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UNITED
    STATES SECURITIES AND EXCHANGE COMMISSIONWashington, D.C.
    20549
      Form 10-K
      (Mark One)þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the fiscal period ended
    December 31,
    2009ORo

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the transition period
    from          to   Commission File Number
    000-51064
      GREAT WOLF RESORTS,
    INC.
 (Exact name of registrant as
    specified in its charter)
  Delaware

51-0510250(State or other jurisdiction
    of
    incorporation or organization)

(I.R.S. Employer
    Identification No.)122 West Washington Avenue
    Madison, Wisconsin 53703

53703(Zip Code)(Address of principal executive
    offices)   Registrants
    telephone number, including area code
    608
    661-4700
    Securities registered pursuant to Section 12(b) of the
    Act:
    None
  Securities registered pursuant to Section 12(g) of the
    Act:
  Title of Each Class

Name of Each Exchange on Which RegisteredCommon Stock, par value $0.01 per share

NASDAQ Global Market   o þ
  o þ
  þ o
  Regulation S-K Form 10-K Form 10-K. þ
  Rule 12b-2
  Large
    accelerated filer o

Accelerated filer þ

Non-accelerated filero
    (Do not check if a smaller reporting company)

Smaller reporting company o   Rule 12b-2 o þ
      DOCUMENTS
    INCORPORATED BY REFERENCE




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##### 





Great
    Wolf Resorts, Inc.
    Annual Report on
    Form 10-K
    For the Year Ended December 31, 2009
    INDEX
  PageNo.PART IItem 1.

Business


2Item 1A.

Risk Factors


22Item 1B.

Unresolved Staff Comments


41Item 2.

Properties


41Item 3.

Legal Proceedings


42Item 4.

Submission of Matters to a Vote of Security HoldersPART IIItem 5.

Market for Registrants Common Equity,
    Related Stockholder Matters and Issuer Purchases of Equity
    Securities


42Item 6.

Selected Financial Data


44Item 7.

Managements Discussion and Analysis of
    Financial Condition and Results of Operations


46Item 7A.

Quantitative and Qualitative Disclosures About
    Market Risk


69Item 8.

Financial Statements and Supplementary Data


70Item 9.

Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosure


103Item 9A.

Controls and Procedures


103Item 9B.

Other Information


108PART IIIItem 10.

Directors, Executive Officer and Corporate
    Governance of the Registrant


108Item 11.

Executive Compensation


108Item 12.

Security Ownership of Certain Beneficial Owners
    and Management and Related Stockholder Matters


108Item 13.

Certain Relationships and Related Transactions,
    and Director Independence


108Item 14.

Principal Accountant Fees and Services


108PART IVItem 15.

Exhibits and Financial Statement Schedules


108Signatures


109EX-10.5EX-10.6EX-10.7EX-10.8EX-10.9EX-10.10EX-10.11EX-10.23EX-21.1EX-23.1EX-23.2EX-31.1EX-31.2EX-32.1EX-32.2   1




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PART I  ITEM 1.
    BUSINESS  Overview
    and Development
  ® Form 10-K
  ® tm
          Properties 
    Overview
  on-site
 2




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and/or and/or and/or
  IndoorOwnership





Number of


Number of


EntertainmentPercentage


Opened


Guest Suites


Condo Units(1)


Area(2)(Approx. sq. ft)Wisconsin Dells, WI(3)






1997



308



77



102,000Sandusky, OH(3)






2001



271







41,000Traverse City, MI


100
%


2003



280







57,000Kansas City, KS


100
%


2003



281







57,000Sheboygan, WI


100
%


2004



182



64



54,000Williamsburg, VA(4)


100
%


2005



405







87,000Pocono Mountains, PA(4)


100
%


2005



401







101,000Niagara Falls, ONT(5)






2006



406







104,000Mason, OH(4)


100
%


2006



401







105,000Grapevine, TX(4)


100
%


2007



605







110,000Grand Mound, WA(6)


49
%


2008



398







74,000Concord, NC(4)


100
%


2009



402







97,000     (1)
    
    Condominium units are individually owned by third parties and
    are managed by us.(2)
    
    Our indoor entertainment areas generally include our indoor
    waterpark, game arcade, childrens activity room, family
    tech center,
    MagiQuest®

    (an interactive game attraction) and fitness room, as well as
    our spa in the resorts that have such amenities.(3)
    
    These properties are owned by CNL Lifestyle Properties, Inc.
    (CNL), a real estate investment trust focused on leisure and
    lifestyle properties. Prior to August 2009, these properties
    were owned by a joint venture between CNL and us. In August 2009
    we sold our 30.26% joint venture interest to CNL for $6,000. We
    currently manage both properties and license the Great Wolf
    Lodge brand to these resorts.(4)
    
    Five of our properties (Great Wolf Lodge resorts in
    Williamsburg, VA; Pocono Mountains, PA; Mason, OH; Grapevine, TX
    and Concord, NC) each had a book value of fixed assets equal to
    ten percent or more of our total assets as of December 31,
    2009. Four of our properties (Great Wolf Lodge resorts in
    Williamsburg, VA; Pocono Mountains, PA; Mason, OH and Grapevine,
    TX) each had total revenues equal to ten percent or more of our
    total revenues for the year ended December 31, 2009.(5)
    
    An affiliate of Ripley Entertainment, Inc. (Ripley), our
    licensee, owns this resort. We have granted Ripley a license to
    use the Great Wolf Lodge name for this resort through April
    2016. We managed the resort on behalf of Ripley through April
    2009.(6)
    
    This property is owned by a joint venture. The Confederated
    Tribes of the Chehalis Reservation (Chehalis) owns a 51%
    interest in the joint venture, and we own a 49% interest. We
    operate the property and license the Great Wolf Lodge brand to
    the joint venture under long-term agreements through April 2057,
    subject to earlier termination in certain situations. The joint
    venture leases the land for the resort from the United States
    Department of the Interior, which is trustee for Chehalis.  Northwoods Lodge Theme.
 3




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Guest Suites. ® tm tm tm tm pay-per-view pay-per-play
  Indoor Waterparks.
       4




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Amenities.
  
    Themed Restaurants.  Our resorts feature one or
    more full-service, themed restaurants and a themed bar and
    grille that serves alcoholic beverages and sandwiches. Our
    themed restaurants include the Gitchigoomie
    Grilltm,

    with a life-sized sea plane suspended over the dining area,
    Lumber Jacks Cook
    Shantytm,

    the Loose Moose Bar &
    Grilltm,

    and the Camp Critter Bar &
    Grilletm,

    which features a two-story realistic tree with a canopy of
    leaves and canvas-topped booths with hanging lanterns, giving
    guests the impression that they are dining in a Northwoods
    forest campsite. Our Blue Harbor Resort features our On the
    Rocks Bar & Grille and Rusty
    Anchortm

    Buffet.
    Ice Cream Shop and Confectionery.  Each of our
    Great Wolf Lodge resorts has a Bear Claw
    Cafétm

    or Bear Paw Sweets &
    Eatstm

    ice cream shop and confectionery that provides sandwiches,
    coffee, pastries, ice cream, candies, home-made fudge and other
    snacks that families can share together. Our Blue Harbor Resort
    has a Sweetshop Landing confectionery.
    Coffee Shop.  Some of our resorts have a
    separate coffee shop that offers
    Starbucks®

    or Dunkin
    Donuts®

    coffee, as well as other pastry items provided by those brands.
    Snack Bar.  Each of our waterparks has a snack
    bar that offers a variety of sandwiches, pizzas and similar
    foods with ample seating so that our guests do not have to leave
    the warmth and comfort of the waterpark.
    Gift Shop.  Each of our resorts has a Buckhorn
    Exchangetm

    or Precious Cargo gift shop that provides unique themed gifts,
    including Great Wolf Lodge or Blue Harbor Resort logo
    merchandise, souvenirs, collectibles and stuffed animals. The
    gift shop also offers resort toys, swimwear and personal
    necessities. Our resorts also have a Bear
    Essentialstm

    or Washed Ashore gift shop located in the waterpark.
    Full-Service Spa.  Each of our resorts, with
    the exception of our Sandusky resort, has an
    Elementstm

    Spa and Salon that provides a relaxing
    get-a-way
    with a full complement of massages, facials, manicures,
    pedicures and other spa treatments and a wide selection of
    Aveda®

    products. Each of our spas also includes our
    Scooops®

    Kid Spa. The furnishings for the kid-friendly spa have the look
    of a modern ice cream parlor, with chocolate-colored walls,
    retro swivel stools and a pedicure sofa that looks like an
    oversized ice cream sundae. While enjoying their treatments,
    kids can listen to music with a provided CD player and speakers
    or with their own digital music player.
    Game Arcade.  Our Youkon Jacks Game
    Parlortm

    or Northern Lights
    Arcadetm

    range in size from approximately 3,900 to 7,000 square
    feet, generally feature over 70 games and are divided into
    distinct areas with video and skill games that appeal to
    children of different ages. Tickets won from the skill games may
    be exchanged for a wide selection of merchandise that appeals to
    our younger guests. 5




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
    Cub
    Clubtm.  Our

    Cub Club rooms are professionally staffed childrens
    activity rooms with programmed activities, including arts and
    crafts, games and nature hikes. Our Blue Harbor Resort features
    a Crew
    Clubtm

    activity room with activities that are similar to our Cub
    Clubtm.
    Animated Clock Tower.  Each of our Great Wolf
    Lodge resorts has a two-story animated Clock Tower located in
    the resorts main atrium lobby. The Clock Tower provides
    daily theatrical entertainment through talking and singing
    trees, animals and Northwoods figures. Our Blue Harbor Resort
    features a 2,000-gallon water fountain featuring a hand-blown
    glass sculpture and a music and light show located in its main
    atrium lobby.
    Outdoor Water Amenities.  Outdoor water
    amenities complement our indoor waterpark facilities and allow
    our guests to take advantage of favorable weather conditions.
    Our outdoor water amenities include activity pools and a large
    deck or patio area and are generally open from May until
    September, longer if the weather is favorable. Our Wisconsin
    Dells and Grapevine resorts also have outdoor waterslides.
    Fitness Room.  Our fitness rooms contain
    aerobic exercise equipment, weight-lifting machines, and
    numerous televisions for active viewing.
    Meeting Space.  Our resorts offer meeting space
    ranging from approximately 3,000 to over 7,000 square feet
    that are available for guest meetings, including a 99-seat,
    state-of-the-art,
    symposium-style room at our Traverse City and Niagara Falls
    resorts.
    Conference Facility.  Many of our resorts
    feature conference facility space. Our Traverse City, Sheboygan,
    Williamsburg, Mason, Grapevine, Grand Mound and Concord resorts
    feature conference facilities that range in size from
    10,000  40,000 square feet. Each of these
    conference facilities also feature some, if not all, of the
    following additional aspects to their conference facilities:
    Grand Ballroom, flexible meeting spaces, executive boardroom,
    audio visual systems, and multiple pre-function concourses
    including an outdoor patio.
    MagiQuest.  Nine of our resorts feature a
    MagiQuest attraction. MagiQuest is an interactive, live-action,
    fantasy adventure game that guests can play throughout the
    resort.
    Minigolf.  Five of our resorts feature a
    custom-designed, outdoor 18-hole miniature golf course.
    gr8_spacetm.

    Five of our resorts feature an approximately 1,000 square
    foot interactive family tech center, gr8_space, which features
    multiple computer stations offering Internet access, docking
    stations for digital music players, as well as multiple gaming
    stations. gr8_space also features family events, like rock star
    karaoke and family challenge games. In the evening, gr8_space
    features dedicated teen time and activities for fun on their
    terms.  Property
    Descriptions
  and/or
  Great
    Wolf Lodge  Wisconsin Dells, Wisconsin
     6




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one-hour two-hour three-hour five-hour
  six-acre
  Great
    Wolf Lodge  Sandusky, Ohio
    one-hour two-hour three-hour
    Great
    Wolf Lodge  Traverse City, Michigan
  two-hour three-hour four-hour
  10,000 square-feet.
  Great
    Wolf Lodge  Kansas City, Kansas
   7




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one-hour three-hour four-hour
    Blue
    Harbor Resort  Sheboygan, Wisconsin
  12-acre one-hour two-hour three-hour four-hour
      Great
    Wolf Lodge  Williamsburg, Virginia
  83-acre one-hour three-hour five-hour
     8




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10,000 square-feet.
  Great
    Wolf Lodge  Pocono Mountains, Pennsylvania
  95-acre one-hour two-hour five-hour
    Great
    Wolf Lodge  Niagara Falls, Ontario
       9




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Great
    Wolf Lodge  Mason, Ohio
  39-acre Mason/Cincinnati one-hour two-hour
  state-of-the-art
  Great
    Wolf Lodge  Grapevine, Texas
  51-acre one-hour 60-mile three-hour
    Great
    Wolf Lodge  Grand Mound, Washington
  39-acre one-hour three-hour four-hour five-hour
   10




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Great
    Wolf Lodge  Concord, North Carolina
  37-acre one-hour two-hour
    Business
    and Growth Strategies
    
    Leveraging Our Competitive Advantages and Increasing Domestic
    Geographic Diversification through a Licensing-Based Business
    Model and Joint Venture Investments in Target
    Markets.  We are seeking to grow our business and
    diversify our domestic geographic brand footprint in a
    capital-efficient manner primarily through a licensing-based
    business model. This business model is designed to further
    exploit our competitive advantages of being the first-mover in
    the indoor waterpark resort business, our strong brand equity
    and our waterpark resort management expertise by seeking
    opportunities to earn fees through licensing our brand and
    managing new resorts that are constructed and developed
    primarily by third-party owners. We may also seek to make
    minority investments in joint ventures that own most of the
    licensed resorts in order to share in any equity appreciation
    and profits of those resorts. Our proposed transaction to
    license and manage a new Great Wolf Lodge resort near the
    Galleria at Pittsburgh Mills is an example of a typical
    transaction under this strategy. We expect this business model
    to allow us to deploy our capital resources more efficiently,
    reduce our overall leverage and diversify our operations
    geographically, since we will not be fully responsible for the
    construction and ownership of the licensed resorts, and will
    generally not be required to incur associated mortgage or
    construction debt. In addition, this business model is designed
    to allow us to more quickly expand domestically, reducing our
    sensitivity to economic conditions affecting any single region.
    Expanding Our Brand Footprint
    Internationally.  We also expect to use our
    licensing-based business model to efficiently expand our
    business internationally. Similar to our arrangement with
    Ripleys in Niagara Falls, Ontario, we will seek to enter
    into license
    and/or
    management agreements with reputable companies that have local
    market knowledge in order to increase revenues and expand the
    international footprint of our Great Wolf Lodge brand. We may
    also seek to make strategic minority joint venture investments
    in the licensed resorts in order to share in the profits and
    equity appreciation of the resorts. We believe this model is the
    most efficient strategy for international expansion, since it
    enables us to leverage the local expertise of our joint venture
    partners while minimizing our capital investment. 11




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
    Selective Sales of Ownership Interests/Recycling of
    Capital.  We will selectively consider
    opportunities to sell partial or whole interests in one or more
    of our owned and operated properties, as we did in our CNL joint
    venture. We intend to continue to manage
    and/or
    license our Great Wolf Lodge branded resorts, and we will
    consider transactions that allow us to maintain our
    management/licensing agreement at a resort while realizing value
    through our selective sales. In those situations, we expect to
    recycle capital generated by such transactions for investment in
    future growth opportunities.
    Expanding and Enhancing Existing Resorts.  We
    will seek to continue to focus on growth opportunities at our
    existing resorts by adding revenue-enhancing features that drive
    ancillary vacation spending and meet our target returns,
    including non-water based attractions. We also intend to
    continue to evaluate incremental revenue-generating
    opportunities, such as expanding the number of rooms at certain
    of our resorts.
    Continuing to Innovate.  We intend to leverage
    our in-house expertise, in conjunction with the knowledge and
    experience of our third-party suppliers and designers, to
    develop and implement the latest innovations in family
    entertainment activities and amenities, including waterpark
    attractions. We have received numerous industry awards for our
    guests experiences, our operations, innovative
    development, sales and marketing initiatives and materials, and
    employee retention. We are currently exploring several new
    concepts that, we believe, will allow us to generate additional
    revenue without requiring significant capital investment. Among
    these concepts is an adaptive re-use model, pursuant to which we
    would license the right to use entertainment features currently
    used in Great Wolf resorts to existing, full-service hotels,
    featuring family-oriented activities. While these concepts are
    still in the initial stages of development, we are seeking to
    innovatively extend our brand and to take these concepts to
    market.
    Maximizing Total Resort Revenues.  We will
    continue to employ aggressive yield management techniques and
    effectively direct sales and marketing efforts to maximize
    occupancy and room rates at both our owned and managed resorts.
    During off-peak times (generally in May and September, and
    during the middle of weeks when schools are in session), we will
    seek to maintain higher occupancy by holding special events and
    targeting group sales and conferences. We will also seek to
    maximize other
    on-site
    revenue, such as food and beverage, entertainment and
    merchandise revenue through themed restaurants, ice cream shops,
    snack shops, adult and kids spas, gift shops, game arcades,
    MagiQuest, mini-golf and teen-themed areas. We have also entered
    into a number of co-marketing agreements with strategic partners
    and expect to enter into additional co-marketing agreements in
    the future in order to increase other revenue.
    Minimizing Total Resort Costs.  We will seek to
    reduce operating costs by leveraging our purchasing power with
    respect to operating supplies, food and beverage, insurance and
    employee benefits. By centralizing certain of our services, we
    also seek to reduce our
    per-unit
    costs, increasing our control over those services in order to
    deliver a greater quality of service to our customers. Our
    centralized reservations system is scalable and, together with
    our web-based reservations system, enables us to efficiently
    handle high reservation volumes and which we expect to require
    only limited additional incremental costs over the next several
    years as we increase our portfolio of resorts.
    Building Upon Our Existing Brand Awareness and
    Loyalty.  Our Great Wolf Lodge brand is
    recognizable by our customers because of our distinctive and
    easily identifiable theming, from our signature treehouse
    waterfort, to our mascots and distinctive logos and merchandise.
    We believe we have fostered strong customer and brand loyalty,
    which is evidenced by our high levels of repeat and referral
    guests. We will continue to focus on ensuring that each of our
    guests associates the Great Wolf Lodge brand with a memorable
    and consistent family vacation experience. 12




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Our
    Competitive Strengths
    Strong barriers to entry with an established first mover
    advantage.
  Strong brand name awareness.
  Resilient business model. three-hour
  Positioned for economic recovery.
  Extensive customer database through a centralized service
    center drives repeat and referral business.
 13




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per-unit
  Near-term growth from select resort expansions and
    openings.
  Strategic transition to a license and management
    model.
  Several development projects under letter of
    intent.
  Significant portfolio of product offerings that increase
    ancillary
    on-site
    revenues. tm tm tm tm ® tm
  International growth opportunities. and/or
  Continual innovation.
 14




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Strong management team with skilled resort level
    staff.
  Focus on Safety. state-of-the-art best-in-class
  Our
    History
    Industry
    Overview
     15




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Resort
    Operations
        Training
    and Development
    Sales and
    Marketing
   16




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Maintenance
    and Inspections
  On-site build-up,
    Development
    Criteria
    
    Large target customer base.  We select
    development sites that generally have a minimum of five million
    target customers within a convenient driving distance. Because
    we offer an affordable vacation experience, we appeal to
    families in a variety of income ranges.
    Recognized tourist destination.  We generally
    focus on drive-to destinations that attract a large number of
    tourists, including both emerging and traditional family
    vacation markets. We believe we can charge premium rates in
    these markets due to the high quality of our resorts and our
    family-oriented amenities and activities. In addition, the
    indoor nature of many of our amenities and activities allows us
    to reduce the impact of seasonality that negatively affects
    other attractions in these areas. These areas also often have
    active and effective local visitors and convention bureaus that
    complement our marketing and advertising efforts at little or no
    cost to us.
    Highly visible and large sites.  We generally
    develop resorts in highly visible locations along major
    roadways. Visibility from highways enhances easy drive-to
    access, provides marketing benefits due to high volumes of
    traffic and often produces synergies from adjacent land uses or
    complementary 17




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developments. We generally choose sites that have enough acreage
    to allow for potential expansions and future sales of out-lots.      Competition
      and/or
   18




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Governmental
    Regulation
        time-to-time,
   19




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Environmental
    Matters
          and/or clean-up clean-up,
 20




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clean-up
    Insurance
      Intellectual
    Property
    Employees
    Offices
   21




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Domestic
    and Foreign Operations
    Code
    of Business Conduct and Ethics
  www.greatwolf.com
  Available
    Information
  www.greatwolf.com Form 10-K, Form 10-Q, Form 8-K www.sec.gov
  Legal
    Proceedings
    ITEM 1A.
    RISK
    FACTORS  Risks
    Related to Our Business Activities
    Current
    economic conditions, including recent disruptions in the
    financial markets may adversely affect our industry, business
    and results of operations, our ability to obtain financing on
    reasonable and acceptable terms and the market price of our
    common stock.
   22




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
    severe turbulence in the banking and lending sectors, which has
    led to a general lessening of the availability of credit to
    consumers;
    an increased national unemployment rate;
    a continuing decline in the national average of home prices and
    an increase in national foreclosure rates; and
    high volatility in the stock market that led to substantial
    declines in stock values and aggregate household savings from
    2007 to 2009.        We may
    not be able, by ourselves or with others, to develop new resorts
    or further develop existing resorts on a timely or cost
    efficient basis, which would adversely affect our growth
    strategy.
    
    development costs may exceed budgeted or contracted amounts or
    may exceed available capital;
    increases in the costs of materials or supplies used in
    construction of our resorts;
    changes in applicable building codes, construction materials,
    labor costs or construction methodologies may increase
    development costs; 23




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
    delays in architectural or other design-related services, or in
    the commencement or completion of construction;
    failure to obtain all necessary zoning, land use, occupancy,
    construction, operating and other required governmental permits
    and authorizations;
    changes in real estate, zoning, land use, environmental and tax
    laws;
    unavailability of financing on favorable or any terms;
    failure of developed properties to achieve desired revenue or
    profitability levels once opened;
    negative changes in the local markets, the local competitive
    environment or in local economic conditions that occur between
    the commencement of development and the completion of the resort;
    scarcity of suitable development sites, due to existing
    development, physical limitation or competition for sites from
    competitors that may have greater financial resources or risk
    tolerance than we do or other factors; and
    incurrence of substantial costs in the event a development
    project is abandoned or modified prior to completion.    We
    compete with other family vacation travel destinations and
    resorts.
    
    location,
    room rates,
    name recognition,
    reputation,
    the uniqueness and perceived quality of the attractions and
    amenities,
    the atmosphere and cleanliness of the attractions and amenities,
    the quality and perceived value of the lodging accommodations,
    the quality and perceived value of the food and beverage service,
    convenience,
    service levels and
    reservation systems.   24




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We
    have a history of losses and we may not be able to achieve or
    sustain profitability.
    We may
    not be able to achieve or manage our expected growth, which
    could adversely affect our operating results.
  and/or
  We
    currently have one resort located outside of the United States,
    and international expansion may cause the proportion of our
    international business to expand. Many factors affecting
    business activities outside the United States could adversely
    impact this business.
      
    instability or changes in social, political
    and/or
    economic conditions that could disrupt the trade activity in the
    countries where our resorts are located;
    the imposition of additional duties, taxes and other charges on
    imports and exports;
    changes in foreign laws and regulations;
    any inability to enforce contracts or intellectual property
    protections under the laws of the relevant jurisdiction;
    the availability of qualified labor and other resources in the
    relevant region;
    potential and actual international terrorism and hostilities; 25




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
    the adoption or expansion of trade sanctions or other similar
    restrictions;
    tax laws and other regulations that may impede our ability to
    receive revenues from international resorts;
    recessions in foreign economies or changes in local economic
    conditions; and
    changes in currency valuations in specific countries or markets.    Accidents
    or injuries at our resorts, particularly in our waterparks, may
    subject us to liability, and accidents or injuries at our
    resorts or at competing resorts with waterparks could adversely
    affect our safety reputation and ability to attract customers,
    which would harm our business, financial condition and results
    of operations.
      Our
    business is seasonal and largely dependent upon family vacation
    patterns, which may cause fluctuations in our
    revenues.
    We may
    not be able to attract a significant number of customers from
    our key target markets, which would adversely affect our
    business, financial condition and results of
    operations.
   26




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Because
    we concentrate in a single industry segment, we may be adversely
    affected by a downturn in that industry segment.
    Adverse
    changes in consumer spending habits may affect our growth,
    financial condition and results of operations.
    Increases
    in operating costs and other expense items could reduce our
    operating margins and adversely affect our growth, financial
    condition and results of operations.
       27




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Uninsured
    losses or losses in excess of our insurance coverage could
    adversely affect our financial condition and our cash flow, and
    there are a limited number of insurers that will underwrite
    coverage for resorts with indoor waterparks.
    We or
    the principal owners of our licensed and managed resorts will be
    required to make certain capital expenditures to maintain the
    quality of our resorts, and the failure to make such
    expenditures could materially and adversely affect our brand
    equity as well as our business, our financial condition and
    results of operations.
    We may
    not be able to adequately protect our intellectual property,
    which could harm the value of our brands and adversely affect
    our business.
   28




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Because
    nine of our resorts derive a portion of their revenue and EBITDA
    from the MagiQuest attraction, if supplies, parts or maintenance
    and repair services for that attraction become unavailable,
    forcing us to close or reduce the operations of one or more of
    the attractions, it could have an adverse effect on our
    financial results and/or condition.
      Our
    operations may be adversely affected by extreme weather
    conditions and the impact of disasters.
    A
    significant decline in real estate values may have an adverse
    impact on our financial condition.
    If we
    fail to maintain effective internal control over financial
    reporting or remediate any future material weakness in our
    internal control over financial reporting, we may be unable to
    accurately report our financial results or prevent fraud, which
    could have a material adverse effect on our financial results
    and our stock price.
   29




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Sustained
    increases in costs of medical and other employee health and
    welfare benefits may reduce our profitability.
    A
    failure to maintain good relationships with third-party property
    owners and licensees could have a material, adverse effect on
    our growth strategies and our business, financial condition and
    results of operations.
  and/or
   30




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##### Table of Contents



We are
    dependent on the owners of the resorts we manage and license to
    fund certain operational expenditures related to those resorts,
    and if such funds are untimely or not paid, we are required to
    bear the cost.
    Investing
    through partnerships or joint ventures may decrease our ability
    to manage risk, and our license fee and management fee revenue
    streams, as well as any joint venture equity investments, are
    subject to property-level indebtedness and other
    risks.
        Because
    the land used by two of our resorts are subject to ground
    leases, termination of these leases by the lessors could cause
    us to lose the ability to operate these resorts altogether and
    incur substantial costs in restoring the premises.
     31




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##### Table of Contents



We are
    subject to the risks of brand concentration.
    A
    failure to keep pace with developments in technology could
    impair our operations or competitive position.
  and/or
  An
    increase in the use of third-party Internet reservation services
    could adversely impact our revenues.
  ® ® ®
  The
    illiquidity of real estate may make it difficult for us to
    dispose of one or more of our resorts.
    We
    depend on a seasonal workforce.
    A
    regional, national or global outbreak of influenza or other
    disease, such as the recent international outbreak of influenza
    A (H1N1), could adversely affect our business and results of
    operations.
   32




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Our
    future financial results could be adversely impacted by asset
    impairments or other charges.
        We
    have identified certain material weaknesses in our internal
    controls.
    Form 10-K
 33




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Risks
    Related to Regulation
  Compliance
    with the Americans with Disabilities Act and other governmental
    regulations and changes in governmental rules and regulations
    may adversely affect our financial condition and results of
    operations.
      We
    face possible liability for environmental cleanup costs and
    damages for contamination related to our properties, which could
    adversely affect our business, financial condition and results
    of operations.
  out-of-compliance out-of-compliance
   34




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##### Table of Contents



and/or clean-up clean-up, clean-up
    Regulation
    of the marketing and sale of condominiums could adversely affect
    our business.
   35




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Failure
    to maintain the integrity of internal or customer data could
    result in faulty business decisions, damage of reputation and/or
    subject us to costs, fines or lawsuits.
    Changes
    in privacy law could adversely affect our ability to market our
    products effectively.
    Risks
    Related to Our Capital Structure
  We may
    issue partnership units in the future that may be dilutive to,
    and may have preferential rights over, our common
    stockholders.
    Our
    stock price has been volatile in the past and may be volatile in
    the future.
    
    variations in our quarterly operating results;
    changes in market valuations of companies in the hospitality or
    entertainment industries, generally, and the family
    entertainment resort segment, specifically;
    fluctuations in stock market prices and volumes;
    issuances of common stock or other securities in the future; 36




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##### Table of Contents




    the addition or departure of key personnel;
    announcements by us or our competitors of new properties,
    acquisitions or joint ventures, or our failure to announce new
    properties, acquisitions or joint ventures of a type or in a
    quantity deemed desirable by participants in the public
    market; and
    expectations about macroeconomic condition.    Provisions
    in our certificate of incorporation, bylaws, employment
    agreements and Delaware law have anti-takeover effects that
    could prevent a change in control that could be beneficial to
    our stockholders, which could depress the market price of our
    common stock.
    
    authorize our board of directors to issue blank
    check preferred stock and determine the powers,
    preferences and privileges of those shares without prior
    stockholder approval;
    prohibit the ability of our stockholders to act by written
    consent;
    limit the calling of special meetings of stockholders;
    impose a requirement that holders of 50% of the outstanding
    shares of common stock are required to amend the provisions
    relating to actions by written consent of stockholders and the
    limitations of calling special meetings; and
    provide for payments to certain of our executive officers upon
    termination of employment within certain time periods before or
    after a change of control.  Our
    organizational documents contain no limitations on the amount of
    debt we may incur, so we may become too highly
    leveraged.
    We and
    the owners and developers of our licensed and managed resorts
    may not be able to obtain additional financing on favorable
    terms, if at all.
    
    general capital market conditions; 37




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
    capital providers perception of our growth potential;
    our then-current debt levels;
    our then-current and expected future earnings;
    our cash flow; and
    the market price per share of our common stock.      The
    covenants in our mortgage loan agreements impose significant
    restrictions on us.
    
    incurring or guaranteeing additional indebtedness;
    transferring or selling assets currently held by us;
    transferring ownership interests in certain of our
    subsidiaries; and
    reducing our tangible net worth below specified levels.       38




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Issues
    affecting financial institutions could adversely affect
    financial markets generally as well as our ability to raise
    capital or access liquidity.
    Because
    we have guaranteed certain mortgage-related obligations of our
    subsidiaries, if one or more of our subsidiaries fail to meet
    its obligations under the mortgage, we may be required to
    satisfy such obligations and such an undertaking could have an
    adverse affect on our financial condition.
    25-year
    We may
    be unable to generate sufficient cash and may not have access to
    the cash flow and other assets of our subsidiaries to service
    all of our indebtedness and may be forced to take other actions
    to satisfy our obligations under such indebtedness, which may
    not be successful.
   39




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Because
    we have guaranteed certain minimum payments related to our
    Sheboygan resort, if that resort does not generate sufficient
    cash flow to satisfy the minimum required payments, we may be
    required to satisfy such obligations and such an undertaking
    could have an adverse effect on our financial
    condition.
    1 2
  14-year 1 2
  Forward-Looking
    Statements
  Form 10-K,
 40




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##### Table of Contents



Form 10-K
  ITEM 1B.
    UNRESOLVED
    STAFF COMMENTS    ITEM 2.
    PROPERTIES    
    resort ownership/operation, and
    resort third-party management/licensing.    
    Great Wolf Lodge of Traverse City is located on 48 acres in
    Traverse City, Michigan, of which 27 acres have been
    developed and 21 acres remain undeveloped.
    Great Wolf Lodge of Kansas City is located on 17 acres in
    Kansas City, Kansas, all of which have been developed.
    Blue Harbor Resort of Sheboygan is located on 12 leased acres in
    Sheboygan, Wisconsin, all of which have been developed.
    Great Wolf Lodge of Williamsburg is located on 84 acres in
    Williamsburg, Virginia, of which 48 acres have been
    developed (2 of which are leased to another entity) and
    36 acres remain undeveloped.
    Great Wolf Lodge of the Pocono Mountains is located on
    95 acres in Pocono Township, near Stroudsburg,
    Pennsylvania, of which 45 acres are developed and
    50 acres remain undeveloped.
    Great Wolf Lodge of Mason is located on 39 acres in Mason,
    Ohio. All 39 acres of this property are developed.
    Great Wolf Lodge of Grapevine is located on 51 acres in
    Grapevine, Texas, of which 30 acres are developed and
    21 acres remain undeveloped.
    Great Wolf Lodge of Concord is located on 37 acres in
    Concord, North Carolina, of which 34 acres are developed
    and 3 acres may be subdivided and developed separately.    
    Great Wolf Lodge of Grand Mound is located on 39 leased acres in
    Grand Mound, Washington. This property is owned by a joint
    venture of which we have a 49% minority interest and The
    Confederated Tribes of the Chehalis Reservation has a 51%
    majority interest. 41




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##### Table of Contents



ITEM 3.
    LEGAL
    PROCEEDINGS   PART II  ITEM 5.
    MARKET
    FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS
    AND ISSUER PURCHASES OF EQUITY SECURITIES    Stock PriceHigh


LowFiscal 2008:First Quarter

$
9.94


$
6.29Second Quarter

$
8.38


$
4.34Third Quarter

$
6.40


$
3.00Fourth Quarter

$
3.80


$
0.61Fiscal 2009:First Quarter

$
3.05


$
1.26Second Quarter

$
3.80


$
1.93Third Quarter

$
3.95


$
2.04Fourth Quarter

$
3.88


$
2.27Fiscal 2010:First Quarter through February 26, 2010

$
2.69


$
2.09      42




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##### Table of Contents



10-year
  Dividend
    Policy
    Performance
    Graph
      
 43




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##### Table of Contents



ITEM 6.
    SELECTED
    FINANCIAL DATA  Form 10-K.
    
    our subsidiary that provides resort development and management
    services and licenses certain intellectual property;
    our Traverse City, Kansas City, Sheboygan, Williamsburg, Pocono
    Mountains, Mason, Grapevine and Concord operating resorts;
    for all periods prior to October 2005, the Wisconsin Dells and
    Sandusky resorts; and
    equity interests in resorts in which we have ownership interests
    but which we do not consolidate.  Year Ended


Year Ended


Year Ended


Year Ended


Year EndedDecember 31,


December 31,


December 31,


December 31,


December 31,2009


2008


2007


2006


2005(Dollars in thousands, except per share amounts)Statement of Operations and Comprehensive Loss:Revenues:Rooms

$
154,751


$
143,395


$
112,261


$
87,775


$
73,207Food, beverage and other


81,020



74,173



56,673



43,137



36,846Sales of condominiums


















25,862Management and other fees


1,990



2,798



2,855



2,087



494Management and other fees-affiliates


4,973



5,346



4,314



3,729



482Other revenue from managed properties  affiliates(1)


17,132



19,826



11,477



11,920



2,524Other revenue from managed properties(1)


4,166















Total revenues


264,032



245,538



187,580



148,648



139,415Operating expenses by department:Rooms


22,449



20,134



15,716



11,914



10,944Food, beverage and other


65,341



59,949



48,300



35,923



31,407Other operating expenses:Selling, general and administrative


60,986



51,902



47,915



41,421



26,894Property operating costs


37,788



37,086



30,555



23,217



24,798Depreciation and amortization


56,378



46,081



36,372



25,903



26,248Costs of sales of condominiums


















16,780Impairment loss on investment in affiliates






18,777











Goodwill impairment






17,430







50,975



Asset impairment loss


24,000















Loss on disposition of property


255



19



128



1,066



26,161Other expenses from managed properties  affiliates(1)


17,132



19,826



11,477



11,920



2,524Other expenses from managed properties(1)


4,166















Total operating expenses


288,495



271,204



190,463



202,339



165,756Net operating loss


(24,463
)


(25,666
)


(2,883
)


(53,691
)


(26,341
)Gain on sales of unconsolidated affiliate


(962
)














Investment income  affiliates


(1,330
)


(2,187
)


(667
)






Interest income


(642
)


(1,424
)


(2,758
)


(3,105
)


(1,623
)Interest expense


34,072



27,277



14,887



7,169



6,728Loss before income taxes and equity in unconsolidated affiliates


(55,601
)


(49,332
)


(14,345
)


(57,755
)


(31,446
)Income tax expense (benefit)


440



(11,956
)


(5,859
)


(8,764
)


(7,199
)Equity in unconsolidated affiliates, net of tax


2,435



3,349



1,547



761



170Net loss


(58,476
)


(40,725
)


(10,033
)


(49,752
)


(24,417
)Net loss attributable to non controlling interest










(452
)


(502
)


(4
)Net loss attributable to Great Wolf Resorts, Inc.

$
(58,476
)

$
(40,725
)

$
(9,581
)

$
(49,250
)

$
(24,413
)Basic loss per common share

$
(1.90
)

$
(1.32
)

$
(0.31
)

$
(1.63
)

$
(0.81
)Diluted loss per common share

$
(1.90
)

$
(1.32
)

$
(0.31
)

$
(1.63
)

$
(0.81
)Weighted average common shares outstanding  Basic(2)


30,749,318



30,827,860



30,533,249



30,299,647



30,134,146 44




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##### Table of Contents



Year Ended


Year Ended


Year Ended


Year Ended


Year EndedDecember 31,


December 31,


December 31,


December 31,


December 31,2009


2008


2007


2006


2005(Dollars in thousands, except per share amounts)Diluted(2)


30,749,318



30,827,860



30,533,249



30,299,647



30,134,146Other comprehensive loss, net of tax:Net loss


(58,476
)


(40,725
)


(10,033
)


(49,752
)


(24,417
)Unrealized (gain) loss on interest rate swaps






(387
)


387







Comprehensive loss

$
(58,476
)

$
(40,338
)

$
(10,420
)

$
(49,752
)

$
(24,417
)Comprehensive loss attributable to noncontrolling interest










(452
)


(502
)


(4
)Comprehensive loss attributable to Great Wolf 
    Resorts, Inc.

$
(58,476
)

$
(40,338
)

$
(9,968
)

$
(49,250
)

$
(24,413
)Cash Flows:Cash flows from:Operating activities

$
12,215


$
33,534


$
29,751


$
29,723


$
17,788Investing activities


(36,659
)


(144,612
)


(206,967
)


(107,123
)


(65,496
)Financing activities


31,126



106,712



99,035



119,396



23,081Balance Sheet Data (end of period):Total assets

$
805,744


$
840,061


$
770,805


$
683,439


$
605,526Total debt


550,071



507,051



396,302



289,389



168,328Non-GAAP financial Measures:EBITDA(3)

$
31,791


$
18,181


$
32,305


$
(28,221
)

$
(369
)     (1)
    
    Reflects reimbursement of payroll, benefits and costs related to
    the operations of properties managed by us.(2)
    
    Included in the total shares outstanding of our common stock are
    11,765 shares (in
    2008-2009)
    and 129,412 shares (in
    2005-2007)
    held in a trust that holds the assets to pay obligations under
    our deferred compensation plan. Under applicable accounting
    rules, the shares of common stock held in that trust are treated
    as treasury stock for purposes of our earnings per share
    computations and are therefore excluded from the basic and
    diluted earnings per share calculations.(3)
    
    EBITDA is a non-GAAP performance measure. We define EBITDA as
    net income (loss) attributable to Great Wolf Resorts, Inc. on a
    consolidated basis, adjusted to exclude the following items:  
    interest expense, net of interest income,
    income tax expense or benefit, and
    depreciation and amortization.     45




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##### Table of Contents



Year Ended December 31,2009


2008


2007


2006


2005Net loss attributable to Great Wolf Resorts, Inc.

$
(58,476)


$
(40,725
)

$
(9,581
)

$
(49,250
)

$
(24,413
)Interest expense, net of interest income


33,430



25,853



12,129



4,064



5,105Income tax expense (benefit)


459



(13,028
)


(6,615
)


(8,938
)


(7,309
)Depreciation and amortization


56,378



46,081



36,372



25,903



26,248EBITDA

$
31,791


$
18,181


$
32,305


$
(28,221
)

$
(369
)   ITEM 7.
    MANAGEMENTS
    DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
    OPERATIONS  This Managements Discussion and Analysis of
    Financial Condition and Results of Operations of Great
    Wolf Resorts Inc. is a discussion of our financial condition,
    results of operations and liquidity and capital resources for
    the fiscal years ended December 31, 2009, 2008 and 2007 and
    should be read in conjunction with the consolidated financial
    statements and the related notes that appear elsewhere herein.
    Certain statements we make under this section constitute
    forward-looking statements under the Private
    Securities Litigation Reform Act of 1995. See
    Forward-Looking Statements included elsewhere in
    this report. You should consider our forward-looking statements
    in light of the risks discussed under the heading Risk
    Factors above as well as our consolidated financial
    statements, related notes, and other financial information
    appearing elsewhere in this report.
  All dollar amounts in this discussion, except for per share
    data and operating statistics, are in thousands.
  Overview
    Business. ® tm
   46




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##### Table of Contents



and/or and/or and/or
  IndoorNumber of


Number of


EntertainmentOwnership Percentage


Opened

Guest Suites


Condo Units(1)


Area(2)(Approx. sq. ft.)Wisconsin Dells, WI(3)





1997


308



77



102,000Sandusky, OH(3)





2001


271







41,000Traverse City, MI


100
%

2003


280







57,000Kansas City, KS


100
%

2003


281







57,000Sheboygan, WI


100
%

2004


182



64



54,000Williamsburg, VA(4)


100
%

2005


405







87,000Pocono Mountains, PA(4)


100
%

2005


401







101,000Niagara Falls, ONT(5)





2006


406







104,000Mason, OH(4)


100
%

2006


401







105,000Grapevine, TX(4)


100
%

2007


605







110,000Grand Mound, WA(6)


49
%

2008


398







74,000Concord, NC(4)


100
%

2009


402







97,000     (1)
    
    Condominium units are individually owned by third parties and
    are managed by us.(2)
    
    Our indoor entertainment areas generally include our indoor
    waterpark, game arcade, childrens activity room, family
    tech center,
    MagiQuest®

    (an interactive game attraction) and fitness room, as well as
    our spa in the resorts that have such amenities.(3)
    
    These properties are owned by CNL Lifestyle Properties, Inc.
    (CNL), a real estate investment trust focused on leisure and
    lifestyle properties. Prior to August 2009, these properties
    were owned by a joint venture between CNL and us. In August 2009
    we sold our 30.26% joint venture interest to CNL for $6,000. We
    currently manage both properties and license the Great Wolf
    Lodge brand to these resorts.(4)
    
    Five of our properties (Great Wolf Lodge resorts in
    Williamsburg, VA; Pocono Mountains, PA; Mason, OH; Grapevine, TX
    and Concord, NC) each had a book value of fixed assets equal to
    ten percent or more of our total assets as of December 31,
    2009. Four of our properties (Great Wolf Lodge resorts in
    Williamsburg, VA; Pocono Mountains, PA; Mason, OH and Grapevine,
    TX) each had total revenues equal to ten percent or more of our
    total revenues for the year ended December 31, 2009.(5)
    
    An affiliate of Ripley Entertainment, Inc. (Ripley), our
    licensee, owns this resort. We have granted Ripley a license to
    use the Great Wolf Lodge name for this resort through April
    2016. We managed the resort on behalf of Ripley through April
    2009.(6)
    
    This property is owned by a joint venture. The Confederated
    Tribes of the Chehalis Reservation (Chehalis) owns a 51%
    interest in the joint venture, and we own a 49% interest. We
    operate the property and license the Great Wolf Lodge brand to
    the joint venture under long-term agreements through April 2057,
    subject to earlier termination in certain situations. The joint
    venture leases the land for the resort from the United States
    Department of the Interior, which is trustee for Chehalis.  Industry Trends.
 47




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##### Table of Contents



Outlook.
  and/or
    
    Leveraging our competitive advantages and increasing domestic
    geographic diversification through a license-based business
    model and joint venture investments in target markets;
    Expanding our brand footprint internationally;
    Selective sales of ownership interests/recycling of capital;
    Expanding and enhancing existing resorts;
    Continuing to innovate;
    Maximizing total resort revenues;
    Minimizing total resort costs; and
    Building upon our existing brand awareness and loyalty.   48




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##### Table of Contents




    severe turbulence in the banking and lending sectors, which has
    led to a general lessening of the availability of credit to
    consumers;
    an increased national unemployment rate;
    a continuing decline in the national average of home prices and
    an increase in the national home foreclosure rate; and
    high volatility in the stock market that led to substantial
    declines in stock values and aggregate household savings from
    2007 to 2009.    
    We believe that our Traverse City and Sandusky resorts have been
    and will continue to be affected by especially adverse general
    economic circumstances in the Michigan/Northern Ohio region
    (such as bankruptcies of several major companies
    and/or large
    announced layoffs by major employers) and increased competition
    that has occurred in these markets over the past few years. The
    Michigan/Northern Ohio region includes cities that have
    historically been the Traverse City and Sandusky resorts
    largest source of customers. We believe the adverse general
    economic circumstances in the region have negatively impacted
    overall discretionary consumer spending in that region over the
    past few years and may continue to do so going forward. Although
    we have taken steps to reduce our operating costs at these
    resorts, we believe the general regional economic downturn has
    and may continue to have an impact on the operating performance
    of our Traverse City and Sandusky resorts.
    Our Wisconsin Dells property has been significantly impacted by
    the abundance of competing indoor waterpark resorts in that
    market. The Wisconsin Dells market has approximately 16 indoor
    waterpark resorts that compete with us. We believe this large
    number of competing properties in a relatively small tourist
    destination location has and will likely continue to have an
    adverse impact on the operating performance of our Wisconsin
    Dells resort.
    We have experienced much lower than expected occupancy and lower
    than expected average daily room rates at our Sheboygan,
    Wisconsin property since its opening in 2004. We believe this
    operating weakness has been primarily attributable to the fact
    that the overall development of Sheboygan as a tourist
    destination continues to lag materially behind our initial
    expectations. We believe this has materially impacted and will
    likely continue to impact the consumer demand for our indoor
    waterpark resort in that market and the operations of the
    resort. As described under Critical Accounting Policies
    and Estimates  Investments in Property and
    Equipment, we recorded a $24,000 impairment charge in 2009
    relating to our Sheboygan resort. The impaired long-lived asset
    is included in our Resort Ownership/Operation segment.
    Our Mason resort opened its first phase in December 2006 and has
    experienced lower than expected occupancy and
    lower-than-expected
    average daily room rates. We believe this is due, in part, to
    the opening of competitive properties in the region. 49




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and/or and/or
  Revenue and Key Performance Indicators.
  
    Monitoring our historical trends for occupancy and estimating
    our high occupancy nights;
    Offering the highest discounts to previous guests in off-peak
    periods to build customer loyalty and enhance our ability to
    charge higher rates in peak periods;
    Structuring rates to allow us to offer our previous guests the
    best rate while simultaneously working with a promotional
    partner or offering internet specials;
    Monitoring sales of room types daily to evaluate the
    effectiveness of offered discounts; and
    Offering specials on standard suites and yielding better rates
    on larger suites when standard suites sell out.  on-site
    
    Occupancy;
    Average daily room rate, or ADR;
    Revenue per available room, or RevPAR;
    Total revenue per available room, or Total RevPAR;
    Total revenue per occupied room, or Total RevPOR; and
    Earnings before interest, taxes, depreciation and amortization,
    or EBITDA.    
    Occupancy is calculated by dividing total occupied rooms by
    total available rooms.
    ADR is calculated by dividing total rooms revenue by total
    occupied rooms. 50




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##### Table of Contents




    RevPAR is the product of occupancy and ADR.    
    Total RevPAR is calculated by dividing total revenue by total
    available rooms.
    Total RevPOR is calculated by dividing total revenue by total
    occupied rooms.        Critical
    Accounting Policies and Estimates
    Investments in Property and Equipment.
    Buildings and improvements


20-40 yearsFixtures and equipment, including waterpark equipment


5-15 years    51




---



##### Table of Contents



Goodwill 
    52




---



##### Table of Contents



2009


2008Balance as of January 1Goodwill

$
130,496


$
130,496Accumulated impairment losses


(68,405
)


(50,975
)Goodwill related to sale of affiliate


(62,091
)


(62,091
)



17,430Impairment losses






(17,430
)Balance as of December 31Goodwill.


130,496



130,496Accumulated impairment losses


(68,405
)


(68,405
)Goodwill related to sale of affiliate


(62,091
)


(62,091
)$



$
   Intangible Assets 
    Investments in Affiliates 
      Accounting for Income Taxes.
 53




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##### Table of Contents



New
    Accounting Pronouncements
           54




---



##### Table of Contents



Non-GAAP Financial
    Measures
        
    a significant portion of our assets consists of property and
    equipment that are depreciated over their remaining useful lives
    in accordance with GAAP. Because depreciation and amortization
    are non-cash items, we believe that presentation of EBITDA is a
    useful measure of our operating performance;
    it is widely used in the hospitality and entertainment
    industries to measure operating performance without regard to
    items such as depreciation and amortization; and
    we believe it helps investors meaningfully evaluate and compare
    the results of our operations from period to period by removing
    the impact of items directly resulting from our asset base,
    primarily depreciation and amortization, from our operating
    results.    
    as a measurement of operating performance because it assists us
    in comparing our operating performance on a consistent basis as
    it removes the impact of items directly resulting from our asset
    base, primarily depreciation and amortization, from our
    operating results;
    for planning purposes, including the preparation of our annual
    operating budget;
    as a valuation measure for evaluating our operating performance
    and our capacity to incur and service debt, fund capital
    expenditures and expand our business; and
    as one measure in determining the value of other acquisitions
    and dispositions.    
    it does not reflect every cash expenditure, future requirements
    for capital expenditures or contractual commitment;
    it does not reflect the significant interest expense or the cash
    requirements necessary to service interest or principal payments
    on our debt; 55




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##### Table of Contents




    although depreciation and amortization are non-cash charges, the
    assets being depreciated and amortized will often have to be
    replaced or require improvements in the future, and our
    EBITDA-based measures do not reflect any cash requirements for
    such replacements or improvements;
    it is not adjusted for all non-cash income or expense items that
    are reflected in our statements of cash flows;
    it does not reflect the impact of earnings or charges resulting
    from matters we consider not to be indicative of our ongoing
    operations;
    it does not reflect limitations on our costs related to
    transferring earnings from our subsidiaries to us; and
    other companies in our industry may calculate these measures
    differently than we do, limiting their usefulness as competitive
    measures.        Year Ended December 31,2009


2008


2007Net loss attributable to Great Wolf Resorts, Inc.

$
(58,476
)

$
(40,725
)

$
(9,581
)Interest expense, net of interest income


33,430



25,853



12,129Income tax expense (benefit)


459



(13,028
)


(6,615
)Depreciation and amortization


56,378



46,081



36,372EBITDA

$
31,791


$
18,181


$
32,305   Results
    of Operations
  General
    
    our subsidiary entity that provides resort development and
    management/licensing services;
    our Traverse City, Kansas City, Sheboygan, Williamsburg, Pocono
    Mountains, Mason, Grapevine and Concord wholly-owned
    resorts; and
    our equity interests in the Wisconsin Dells and Sandusky resorts
    through August 2009, when we sold our minority ownership
    interests in those resorts, and our equity interest in Grand
    Mound resort in which we have an ownership interest but which we
    do not consolidate. 56




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##### Table of Contents



Revenues.
  
    lodging revenue, which includes rooms, food and beverage, and
    other department revenues from our resorts;
    management fee and other revenue from resorts, which includes
    fees received under our management, license, development and
    construction management agreements; and
    other revenue from managed properties. We employ the staff at
    our managed properties. Under our management agreements, the
    resort owners reimburse us for payroll, benefits and certain
    other costs related to the operations of the managed properties.
    We include the reimbursement of payroll, benefits and costs is
    recorded as revenue on our statements of operations, with a
    corresponding expense recorded as other expenses from
    managed properties.  Operating Expenses.
    
    selling, general and administrative expenses, which are
    associated with the operations and management of resorts and
    which consist primarily of expenses such as corporate payroll
    and related benefits, operations management, sales and
    marketing, finance, legal, information technology support, human
    resources and other support services, as well as general
    corporate expenses;
    property operation and maintenance expenses, such as utility
    costs and property taxes;
    depreciation and amortization; and
    other expenses from managed properties.  Year
    Ended December 31, 2009 compared with Year Ended
    December 31, 2008
    All Properties(a)

Same Store Comparison(b)Increase (Decrease)2009

2009

2008

$

%Occupancy


59.0
%


58.9
%


61.9
%


N/A



(4.8
)%ADR

$
242.07


$
235.14


$
243.81


$
(8.67
)


(3.6
)%RevPAR

$
142.79


$
138.59


$
151.02


$
(12.43
)


(8.2
)%Total RevPOR

$
374.21


$
359.79


$
369.61


$
(9.82
)


(2.7
)%Total RevPAR

$
220.74


$
212.07


$
228.95


$
(16.88
)


(7.4
)%Non-rooms revenue per occupied room

$
132.14


$
124.65


$
125.80


$
(1.15
)


(0.9
)%     (a)
    
    Includes results for properties that were open for any portion
    of the period, for all owned, managed and/or licensed resorts.(b)
    
    Same store comparison includes properties (other than properties
    that had significant expansions) that were open for the full
    periods in 2009 and 2008 (that is, our Wisconsin Dells,
    Sandusky, Traverse City, Kansas City, Sheboygan, Williamsburg,
    Pocono Mountains, Niagara Falls, and Mason resorts).   57




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##### Table of Contents



Increase2009


2008


(Decrease)Revenues

$
264,032


$
245,538


$
18,494Operating expenses:Departmental operating expenses


87,790



80,083



7,707Selling, general and administrative


60,986



51,902



9,084Depreciation and amortization


56,378



46,081



10,297Impairment loss on investment in affiliates






18,777



(18,777
)Goodwill impairment






17,430



(17,430
)Asset impairment loss


24,000







24,000Net operating loss


(24,463
)


(25,666
)


1,203Gain on sale of unconsolidated affiliate


(962
)






(962
)Interest expense, net of interest income


33,430



25,853



7,577Income tax expense (benefit)


440



(11,956
)


12,396Net loss attributable to Great Wolf Resorts, Inc.


(58,476
)


(40,725
)


(17,751
)   Revenues.
  
    An increase in revenue from our Grapevine resort, due primarily
    to the completion of its expansion in early 2009; and
    An increase in revenue from our Concord resort, which opened in
    March 2009.  on-site
  Operating expenses.
  
    Departmental expenses increased by $7,707 for the year ended
    December 31, 2009, as compared to the year ended
    December 31, 2008, due primarily to the opening of our
    Concord resort.
    Total selling, general and administrative expenses increased by
    $9,084 in the year ended December 31, 2009, as compared to
    the year ended December 31, 2008, due primarily to the
    opening of our Concord resort in March 2009, the expansion at
    our Grapevine resort, which was completed in January 2009, and
    lower labor and overhead expenses allocated to properties under
    development during the year ended December 31, 2009 than in
    the year ended December 31, 2008 due to fewer properties
    under development.
    Total depreciation and amortization increased for the year ended
    December 31, 2009, as compared to the year ended
    December 31, 2008, primarily due to the expansion of our
    Grapevine resort as well as the opening of our Concord resort.
    Also, loan fees incurred during the year ended December 31,
    2009 were higher than in the year ended December 31, 2008
    due to fees incurred in connection with the extensions of our
    Mason and Grapevine mortgage loans.
    For the year ended December 31, 2008, we recorded an
    aggregate $18,777 impairment loss related to our 30.26% interest
    in the joint venture that owed Wisconsin Dells and Sandusky
    resorts. There was no similar charge recorded in the year ended
    December 31, 2009.
    For the year ended December 31, 2008, we recorded a
    goodwill impairment charge of $17,430 related to our Kansas City
    and Mason resorts. We had no similar charge in the year ended
    December 31, 2009. 58




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##### Table of Contents




    We recorded a $24,000 asset impairment loss related to our
    resort in Sheboygan during the year ended December 31,
    2009. We had no similar loss in the year ended December 31,
    2008.  Net operating loss.
  Net loss attributable to Great Wolf Resorts,
    Inc.
  
    An increase in net interest expense of $7,577, mainly due to
    interest expense on our Concord loan, and less interest being
    capitalized to development properties in 2009 as compared to
    2008; and
    A decrease in income tax benefit mainly due to $23,008 income
    tax expense related to our net operating loss valuation
    allowance.    Year
    Ended December 31, 2008 compared with Year Ended
    December 31, 2007
    All Properties(a)

Same Store Comparison(b)Increase(Decrease)2008

2008

2007

$

%Occupancy


62.9
%


61.9
%


61.5
%


N/A



0.7
%ADR

$
249.92


$
243.81


$
244.16


$
(0.35
)


(0.1
)%RevPAR

$
157.19


$
151.02


$
150.16


$
0.86



0.6
%Total RevPOR

$
383.75


$
369.61


$
370.77


$
(1.16
)


(0.3
)%Total RevPAR

$
241.36


$
228.95


$
228.02


$
0.93



0.4
%Non-rooms revenue per occupied room

$
133.83


$
125.80


$
126.61


$
(0.81
)


(0.6
)%     (a)
    
    Includes results for properties that were open for any portion
    of the period, for all owned and/or managed resorts.(b)
    
    Same store comparison includes properties that were open for the
    full periods in 2008 and 2007 (that is, our Wisconsin Dells,
    Sandusky, Traverse City, Kansas City, Sheboygan, Williamsburg,
    Pocono Mountains, Niagara Falls, and Mason resorts).     59




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##### Table of Contents



Increase2008


2007


(Decrease)Revenues

$
245,538


$
187,580


$
57,958Operating expenses:Departmental operating expenses


80,083



64,016



16,067Selling, general and administrative


51,902



47,915



3,987Property operating costs


37,086



30,555



6,531Depreciation and amortization


46,081



36,372



9,709Impairment loss on investment in affiliates


18,777







18,777Goodwill impairment


17,430







17,430Net operating loss


(25,666
)


(2,883
)


(22,783
)Interest expense, net of interest income


25,853



12,129



13,724Income tax benefit


(11,956
)


(5,859
)


(6,097
)Net loss attributable to Great Wolf Resorts, Inc.


(40,725
)


(9,581
)


(31,144
)   Revenues.
  Operating expenses.
  
    Departmental expenses increased $16,067 for the year ended
    December 31, 2008, as compared to the year ended
    December 31, 2007, due primarily to the opening of our
    Grapevine resort.
    Total selling, general and administrative expenses increased
    $3,987 for the year ended December 31, 2008, as compared to
    the year ended December 31, 2007, due primarily to the
    opening of our Grapevine resort. This increase was offset by a
    decrease in corporate selling, general and administrative
    expenses. Corporate selling, general and administrative expenses
    decreased due to decreases in bonus expense and restricted stock
    expense, primarily due to the resignation of two senior officers
    in 2008; and a decrease in stock option expense, as most options
    were fully vested as of December 31, 2007.
    Total property operating costs (exclusive of opening costs)
    increased $9,614 for the year ended December 31, 2008, as
    compared to the year ended December 31, 2007, due primarily
    to the opening of our Grapevine resort, as well as increased
    repairs and maintenance expense and increased utilities expense
    related to the expansion of our Williamsburg resort. Opening
    costs related to our resorts were $6,301 for the year ended
    December 31, 2008, as compared to $9,384 for the year ended
    December 31, 2007.
    Total depreciation and amortization increased mainly due to the
    opening of our Grapevine resort and the expansion of our
    Williamsburg resort as well as the write off of loan fees of
    $615 related to our Williamsburg mortgage loan that we paid off
    in August 2008. We had no similar loan fee write offs for the
    year ended December 31, 2007.
    For the year ended December 31, 2008, we recorded an
    aggregate $18,777 impairment loss related to our 30.32% interest
    in the joint venture that owns the Wisconsin Dells and Sandusky
    resorts. There was no similar charge recorded in the year ended
    December 31, 2007.
    For the year ended December 31, 2008, we recorded a
    goodwill impairment charge of $17,430 related to our Kansas City
    and Mason resorts. There was no similar charge recorded in the
    year ended December 31, 2007. 60




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##### Table of Contents



Net operating loss.
  Net loss attributable to Great Wolf Resorts,
    Inc..
    Segments
    
    Resort ownership/operation  revenues derived from our
    consolidated owned resorts; and
    Resort third-party management/licensing  revenues
    derived from management, license and other related fees from
    unconsolidated managed resorts; and
    Condominium sales  revenues derived from sales of
    condominium units to third-party owners. This segment had no
    activity in 2008 or 2009.    Year Ended December 31,


Increase (Decrease)2009


2008


2007


2009 - 2008


2008 - 2007Resort Ownership/OperationRevenues

$
235,771


$
217,568


$
168,934


$
18,203


$
48,634EBITDA


3,350



33,756



32,179



(30,406
)


1,577Resort Third-Party Management/LicensingRevenues


28,261



27,970



18,646



291



9,324EBITDA


6,963



8,144



7,169



(1,181
)


975Condominium SalesRevenues


















EBITDA










(682
)






682OtherRevenues


















EBITDA


21,478



(23,719
)


(6,361
)


45,197



(17,358
)      61




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##### Table of Contents



Liquidity
    and Capital Resources
    Long-Term Debt:Traverse City/Kansas City mortgage loan

$
68,773Mason mortgage loan


73,800Pocono Mountains mortgage loan


95,458Williamsburg mortgage loan


63,125Grapevine mortgage loan


77,909Concord construction loan


78,549Junior subordinated debentures


80,545Other Debt:City of Sheboygan bonds


8,544City of Sheboygan loan


3,290Other


78$
550,071   Traverse City/Kansas City Mortgage Loan 25-year
        Mason Mortgage Loan
 62




---



##### Table of Contents



Pocono Mountains Mortgage Loan  30-year
    Williamsburg Mortgage Loan  30-day
   63




---



##### Table of Contents



Grapevine Mortgage Loan
    Concord Construction Loan 25-year 25-year
    Junior Subordinated Debentures
 64




---



##### Table of Contents



30-year
    10-year
      City of Sheboygan Bonds
  City of Sheboygan Loan
  Future Maturities
  2010

$
16,1262011


206,6452012


80,1892013


3,6752014


3,966Thereafter


239,470Total

$
550,071  65




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##### Table of Contents



Short-Term
    Liquidity Requirements
    
    recurring maintenance, repairs and other operating expenses
    necessary to properly maintain and operate our resorts;
    recurring capital expenditures we make at our resorts;
    debt maturities within the next year;
    property taxes and insurance expenses;
    interest expense and scheduled principal payments on outstanding
    indebtedness;
    general and administrative expenses; and
    income taxes.    Long-Term
    Liquidity Requirements
    
    scheduled debt maturities;
    costs associated with the development of new resorts;
    renovations, expansions and other non-recurring capital
    expenditures that need to be made periodically to our
    resorts; and
    capital contributions and loans to unconsolidated joint ventures.    
    existing working capital (deficit),
    cash provided by operations,
    proceeds from investing activities, including sales of partial
    or whole ownership interests in certain of our resorts; and
    proceeds from financing activities, including mortgage financing
    on properties being developed, additional or replacement
    borrowings under future credit facilities, contributions from
    joint venture partners, and the issuance of equity instruments,
    including common stock, or additional or replacement debt,
    including debt securities, as market conditions permit.     66




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##### Table of Contents



and/or
  Off
    Balance Sheet Arrangements
      39-acre
    Contractual
    Obligations
    Payment TermsLess Than








More ThanTotal


1 Year


1-3 Years


3-5 Years


5 YearsDebt obligations(1)

$
613,251


$
26,827


$
307,701


$
27,644


$
251,079Operating lease obligations


814



377



369



68



Reserve on unrecognized tax benefits


1,298















1,298Total

$
615,363


$
27,204


$
308,070


$
27,712


$
252,377     (1)
    
    Amounts include interest (for fixed rate debt) and principal.
    They also include $8,544 of fixed rate debt recognized as a
    liability related to certain bonds issued by the City of
    Sheboygan and $3,290 of fixed rate debt recognized as a
    liability related to a loan from the City of Sheboygan. These
    liabilities will be satisfied by certain future minimum
    guaranteed amounts of real and personal property tax payments
    and room tax payments to be made by our Sheboygan resort.   67




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##### Table of Contents



Working
    Capital
    Cash
    Flows
  Comparison
    of Year Ended December 31, 2009 to Year Ended
    December 31, 2008
  Year Ended December 31,


Increase2009


2008


(Decrease)Net cash provided by operating activities

$
12,215


$
33,534


$
(21,319
)Net cash used in investing activities


(36,659
)


(144,612
)


107,953Net cash provided by financing activities


31,126



106,712



(75,586
)   Operating Activities.
  Investing Activities.
  Financing Activities.
  Comparison
    of Year Ended December 31, 2008 to Year Ended
    December 31, 2007
  Year Ended December 31,


Increase2008


2007


(Decrease)Net cash provided by operating activities

$
33,534


$
29,751


$
3,783Net cash used in investing activities


(144,612
)


(206,967
)


62,355Net cash provided by financing activities


106,712



99,035



7,677   Operating Activities.
  Investing Activities.
  Financing Activities.
  Inflation
   68




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##### Table of Contents



ITEM 7A.
    QUANTITATIVE
    AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK      
    $68,773 of fixed rate debt secured by two of our resorts. This
    debt bears interest at 6.96%.
    $73,800 of variable rate debt secured by one of our resorts.
    This debt bears interest at a floating rate of
    90-day LIBOR
    plus a spread of 425 basis points, with a minimum rate of
    6.50% per annum. The effective rate was 6.50% at
    December 31, 2009.
    $95,458 of fixed rate debt secured by one of our resorts. This
    debt bears interest at 6.10%.
    $63,125 of variable rate debt secured by one of our resorts.
    This debt bears interest at a floating rate of
    30-day LIBOR
    plus a spread of 350 basis points, with a minimum rate of
    6.25% per annum. The effective rate was 6.25% at
    December 31, 2009.
    $77,909 of variable rate debt secured by one of our resorts.
    This debt bears interest at a floating rate of
    90-day LIBOR
    plus a spread of 400 basis points, with a minimum rate of
    7.00% per annum. The effective rate was 7.00% at
    December 31, 2009.
    $78,549 of variable rate debt secured by one of our resorts.
    This debt bears interest at a floating annual rate of LIBOR plus
    a spread of 310 basis points, with a minimum rate of 6.50%
    per annum. The effective rate was 6.50% at December 31,
    2009.
    $51,550 of subordinated debentures that bear interest at a fixed
    rate of 7.80% through March 2015 and then at a floating rate of
    LIBOR plus 310 basis points thereafter. The securities
    mature in March 2035.
    $28,995 of subordinated debentures that bear interest at a fixed
    rate of 7.90% through June 2012 and then at a floating rate of
    LIBOR plus 300 basis points thereafter. The securities
    mature in June 2017.
    $8,544 of fixed rate debt (effective interest rate of 10.67%)
    recognized as a liability related to certain bonds issued by the
    City of Sheboygan and $3,290 of noninterest bearing debt
    recognized as a liability related to a loan from the City of
    Sheboygan. These liabilities will be satisfied by certain future
    minimum guaranteed amounts of real and personal property tax
    payments and room tax payments to be made by the Sheboygan
    resort.
    $78 related to a capital lease that was entered into in June
    2009. The lease matures in May 2012.     69




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##### Table of Contents



ITEM 8.
    FINANCIAL
    STATEMENTS AND SUPPLEMENTARY DATA  Form 10-K:
  PageNo.Consolidated Financial Statements of Great Wolf Resorts, Inc.
    and Subsidiaries:Reports of Independent Registered Public
    Accounting Firms


71Consolidated Balance Sheets as of
    December 31, 2009 and 2008


73Consolidated Statements of Operations and
    Comprehensive Loss for the years ended December 31, 2009,
    2008 and 2007


74Consolidated Statements of Equity for the years
    ended December 31, 2009, 2008 and 2007


75Consolidated Statements of Cash Flows for the
    years ended December 31, 2009, 2008 and 2007


76Notes to Consolidated Financial Statements


77  70




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##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM           Internal Control  Integrated Framework
  
  
 71




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
              
    72




---



##### Table of Contents



GREAT
    WOLF RESORTS, INC. AND SUBSIDIARIES
  CONSOLIDATED
    BALANCE SHEETS
  December 31,2009


2008(dollars in thousands,except per share amounts)ASSETSCurrent assets:Cash and cash equivalents

$
20,913


$
14,231Escrows


5,938



2,555Accounts receivable, net of allowance for doubtful accounts of
    $101 and $114


2,192



2,167Accounts receivable  affiliates, net of allowance for
    doubtful accounts of $1,201 in 2008


2,614



925Inventory


4,791



4,265Other current assets


4,252



3,055Total current assets


40,700



27,198Property and equipment, net


676,405



716,173Investment in and advances to affiliates


27,484



43,855Notes receivable


8,268



3,248Other assets


29,058



25,758Intangible assets


23,829



23,829Total assets

$
805,744


$
840,061LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Current portion of long-term debt

$
16,126


$
81,464Accounts payable


5,078



23,217Accrued expenses


21,970



22,565Accrued expenses  affiliates






1,806Advance deposits


7,114



7,498Gift certificates payable


5,946



5,416Total current liabilities


56,234



141,966Mortgage debt


441,724



333,259Other long-term debt


92,221



92,328Deferred compensation liability


809



568Total liabilities


590,988



568,121Commitments and contingenciesStockholders Equity:Common stock, $0.01 par value, 250,000,000 shares
    authorized, 31,278,889 and 30,982,646 shares issued and
    outstanding at December 31, 2009 and 2008


313



310Preferred stock, $0.01 par value, 10,000,000 shares
    authorized, no shares issued or outstanding at December 31,
    2009 and 2008






Additional paid-in capital


400,930



399,641Accumulated deficit


(186,287
)


(127,811
)Deferred compensation


(200
)


(200
)Total stockholders equity


214,756



271,940Total liabilities and stockholders equity

$
805,744


$
840,061    73




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##### Table of Contents



GREAT
    WOLF RESORTS, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF OPERATIONS
    AND COMPREHENSIVE LOSS
    (dollars in thousands, except per share data)
  Year Ended December 31,2009


2008


2007Revenues:Rooms

$
154,751


$
143,395


$
112,261Food and beverage


42,643



38,808



29,588Other hotel operations


38,377



35,365



27,085Management and other fees


1,990



2,798



2,855Management and other fees  affiliates


4,973



5,346



4,314242,734



225,712



176,103Other revenue from managed properties-affiliates


17,132



19,826



11,477Other revenue from managed properties


4,166







Total revenues


264,032



245,538



187,580Operating expenses by department:Rooms


22,449



20,134



15,716Food and beverage


33,217



30,990



25,196Other


32,124



28,959



23,104Other operating expenses:Selling, general and administrative


60,986



51,902



47,915Property operating costs


37,788



37,086



30,555Depreciation and amortization


56,378



46,081



36,372Impairment loss on investment in affiliates






18,777



Goodwill impairment






17,430



Asset impairment loss


24,000







Loss on disposition of property


255



19



128267,197



251,378



178,986Other expenses from managed properties-affiliates


17,132



19,826



11,477Other expenses from managed properties


4,166







Total operating expenses


288,495



271,204



190,463Net operating loss


(24,463
)


(25,666
)


(2,883
)Gain on sale of unconsolidated affiliate


(962
)






Investment income  affiliates


(1,330
)


(2,187
)


(667
)Interest income


(642
)


(1,424
)


(2,758
)Interest expense


34,072



27,277



14,887Loss before income taxes and equity in unconsolidated affiliates


(55,601
)


(49,332
)


(14,345
)Income tax expense (benefit)


440



(11,956
)


(5,859
)Equity in unconsolidated affiliates, net of tax


2,435



3,349



1,547Net loss.


(58,476
)


(40,725
)


(10,033
)Net loss attributable to noncontrolling interest, net of tax.










(452
)Net loss attributable to Great Wolf Resorts, Inc.

$
(58,476
)

$
(40,725
)

$
(9,581
)Basic loss per common share

$
(1.90
)

$
(1.32
)

$
(0.31
)Diluted loss per common share

$
(1.90
)

$
(1.32
)

$
(0.31
)Weighted average common shares outstanding:Basic


30,749,318



30,827,860



30,533,249Diluted


30,749,318



30,827,860



30,533,249Other comprehensive loss, net of tax:Net loss.

$
(58,476
)

$
(40,725
)

$
(10,033
)Unrealized (gain) loss on interest rate swap






(387
)


387Comprehensive loss


(58,476
)


(40,338
)


(10,420
)Comprehensive loss attributable to noncontrolling interest










(452
)Comprehensive loss attributable to Great Wolf Resorts, Inc.

$
(58,476
)

$
(40,338
)

$
(9,968
)    74




---



##### Table of Contents



GREAT
    WOLF RESORTS, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF EQUITY(dollars in thousands, except per share data)
  AdditionalCommon


Common


Paid- in


Accumulated


Deferred


Accumulated Other


Noncontrolling


TotalShares


Stock


Capital


Deficit


Compensation


Comprehensive Loss


Interest


EquityBalance, January 1, 2007


30,509,320


$
305


$
396,909


$
(77,505
)

$
(2,200
)

$



$
5,757


$
323,266Issuance of non-vested equity shares


189,363



2























2Stock-based compensation










2,850



















2,850Unrealized loss on interest rate swap, net of tax






















(387
)






(387
)Net loss attributable to noncontrolling interest


























(452
)


(452
)Net loss attributable to Great Wolf Resorts, Inc.














(9,581
)














(9,581
)Purchase of noncontrolling interest


























(5,305
)


(5,305
)Balance, December 31, 2007


30,698,683



307



399,759



(87,086
)


(2,200
)


(387
)






310,393Issuance of non-vested equity shares


283,963



3























3Sale of common stock  deferred compensation plan










(2,000
)






2,000











Stock-based compensation










1,882



















1,882Unrealized gain on interest rate swap, net of tax






















387







387Net loss attributable to Great Wolf Resorts, Inc.














(40,725
)














(40,725
)Balance, December 31, 2008


30,982,646



310



399,641



(127,811
)


(200
)










271,940Issuance of non-vested equity shares


296,243



3























3Stock-based compensation










1,289



















1,289Net loss attributable to Great Wolf Resorts, Inc.














(58,476
)














(58,476
)Balance, December 31, 2009


31,278,889


$
313


$
400,930


$
(186,287
)

$
(200
)

$



$



$
214,756    75




---



##### Table of Contents



GREAT
    WOLF RESORTS, INC. AND SUBSIDIARIES
  CONSOLIDATED
    STATEMENTS OF CASH FLOWS
 (dollars in thousands)
  Year Ended December 31,2009


2008


2007Operating activities:Net loss.

$
(58,476
)

$
(40,725
)

$
(10,033
)Adjustments to reconcile net loss to net cash provided by
    operating activities:Depreciation and amortization


56,378



46,081



36,372Bad debt expense


680



1,305



154Impairment loss on investment in affiliates






18,777



Goodwill impairment






17,430



Non-cash employee and director compensation


1,138



250



5,080Loss on disposition of property


255



19



128Asset impairment loss


24,000







Gain on sale of unconsolidated affiliate


(962
)






Equity in losses of unconsolidated affiliates


2,416



4,421



2,616Deferred tax expense (benefit)


131



(14,072
)


(7,417
)Changes in operating assets and liabilities:Accounts receivable and other assets


(8,865
)


(1,916
)


(4,399
)Accounts payable, accrued expenses and other liabilities


(4,480
)


1,964



7,250Net cash provided by operating activities


12,215



33,534



29,751Investing activities:Capital expenditures for property and equipment


(49,258
)


(134,967
)


(171,884
)Loan repayment from unconsolidated affiliate


9,225



3,168



Investment in unconsolidated affiliates


(303
)


(10,430
)


(24,058
)Proceeds from sale of interest in unconsolidated affiliate


6,000







Investment in development


834



(2,255
)


(10,276
)Issuance of notes receivable










(3,263
)Proceeds from sale of assets


66







Decrease in restricted cash


160



55



2,289(Increase) decrease in escrows


(3,383
)


(183
)


225Net cash used in investing activities


(36,659
)


(144,612
)


(206,967
)Financing activities:Principal payments on long-term debt


(8,031
)


(57,294
)


(1,350
)Proceeds from issuance of long-term debt


51,051



168,042



108,263Payment of loan costs


(11,894
)


(4,036
)


(978
)Purchase of noncontrolling interests










(6,900
)Net cash provided by financing activities


31,126



106,712



99,035Net increase (decrease) in cash and cash equivalents


6,682



(4,366
)


(78,181
)Cash and cash equivalents, beginning of year


14,231



18,597



96,778Cash and cash equivalents, end of year

$
20,913


$
14,231


$
18,597Supplemental cash flow information:Cash paid for interest, net of capitalized interest

$
33,458


$
26,749


$
13,404Cash paid for income taxes, net of refunds

$
411


$
597


$
(312
)Non-cash items:Construction in process accruals

$
20


$
6,969


$
9,728Guarantee on loan for unconsolidated affiliate

$



$



$
1,180    76




---



##### Table of Contents



GREAT
    WOLF RESORTS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 (dollars in thousands, except per share amounts)
  1.
    ORGANIZATION  ®
  Business
    Summary
  ® tm
    and/or and/or and/or
  Number of


IndoorOwnership





Number of


Condo


EntertainmentPercentage


Opened


Guest Suites


Units(1)


Area(2)(Approx. sq. ft.)Wisconsin Dells, WI(3)






1997



308



77



102,000Sandusky, OH(3)






2001



271







41,000Traverse City, MI


100
%


2003



280







57,000Kansas City, KS


100
%


2003



281







57,000Sheboygan, WI


100
%


2004



182



64



54,000Williamsburg, VA(4)


100
%


2005



405







87,000Pocono Mountains, PA(4)


100
%


2005



401







101,000Niagara Falls, ONT(5)






2006



406







104,000Mason, OH(4)


100
%


2006



401







105,000Grapevine, TX(4)


100
%


2007



605







110,000Grand Mound, WA(6)


49
%


2008



398







74,000Concord, NC


100
%


2009



402







97,000  77




---



##### Table of Contents



GREAT
    WOLF RESORTS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (1)
    
    Condominium units are individually owned by third parties and
    are managed by us.(2)
    
    Our indoor entertainment areas generally include our indoor
    waterpark, game arcade, childrens activity room, family
    tech center,
    MagiQuest®

    (an interactive game attraction) and fitness room, as well as
    our spa in the resorts that have such amenities.(3)
    
    These properties are owned by CNL Lifestyle Properties, Inc.
    (CNL), a real estate investment trust focused on leisure and
    lifestyle properties. Prior to August 2009, these properties
    were owned by a joint venture between CNL and us. In August 2009
    we sold our 30.26% joint venture interest to CNL for $6,000. We
    currently manage both properties and license the Great Wolf
    Lodge brand to these resorts.(4)
    
    Five of our properties (Great Wolf Lodge resorts in
    Williamsburg, VA; Pocono Mountains, PA; Mason, OH; Grapevine, TX
    and Concord, NC) each had a book value of fixed assets equal to
    ten percent or more of our total assets as of December 31,
    2009. Four of our properties (Great Wolf Lodge resorts in
    Williamsburg, VA; Pocono Mountains, PA; Mason, OH and Grapevine,
    TX) each had total revenues equal to ten percent or more of our
    total revenues for the year ended December 31, 2009.(5)
    
    An affiliate of Ripley Entertainment, Inc. (Ripley), our
    licensee, owns this resort. We have granted Ripley a license to
    use the Great Wolf Lodge name for this resort through April
    2016. We managed the resort on behalf of Ripley through April
    2009.(6)
    
    This property is owned by a joint venture. The Confederated
    Tribes of the Chehalis Reservation (Chehalis) owns a 51%
    interest in the joint venture, and we own a 49% interest. We
    operate the property and license the Great Wolf Lodge brand to
    the joint venture under long-term agreements through April 2057,
    subject to earlier termination in certain situations. The joint
    venture leases the land for the resort from the United States
    Department of the Interior, which is trustee for Chehalis.  2.
    SUMMARY
    OF SIGNIFICANT ACCOUNTING POLICIES  Principles of Consolidation 
  Reclassifications 
  Cash and Cash Equivalents
  Accounts receivable
  Inventory
 78




---



##### Table of Contents



GREAT
    WOLF RESORTS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Property and Equipment
  Buildings and improvements


20-40 yearsFixtures and equipment, including waterpark equipment


5-15 years       Loan Fees
  Partially-Owned Entities
  Investments In and Advances to Unconsolidated
    Affiliates
  Notes Receivable
  Intangible Assets
 79




---



##### Table of Contents



GREAT
    WOLF RESORTS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Goodwill
  2009


2008Balance as of January 1Goodwill

$
130,496


$
130,496Accumulated impairment losses


(68,405
)


(50,975
)Goodwill related to sale of affiliate


(62,091
)


(62,091
)



17,430Impairment losses






(17,430
)Balance as of December 31Goodwill


130,496



130,496Accumulated impairment losses


(68,405
)


(68,405
)Goodwill related to sale of affiliate


(62,091
)


(62,091
)$



$
   Impairment of Long-Lived Assets
    Revenue Recognition
   80




---



##### Table of Contents



GREAT
    WOLF RESORTS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  contract-to-date
  Other Revenue and Other Expenses From Managed
    Properties
  Noncontrolling Interests 
    Income Taxes
       81




---



##### Table of Contents



GREAT
    WOLF RESORTS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Earnings per share
  Derivatives
  Share-based compensation
  Advertising
  Comprehensive Income
  Segments
  
    Resort ownership/operation  revenues derived from our
    consolidated owned resorts; and
    Resort third-party management/licensing  revenues
    derived from management, license and other related fees from
    unconsolidated managed resorts; and
    Condominium sales  revenues derived from sales of
    condominium units to third-party owners. This segment had no
    activity in 2008 or 2009. 82




---



##### Table of Contents



GREAT
    WOLF RESORTS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     Resort Third-Resort


Party








Totals perOwnership/


Management/


Condominium





FinancialOperation


Licensing


Sales


Other


StatementsYear Ended December 31, 2009Revenues

$
235,771


$
28,261


$



$



$
264,032Depreciation and amortization


(55,596
)










(782
)

$
(56,378
)Asset impairment loss


(24,000
)













$
(24,000
)Net operating income (loss)


(52,246
)


6,963







20,820


$
(24,463
)Gain on sale of unconsolidated affiliate














(962
)


(962
)Investment income  affiliates


















(1,330
)Interest income


















(642
)Interest expense


















34,072Loss before income taxes and equity in unconsolidated affiliates

















$
(55,601
)Additions to long-lived assets


48,768











490


$
49,258Total assets


707,472



2,942







95,330


$
805,744   Resort Third-Resort


Party








Totals perOwnership/


Management/


Condominium





FinancialOperation


Licensing


Sales


Other


StatementsYear Ended December 31, 2008Revenues

$
217,568


$
27,970


$



$



$
245,538Depreciation and amortization


(45,042
)










(1,039
)

$
(46,081
)Impairment loss on investment in affiliates














(18,777
)

$
(18,777
)Goodwill impairment


(16,021
)










(1,409
)

$
(17,430
)Net operating income (loss)


(11,286
)


8,144







(22,524
)

$
(25,666
)Investment income  affiliates


















(2,187
)Interest income


















(1,424
)Interest expense


















27,277Loss before income taxes and equity in unconsolidated affiliates

















$
(49,332
)Additions to long-lived assets


134,167











800


$
134,967Total assets


738,119



2,314







99,628


$
840,061   83




---



##### Table of Contents



GREAT
    WOLF RESORTS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Resort Third-Resort


Party








Totals perOwnership/


Management/


Condominium





FinancialOperation


Licensing


Sales


Other


StatementsYear Ended December 31, 2007Revenues

$
168,934


$
18,646


$



$



$
187,580Depreciation and amortization


(35,767
)










(605
)

$
(36,372
)Net operating income (loss)


(3,588
)


7,169



(682
)


(5,782
)

$
(2,883
)Investment income  affiliates


















(667
)Interest income


















(2,758
)Interest expense


















14,887Loss before income taxes, noncontrolling interest, and equity in
    unconsolidated affiliates

















$
(14,345
)Additions to long-lived assets


171,197











687


$
171,884Total assets


653,367



4,384







113,054


$
770,805     Use of Estimates
  New Accounting Pronouncements 
       84




---



##### Table of Contents



GREAT
    WOLF RESORTS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
          3.
    INVESTMENT
    IN AFFILIATES  CNL
    Joint Venture
      Period January 1through

Year EndedAugust 5,

December 31,Operating data:

2009

2008Revenue

$
19,750


$
31,531Operating expenses

$
(24,213
)

$
(39,491
)Net loss

$
(4,463
)

$
(7,960
)     Grand
    Mound Joint Venture
  39-acre
 85




---



##### Table of Contents



GREAT
    WOLF RESORTS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    2009


2008Balance sheet data:Total assets

$
145,247


$
152,215Total liabilities

$
114,129


$
118,636Operating data:Revenue

$
39,645


$
33,194Operating expenses

$
36,353


$
31,739Net loss

$
(2,461
)

$
(5,553
)     4.
    PROPERTY
    AND EQUIPMENT    December 31,2009


2008Land and improvements

$
60,718


$
51,684Building and improvements


427,602



353,537Furniture, fixtures and equipment


341,529



315,577Construction in process


327



117,063830,176



837,861Less accumulated depreciation


(153,771
)


(121,688
)Property and equipment, net

$
676,405


$
716,173    86




---



##### Table of Contents



GREAT
    WOLF RESORTS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   5.
    LONG-TERM
    DEBT    December 31,2009


2008Long-Term Debt:Traverse City/Kansas City mortgage loan

$
68,773


$
70,211Mason mortgage loan


73,800



76,800Pocono Mountains mortgage loan


95,458



96,571Williamsburg mortgage loan


63,125



64,625Grapevine mortgage loan


77,909



78,709Concord construction loan


78,549



27,594Junior subordinated debentures


80,545



80,545Other Debt:City of Sheboygan bonds


8,544



8,493City of Sheboygan loan


3,290



3,503Other


78



550,071



507,051Less current portion of long-term debt


(16,126
)


(81,464
)Total long-term debt

$
533,945


$
425,587   Traverse City/Kansas City Mortgage Loan 25-year
       87




---



##### Table of Contents



GREAT
    WOLF RESORTS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Mason Mortgage Loan
        Pocono Mountains Mortgage Loan  30-year
   88




---



##### Table of Contents



GREAT
    WOLF RESORTS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Williamsburg Mortgage Loan  30-day
      Grapevine Mortgage Loan
    Concord Construction Loan
 89




---



##### Table of Contents



GREAT
    WOLF RESORTS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  25-year 25-year
    Junior Subordinated Debentures
  30-year
    10-year
     90




---



##### Table of Contents



GREAT
    WOLF RESORTS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  City of Sheboygan Bonds
  City of Sheboygan Loan
  Future Maturities
  2010

$
16,1262011


206,6452012


80,1892013


3,6752014


3,966Thereafter


239,470Total

$
550,071   6.
    FAIR
    VALUE OF FINANCIAL INSTRUMENTS              Level 1

Level 2

Level 3

TotalInterest rate caps

$

$133

$

$133  91




---



##### Table of Contents



GREAT
    WOLF RESORTS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        Level 1

Level 2

Level 3

TotalProperty and Equipment

$  

$  

$5,771

$5,771       7.
    INCOME
    TAXES  Income Tax Expense 
  Current


Deferred


TotalYear ended December 31, 2009Federal

$



$
86


$
86State and local


248



45



293Foreign


80







80$
328


$
131


$
459Year ended December 31, 2008Federal

$



$
(12,499
)

$
(12,499
)State and local


955



(1,573
)


(618
)Foreign


89







89$
1,044


$
(14,072
)

$
(13,028
)Year ended December 31, 2007Federal

$



$
(5,723
)

$
(5,723
)State and local


398



(1,382
)


(984
)Foreign


92







92$
490


$
(7,105
)

$
(6,615
)  92




---



##### Table of Contents



GREAT
    WOLF RESORTS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Income Tax Expense (Benefit)for the Year Ending December 31,2009


2008


2007Income tax expense (benefit)

$
440


$
(11,956
)

$
(5,859
)Net loss attributable to noncontrolling interest










312Equity in unconsolidated affiliates, net of tax


19



(1,072
)


(1,068
)Total income tax expense (benefit)

$
459


$
(13,028
)

$
(6,615
)     2009


2008


2007Federal statutory income tax benefit


(35.0
)%


(35.0
)%


(35.0
)%State income taxes, net of federal income taxes


(3.5
)%


(0.6
)%


(6.1
)%Nondeductible goodwill






11.5
%


Change in valuation allowance


39.7
%






Other


(0.4
)%


(0.1
)%


0.3
%0.8
%


(24.2
)%


(40.8
)%   Deferred Tax Assets and Liabilities
  2009


2008Deferred tax assets:Net operating loss carryforwards

$
31,032


$
17,504Intangibles


14,222



11,564Investment in affiliates


2,200



7,161Salaries and wages


2,901



2,534Other


1,329



1,329Total deferred tax assets


51,684



40,092Deferred tax liabilities:Property and equipment


(22,522
)


(32,922
)Prepaid expenses


(856
)


(932
)Interest rate swap






(273
)Total deferred tax liabilities


(23,378
)


(34,127
)Valuation allowance


(23,008
)


(366
)Net deferred tax asset

$
5,298


$
5,599    93




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##### Table of Contents



GREAT
    WOLF RESORTS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Net Operating Loss Carryforwards
  Other
    Unrecognized tax benefit  December 31, 2008

$
1,298Gross increases  tax positions in current period


Unrecognized tax benefit  December 31, 2009

$
1,298   8.
    RELATED-PARTY
    TRANSACTIONS   94




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##### Table of Contents



GREAT
    WOLF RESORTS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    2009


2008


2007Management and other fees

$
4,973


$
5,346


$
4,314Other revenue from managed properties


17,132



19,826



11,477Other expenses from managed properties


17,132



19,826



11,477Investment income


1,330



2,187



667Accounts receivable


2,614



925



3,973Accrued expenses






1,806



124   9.
    COMMITMENTS
    AND CONTINGENCIES  Legal Matters
  Letters of Credit
  Guarantees
      1 2
    cross-collateralized
 95




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##### Table of Contents



GREAT
    WOLF RESORTS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Commitments
  2010

$
3772011


1952012


1742013


342014


34Thereafter


Total

$
814     10.
    RETIREMENT
    PLAN    11.
    EQUITY  Deferred Compensation
  Earnings per Share
   96




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##### Table of Contents



GREAT
    WOLF RESORTS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Year Ended December 31,2009


2008


2007Net loss attributable to common shares

$
(58,476
)

$
(40,725
)

$
(9,581
)Weighted average common shares outstanding  basic and
    diluted


30,749,318



30,827,860



30,533,249Net loss per share  basic and diluted

$
(1.90
)

$
(1.32
)

$
(0.31
)   and/or
  12.
    SHARE-BASED
    COMPENSATION          Stock
    Options
     97




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##### Table of Contents



GREAT
    WOLF RESORTS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    WeightedWeighted


AverageAverage


RemainingExercise


ContractualShares


Price


LifeNumber of shares under option:Outstanding at January 1, 2007


1,064,500


$
17.55



8.05 yearsGranted


Exercised


(167
)

$
12.40Forfeited


(77,333
)

$
20.87Outstanding at December 31, 2007


987,000


$
17.29



7.03 yearsGranted


Exercised


Forfeited


(512,000
)

$
17.01Outstanding at December 31, 2008


475,000


$
17.59



6.09 yearsGranted


Exercised


Forfeited


(34,000
)

$
18.41Outstanding at December 31, 2009


441,000


$
17.53



5.09 yearsExercisable at December 31, 2009


441,000


$
17.53



5.09 years     Market
    Condition Share Awards
        
    541,863 were based on our common stocks performance in
    2009 relative to a stock index, as designated by the
    Compensation Committee of the Board of Directors. These shares
    vest ratably over a three-year period,
    2009-2011.
    The per share fair value of these market condition shares was
    $1.26 as of the grant date. 98




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##### Table of Contents



GREAT
    WOLF RESORTS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     Dividend yield


Weighted average, risk free interest rate


0.62
%Expected stock price volatility


96.51
%Expected stock price volatility (small-cap stock index)


37.89
%         
    84,748 are based on our common stocks performance in 2008
    relative to a stock index, as designated by the Compensation
    Committee of the Board of directors. These shares vest ratably
    over a three-year period,
    2008-2010.
    The per share fair value of these market condition shares was
    $1.63.    Dividend yield


Weighted average, risk free interest rate


2.05
%Expected stock price volatility


34.98
%Expected stock price volatility (small-cap stock index)


20.08
%         
    53,006 are based on our common stocks performance in 2007
    relative to a stock index, as designated by the Compensation
    Committee of the Board of directors. These shares vest ratably
    over a three-year period,
    2007-2009.
    The per share fair value of these market condition shares was
    $7.25.    Dividend yield


Weighted average, risk free interest rate


5.05
%Expected stock price volatility


42.13
%Expected stock price volatility (small-cap stock index)


16.64
%  99




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##### Table of Contents



GREAT
    WOLF RESORTS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      
    81,293 are based on our common stocks absolute performance
    during the three-year period
    2007-2009.
    Half of these shares vested on December 31, 2009, and the
    other half vest on December 31, 2010. The per share fair
    value of these market condition shares was $6.65.    Dividend yield


Weighted average, risk free interest rate


4.73
%Expected stock price volatility


42.13
%     2007-2009,
  
    81,293 are based on our common stocks performance in
    2007-2009
    relative to a stock index, as designated by the Compensation
    Committee of the Board of directors. Half of these shares vested
    December 31, 2009, and the other half vest on
    December 31, 2010. The per share fair value of these market
    condition shares was $8.24.    Dividend yield


Weighted average, risk free interest rate


4.73
%Expected stock price volatility


42.13
%Expected stock price volatility (small-cap stock index)


16.64
%     2007-2009
 100




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##### Table of Contents



GREAT
    WOLF RESORTS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Performance
    Share Awards
  2009-2011; 2008-2010; 2007-2009.
      
    Employees earned and were issued 18,084 performance shares in
    February 2009 related to the 2008 grants, and
    Employees earned and were issued 20,843 performance shares in
    February 2008 related to the 2007 grants.  Deferred
    Compensation Awards
    paid-in-capital.
  Non-vested
    Shares
   101




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##### Table of Contents



GREAT
    WOLF RESORTS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    WeightedAverageGrant DateShares


Fair ValueNon-vested shares balance at January 1, 2007


245,000


$
11.08Granted


143,711


$
13.47Forfeited


(5,000
)

$
10.79Vested


(50,600
)

$
11.53Non-vested shares balance at December 31, 2007


333,111


$
12.37Granted


210,799


$
6.78Forfeited


(162,008
)

$
10.91Vested


(81,653
)

$
12.14Non-vested shares balance at December 31, 2008


300,249


$
9.29Granted


331,179


$
2.75Forfeited


(61,809
)

$
4.73Vested


(86,151
)

$
10.79Non-vested shares balance at December 31, 2009


483,468


$
5.13       Vested
    Shares
    
    In connection with the elections related to 2008 bonus amounts,
    we issued 17,532 shares in February 2009. We valued these
    shares at $32 based on the closing market value of our common
    stock on the date of the grant.
    In connection with the elections related to 2007 bonus amounts,
    we issued 265,908 shares in February 2008. We valued these
    shares at $2,055 based on the closing market value of our common
    stock on the date of the grant.   102




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##### Table of Contents



GREAT
    WOLF RESORTS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    13.
    QUARTERLY
    FINANCIAL DATA (UNAUDITED)    First


Second


Third


FourthQuarter


Quarter


Quarter


Quarter2009:Total Revenues

$
62,307


$
68,625


$
76,827


$
56,273Net operating loss


(2,450
)


(581
)


(15,491
)


(5,941
)Net loss attributable to Great Wolf Resorts, Inc.


(5,645
)


(5,706
)


(36,923
)


(10,202
)Basic loss per common share

$
(0.18
)

$
(0.18
)

$
(1.18
)

$
(0.33
)Diluted loss per common share

$
(0.18
)

$
(0.18
)

$
(1.18
)

$
(0.33
)   First


Second


Third


FourthQuarter


Quarter


Quarter


Quarter2008:Total Revenues

$
64,208


$
63,018


$
69,413


$
48,899Net operating income (loss)


4,062



51



9,763



(39,542
)Net (loss) income attributable to Great Wolf Resorts, Inc.


(2,327
)


(4,090
)


2,171



(36,479
)Basic (loss) earnings per share

$
(0.08
)

$
(0.13
)

$
0.07


$
(1.18
)Diluted (loss) earnings per share

$
(0.08
)

$
(0.13
)

$
0.07


$
(1.18
)     Impairment loss on investment in affiliates

$
18,777Goodwill impairment


17,430$
36,207     ITEM 9.
    CHANGES
    IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
    FINANCIAL DISCLOSURE    ITEM 9A.
    CONTROLS
    AND PROCEDURES  Evaluation
    of Disclosure Controls and Procedures
  Rules 13a-15(e) 15d-15(e)
 103




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##### Table of Contents



GREAT
    WOLF RESORTS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Changes
    in Internal Control
    Managements
    Report on Internal Control over Financial
    Reporting
    
    Pertain to the maintenance of records that in reasonable detail
    accurately and fairly reflect the transactions and dispositions
    of the assets of the Company;
    Provide reasonable assurance that transactions are recorded as
    necessary to permit preparation of financial statements in
    accordance with U.S. generally accepted accounting
    principles, and that receipts and expenditures of the Company
    are being made only in accordance with authorizations of our
    management and directors; and
    Provide reasonable assurance regarding prevention or timely
    detection of unauthorized acquisition, use or disposition of our
    assets that could have a material effect on the financial
    statements.     104




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##### Table of Contents



GREAT
    WOLF RESORTS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Material
    Weakness Detected During the First Quarter 2010
        Conclusion
      Remediation
    Measures for Identified Material Weakness
   105




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##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
     Internal Control 
    Integrated Framework
            Internal Control  Integrated Framework
 106




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##### Table of Contents



107




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##### Table of Contents



ITEM 9B.
    OTHER
    INFORMATION   PART III  ITEM 10.
    DIRECTORS,
    EXECUTIVE OFFICER AND CORPORATE GOVERNANCE    ITEM 11.
    EXECUTIVE
    COMPENSATION    ITEM 12.
    SECURITY
    OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
    RELATED STOCKHOLDER MATTERS    ITEM 13.
    CERTAIN
    RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
    INDEPENDENCE    ITEM 14.
    PRINCIPAL
    ACCOUNTANT FEES AND SERVICES    ITEM 15.
    EXHIBITS AND
    FINANCIAL STATEMENT SCHEDULES  Financial Statements
  Form 10-K
  Financial Statement Schedules
    Exhibits
   108




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##### Table of Contents



SIGNATURES      /s/  KIMBERLY
    K. SCHAEFER         Signature

Title

Date/s/  Kimberly
    K. SchaeferKimberly
    K. Schaefer

Chief Executive Officer (Principal Executive Officer) and
    Director

March 2, 2010/s/  James
    A. CalderJames
    A. Calder

Chief Financial Officer (Principal Financial and Accounting
    Officer)

March 2, 2010/s/  Joseph
    V. VittoriaJoseph
    V. Vittoria

Chairman of the Board and Director

March 2, 2010Elan
    Blutinger

Director

March 2, 2010/s/  Randy
    L. ChurcheyRandy
    L. Churchey

Director

March 2, 2010/s/  Edward
    H. RensiEdward
    H. Rensi

Director

March 2, 2010/s/  Howard
    A. SilverHoward
    A. Silver

Director

March 2, 2010  109




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##### Table of Contents



INDEX TO
    EXHIBITS
  Form 10-K.
  ExhibitNumber

Description2
.1

Form of Merger Agreement (Delaware) (incorporated herein by
    reference to Exhibit 2.1 to the Companys Registration
    Statement on
    Form S-1
    filed August 12, 2004)2
.2

Form of Merger Agreement (Wisconsin) (incorporated herein by
    reference to Exhibit 2.2 to the Companys Registration
    Statement on
    Form S-1
    filed August 12, 2004)3
.1

Form of Amended and Restated Certificate of Incorporation for
    Great Wolf Resorts, Inc. dated December 9, 2004
    (incorporated herein by reference to Exhibit 3.1 to the
    Companys Registration Statement on
    Form S-1
    filed August 12, 2004)3
.2

Form of Amended and Restated Bylaws of Great Wolf Resorts, Inc.
    effective September 12, 2007 (incorporated herein by
    reference to Exhibit 4.1 to the Companys Current
    Report on
    Form S-1
    filed September 18, 2007)4
.1

Form of the Common Stock Certificate of Great Wolf Resorts, Inc.
    (incorporated herein by reference to Exhibit 4.1 to the
    Companys Registration Statement on
    Form S-1
    filed October 21, 2004)4
.2

Junior Subordinated Indenture, dated as of March 15, 2005,
    between Great Wolf Resorts, Inc. and JPMorgan Chase Bank,
    National Association, as trustee (incorporated herein by
    reference to Exhibit 4.1 to the Companys Current
    Report on
    Form 8-K
    filed March 18, 2005)4
.3

Amended and Restated Trust Agreement, dated as of
    March 15, 2005, by and among Chase Manhattan Bank USA,
    National Association, as Delaware trustee; JPMorgan Chase Bank,
    National Association, as property trustee; Great Wolf Resorts,
    Inc., as depositor; and James A. Calder, Alex G. Lombardo and J.
    Michael Schroeder, as administrative trustees (incorporated
    herein by reference to Exhibit 4.2 to the Companys
    Current Report on
    Form 8-K
    filed March 18, 2005)10
.1

License Agreement, dated January 30, 2004, by and between
    The Great Lakes Companies, Inc. and Jim Pattison Entertainment
    Ltd. (incorporated herein by reference to Exhibit 10.1 to
    the Companys Registration Statement on
    Form S-1
    filed September 23, 2004)10
.2

Development Agreement, dated as of July 30, 2003, among the
    City of Sheboygan, Wisconsin, the Redevelopment Authority of the
    City of Sheboygan, Wisconsin, The Great Lakes Companies, Inc.,
    Blue Harbor Resort Sheboygan, LLC, and Blue Harbor Resort
    Condominium, LLC (incorporated herein by reference to
    Exhibit 10.2 to the Companys Registration Statement
    on
    Form S-1
    filed August 12, 2004)10
.3

First Amendment to the Development Agreement, dated
    June 25, 2004, by and among the City of Sheboygan,
    Wisconsin, the Redevelopment Authority of the City of Sheboygan,
    Wisconsin, The Great Lakes Companies, Inc., Blue Harbor Resort
    Sheboygan, LLC, and Blue Harbor Resort Condominium, LLC
    (incorporated herein by reference to Exhibit 10.3 to the
    Companys Registration Statement on
    Form S-1
    filed August 12, 2004)10
.4

Tall Pines Exclusive License and Royalty Agreement, dated
    July 25, 2004, between Tall Pines Development Corporation
    and The Great Lakes Companies, Inc. (incorporated herein by
    reference to Exhibit 10.4 to the Companys
    Registration Statement on
    Form S-1
    filed December 7, 2004)10
.5+

Employment Agreement between Great Wolf Resorts, Inc., and
    Kimberly Schaefer, dated December 13, 200410
.6+

Employment Agreement between Great Wolf Resorts, Inc. and James
    Calder, dated December 13, 200410
.7+

Employment Agreement between Great Wolf Resorts, Inc. and J.
    Michael Schroeder, dated December 13, 200410
.8+

First Amendment to Employment Agreement between Great Wolf
    Resorts, Inc. and J. Michael Schroeder, dated May 28, 200810
.9+

Second Amendment to Employment Agreement between Great Wolf
    Resorts, Inc. and J. Michael Schroeder, dated July 2, 200810
.10+

Employment Agreement between Great Wolf Resorts, Inc. and
    Timothy Black, dated March 20, 200910
.11+

First Amendment to Employment Agreement between Great Wolf
    Resorts, Inc. and Timothy Black, dated December 16, 200910
.12

Registration Statement on
    Form S-1
    filed January 21, 2005) Form of Noncompete Agreement,
    Trade Secret and Confidentiality Agreement (incorporated herein
    by reference to Exhibit 10.6 to the Companys
    Registration Statement on
    Form S-1
    filed January 21, 2005)




---



##### Table of Contents



ExhibitNumber

Description10
.13

Form of Officers and Directors Indemnification Agreement
    (incorporated herein by reference to Exhibit 10.7 to the
    Companys Registration Statement on
    Form S-1
    filed August 12, 2004)10
.14

Form of Indemnity Agreement (incorporated herein by reference to
    Exhibit 10.8 to the Companys Registration Statement
    on
    Form S-1
    filed September 23, 2004)10
.14

Form of Great Wolf Resorts, Inc. Employee Stock Purchase Plan
    (incorporated herein by reference to Exhibit 10.9 to the
    Companys Registration Statement on
    Form S-1
    filed August 12, 2004)10
.15

Form of Great Wolf Resorts, Inc. 2004 Incentive Stock Plan
    (incorporated herein by reference to Exhibit 10.10 to the
    Companys Registration Statement on
    Form S-1
    filed November 26, 2004)10
.16

Form of Great Wolf Resorts, Inc. Deferred Compensation Plan
    (incorporated herein by reference to Exhibit 10.11 to the
    Companys Registration Statement on
    Form S-1
    filed August 12, 2004)10
.17

Loan Agreement by and among Great Wolf Resorts, Inc., Citigroup
    Global Markets Realty Corp. and The Travelers Insurance Company
    (incorporated herein by reference to Exhibit 10.16 to
    Companys Registration Statement on
    Form S-1
    filed January 21, 2005)10
.18

Purchase Agreement, dated as of March 15, 2005, among Great
    Wolf Resorts, Inc., Great Wolf Capital Trust I, Taberna
    Preferred Funding I, Ltd and Merrill Lynch International
    (incorporated herein by reference to Exhibit 1.1 to the
    Companys Current Report on
    Form 8-K
    filed March 18, 2005)10
.19

Loan Agreement dated July 28, 2007, among Great Wolf Lodge
    of Grapevine, LLC, as borrower, and Merrill Lynch Capital and
    HSH Nordbank, as lenders (incorporated herein by reference to
    Exhibit 1.1 to the Companys Current Report on
    Form 8-K
    filed July 31, 2007).10
.20

Third Amendment to Loan Agreement dated July 31, 2009,
    among Great Wolf Lodge of Grapevine, LLC, as borrower, and GE
    Business Financial Services Inc. (f/k/a Merrill Lynch Business
    Financial Services, Inc. through its division Merrill Lynch
    Capital), as administrative agent on behalf of the lenders
    (incorporated herein by reference to Exhibit 1.1 to the
    Companys Current Report on
    Form 8-K
    filed July 31, 2009).10
.21

Loan Agreement dated December 6, 2007, between Great Wolf
    Lodge of the Poconos, LLC, as borrower, and Citigroup Global
    Markets Realty Corp., as lender (incorporated herein by
    reference to Exhibit 1.1 to the Companys Current
    Report on
    Form 8-K
    filed December 13, 2007).10
.22

Loan Agreement dated August 4, 2008, between Great Wolf
    Lodge Williamsburg SPE, LLC, as borrower, and Calyon New York
    Branch and Capmark Bank, as lenders (incorporated herein by
    reference to the Companys Current Report on
    Form 10-Q
    filed August 5, 2008).10
.23*

Amendment to Loan Agreement dated January 15, 2010, among
    Great Wolf Lodge Williamsburg SPE, LLC, as borrower, and Calyon
    New York Branch, as agent, and Calyon New York Branch and
    Capmark Bank, as lenders.10
.24

Loan Agreement dated April 30, 2008, among Great Wolf Lodge
    of the Carolinas, LLC, as borrower, Marshall Financial Group, as
    administrative agent, and the several banks and other financial
    institutions from time to time party thereto, as lenders
    (incorporated herein by reference to Exhibit 1.1 to the
    Companys Current Report on
    Form 8-K
    filed May 6, 2008).10
.25

Fifth Amendment to Lease, dated January 22, 2009, between
    the registrant and Hovde Building, LLC, (incorporated herein by
    reference to the Companys Current Report on
    Form 8-K
    filed January 28, 2009).21
.1*

List of Subsidiaries23
.1*

Consent of Grant Thornton LLP23
.2*

Consent of Deloitte & Touche LLP31
.1*

Certification of Chief Executive Officer of Periodic Report
    Pursuant to Rule 13a  14(a) and
    Rule 15d  14(a)31
.2*

Certification of Chief Financial Officer of Periodic Report
    Pursuant to Rule 13a  14(a) and
    Rule 15d  14(a)32
.1*

Certification of Chief Executive Officer Pursuant to
    18 U.S.C. Section 135032
.2*

Certification of Chief Financial Officer Pursuant to
    18 U.S.C. Section 1350     *
    
    Filed herewith.+
    
    Indicated management contract or compensatory plan or
    arrangement required to be filed as an exhibit pursuant to
    Item 15(c) of Form
    10-K.