EX-99.1 2 d304377dex991.htm EXHIBIT 99.

1
Exhibit 99.1

Contact:

Alex Lombardo or Nikki Sacks Investors (608) 662-4698

Nikki Donofrio Media (608) 662-4707

Great Wolf Resorts Reports 2011 Fourth Quarter Results ~ Q4 Adjusted EBITDA Increases 16% ~ ~ Full-Year 2011 Adjusted EBITDA of $80.5 million ~ MADISON,Wis.,February22,2012Great Wolf Resorts, Inc. (NASDAQ: WOLF), North Americas largest family of indoor waterpark resorts, reported results today for the fourth quarterendedDecember31,2011. Fourth Quarter and 2011 Highlights

Adjusted EBITDA increased 15.7 percent to $13.0 million in the fourth quarter from the prior year and 16.7 percent to $80.5 million for the full year. Same store revenue per available room (RevPAR) increased 6.4 percent and total revenue per available room (Total RevPAR) increased 5.5 percent over the prior year quarter, andsamestoreRevPARincreased9.3percentforyearendedDecember31,2011ascomparedtotheyearendedDecember31,2010. Same store occupancy in the fourth quarter increased by 220 basis points and average daily rate (ADR) increased 2.0 percent as compared to the prior year quarter, and for the year same store occupancy increased 360 basis points and ADR increased 3.1 percent. Improved its net debt to trailing twelve-month Adjusted EBITDA ratio to 5.98 times and eliminated all debt maturities until July 2014.

ForthefourthquarterendedDecember31,2011,theCompanyreportednetlossof$(14.4)million,or$(0.46)pershare,comparedtoanetlossof$(29.2)million,or$(0.94)pershare,for the same period a year earlier. The year over year improvement was due primarily to the effect of higher overall revenues, along with ongoing expense discipline, as well as the net effect of a non-cash impairment charge recorded in the 2010 fourth quarter. Kim Schaefer, chief executive officer, commented, Throughout 2011 we delivered outstanding operating results culminating in our second consecutive year of record Adjusted EBITDA. Our ongoing commitment to providing our guests with a superior experience,

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combined with the value of a Great Wolf Lodge getaway, continues to resonate with consumers. During the year we successfully accomplished our goal of attracting an increased number of new guests to our resorts, creating a strong pipeline of potential future repeat visits. We continue to refine our sales and marketing strategies, which combined with enhanced amenities and a stabilizing economy, should result in ongoing growth as we progress through 2012 and beyond. Operating Results Total revenues increased 4.7 percent to $65.5 from $62.6 million in the fourth quarter of 2010, due primarily to increased demand at the Companys resorts. Adjusted EBITDA in the 2011 fourth quarter increased 15.7 percent to $13.0 million from $11.2 million in the fourth quarter of 2010. As a percentage of total revenue, Adjusted EBITDA was 19.8 percent, up 188 basis points from 18.0 percent in the fourth quarter of 2010. The Company continued its ongoing focus on managing its controllable expenses. As a percentage of total revenues, resort departmental expenses, property operating costs and SG&A costs combined decreased 86 basis points in the 2011 fourth quarter as compared to the 2010 period. Brand Results Same store RevPAR in the fourth quarter of 2011 was up 6.4 percent (6.6 percent increase using constant dollars, which normalizes the foreign currency translation effect on operating statistics of the Companys Canadian resort) compared to the 2010 quarter. Same store occupancy was up 220 basis points compared to the prior year quarter. Same store ADR increased 2.0 percent (2.1 percent increase using constant dollars) compared to the 2010 quarter. Total same store revenue per occupied room (Total RevPOR), which includes revenue from rooms, food and beverage, and other amenities, increased 1.1 percent (1.2 percent increase using constant dollars) compared to the prior year quarter. Same store RevPAR for Great Wolfs Generation II resorts, which are generally larger resorts that better represent the Companys current resort development model and contribute about 80 percent of the Companys Adjusted EBITDA, increased 7.1 percent (7.3 percent increase using constant dollars) in the 2011 fourth quarter versus 2010. Same store occupancy increased 270 basis points, same store ADR increased 1.9 percent (2.0 percent using constant dollars), and same store Total RevPOR for Generation II resorts increased 0.7 percent (0.9 percent using constant dollars) in the fourth quarter of 2011 as compared to the 2010 quarter. Balance Sheet and Liquidity The Company has no debt maturities until July 2014 and no significant long-term capital commitments for construction or development of new properties. Over the near term, the Company intends to utilize a substantial portion of its free cash flow to manage its balance sheet leverage.

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AsofDecember31,2011,theCompanyhad: Unrestricted cash and cash equivalents: $33.8 million Total debt: $515.2 million Total secured debt: $434.7 million Total unsecured debt: $80.5 million Weighted average cost of total debt: 9.0 percent Weighted average debt maturity: 6.5 years Net debt (total debt minus unrestricted cash) to trailing twelve-month Adjusted EBITDA ratio: 5.98x Outlook and Guidance The Company is introducing the following outlook and earnings guidance for the first quarter 2012. Based on its current operating outlook, the Company is maintaining the midpoint of its previously announced guidance for full year Adjusted EBITDA to be in the range of $83.0 million to $89.0 million. The outlook and earnings guidance information is based on the Companys current assessment of business conditions, including a forecast of consumer demand and discretionary spending trends. The Company may update any portion of its business outlook at any time as conditions dictate:

(amounts in millions, except per share data)

$ $ $

Low

Q1 2012 High

Full year 2012 Low High

Net income (loss) Net income (loss) per diluted share Adjusted EBITDA (a)

(6.6)$ (0.21)$ 18.5 $

(4.6)$ (0.15)$ 20.5 $

(18.7) $ (0.58) $ 83.0 $

(12.7) (0.40) 89.0

(a)

For reconciliations of net income (loss) to Adjusted EBITDA, see tables accompanying this press release.

The forecast above projects first quarter 2012 same store RevPAR growth in the range of approximately 4 percent to 6 percent in constant dollars versus first quarter 2011 and full year 2012 same store RevPAR growth in the range of approximately 3 percent to 7 percent as compared to the prior year. Adjusted EBITDA is a non-GAAP financial measure. See the discussion below in the Non-GAAP Financial Measure section of this press release. A reconciliation of net income (loss) to Adjusted EBITDA is provided in the tables of this press release.

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Conference Call Great Wolf Resorts will hold a 2011 fourth quarter results conference call today at 9:00 a.m. Eastern Time. The conference call will be hosted by Chief Executive Officer Kim Schaefer and Chief Financial Officer Jim Calder. Stockholders and other interested parties may listen to a simultaneous webcast of the conference call on the Internet by logging onto the Companys Corporate Web site at, http://corp.greatwolfresorts.com, then going to the Investor Relations tab and selecting Event Calendar. Interested parties may also call 1-877-705-6003, or for international callers 1-201-493-6725.ArecordingofthecallwillbeavailablebytelephoneuntilmidnightonFebruary29,2012bydialing1-877-870-5176, or for international callers 1-858-3845517 and using the conference ID 387859. Non-GAAP Financial Measure Included in this press release is Adjusted EBITDA, which is a non-GAAP financial measure, which is a measure of the Companys historical or future performance that is different from measures calculated and presented in accordance with GAAP that Great Wolf Resorts believes is useful to investors. The following discussion defines Adjusted EBITDA and presents the reasons the Company believes it is a useful measure of the Companysperformance.GreatWolfResortsdefinesAdjustedEBITDAasnetincome(loss)plus(a)interestexpense,net, (b)incometaxes,(c)depreciationandamortization,(d)non-cashemployeeanddirectorcompensation,(e)costsassociatedwithearlyextinguishmentofdebtorpotentialcapitalmarkets transactions,(f)openingcostsofprojectsunderdevelopment,(g)equityinearnings(loss)ofunconsolidatedrelatedparties,(h)gainorlossondispositionofpropertyorinvestments, (i)separationpaymentstoseniorexecutives,(j)environmentalliabilitycosts,(k)assetimpairmentcharges,(l)non-controllinginterests,(m)acquisition-relatedexpenses,and(n)other unusual or non-recurring items. Adjusted EBITDA as calculated by the Company is not necessarily comparable to similarly titled measures by other companies. In addition, Adjusted EBITDA(a)doesnotrepresentnetincomeorcashflowsfromoperationsasdefinedbyGAAP,(b)isnotnecessarilyindicativeofcashavailabletofundtheCompanys cash flow needs, and(c)shouldnotbeconsideredasanalternativetonetincome,operatingincome,cashflowsfromoperatingactivitiesortheCompanys other financial information as determined under GAAP. ManagementusesAdjustedEBITDA:(i)asameasurementofoperatingperformancebecauseitassistsincomparingtheCompanys operating performance on a consistent basis by removing the impact of items directly resulting from the Companysassetbase(primarilydepreciationandamortization)fromitsoperatingresults(ii)forplanningpurposes,includingthe preparation of the Companysannualoperatingbudget(iii)asavaluationmeasureforevaluatingtheCompanys operating performance and its capacity to incur and service debt, fund capitalexpendituresandexpanditsbusinessand(iv)asonemeasureindeterminingthevalueofotheracquisitionsanddispositions. Adjusted EBITDA is an operating performance measure, and not a liquidity measure, that provides investors and analysts with a measure of operating results unaffected by differences in capital structures, capital investment cycles and ages of related assets among otherwise comparable companies. The Company also presents Adjusted EBITDA because it is used by some investors as a way to measure its ability to incur and service debt, make capital expenditures and meet working capital requirements. The Company believes Adjusted EBITDA

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is useful to an investor in evaluating the Companysoperatingperformancebecause:(i)asignificantportionoftheCompanys assets consists of property and equipment that are depreciatedovertheirremainingusefullivesinaccordancewithGAAP(ii)itiswidelyusedinthehospitalityandentertainmentindustriestomeasureoperatingperformancewithoutregard toitemssuchasdepreciationandamortizationand(iii)theCompanybelievesithelpsinvestorsmeaningfullyevaluateandcomparetheresultsoftheCompanys operations from period to period by removing the impact of items directly resulting from its asset base (primarily depreciation and amortization) from the Companys operating results. Adjusted EBITDA is a measure commonly used in the Companys industry, and the Company presents EBITDA to enhance investors understanding of its operating performance. The Company uses Adjusted EBITDA as one criterion for evaluating its performance relative to that of its peers. The compensation committee of the Companys board of directors determines the annual variable compensation for certain members of the Companys management based in part on Adjusted EBITDA. The Company also believes Adjusted EBITDA is a useful performance measure because it also eliminates a number of non-cash items and other items that do not reflect the Companys core operating performance on a consolidated basis, which allows investors to more easily compare the Companys performance over various reporting periods on a consistent basis. Although the Company believes that Adjusted EBITDA can make an evaluation of the Companys operating performance more consistent because it removes items that do not reflect its core operations, other companies in the hospitality industry may define Adjusted EBITDA differently than the Company does. As a result, it may be difficult to compare the performance of other companies to the Companys performance by using Adjusted EBITDA or similarly named non-GAAP measures that other companies may use. Forward-Looking Statements This press release contains forward-lookingstatementswithinthemeaningofSection27AoftheSecuritiesActandSection21EoftheSecuritiesExchangeActof1934,asamended, and are subject to the safe harbor created by the Private Securities Litigation Act of 1995. All statements, other than statements of historical facts, including, among others, statements regarding the Companys future financial results or position, business strategy, projected levels of growth, projected costs and projected financing needs, are forward-looking statements. Those statements include statements regarding the intent, belief or current expectations of Great Wolf Resorts, Inc. and members of its management team, as well as the assumptions on which such statements are based, and generally are identified by the use of words such as may,might,will,could,plan,objective,predict,project,potential,continue, ongoing, seeks, anticipates, believes, estimates, expects, plans, intends, should or similar expressions. Forward-looking statements are not guarantees of future performance and involve risks and uncertainties that actual results may differ materially from those contemplated by such forward-looking statements. Many of these factors are beyond the Companys ability to control or predict. Such factors include, but are not limited to, competition in the Companys markets, changes in family vacation patterns and consumer spending habits, regional or national economic downturns, the Companys ability to attract a significant number of guests from its target markets, economic conditions in its target markets, the impact of fuel costs and other operating costs, the Companys ability to develop new resorts in desirable markets or further develop

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existing resorts on a timely and cost efficient basis, the Companys ability to manage growth, including the expansion of the Companys infrastructure and systems necessary to support growth, the Companys ability to manage cash and obtain additional cash required for growth, the general tightening in the U.S. lending markets, potential accidents or injuries at its resorts, decreases in travel due to pandemic or other widespread illness, its ability to achieve or sustain profitability, downturns in its industry segment and extreme weather conditions, reductions in the availability of credit to indoor waterpark resorts generally or to the Company and its subsidiaries, increases in operating costs and other expense items and costs, uninsured losses or losses in excess of the Companys insurance coverage, the Companys ability to protect its intellectual property, trade secrets and the value of its brands, current and possible future legal restrictions and requirements. A further description of these risks, uncertainties and other matters can be found in the Companys annual report and other reports filed from time to time with the Securities and Exchange Commission, including but not limited to the Companys Annual Report on Form 10-KfortheyearendedDecember31,2010.GreatWolfResortscautionsthat the foregoing list of important factors is not complete and assumes no obligation to update any forward-looking statement that it may make. Management believes these forward-looking statements are reasonable; however, undue reliance should not be placed on any forward-looking statements, which are based on current expectations. All written and oral forward-looking statements attributable to the Company or persons acting on its behalf are qualified in their entirety by these cautionary statements. Further, forward-looking statements speak only as of the date they are made, and the Company undertakes no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results over time unless otherwise required by law. Past financial or operating performance is not necessarily a reliable indicator of future performance and investors should not use the Companys historical performance to anticipate results or future period trends. About Great Wolf Resorts, Inc. Great Wolf Resorts, Inc. (NASDAQ: WOLF), Madison, Wis., is North Americas largest family of indoor waterpark resorts, and, through its subsidiaries and affiliates, owns, licenses and/or operates its family resorts under the Great Wolf Lodge brand. Great Wolf Resorts is a fully integrated resort company with Great Wolf Lodge locations in: Wisconsin Dells, Wis.; Sandusky, Ohio; Traverse City, Mich.; Kansas City, Kan.; Williamsburg, Va.; the Pocono Mountains, Pa.; Niagara Falls, Ontario; Mason, Ohio; Grapevine, Texas; Grand Mound, Wash.; and Concord, N.C. The Companys resorts are family-oriented destination facilities that generally feature 300 to 600 rooms and a large indoor entertainment area measuring 40,000 to 100,000 square feet. The allsuite properties offer a variety of room styles, arcade/game rooms, fitness rooms, themed restaurants, spas, supervised childrens activities and other amenities. The Companys consolidated subsidiary, Creative Kingdoms, LLC, is a developer and operator of technology-based, interactive quest adventure experiences such as MagiQuest. Additional information may be found on the Companys Web site at www.greatwolf.com.

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Great Wolf Resorts, Inc. Condensed Consolidated Statements of Operations (Unaudited; dollars in thousands, except per share amounts)
ThreeMonths Ended December31, 2011 $

Revenues: Rooms Food and beverage Other Management and other fees Other revenue from managed properties Total revenues Operating expenses: Resort departmental expenses Selling, general and administrative Property operating costs Opening costs for projects under development Non-cash employee and director compensation Environmental liability costs Depreciation and amortization Debt extinguishment costs Acquisition-related expenses Loss on disposition of assets Asset impairment loss Other expenses from managed properties Total operating expenses Operating (loss) income Investment income Interest income Interest expense Loss from continuing operations before income taxes and equity in unconsolidated affiliates Income tax expense (benefit) Equity in unconsolidated affiliates, net of tax Net loss from continuing operations Discontinued operations, net of tax Net loss Net (income) loss attributable to noncontrolling interest, net of tax Net loss attributable to Great Wolf Resorts, Inc. Net loss per share: Basic Diluted Weighted average common shares outstanding: Basic Diluted

ThreeMonths Ended YearEnded YearEnded December31, December December 2010 31, 2010 31, 2011

36,967 $ 10,487 10,272 2,490 60,216 5,331 65,547

34,143 $ 10,019 10,844 2,249 57,255 5,339 62,594

174,325 $ 46,507 45,910 7,793 274,535 22,173 296,708

158,985 44,434 43,229 7,240 253,888 22,072 275,960

23,353 14,453 9,549 618 12,361 145 60,479 5,331 65,810

21,674 15,980 8,107 1,059 (24) 13,439 99 18,741 79,075 5,339 84,414

98,024 62,080 35,373 2,252 51,873 1,850 1,513 252,965 22,173 275,138

90,212 63,306 32,848 156 2,665 (1,292) 54,820 3,498 396 19 18,741 265,369 22,072 287,441

(263) (220) (54) 11,728

(21,820) (256) (55) 12,208

21,570 (902) (210) 47,902

(11,481) (1,088) (543) 45,540

(11,717) 1,911 685

(33,717) (5,824) 645

(25,220) 7,086 18

(55,390) (5,403) 576

(14,313) 70

(28,538) 637

(32,324) (6,634)

(50,563) 455

(14,383) (10)

(29,175) 16

(25,690) (27)

(51,018) (9)

(14,373)$

(29,191)$

(25,663) $

(51,009)

$ $

(0.46)$ (0.46)$

(0.94)$ (0.94)$

(0.82) $ (0.82) $

(1.65) (1.65) 30,988 30,988

31,431 31,431

31,078 31,078

31,332 31,332

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Great Wolf Resorts, Inc. Reconciliations of Non-GAAP Financial Measures (Unaudited; dollars in thousands, except per share amounts)
ThreeMonths ThreeMonths Ended Year Ended YearEnded Ended December31, December31, December December31,2011 2010 2011 31, 2010 $

Net loss attributable to Great Wolf Resorts, Inc. Adjustments: Opening costs for projects under development Non-cash employee and director compensation Depreciation and amortization Interest expense, net Separation payments Loss on disposition of assets Gain on disposition of property included in discontinued operations Environmental liability costs Debt extinguishment and other offering costs Acquisition-related expenses Asset impairment loss Equity in income of unconsolidated affiliates, net of tax Net (income) loss attributable to noncontrolling interest, net of tax Income tax expense (benefit) Other Adjusted EBITDA adjustments included in discontinued operations Adjusted EBITDA (1)

(14,373) $

(29,191) $

(25,663) $

(51,009) 156 2,665 54,820 44,997 19 (1,292) 3,498 396 18,741 576 (9) (5,403) 823

618 12,361 11,674 145 685 (10) 1,911

1,059 13,439 12,153 (24) 99 18,741 645 16 (5,824) 135

2,252 51,873 47,692 385 1,513 (6,667) 1,850 18 (27) 7,086 176

13,011 $

11,248 $

80,488 $

68,978

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Great Wolf Resorts, Inc. Operating Statistics Great Wolf Lodge Resorts
ThreeMonthsEndedDecember31, 2011 2010 $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ YearEndedDecember31, 2011 2010

Great Wolf Lodge Brand Properties Same Store Occupancy ADR RevPAR Total RevPOR Total RevPAR Great Wolf Lodge Brand Properties Consolidated (2) Occupancy ADR RevPAR Total RevPOR Total RevPAR Great Wolf Lodge Brand Generation I Resorts Same Store (3) Occupancy ADR RevPAR Total RevPOR Total RevPAR Great Wolf Lodge Brand Generation II Resorts Same Store (4) Occupancy ADR RevPAR Total RevPOR Total RevPAR Great Wolf Lodge Brand Properties Securing First Mortgage Notes (5) Occupancy ADR RevPAR Total RevPOR Total RevPAR The company defines its operating statistics as follows: Occupancy is calculated by dividing total occupied rooms by total available rooms.

52.5% 255.39 134.08 393.05 206.36 54.0% 268.20 144.80 405.78 219.07 41.2% 196.15 80.79 303.64 125.06 56.7% 271.51 154.07 417.39 236.85 52.8% 267.76 141.32 409.09 215.92

$ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $

50.3% 250.49 125.97 388.94 195.59

$ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $

63.3% 260.10 164.58 395.18 250.05

$ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $

59.7% 252.30 150.60 387.83 231.50 59.3% 264.78 156.96 400.29 237.30 52.7% 198.56 104.70 300.42 158.42 62.3% 269.48 167.94 415.76 259.11 58.3% 266.35 155.38 407.93 237.97

50.6% 264.20 133.73 402.57 203.77

63.4% 271.38 172.11 405.67 257.27

40.5% 193.67 78.43 298.87 121.03

56.1% 201.09 112.77 302.77 169.79

54.0% 266.50 143.82 414.32 223.60

66.0% 279.05 184.15 424.84 280.37

49.6% 263.18 130.52 407.51 202.10

62.4% 274.47 171.18 414.59 258.57

Average daily rate (ADR) is the average daily room rate charged and is calculated by dividing total rooms revenue by total occupied rooms. Revenueperavailableroom(RevPAR)istheproductof(a)occupancyand(b)ADR. Total revenue per occupied room (Total RevPOR) is calculated by dividing total resort revenue (including revenue from rooms, food and beverage, and other amenities) by total occupied rooms. Totalrevenueperavailableroom(TotalRevPAR)istheproductof(a)occupancyand(b)TotalRevPOR.

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Great Wolf Resorts, Inc. Reconciliations of Outlook Financial Information (6) (in thousands, except per share amounts)
ThreeMonths Ending March31, 2012 $

Year Ending December31, 2012

Net loss Adjustments: Non-cash employee and director compensation Depreciation and amortization Interest expense, net Equity in income of unconsolidated affiliates Noncontrolling interest Income tax expense Adjusted EBITDA (1) Net loss per share: Basic Diluted Weighted average shares outstanding: Basic Diluted

(5,650) $

(15,700) 2,500 52,600 45,800 200 600

600 13,000 11,700 (300) 150

19,500 $

86,000

$ $

(0.18) $ (0.18) $

(0.49) (0.49) 32,000 32,000

31,750 31,750

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(1)

See discussion of Adjusted EBITDA located in the Non-GAAP Financial Measure section of this press release. Consolidated properties comparison includes Great Wolf Lodge resorts that are consolidated for financial reporting purposes (that is, the company's Traverse City, Kansas City, Williamsburg, Pocono Mountains, Mason, Grapevine and Concord resorts). Generation I properties same store comparison includes only Great Wolf Lodge resorts of approximately 300 rooms or less that were open for the same periods in 2011 and 2010. Generation II properties same store comparison includes only Great Wolf Lodge resorts of approximately 400 rooms or more that were open for the same periods in 2011 and 2010. The properties securing First Mortgage Notes are the companys Williamsburg, Mason and Grapevine resorts. The company's outlook reconciliations use the mid-points of its estimates of Adjusted EBITDA.

(2)

(3)

(4)

(5)

(6)

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