UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 FORM 10-Q
 
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended March 31, 2010
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For
the transition period from  to
 Commission File Number 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 AvenueMadison, Wisconsin 53703
    
    53703(Address of principal executive offices)
    
    (Zip Code)
 (608) 661-4700
 þ o
 o o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 o þ




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Great Wolf Resorts, Inc.
 Quarterly Report on Form 10-Q
For the Quarter Ended March 31, 2010
 INDEX
 PageNo.PART I. FINANCIAL INFORMATIONItem 1. Financial Statements (unaudited)Condensed Consolidated Balance Sheets as of March 31, 2010 and December 31, 2009
    
    
    3Condensed Consolidated Statements of Operations for the three months ended March 31, 2010 and 2009
    
    
    4Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2010 and 2009
    
    
    5Notes to Condensed Consolidated Financial Statements
    
    
    6Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    23Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    42Item 4. Controls and Procedures
    
    
    43PART II. OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    44Item 1A. Risk Factors
    
    
    44Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    44Item 3. Defaults Upon Senior Securities
    
    
    44Item 4. Submission of Matters to a Vote of Security Holders
    
    
    44Item 5. Other Information
    
    
    45Item 6. Exhibits
    
    
    45Signature
    
    
    48
  2




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##### 



PART I. FINANCIAL INFORMATION
 
 ITEM 1.
    
    FINANCIAL STATEMENTS
 GREAT WOLF RESORTS, INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except share and per share amounts)
 March 31,
    
    
    December 31,2010
    
    
    2009(Unaudited)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    27,195
    
    
    $
    20,913Escrows
    
    
    4,399
    
    
    
    5,938Accounts receivable, net of allowance for doubtful accounts of $101 and $101
    
    
    2,500
    
    
    
    2,192Accounts receivable  affiliates
    
    
    2,471
    
    
    
    2,614Inventory
    
    
    5,022
    
    
    
    4,791Other current assets
    
    
    5,100
    
    
    
    4,252Total current assets
    
    
    46,687
    
    
    
    40,700Property and equipment, net
    
    
    667,985
    
    
    
    676,405Investments in and advances to affiliates
    
    
    27,222
    
    
    
    27,484Notes receivable
    
    
    8,883
    
    
    
    8,268Other assets
    
    
    31,979
    
    
    
    29,058Intangible assets
    
    
    23,829
    
    
    
    23,829Total assets
    
    $
    806,585
    
    
    $
    805,744LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Current portion of long-term debt
    
    $
    16,505
    
    
    $
    16,126Accounts payable
    
    
    6,395
    
    
    
    5,078Accounts payable  affiliates
    
    
    7
    
    
    
    Accrued expenses
    
    
    27,994
    
    
    
    21,970Advance deposits
    
    
    12,904
    
    
    
    7,114Gift certificates payable
    
    
    5,138
    
    
    
    5,946Total current liabilities
    
    
    68,943
    
    
    
    56,234Mortgage debt
    
    
    437,515
    
    
    
    441,724Other long-term debt
    
    
    92,159
    
    
    
    92,221Deferred compensation liability
    
    
    1,074
    
    
    
    809Total liabilities
    
    
    599,691
    
    
    
    590,988Commitments and contingencies
Stockholders equity:Common stock, $0.01 par value; 250,000,000 shares authorized;
32,146,645 and 31,278,889 shares issued and outstanding
    
    
    321
    
    
    
    313Preferred stock, $0.01 par value, 10,000,000 shares authorized, no
shares issued or outstanding
    
    
    
    
    
    
    Additional paid-in-capital
    
    
    401,125
    
    
    
    400,930Accumulated deficit
    
    
    (194,352
    )
    
    
    (186,287
    )Deferred compensation
    
    
    (200
    )
    
    
    (200
    )Total stockholders equity
    
    
    206,894
    
    
    
    214,756Total liabilities and stockholders equity
    
    $
    806,585
    
    
    $
    805,744
  3




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##### 



GREAT WOLF RESORTS, INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited; dollars in thousands, except share and per share data)
 Three months endedMarch 31,2010
    
    
    2009Revenues:Rooms
    
    $
    41,788
    
    
    $
    36,345Food and beverage
    
    
    11,617
    
    
    
    9,902Other hotel operations
    
    
    10,208
    
    
    
    8,965Management and other fees
    
    
    635
    
    
    
    589Management and other fees  affiliates
    
    
    1,020
    
    
    
    1,22465,268
    
    
    
    57,025Other revenue from managed properties  affiliates
    
    
    2,694
    
    
    
    5,282Other revenue from managed properties
    
    
    2,717
    
    
    
    Total revenues
    
    
    70,679
    
    
    
    62,307Operating expenses by department:Rooms
    
    
    6,029
    
    
    
    5,029Food and beverage
    
    
    8,527
    
    
    
    7,415Other
    
    
    8,367
    
    
    
    7,268Other operating expenses:Selling, general and administrative
    
    
    18,742
    
    
    
    14,644Property operating costs
    
    
    9,034
    
    
    
    12,342Depreciation and amortization
    
    
    14,020
    
    
    
    12,586Loss on disposition of property
    
    
    10
    
    
    
    19164,729
    
    
    
    59,475Other expenses from managed properties  affiliates
    
    
    2,694
    
    
    
    5,282Other expenses from managed properties
    
    
    2,717
    
    
    
    Total operating expenses
    
    
    70,140
    
    
    
    64,757Net operating income (loss)
    
    
    539
    
    
    
    (2,450
    )Investment income  affiliates
    
    
    (289
    )
    
    
    (384
    )Interest income
    
    
    (253
    )
    
    
    (188
    )Interest expense
    
    
    9,199
    
    
    
    6,267Loss before income taxes and equity in unconsolidated affiliates
    
    
    (8,118
    )
    
    
    (8,145
    )Income tax expense (benefit)
    
    
    180
    
    
    
    (3,148
    )Equity in (income) loss of unconsolidated affiliates, net of tax
    
    
    (233
    )
    
    
    648Net loss
    
    $
    (8,065
    )
    
    $
    (5,645
    )Basic loss per common share
    
    $
    (0.26
    )
    
    $
    (0.18
    )Diluted loss per common share
    
    $
    (0.26
    )
    
    $
    (0.18
    )Weighted average common shares outstanding:Basic
    
    
    30,837,867
    
    
    
    30,982,656Diluted
    
    
    30,837,867
    
    
    
    30,982,656
  4




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##### 



GREAT WOLF RESORTS, INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited; dollars in thousands)
 Three months endedMarch 31,2010
    
    
    2009Operating activities:Net loss
    
    $
    (8,065
    )
    
    $
    (5,645
    )Adjustments to reconcile net loss to net cash provided by operating activities:Depreciation and amortization
    
    
    14,020
    
    
    
    12,586Bad debt expense
    
    
    134
    
    
    
    260Non-cash employee compensation and professional fees expense
    
    
    544
    
    
    
    88Loss on disposition of property
    
    
    10
    
    
    
    191Equity in (income) losses of unconsolidated affiliates
    
    
    (228
    )
    
    
    1,056Deferred tax benefit
    
    
    (220
    )
    
    
    (3,576
    )Changes in operating assets and liabilities:Accounts receivable and other assets
    
    
    (2,726
    )
    
    
    (738
    )Accounts payable, accrued expenses and other liabilities
    
    
    9,326
    
    
    
    3,900Net cash provided by operating activities
    
    
    12,795
    
    
    
    8,122Investing activities:Capital expenditures for property and equipment
    
    
    (3,781
    )
    
    
    (29,678
    )Loan repayment from unconsolidated affiliates
    
    
    490
    
    
    
    7,363Investment in unconsolidated affiliates
    
    
    
    
    
    
    (303
    )Investment in development
    
    
    (162
    )
    
    
    102(Increase) decrease in restricted cash
    
    
    (2
    )
    
    
    162Decrease (increase) in escrows
    
    
    1,539
    
    
    
    (1,511
    )Net cash used in investing activities
    
    
    (1,916
    )
    
    
    (23,865
    )Financing activities:Principal payments on long-term debt
    
    
    (3,931
    )
    
    
    (1,079
    )Proceeds from issuance of long-term debt
    
    
    39
    
    
    
    28,812Payment of loan costs
    
    
    (705
    )
    
    
    (7,984
    )Net cash (used in) provided by financing activities
    
    
    (4,597
    )
    
    
    19,749Net increase in cash and cash equivalents
    
    
    6,282
    
    
    
    4,006Cash and cash equivalents, beginning of period
    
    
    20,913
    
    
    
    14,231Cash and cash equivalents, end of period
    
    $
    27,195
    
    
    $
    18,237Supplemental Cash Flow Information:Cash paid for interest, net of capitalized interest
    
    $
    9,146
    
    
    $
    6,248Cash paid for income taxes, net of refunds
    
    $
    104
    
    
    $
    1Non-cash items:Construction in process accruals
    
    $
    
    
    
    $
    338Loan cost accruals
    
    $
    2,947
    
    
    $
    
  5




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##### 



GREAT WOLF RESORTS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited; dollars in thousands, except share and per share amounts)
 1. ORGANIZATION
 ®
 Business Summary
 ® tm
     6




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##### 



IndoorEntertainmentOwnership
    
    
    
    Number of
    
    Number of
    
    Area (2)Percentage
    
    Opened
    
    Guest Suites
    
    Condo Units (1)
    
    (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 March
31, 2010 and each of those five properties had total revenues equal to ten
percent or more of our total revenues for the three months ended March 31,
2010.(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 property 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 Interior, which is trustee
for Chehalis. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 General
 7




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##### 



Principles of Consolidation
 Income Taxes
 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.
  Totals perResort Ownership/
    
    
    Resort Third-Party
    
    
    
    
    
    
    FinancialOperation
    
    
    Management/License
    
    
    Other
    
    
    StatementsThree months ended March 31,
2010Revenues
    
    $
    63,613
    
    
    $
    7,066
    
    
    $
    
    
    
    $
    70,679Depreciation and amortization
    
    
    (13,855
    )
    
    
    
    
    
    
    (165
    )
    
    
    (14,020
    )Net operating income (loss)
    
    
    955
    
    
    
    1,656
    
    
    
    (2,072
    )
    
    
    539Investment income  affiliates
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (289
    )Interest income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (253
    )Interest expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,199Loss before income taxes and
equity in income of
unconsolidated affiliates
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (8,118
    )Additions to long-lived assets
    
    
    3,629
    
    
    
    
    
    
    
    152
    
    
    $
    3,781Total assets
    
    
    698,089
    
    
    
    3,032
    
    
    
    105,464
    
    
    $
    806,585
 8




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##### 



Totals perResort Ownership/
    
    
    Resort Third-Party
    
    
    
    
    
    
    FinancialOperation
    
    
    Management/License
    
    
    Other
    
    
    StatementsThree months ended March 31,
2009Revenues
    
    $
    55,212
    
    
    $
    7,095
    
    
    $
    
    
    
    $
    62,307Depreciation and amortization
    
    
    (12,390
    )
    
    
    
    
    
    
    (196
    )
    
    
    (12,586
    )Net operating income (loss)
    
    
    1,115
    
    
    
    1,813
    
    
    
    (5,378
    )
    
    
    (2,450
    )Investment income  affiliates
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (384
    )Interest income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (188
    )Interest expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,267Loss before income taxes and
equity in losses of
unconsolidated affiliates
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (8,145
    )Additions to long-lived assets
    
    
    29,555
    
    
    
    
    
    
    
    123
    
    
    $
    29,678Total assets
    
    
    762,902
    
    
    
    1,443
    
    
    
    101,246
    
    
    $
    865,591
  Recent Accounting Pronouncements 
    9




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##### 



3. INVESTMENT IN AFFILIATES
 CNL Joint Venture
   Three monthsended March 31,Operating data:
    
    2009Revenue
    
    $
    7,609Operating expenses
    
    $
    (10,238
    )Net loss
    
    $
    (2,629
    )
 Grand Mound Joint Venture
   March 31,
    
    
    December 31,2010
    
    
    2009Balance sheet data:Total assets
    
    $
    145,728
    
    
    $
    145,247Total liabilities
    
    $
    114,093
    
    
    $
    114,129
 Three months endedMarch 31,2010
    
    
    2009Operating data:Revenue
    
    $
    11,213
    
    
    $
    9,977Operating expenses
    
    $
    (9,424
    )
    
    $
    (8,584
    )Net income (loss)
    
    $
    517
    
    
    $
    (164
    )
  4. VARIABLE INTEREST ENTITIES
 10




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##### 




    
    We have equity investments in and a loan to the joint venture
that owns the Great Wolf Lodge resort in Grand Mound, Washington. We
manage that resort and we have concluded that the joint venture is a
variable interest entity because the management fees we receive
represent a variable interest. The management contract, however, does
not provide us with power over the activities that most significantly
impact the economic performance of the joint venture. As we lack the
ability to direct the activities that most significantly affect the
resorts performance, we are not the primary beneficiary of the
joint venture and, therefore, we do not consolidate this entity as of
March 31, 2010. During the three months ended March 31, 2010 and 2009, we did not provide any
support to this entity that we were not contractually obligated to do so. Our
maximum exposure to loss related to our involvement with this entity as of March 31,
2010 is limited to the carrying value of our equity investments in and loans to the
joint venture as of that date. The total carrying values of those items on our
balance sheet as of March 31, 2010 is $27,222.
    
    We have equity investments in two subsidiaries which are Delaware statutory
trusts, both of which were used to issue trust preferred securities through private
offerings. We have concluded that both of these trusts are variable interest
entities. As we lack the ability to direct the activities that most significantly
impact the trusts performance, however, we are not the primary beneficiary and
therefore, we do not consolidate these entities at March 31, 2010. During the three
months ended March 31, 2010 and 2009, we did not provide any support to these
entities that we were not contractually obligated to do so. Our maximum exposure to
loss related to our involvement with these entities as of March 31, 2010 is limited
to the carrying value of our equity investments in the entities as of that date.
The total carrying values of those items on our balance sheet as of March 31, 2010
is $2,420.
 5. SHARE-BASED COMPENSATION
     11




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##### 



Stock Options
    WeightedWeighted
    
    
    AverageAverage
    
    
    RemainingExercise
    
    
    ContractualShares
    
    
    Price
    
    
    LifeNumber of shares under option:Outstanding at beginning of period
    
    
    441,000
    
    
    $
    17.53
    
    
    5.09 yearsExercised
    
    
    Forfeited
    
    
    Outstanding at end of period
    
    
    441,000
    
    
    $
    17.53
    
    
    4.84 yearsExercisable at end of period
    
    
    441,000
    
    
    $
    17.53
    
    
    4.84 years
  Market Condition Share Awards
    
    
    333,060 were based on our common stocks performance in 2010 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, 2010-2012. The per share fair value of these market
condition shares was $2.43 as of the grant date.
  Dividend yield
    
    
    Weighted average, risk free interest rate
    
    
    0.26
    %Expected stock price volatility
    
    
    108.06
    %Expected stock price volatility (small-cap stock index)
    
    
    40.92
    %
  12




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##### 




    
    91,463 were based on our common stocks absolute performance during the three year period
2010-2012. For shares that are earned, half of the shares vest on December 31, 2012, and
the other half vest on December 31, 2013. The per share fair value of these market
condition shares was $2.53 as of the grant date.
  Dividend yield
    
    
    Weighted average, risk free interest rate
    
    
    1.27
    %Expected stock price volatility
    
    
    95.21
    %
  
    
    91,463 were based on our common stocks performance in 2010-2012 relative to a stock
index, as designated by the Compensation Committee of the Board of Directors. For shares
that are earned, half of the shares vest on December 31, 2012, and the other half vest on
December 31, 2013. The per share fair value of these market condition shares was $2.61 as
of the grant date.
  Dividend yield
    
    
    Weighted average, risk free interest rate
    
    
    1.27
    %Expected stock price volatility
    
    
    95.21
    %Expected stock price volatility (small-cap stock index)
    
    
    37.51
    %
   
    
    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.
  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
    %
 13




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##### 




    
    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
    %
    
    
    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
    %
   14




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##### 




    
    81,293 were 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
    %
   Performance Share Awards
    
    
    Employees earned and were issued 162,559 performance shares in March 2010 related to
2009 grants and
    
    Employees earned and were issued 18,084 performance shares in February 2009 related to
the 2008 grants.
 Deferred Compensation Awards
  15




---



##### 



Non-vested Shares
   WeightedAverageGrant DateShares
    
    
    Fair ValueNon-vested shares balance at beginning of period
    
    
    483,468
    
    
    $
    5.13Granted
    
    
    978,813
    
    
    $
    1.85Forfeited
    
    
    (6,400
    )
    
    $
    5.42Vested
    
    
    (242,816
    )
    
    $
    1.62Non-vested shares balance at end of period
    
    
    1,213,065
    
    
    $
    3.18
   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.
    
    There were no shares issued in the three months ended March 31, 2010 related to 2009 bonus
amounts.
  16




---



##### 



6. PROPERTY AND EQUIPMENT
  March 31,
    
    
    December 31,2010
    
    
    2009Land and improvements
    
    $
    60,718
    
    
    $
    60,718Building and improvements
    
    
    428,610
    
    
    
    427,602Furniture, fixtures and equipment
    
    
    344,644
    
    
    
    341,529Construction in process
    
    
    306
    
    
    
    327834,278
    
    
    
    830,176Less accumulated depreciation
    
    
    (166,293
    )
    
    
    (153,771
    )Property and equipment, net
    
    $
    667,985
    
    
    $
    676,405
  7. LONG-TERM DEBT
  March 31,
    
    
    December 31,2010
    
    
    2009Long-Term Debt:Traverse City/Kansas City mortgage loan
    
    $
    68,382
    
    
    $
    68,773Mason mortgage loan
    
    
    71,800
    
    
    
    73,800Pocono Mountains mortgage loan
    
    
    95,149
    
    
    
    95,458Williamsburg mortgage loan
    
    
    62,750
    
    
    
    63,125Grapevine mortgage loan
    
    
    77,109
    
    
    
    77,909Concord mortgage loan
    
    
    78,588
    
    
    
    78,549Junior subordinated debentures
    
    
    80,545
    
    
    
    80,545Other Debt:City of Sheboygan bonds
    
    
    8,554
    
    
    
    8,544City of Sheboygan loan
    
    
    3,231
    
    
    
    3,290Other
    
    
    71
    
    
    
    78546,179
    
    
    
    550,071Less current portion of long-term debt
    
    
    (16,505
    )
    
    
    (16,126
    )Total long-term debt
    
    $
    529,674
    
    
    $
    533,945
 Traverse City/Kansas City Mortgage Loan
  17




---



##### 



Mason Mortgage Loan
    18




---



##### 



Pocono Mountains Mortgage Loan 
  Williamsburg Mortgage Loan 
    Grapevine Mortgage Loan
 19




---



##### 



Concord Mortgage Loan
  Junior Subordinated Debentures
    20




---



##### 



City of Sheboygan Bonds
 City of Sheboygan Loan
 Future Maturities
 ThroughMarch 31,2011
    
    $
    16,5052012
    
    
    203,5012013
    
    
    79,9852014
    
    
    3,7462015
    
    
    63,451Thereafter
    
    
    178,991Total
    
    $
    546,179
 8. FAIR VALUE OF FINANCIAL INSTRUMENTS
     21




---



##### 



Level 1
    
    
    Level 2
    
    
    Level 3
    
    
    TotalInterest rate caps
    
    $
    
    
    
    $
    32
    
    
    $
    
    
    
    $
    32
    9. EARNINGS PER SHARE
    22




---



##### 



Three months endedMarch 31,2010
    
    
    2009Net loss
    
    $
    (8,065
    )
    
    $
    (5,645
    )Weighted average common shares outstanding  basic
    
    
    30,837,867
    
    
    
    30,982,656Weighted average common shares outstanding  diluted
    
    
    30,837,867
    
    
    
    30,982,656Net loss per share  basic
    
    $
    (0.26
    )
    
    $
    (0.18
    )Net loss per share  diluted
    
    $
    (0.26
    )
    
    $
    (0.18
    )
 10. SUBSEQUENT EVENTS
   
 ITEM 2. 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
is a discussion and analysis of the financial condition, results of operations and liquidity and
capital resources. The following discussion should be read in conjunction with the financial
statements and notes thereto appearing elsewhere in this report. We make statements in this section
that are forward-looking statements within the meaning of the federal securities laws. For a
complete discussion of forward-looking statements, see the section in Item 1 of our Annual Report
on Form 10-K entitled, Forward-Looking Statements. All dollar amounts in this discussion, except
for per share data and operating statistics, ADR, RevPAR and RevPOR, are in thousands.
 Overview
  Business.
 23




---



##### 



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 March
31, 2010 and each of those five properties had total revenues equal to ten
percent or more of our total revenues for the three months ended March 31,
2010.(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. 24




---



##### 



(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 property 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 Interior, which is trustee
for Chehalis. Industry Trends.
    Outlook.
   
    
    leveraging our competitive advantages and increasing domestic geographic
diversification through a licensing-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;
 25




---



##### 




    
    continuing to innovate;
 
    
    maximizing total resort revenues;
 
    
    minimizing total resort costs; and
 
    
    building upon our existing brand awareness and loyalty.
  
    
    development and licensing of properties;
 
    
    increases in costs of constructing, operating and maintaining our resorts;
 
    
    competition from other entertainment companies, both within and outside our industry
segment; and
 
    
    external economic risks, including family vacation patterns and trends.
   
    
    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 leading
market averages 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.
 26




---



##### 




    
    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 significantly
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 a result of those conditions, we recorded an impairment
charge in 2009 to decrease the resorts carrying value to its estimated fair value (net of
disposal costs). We are also exploring listing the resort for possible sale.
   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.
   27




---



##### 




    
    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.
    
    RevPAR is the product of occupancy and ADR..
    
    Total RevPAR and Total RevPOR are defined as follows:
    
    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
  28




---



##### 



Recent Accounting Pronouncements
     Non-GAAP Financial Measures
 29




---



##### 




    
    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.
   Three months endedMarch 31,2010
    
    
    2009Net loss
    
    $
    (8,065
    )
    
    $
    (5,645
    )Adjustments:Interest expense, net of interest income
    
    
    8,946
    
    
    
    6,079Income tax expense (benefit)
    
    
    175
    
    
    
    (3,557
    )Depreciation and amortization
    
    
    14,020
    
    
    
    12,586EBITDA
    
    $
    15,076
    
    
    $
    9,463
 30




---



##### 



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.Revenues.Our revenues consist of:
    
    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
 31




---



##### 




    
    other expenses from managed properties.
 Three months ended March 31, 2010, compared with the three months ended March 31, 2009
  Same Store Comparison(b)All
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Increase/ (Decrease)Properties(a)2010
    
    
    2010
    
    
    2009
    
    
    $
    
    
    %Occupancy
    
    
    59.5
    %
    
    
    60.3
    %
    
    
    59.1
    %
    
    
    N/A
    
    
    
    2.0
    %ADR
    
    $
    257.77
    
    
    $
    258.20
    
    
    $
    252.12
    
    
    $
    6.08
    
    
    
    2.4
    %RevPAR
    
    $
    153.38
    
    
    $
    155.64
    
    
    $
    149.13
    
    
    $
    6.51
    
    
    
    4.4
    %Total RevPOR
    
    $
    398.84
    
    
    $
    399.99
    
    
    $
    389.11
    
    
    $
    10.88
    
    
    
    2.8
    %Total RevPAR
    
    $
    237.32
    
    
    $
    241.10
    
    
    $
    230.15
    
    
    $
    10.95
    
    
    
    4.8
    %Non-rooms revenue per occupied room
    
    $
    141.07
    
    
    $
    141.78
    
    
    $
    136.99
    
    
    $
    4.79
    
    
    
    3.5
    %
 
 (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 that were open for the full periods and with
comparable number of rooms in 2010 and 2009 (that is, all properties other than our Concord
resort).   Three months endedMarch 31,2010
    
    
    2009
    
    
    Increase/ (Decrease)Revenues
    
    $
    70,679
    
    
    $
    62,307
    
    
    $
    8,372Operating expenses:Departmental operating expenses
    
    
    22,923
    
    
    
    19,712
    
    
    
    3,211Selling, general and administrative
    
    
    18,742
    
    
    
    14,644
    
    
    
    4,098Property operating costs
    
    
    9,034
    
    
    
    12,342
    
    
    
    (3,308
    )Depreciation and amortization
    
    
    14,020
    
    
    
    12,586
    
    
    
    1,434Net operating income (loss)
    
    
    539
    
    
    
    (2,450
    )
    
    
    2,989Interest expense, net of interest income
    
    
    8,946
    
    
    
    6,079
    
    
    
    2,867Income tax expense (benefit)
    
    
    180
    
    
    
    (3,148
    )
    
    
    3,328Net loss
    
    
    (8,065
    )
    
    
    (5,645
    )
    
    
    (2,420
    )
 Revenues.
 
    
    An increase in revenue from our Concord resort, which opened in March 2009.
 32




---



##### 



Operating expenses.
 
    
    Departmental expenses increased by $3,211 for the three months ended March 31, 2010, as
compared to the three months ended March 31, 2009, due primarily to the opening of our
Concord resort.
 
    
    Total selling, general and administrative expenses increased by $4,098 in the three
months ended March 31, 2010, as compared to the three months ended March 31, 2009, due
primarily to the opening of our Concord resort and less labor and overhead expenses
allocated to development properties during the three months ended March 31, 2010 than in the
three months ended March 31, 2009 due to fewer properties under development.
 
    
    Opening-related costs (included in total property operating costs) related to our
resorts were $4,245 for the three months ended March 31, 2009, due primarily to the
expansion of our Grapevine property in January 2009 and opening of our Concord resort in
March 2009. There were no similar opening-related costs for the three months ended March
31, 2010.
 
    
    Total depreciation and amortization increased for the three months ended March 31, 2010,
as compared to the three months ended March 31, 2009, primarily due to the opening of our
Concord resort. This increase was partially offset by a decrease in depreciation on our
Sheboygan resort due to the asset impairment loss recorded in 2009.
 Net operating income (loss).
 Net loss.
 
    
    An increase in net interest expense of $2,867, mainly due to interest expense on our
Concord loan, and less interest being capitalized to development properties in 2010 as
compared to 2009 due to fewer properties under development.
 
    
    An increase in income tax expense of $3,328 recorded in the three months ended March
31, 2010 as compared to the three months ended March 31, 2009 as a result of fully
reserving deferred tax assets resulting from net operating losses in 2010. We did not
record a similar reserve in the three months ended March 31, 2009.
  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.
  33




---



##### 



Three months endedMarch 31,Increase /2010
    
    
    2009
    
    
    (Decrease)Resort Ownership/OperationRevenues
    
    $
    63,613
    
    
    $
    55,212
    
    
    $
    8,401EBITDA
    
    
    14,811
    
    
    
    9,488
    
    
    
    5,323Resort Third-Party
Management/LicenseRevenues
    
    
    7,066
    
    
    
    7,095
    
    
    
    (29
    )EBITDA
    
    
    1,655
    
    
    
    1,813
    
    
    
    (158
    )OtherRevenues
    
    
    
    
    
    
    
    
    
    
    EBITDA
    
    
    (1,390
    )
    
    
    (1,838
    )
    
    
    448
  Liquidity and Capital Resources
  March 31,
    
    
    December 31,2010
    
    
    2009Long-Term Debt:Traverse City/Kansas City mortgage loan
    
    $
    68,382
    
    
    $
    68,773Mason mortgage loan
    
    
    71,800
    
    
    
    73,800Pocono Mountains mortgage loan
    
    
    95,149
    
    
    
    95,458Williamsburg mortgage loan
    
    
    62,750
    
    
    
    63,125Grapevine mortgage loan
    
    
    77,109
    
    
    
    77,909Concord mortgage loan
    
    
    78,588
    
    
    
    78,549Junior subordinated debentures
    
    
    80,545
    
    
    
    80,545Other Debt:City of Sheboygan bonds
    
    
    8,554
    
    
    
    8,544City of Sheboygan loan
    
    
    3,231
    
    
    
    3,290Other
    
    
    71
    
    
    
    78546,179
    
    
    
    550,071Less current portion of long-term debt
    
    
    (16,505
    )
    
    
    (16,126
    )Total long-term debt
    
    $
    529,674
    
    
    $
    533,945
 Traverse City/Kansas City Mortgage Loan
  34




---



##### 



Mason Mortgage Loan
    35




---



##### 



Pocono Mountains Mortgage Loan 
  Williamsburg Mortgage Loan 
    Grapevine Mortgage Loan
 36




---



##### 



Concord Mortgage Loan
  Junior Subordinated Debentures
    37




---



##### 



City of Sheboygan Bonds
 City of Sheboygan Loan
 First Mortgage Notes
 Future Maturities
 ThroughMarch 31,2011
    
    $
    16,5052012
    
    
    203,5012013
    
    
    79,9852014
    
    
    3,7462015
    
    
    63,451Thereafter
    
    
    178,991Total
    
    $
    546,179
 38




---



##### 



ThroughMarch 31,2011
    
    $
    3,8052012
    
    
    4,5422013
    
    
    79,9852014
    
    
    3,7462015
    
    
    63,451Thereafter
    
    
    408,991Total
    
    $
    564,520
 Short-Term Liquidity Requirements
  
    
    recurring maintenance, repairs and other operating expenses necessary to properly
maintain and operate 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.
  39




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##### 




    
    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.
    Off Balance Sheet Arrangements
    40




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##### 



Contractual Obligations
  Payment TermsLess Than
    
    
    
    
    
    
    
    
    
    
    More ThanTotal
    
    
    1 Year
    
    
    1-3 Years
    
    
    3-5 Years
    
    
    5 YearsDebt obligations (1)
    
    $
    606,703
    
    
    $
    27,162
    
    
    $
    304,255
    
    
    $
    86,400
    
    
    $
    188,886Operating lease obligations
    
    
    2,510
    
    
    
    415
    
    
    
    811
    
    
    
    561
    
    
    
    723Reserve on unrecognized tax benefits
    
    
    1,268
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,268Total
    
    $
    610,481
    
    
    $
    27,577
    
    
    $
    305,066
    
    
    $
    86,961
    
    
    $
    190,877
 
 (1)
    
    Amounts include interest (for fixed rate debt) and principal. They also include $8,554 of fixed rate debt
recognized as a liability related to certain bonds issued by the City of Sheboygan and $3,231 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.  Working Capital
  Cash Flows
 Three months ended March 31, 2010, compared with the three months ended March 31, 2009
 Increase/2010
    
    

2009
    
    
    (Decrease)Net cash provided by operating activities
    
    $
    12,795
    
    
    $
    8,122
    
    
    $
    4,673Net cash used in investing activities
    
    
    (1,916
    )
    
    
    (23,865
    )
    
    
    21,949Net cash (used in) provided by financing activities
    
    
    (4,597
    )
    
    
    19,749
    
    
    
    (24,346
    )
 Operating Activities.
 41




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##### 



Investing Activities.
 Financing Activities.
 Inflation
  
 ITEM 3 . QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
   
    
    $68,382 of fixed rate debt secured by two of our resorts. This debt bears interest at
6.96%.
    
    $71,800 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 March 31, 2010.
    
    $95,149 of fixed rate debt secured by one of our resorts. This debt bears interest at
6.10%.
    
    $62,750 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 March 31, 2010.
    
    $77,109 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 March 31, 2010.
    
    $78,588 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 March 31, 2010.
    
    $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.
 42




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##### 




    
    $8,554 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 $3,231 of non-interest 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.
    
    $71 related to a capital lease that was entered into in June 2009. The lease matures in
May 2012.
     
 ITEM 4.
    
    CONTROLS AND PROCEDURES
 Evaluation of Disclosure Controls and Procedures
   43




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##### 



Remediation of Material Weaknesses
  Changes In Internal Control
  
 PART II. OTHER INFORMATION
 
 ITEM 1.
    
    LEGAL PROCEEDINGS
  
 ITEM 1A.
    
    RISK FACTORS
  
 ITEM 2.
    
    UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
  
 ITEM 3.
    
    DEFAULTS UPON SENIOR SECURITIES
  
 ITEM 4.
    
    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  44




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##### 



ITEM 5.
    
    OTHER INFORMATION
  
 ITEM 6.
    
    EXHIBITS
  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, 2004 (incorporated herein by reference to Exhibit 10.5
to the Companys Annual Report on Form 10-K filed March 2,
2010)
 45




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##### 



ExhibitNumber
    
    Description10.6
    
    Employment Agreement between Great Wolf Resorts, Inc. and James Calder,
 dated December 13, 2004 (incorporated herein by reference to Exhibit
10.6
to the Companys Annual Report on Form 10-K filed March 2,
2010)10.7
    
    Employment Agreement between Great Wolf Resorts, Inc. and J. Michael
Schroeder, dated December 13, 2004 (incorporated herein by reference
to Exhibit 10.7
to the Companys Annual Report on Form 10-K filed March 2,
2010)10.8
    
    First Amendment to Employment
Agreement between Great Wolf Resorts, Inc. and J. Michael Schroeder,
dated May 28, 2008 (incorporated herein by reference to Exhibit 10.8
to the Companys Annual Report on Form 10-K filed March 2,
2010)10.9
    
    Second Amendment to Employment
Agreement between Great Wolf Resorts, Inc. and J. Michael Schroeder,
dated July 2, 2008 (incorporated herein by reference to Exhibit 10.9
to the Companys Annual Report on Form 10-K filed March 2,
2010)10.10
    
    Employment Agreement between Great Wolf Resorts, Inc. and Timothy Black,
 dated March 20, 2009 (incorporated herein by reference to Exhibit
10.10
to the Companys Annual Report on Form 10-K filed March 2,
2010)10.11
    
    First Amendment to Employment
Agreement between Great Wolf Resorts, Inc. and Timothy Black, dated December 16, 2009 (incorporated herein by reference
to Exhibit
10.11
to the Companys Annual Report on Form 10-K filed March 2,
2010)10.12
    
    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)10.13
    
    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)10.15
    
    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)10.16
    
    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)10.17
    
    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)10.18
    
    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)10.19
    
    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)10.20
    
    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).10.21
    
    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).10.22
    
    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).10.23
    
    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).
 46




---



##### 



ExhibitNumber
    
    Description10.24
    
    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 (incorporated
herein by reference to the Companys Annual Report on Form 10-K filed March 2, 2010).10.25
    
    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).10.26
    
    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).10.27*
    
    Note Purchase Agreement dated as of March 30, 2010, by and among (i) GWR Operating Partnership, L.L.L.P., a Delaware limited liability limited partnership ("GWR OP"), and Great Wolf Finance Corp., a Delaware corporation, (ii) Mason Family Resorts, LLC, Great Wolf Lodge of Grapevine, LLC and Great Wolf Williamsburg SPE, LLC, (iii) Great Wolf Resorts, Inc. and GWR OP General Partner, LLC, a Delaware limited liability company and certain other direct and indirect subsidiaries of GWR OP; and (iv) Deutsche Bank Securities, Inc., Banc of America Securities, LLC, Wells Fargo Securities, LLC and Credit Agricole Securities (USA) Inc..10.28*
    
    Indenture dated as of April 7, 2010, by and among (i) GWR Operating Partnership, L.L.L.P., a Delaware limited liability limited partnership ("GWR OP"), and Great Wolf Finance Corp., a Delaware corporation, (ii) Mason Family Resorts, LLC, Great Wolf Lodge of Grapevine, LLC and Great Wolf Williamsburg SPE, LLC, (iii) Great Wolf Resorts, Inc. and GWR OP General Partner, LLC, a Delaware limited liability company and certain other direct and indirect subsidiaries of GWR OP and (iv) U.S. Bank National Association. as trustee.31.1*
    
    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. 47




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##### 



SIGNATURE
  GREAT WOLF RESORTS, INC./s/ James A. CalderJames A. CalderChief Financial Officer

(Duly authorized officer)
(Principal Financial and Accounting Officer)  48