (9)

    5.7 8.8

    13 Six Flags White Water

    Atlanta

    (owned)

    Marietta, GA 69 Water Atlanta (9)

    14 Six Flags Over Texas

    (leasehold interest)

    Arlington, TX

    217 Separately-gated

    Theme + Water Dallas/Fort Worth (5) 6.9 8.1

    15

    Six Flags Hurricane

    Harbor

    (owned)

    47

    16 La Ronde (owned)

    Montreal, Canada

    146 Theme N/A 4.4 6.1

    17 The Great Escape and Splashwater Kingdom

    (owned) Queensbury,

    NY 345

    Theme + Water

    (200 room hotel

    and 38,000 square foot

    indoor

    waterpark)

    Albany (59) 1.1 3.1

    18

    Six Flags Great Escape

    Lodge & Indoor Waterpark

    (owned)

  • Appendix 10. U.S. Population Forecast from U.S. Census Bureau

    192,200,000

    192,400,000

    192,600,000

    192,800,000

    193,000,000

    193,200,000

    164,000,000

    164,500,000

    165,000,000

    165,500,000

    166,000,000

    166,500,000

    2,015 2016E 2017E 2018E 2019E 2020E

    US Population Forecast

    Weighted Population Original Population (RHS)

    Population Group Weight 2,015 2016E 2017E 2018E 2019E 2020E

    Female population 10-14 0.50 10,093,446 10,196,000 10,278,000 10,342,000 10,381,000 10,383,000

    Female population 15-19 0.70 10,066,517 10,038,000 10,093,000 10,205,000 10,328,000 10,429,000

    Female population 20-24 0.90 11,266,559 11,209,000 11,018,000 10,756,000 10,531,000 10,406,000

    Female population 25-29 1.00 10,711,383 10,857,000 11,087,000 11,343,000 11,527,000 11,581,000

    Female population 30-34 1.00 10,893,282 11,000,000 10,991,000 10,924,000 10,897,000 10,965,000

    Female population 35-39 1.00 9,770,693 9,918,000 10,197,000 10,542,000 10,850,000 11,055,000

    Female population 40-44 0.90 10,381,899 10,304,000 10,134,000 9,937,000 9,821,000 9,846,000

    Female population 45-49 0.70 10,222,507 10,144,000 10,188,000 10,297,000 10,379,000 10,376,000

    Female population 50-54 0.50 11,532,467 11,314,000 10,990,000 10,628,000 10,325,000 10,142,000

    Male population 10-14 0.70 10,526,401 10,616,000 10,691,000 10,753,000 10,793,000 10,797,000

    Male population 15-19 0.90 10,631,931 10,559,000 10,574,000 10,654,000 10,752,000 10,836,000

    Male population 20-24 1.00 11,996,587 11,915,000 11,679,000 11,362,000 11,081,000 10,909,000

    Male population 25-29 1.00 11,254,853 11,445,000 11,710,000 11,987,000 12,178,000 12,223,000

    Male population 30-34 1.00 11,114,717 11,257,000 11,298,000 11,289,000 11,317,000 11,432,000

    Male population 35-39 1.00 9,932,894 10,090,000 10,361,000 10,694,000 10,998,000 11,219,000

    Male population 40-44 1.00 10,390,339 10,310,000 10,162,000 10,003,000 9,920,000 9,964,000

    Male population 45-49 0.90 10,378,298 10,283,000 10,279,000 10,327,000 10,357,000 10,330,000

    Male population 50-54 0.70 11,387,743 11,207,000 10,938,000 10,634,000 10,376,000 10,210,000

    Total Weighted Population 164,812,740 165,070,000 165,260,500 165,457,900 165,749,100 166,155,100

    Total Population 192,552,516 192,662,000 192,668,000 192,677,000 192,811,000 193,103,000

  • Appendix 11. Management Team Profiles

    Name Age Title

    James Reid-Anderson 56 Chairman, President and Chief Executive Officer

    John M. Duffey 55 Chief Financial Officer

    Lance C. Balk 58 General Counsel

    Walter S. Hawrylak 68 Senior Vice President, Administration

    Michael S. Israel 49 Senior Vice President and Chief Information Officer

    Tom Iven 57 Senior Vice President, U.S. Park Operations

    Nancy A. Krejsa 57 Senior Vice President, Investor Relations and Corporate Communications

    David McKillips 44 Senior Vice President, In-Park Services

    John Odum 58 Senior Vice President, International Park Operations

    Brett Petit 52 Senior Vice President, Marketing and Sales

    Leonard A. Russ 42 Vice President and Chief Accounting Officer

    Appendix 12. Dividend Discount Model Analysis

    2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

    Dividend 2.14 2.38 2.62 2.9 3.22 3.58 3.98 4.42 4.69 5.01 5.31 5.58 5.80 5.98 6.10 6.16

    Dividend 0.24 0.24 0.28 0.32 0.36 0.4 0.44 0.48 0.52 0.55 0.59 0.62 0.64 0.66 0.67 0.68

    Div. growth rate

    17% 14% 13% 11% 10% 9% 8% 7% 6% 5% 4% 3% 2% 1%

    PV of Div.

    2.41 2.45 2.50 2.55 2.61 2.66 2.59 2.55 2.48 2.39 2.29 2.16 2.03 29.9

    Assumption: Discount rate(Cost of equity)=8.84%; according to previous dividend policy in the last five years, we conclude that

    growth rate of dividend will decrease by 1% marginal rate per year from 2016 16% to 2029 2%. At 2030, the terminal growth rate will

    be 2% for infinity. Final price is $61.58.