Good day, ladies and gentlemen, and welcome to the Six Flags second quarter 2010 earnings conference call. (Operator Instructions)
I would now like to turn the conference over to your host for today's call, Ms. Sandra Daniels, Vice President of Communications.
Good morning, everyone, and welcome to our second quarter 2010 earnings call. With me on the call today are Jim Reid-Anderson, Six Flag's new Chairman, President and CEO; Al Weber, Chief Operating Officer; and Jeff Speed, Executive Vice President and CFO.
At this time, I'd like to take a moment to read through the forward-looking statements. In compliance with SEC Regulation FD, a webcast of this call is being made available to the media and the general public, as well as analysts and investors. The company cautions you that comments made during the call will include forward-looking statements within the meaning of the federal securities laws. These statements are subject to risks and uncertainties that could cause actual results to differ materially from those described in such statements. You may refer to the company's 2009 Annual Report on Form 10-K, which is also posted on its website, for a detailed discussion of these risks.
Because the webcast is open to all constituents and prior notification has been widely and unselectively disseminated, all contents of the call will be considered fully disclosed. In accordance with SEC Regulation G, non-GAAP financial measures used in the earnings release and in the company's oral presentation today are required to be reconciled to the most directly comparable GAAP measure. Those reconciliations are available to investors in the earnings release and on our website.
And now, it is my pleasure to introduce Six Flag's new Chairman, President and CEO, Jim Reid-Anderson. Jim joined Six Flags with the distinguished track record, notably as the former Chairman, President and CEO of Dade Behring Holdings.
Thank you for that very nice introduction, Sandra. I am extremely honored to serve as Six Flags' new Chairman, President and CEO, and I'm very excited about taking on this new role.
I have to say when I was approached with this opportunity, I did not hesitate. With its world-class portfolio of theme parks and strong balance sheet, the company is well positioned for success. I am invigorated by the challenge of continuing to improve the company's operational performance through focused execution and to further enhance the company's capital structure through disciplined financial management. There are clear goals in place designed to reduce costs and improve efficiency, and those efforts will continue.
I am very pleased to have the expertise of Al Weber and the great team of executives around the company to draw on. Al has done a fantastic job leading the company over the last few months. His expertise has been critical as the company had transitioned from a successful financial restructuring to a busy summer season.
I will be visiting all of our parks in the coming weeks and examining the core businesses. Six Flags has some of the most talented people in the business, and I am really eager to meet everyone. I anticipate that my first tasks will involve a lot of listening and a lot of asking questions.
Clearly, it's also a high priority for me to get to know our customers and also many of you in the financial community. I look forward to listening to your thoughts. And during the next few months, I also hope to be able to meet as many of you as possible face-to-face.
One of the most important concepts in corporate governance is transparency. For me, that has always been my policy. I am committed to maintaining an open dialog with all shareholders. I believe we have a great story to tell, and I will do my best to communicate about our business and our plans.
That said, today is my first day on the job. So I'm not yet in a position to discuss the specifics of Six Flags business and performance. Al and Jeff are here to provide that information and to take questions along those lines.
Before they give us all the details, I would like to reinforce that all in all, this was a very memorable quarter marked by a great operating and financial performance, strong support from guests, partners, suppliers, employees, lenders and committed shareholders and a positive conclusion to a long and often complex restructuring process.
With that, Al, I'll turn the call over to you now.
Thank you, Jim. Welcome to Six Flags. I look forward to partnering with you. Good morning, everyone, and thank you for participating in this call and for your interest in Six Flags Entertainment.
As you can imagine, a lot has taken place since the company's last investor conference call in the spring of 2009. First, I'd like to talk about what Six Flags accomplished during its financial restructuring.
While the process was challenging, it resulted in the cancellation of $1.7 billion in debt and preferred equity. As of August 1, our net debt balance was $830 million, down from our pre-petitioned balance including peers of over $2.7 billion. Our annual cash financing burden is approximately $75 million and is approximately one-third of historical levels. We have preserved in excess of $1 billion in federal net operating losses, which means that we will pay minimal taxes for the foreseeable future.
Our new capital structure and NOLs will help us generate meaningful free cash flow, which will permit continued deleveraging. In fact, on August 5, we made an unscheduled principal payment of $25 million on our first lien term loan.
Now let's turn to our operations. Since I joined the company in May, we've streamlined our operations and refocused our organization. We began this process starting with the reorganizing of the corporate office and the relocation of the corporate headquarters to Dallas, the home of our original theme park, Six Flags Over Texas. Reorganization of the corporate office is expected to generate $16 million in the annual savings. In addition, we've completed a deep-dive review of operating expenses, which will help implement best practices to enhance productivity.
As a refocused company, we have stopped non-added value spending, which is inefficient and distracting, and we have shifted our focus on the core theme park business.
There is a wealth of theme park experience in the company. Much like myself, many people have dedicated their career to the theme park industry. This depth of experience has allowed us to decentralize our organization and push more local decisions to the field. And we have aligned our organization to a long-term incentive plan which extends to the park level.
I've been in the business for over 40 years. I've been the CEO of two industry-leading companies and have successfully turned around organizational cultures and delivered significant growth in market share and profitability. I know a little bit about the theme park space. So here is what I think about the assets of Six Flags.
Number one, they are in great markets. Our parks are in nine out of the top 10 DMAs. This strong market position provides a great opportunity. Number two, they are in excellent condition. Over the past few years, the company increased its operating expenses in order to clean up the parks and to eliminate deferred maintenance, which has helped drive record guest service levels and has underscored our commitment to provide clean, safe, fun experiences for our guests.
Number three, the parks are well capitalized. The company has spent approximately $1.75 billion in capital expense since 1998, more than any other regional theme park company. We benefit from these investments which provide guests with a wide variety of high-quality rides, shows and attractions that stimulate visitation from guests of all ages.
Number four and most importantly, Six Flags has great people. I've known many Six Flags people for years and enjoyed getting to know them better for the last three months. I am impressed by their abilities, their passion for the guests and their commitment to the company.
While we have generated positive momentum, the company has further opportunity to achieve best-in-class performance. We believe there is great opportunity for growth by focusing our attentions on marketing, pricing and capital efficiency.
Let's first touch on marketing. You just let me comment on our strong product offering. It probably isn't our product; it's how our product is marketed. Our advertisements have relied too heavily on Mr. Six. While his awareness is high, his effectiveness of the message is low. We've already shifted away from Mr. Six and towards advertisements that showcase our product and improve intent-to-visit. We will target families and thrill-seekers alike and convey the message that Six Flags offers something for everyone.
Now on to pricing. Despite being located in better markets, Six Flags under-prices its competitors by 20%. However it's due not to actual pricing levels, rather it's a function of deep unfenced discounting. The point here is that discounts are effective by driving urgency to a specific time. While unfenced discounts, which extend throughout the entire operating season, do not create urgency to visit, and therefore simply serve to reduce the cash. We intend to address our price initiative, but in a more strategic discount plan.
Lastly, I'd like to touch on capital efficiency. It's important to continue to add fresh new product to our parks. In recent years, Six Flags' capital spending has generally been at the right levels. However, there are a few ways to make level spending more effective.
First, through better marketing, we can improve customer awareness of the new product. Second, we need to select product that truly appeals to our customers and closes the gaps in our product mix. Through a more localized approach to capital decision-making, we could improve product selection. These are regional parks. Approximately 25% of the guests live within 100 miles of the parks. We need to listen to the guests to better understand what they want.
And third, we can get a better bang for the buck by analyzing the value proposition of each capital investment. For example, our Glow In The Park parade over the five parks that present the parade, we spent approximately $7.5 million in capital. It's a magnificent event, but it is a night parade and must be schedule at night when guests have already left the park as well as requiring the park to stay open longer than tradition schedule suggests. We see this is as just one small example where we can improve the efficiency and effectiveness by deploying our capital differently.
Taking a step back, we've accomplished quite a lot in the short period of time. I'm pleased by the strong second quarter operating results, because they are an indication of the potential of this great company. And again, I look forward to partnering with Jim on contingently improving Six Flags.
And at this time, I'd like to turn the call over to our CFO, Jeff Speed, to share more detailed results from the quarter.
Thanks, Al. Welcome, Jim, and good morning to everybody. Before discussing the details of our results, let me start off with a brief explanation of our financial statement presentation for the quarter and six months ended June 30.
Clearly, the most significant item affecting our financial statements for the period was our emergence from Chapter 11 on April 30. From a financial reporting perspective, the emergence from bankruptcy required us to adjust our consolidated balance sheet at the emergence state to reflect our assets and liabilities at fair value.
This was accomplished through a detailed exercise known as fresh-start accounting or reporting. Fresh-start reporting not only impacted our balance sheet, but also affected our income statement post-emergence. For example, as part of fresh-start reporting, we were required to record various amortizable and tangible assets which give rise to amortization expense on our income statement for the period after emergence.
Importantly, these non-cash valuation adjustments required by fresh-start reporting do no impact our adjusted EBITDA, as we've excluded the impact of these items consistent with our definition of adjusted EBITDA and the definition included in our secured credit agreements.
As a result of fresh-start reporting, the income statement for the quarter and six months are divided into two sections: predecessor, which reflects the predecessor debtor-in-possession entity that was in Chapter 11; and the successor entity, which is the company as it stands today, recapitalized and out of bankruptcy.
For purposes of analyzing certain key operating results on the call today such as revenues, costs and adjusted EBITDA, I'm going to be discussing the results for the current-year quarter and six months and comparing those results to the prior-year period without distinguishing between the predecessor and successor periods, as we believe this is an appropriate and useful comparison.
In addition to fresh-start adjustments, our financial statements for the quarter and six months also reflect the consolidation of the Six Flags Great Escape Lodge & Indoor Waterpark, which we manage and own 41%. The prior-year quarter and six months does not include consolidation of the Lodge, but rather reflects it as an equity investment. Our financial statements for each period presented also reflect the classification of our former Louisville, Kentucky, theme park as a discontinued operation.
And finally, we've reflected certain post-emergence expenses on a separate line item on our income statement as restructuring expenses, which reflect costs associated with strategic changes in the company's management and operation, including the cost of severance from recent management changes and personnel reductions.
With all that as background, let's get to the results. Revenues for the quarter ended June 30, 2010, totaled $321.3 million, a $24.5 million or 8% increase over the prior-year quarter. The revenue growth reflects increased attendance and higher sponsorship revenues, as well as a $3.4 million impact from consolidating the Lodge. This was partially offset by slightly lower per capita guest spending.
Attendance for the second quarter was $8.2 million, a $500,000 or 7% improvement over the second quarter of 2009, and this was driven by a 16% increase in season pass visitation and 6% growth in group attendance.
Per capital guest spending was $36.86 for the quarter, a decrease of $0.29 from $37.15 in the prior-year quarter. This reflects the decision last fall to reduce season pass pricing, partially offset by increases in non-season pass ticket per capita and a favorable exchange rate impact on guest spending per capital of $0.18 related to our international parks.
Cash operating expenses for the quarter totaled $213.3 million, an $11.9 million or 5% decrease from the second quarter of 2009. This reduction reflects reduced marketing expenses, insurance costs and payroll and benefits expenses, partially offset by higher cost of sales and a $2.5 million impact due to the consolidation of the Lodge.
Adjusted EBITDA for the second quarter was $94.7 million, a $38.3 million or 68% increase over the prior-year quarter's adjusted EBITDA of $56.4 million. This increase reflects our increased revenues and reduced cash operating expenses for the period.
The company's modified EBITDA margin, which reflects adjusted EBITDA before the allocation of amounts attributable to non-controlling interest, primarily in our partnership parks and our equity investment in Dick Clark Productions, was 34% for the second quarter, a significant improvement over the prior-year quarter's 24% margin.
Given the seasonality of our business, the changes in revenue, cash operating expenses and adjusted EBITDA for the six months ended June 30 versus the prior-year period were driven largely by the same factors as our second quarter.
Revenues for the six months increased $30.6 million or 9% to $378.5 million. This was partially driven by the consolidation of the Lodge, which drove $7.7 million of the increase over the prior year. Attendance for the first half of 2010 totaled $9.5 million, an increase of $500,000 over the first half of 2009.
Guest spending per capita was $36.67 for the current-year period, relatively flat to $36.76 in the prior-year period. The favorable exchange rate impact on guest spending per capita growth versus the first half of 2009 was $0.29 related to our international parks.
Cash operating expenses for the six months totaled $332 million, a $5.8 million or 2% decrease from the prior-year period, even after the consolidation of the Lodge which accounted for a $5.4 million increase over the prior year.
Adjusted EBITDA for the first half was $34.7 million, a $37.8 million increase over the prior-year period's adjusted EBITDA loss of $3.1 million. And modified EBITDA margin for the first six months of 2010 was 13% versus 3% in the prior-year first half.
Our performance for the six months also reflects 1% or 10 fewer operating days as well as improved weather primarily at our East Coast parks compared to the prior-year period.
Outside of adjusted EBITDA, the company's results for the quarter and six months reflect higher amortization expense due to the increase in amortizable assets from fresh-start reporting and lower interest expense from the reduction in the company's debt burden as a result of the confirmation of our Chapter 11 plan of reorganization.
The prior-year quarter and six months were also affected by a loss reflected in other expense related to the termination of our interest rate swaps. Reorganization items on the income statement contain the cost of the Chapter 11 proceedings as well as debt extinguishment gains that occurred pursuant to the Chapter 11 plan that were recognized upon emergence at April 30.
Income tax expense of approximately $60 million primarily reflects deferred taxes related to fresh start adjustments, and the gain in discontinued operations for the quarter and six months was due to a reduction in certain liability accruals.
As indicated in our reorganization plan projections, we expect cash taxes of approximately $10 million per year. At the end of June, we had unrestricted cash of $122 million. And in terms of available liquidity, in addition to our cash, the company has a $120 million undrawn revolving line of credit as well as a $150 million facility provided by Time Warner that can be used to finance the redemption of the limited partnership units that are put to the company.
Based on our performance through July and our solid cash and liquidity position, on August 5, the company decided to prepay $25 million in principal on its first lien term loan. Given our existing cash and liquidity sources, we believe the company has ample liquidity to address its anticipated short-term and long-term needs.
And with that, I'd like to turn the call back to Al for some closing comments before we begin Q&A.
Thank you, Jeff. To sum up, here at Six Flags, we're going to stick to what we do best, our great theme parks.
We'll leverage our strong asset base and a dedicated group of employees to achieve best-in-class performance, while at the same time continue to provide our guests with a high-quality theme park experience they have come to expect from Six Flags. With an improved capital structure and a refocused organization, Six Flags is well positioned to create long-term value for its shareholders.
At this time, I'd like to open up the call for questions.
(Operator Instructions) Your first question will come from the line of Joe Stauff of Susquehanna.
Joe Stauff - Susquehanna
I guess with the changes in management over the last month-and-a-half, two months, Jim, I know you've just joined the company, but can you just talk about roughly in some sort of broad outline the change in management strategy now versus under the old regime? Are you targeting more so I guess kind of volume versus pricing versus a tighter cost structure? Anything that you can outline now would be helpful.
Al has already outlined, Joe, the key areas of focus. But let me reinforce once again I have just joined. I am very early into this, but I am very impressed with what I've seen in terms of the folks that are involved here. You talk about management. The leadership is very good and we have great people running our park. We are in really good market, and the parks themselves, as has already been described by Al, are in excellent condition, and our customers' satisfaction numbers are very high.
I look at this and I say there are a lot of positives that exists. We have excellent rides that attract people, and we have very good people. So what we're going to do is we're going to focus on the basics. We're going to take care of our customers. We're going to make sure that the customers have the highest quality theme park experience. And we're going to ensure that we drive attendance the right way, as Al described, without discounting just on an ongoing basis.
We're going to ensure that we do focus on expenses and really tight management of costs I think is key. And if we can do all of that right, get the top-line and the bottom-line right, which a lot us of have experiences in, I think we'll be able to improve cash flow and reduce debt on an ongoing basis.
When you combine all of that, the strong customer experience and strong financial management, I think it will put us in a position where we will go from strength to strength. This is a great company that had a bad balance sheet.
I would also say, again reinforcing Al's point, we know we have an issue in product marketing. And I think that needs to be refocused. We know we have an issue in discounting. Again, that's all within our own control. We can focus on that and get the pricing right. So with a targeted approach on what I would call the basics, I think the company has a really, really good future.
Now I'm going to ask Al to step in. He may have some other source that he wants to add to that answer.
No, Jim, very, very inclusive response to the question. I'd would reiterate the points that you mentioned. We think by deploying capital more effectively, we can continue to improve the guest experience and potentially increase volume attendance in parks.
We do think that the pricing approach to the business could be more strategic, which will improve yield. And of course a continued focus on a back-to-the-basics view, being a theme park company, can help us reduce expenses or redeploy expenses that will improve our margins to best-in-class levels. So we think it's a great opportunity. I really think the second quarter results really underscore the great potential of this company.
Joe Stauff - Susquehanna
I do have a few more detailed questions. With respect to liquidity, obviously you'd outlined that you had paid down your first lien $25 million in early August. How about the amount of professional fees that you guys have to pay out? Is that number fully paid out by the end of the quarter June 30, or is there still amount to be paid out going forward?
We have a couple of items that are sort of residual items to be paid out coming out of the bankruptcy. We have prepetition accounts payable that are still being processed. That's roundly about $20 million. And we have various fees and expenses that are yet to be paid out related to the bankruptcy that are hung up on the balance sheet for approximately another $20 million that are yet to be paid. So in aggregate, about $40 million.
But we have factored all that in when we assessed our cash and liquidity position and our ability to prepay some debt. So that was clearly factored in.
Joe Stauff - CRT Capital
What is the cost of moving the corporate headquarters to Texas? That's number one. Number two, can you talk about your shares and how much has been distributed of the total 27.5 million shares outstanding today? And of that, how much of that represents sort of restricted versus non-restricted ownership? If you cold just again give us a sense of liquidity of the shares going forward.
Joe, let me answer the question on the relocation of offices and let Jeff comment on the second question. It's somewhat of a misnomer. I can show you we’ve always had a significant corporate position at Dallas. It's really been more operating corporate office as it's been. So the relocation from New York to Dallas, other than an adjustment on the rift and severance related to that, is minimal.
Joe, I'm not sure I followed the question on your question on the shares. The outstanding shares that were issued as part of the restructuring were about 27.4 million shares. Obviously, we have some sizeable holdings by certain investors. But I don't know if you were getting at the long-term incentive plan or the actual outstanding shares that existed as of the end of the quarter. Can you clarify?
Joe Stauff - CRT Capital
I'm just trying to understand, of the total 27.5 million shares, as you know, with (inaudible) coming out, some percentage of the shares sometimes are held up in terms of reserves of outstanding litigation or two. There is a certain amount of ownership of these shares that basically prevents holders from selling due to certain restrictions. And that's what I was trying to understand the liquidity of the stock going forward.
All the shares were distributed. And in terms of restrictions, there were registration rights that were granted to certain holders as part of the restructuring. Basically, the holders that held an excess of 1%, those shares are free to trade. To the extent folks have less than 1%, there was a six-month restriction period that will lapse after six months and will be free to trade.
I do not have with me the exact percentage of the folks that hold less than 1%. So I can't answer that part of the question. But that's the upshot of the situation at this point in terms of liquidity in the stock.
Your next question comes from the line of Ian Corydon of B. Riley.
Ian Corydon - B. Riley
Do you have restated attendance and per cap numbers for the back-half of 2009 that reflects the absence of the Kentucky Park?
Ian Corydon - B. Riley
With the Kentucky Park gone, it seems like the numbers that you provided previously for attendance and per cap revenues for Q3 and Q4 of '09 will be changed. Do you have those pro forma numbers?
We have not put those out, but the Kentucky Park, we did between 500,000 and 600,000 in attendance, and it actually lost a couple of million dollars in EBITDA. But you'll see those pulled out when we provide the third and fourth quarter numbers. We will provide comparisons with those pulled out. But we have not provided that to date.
Ian Corydon - B. Riley
And on sponsorship revenues, do you have the Q2 numbers? And then what's the strategy for driving that in the years ahead?
Let me comment, Ian, on strategy and Jeff can give you some of the financials. We think the Corporate Alliance piece of the business has been one of the success stories of this company over the last few years. Not only has it helped create meaningful incremental revenue stream for us, we've aligned ourselves with A player brands that create strategic alliances that position our business both promotionally and for an image standpoint.
So we have been very, very successful in that category. We think it's a great piece of business, and we'll continue to focus on that in the future. From an economic standpoint, Jeff?
Yes, in terms of the performance of the Corporate Alliance business, it drove part of our growth in the quarter for the first six months. Approximately $4 million of our revenue growth for the six months was attributable to our sponsorship licensing and other fees.
It's important to note that in the sponsorship licensing and other fees, we're going to experience a reduction because of the loss of the Dick Clark management contract, as well as because of consolidation, management fee gets eliminated. So there'll be a reduction on that line item. But we are still looking for a meaningful increase in performance in our sponsorship licensing and other fees this year.
Ian Corydon - B. Riley
And in terms of the new strategy, how it might impact attendance and spending in the parks, it sounds like despite maybe reducing some expenses, refocusing marketing, you are not necessarily expecting to see guest count decline due to that. Is that fair?
I think your comment on expecting the guest count to decline is not what we expect to happen actually. The great thing about being a regional theme park focused business is we're very bullish on the space. We look at our historic numbers and see that we have had some decline in volume. We think there are reasons for that that we can address, and we think volume increase is definitely in our future as well as yield increase.
So we actually see there is a great growth opportunity in this company, specially being focused specifically on being a best-in-class performer in this space.
Ian Corydon - B. Riley
Just in terms of guidance, can you talk about how you are tracking versus the plan that was put forth and/or is there a point of time when you're going to feel comfortable giving annual adjusted EBITDA guidance?
We've discussed the point of guidance, and the Board has determined that we shouldn't get guidance at this time.
(Operator Instructions) Your next question comes from the line of Ken Smalley of the Seaport Group.
Ken Smalley - Seaport Group
You talked a bit about group pricing, discounts that were executed last fall and how they impacted the per capita admission? Could you give a little breakdown possibly on admission per capita versus in-park spend per capita and how those have been doing?
Also, given the way the calendar falls, it looks like Memorial Day fell a little later, and we've seen it to potentially have an extended season on the backend in August and in September. How you'll be capitalizing on that?
Ken, let me chat a bit about the pricing, discounting comment, and Jeff can chime in on more the trends going forward. Just to be clear, I think we've commented that we feel good about our season pass number. We also think the group sales business has trended up. I think that's been reported pretty much industry-wide.
We really aren't in a position to want to give you detailed per caps on different ticket types. Obviously, in the business, the variation in attendance between ticket type to aggregate into movement on the overall admissions per cap, but I think we feel good about the attendance strengths.
The comment earlier about discounting was really more of a strategic comment that says, when we look at the way the business has been managed and how we have attempted to generate attendance gain through a deep, unfenced discounting, we think you can continue to drive interest to visit, but in a more strategic, more fenced, more focused approach to discounting, which may be a little different philosophy than of recent times. But it's pretty typical in this business.
So again, group sales has rebounded. We have a good season pass year. Per caps really are a mixture of that. But we see the discounting comment is being more strategic view of what we think we can do going forward.
Jeff, do you want to comment a little bit on the variations on calendar, et cetera?
I guess just one of the questions you had was on per cap, and you'll see that in the Q that will be filed today. But in terms of our per capita, the ticket per capita, which is one component of our guest spending per capita, the other component being in-park, ticket per capita through the first six months was down about 1%. It wasn't group pricing. It was season pass pricing that was decided to be reduced last fall as a promotional effort to get out in front of the season. So that was the primary driver of the reduction in our ticket per capita.
The season pass pricing reduction has been offset by increases in other non-season pass ticket categories. In terms of the in-park side of the guest spending equation, we're actually up approximately 1% for the first six months in terms of our in-park spending and is largely driven by our food and parking and rentals side of the business.
In terms of the calendar, we're not seeing any meaningful difference in the calendar for the remainder of the year, except to say we certainly hope that October weather is going to be better than what we saw last year. You'll recall, last year October, we had a very, very difficult weather season in October when we put on our Fright Fest product.
Ken Smalley - Seaport Group
If I heard you correctly, you generated $90 million in cash in July. Were there any changes in working capital or was that strictly operating cash generation from the business?
Also, there was recently a high yield deal done for Dick Clark Productions in which there was a dividend paid. Could you discuss how much money you will receive, whether you've received it yet, go into the details there?
And then finally, costs associated with sponsorship fees, could you give an idea of the margins there?
On the cash question, yes, that's primarily by operations, not any huge swings in working capital. It was basically operating cash flow, between July and August. It depends on calendar, but generally our most significant month in terms of operations of the season. So that was primarily operationally driven.
Ken Smalley - Seaport Group
It seems exceptionally high, though, but I could be wrong.
It's not a record, but it's certainly a very, very solid performance by historical standards.
In terms of Dick Clark, as you know, we are a minority equity investor in Dick Clark. The majority ownership is by RedZone. We have minority protection. To the extent amounts are distributed to other shareholders, we get our pro rata share. And to date, no amounts have been distributed to the shareholders.
Ken Smalley - Seaport Group
Have you been informed, though, what you'll be getting and how much money that is?
We are generally aware if you just do the math of how much potentially could come out on our minority position applied to that. So we generally have a perspective of what that could possibly be, but it's really to be determined by that company.
Yes, the excess cash is about $100 million. So if they were to distribute it, we'd get 40% of that. But it has not been decided by the controlling shareholder whether it will be distributed to the shareholders.
Ken Smalley - Seaport Group
And finally costs associated with the sponsorship fees, what kind of margins do you get?
A lot of that's very deal oriented, but I'll tell you we're very pleased that it's a very, very high margin business. We've analyzed that one of the things we've done in the last three months is take a relatively deep dive on a contract-by-contract basis on that business. And it is very margin accretive.
There no further questions. At this time, I'd like to turn the call back over to Mr. Al Weber, Chief Operating Officer, for closing remarks.
Thank you, operator, and thanks again for all of you joining us this morning. Jim?
Thanks very much all of you joining us on the call. I wish you a safe and happy summer and encourage all of you to come out to one of our parks to have some fun with your families and friends. All the best. Looking forward to the next call.
Ladies and gentlemen, that concludes today's conference. Thank you for your participation. You may now disconnect. Have a great day.
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