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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 FORM 10-Q/A
  
 (Mark One)
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the Quarterly period ended March 31, 2005
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 Commission File Number 000-51064
 
 GREAT WOLF RESORTS, INC.
 (Exact name of registrant as specified in its charter)
 
 Delaware(State or other jurisdiction of
incorporation or organization)
    
    51-0510250(I.R.S. Employer
Identification No.)122 West Washington Avenue
Madison, Wisconsin 53703(Address of principal executive offices)
    
    53703(Zip Code)
 Registrants telephone number, including area code
608 661-4700
 o þ
 o þ
 o þ




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Great Wolf Resorts, Inc.
 Quarterly Report on Form 10-Q/A
For the Quarter Ended March 31, 2005
 INDEX
 PageNo.PART I. FINANCIAL INFORMATIONItem 1. Financial Statements (unaudited)Condensed Consolidated Balance Sheets for Great Wolf Resorts, Inc. and subsidiaries
as of March 31, 2005 (as restated) and December 31, 2004
    
    
    4Condensed Consolidated and Combined Statements of Operations for Great Wolf Resorts,
Inc. and Subsidiaries for the three months ended March 31, 2005 (as restated) and
for Great Lakes Predecessor for the three months ended March 31, 2004
    
    
    5Condensed Consolidated and Combined Statements of Cash Flows for Great Wolf Resorts,
Inc. and Subsidiaries for the three months ended March 31, 2005 (as restated) and
for Great Lakes Predecessor for the three months ended March 31, 2004
    
    
    6Notes to Condensed Consolidated and Combined Financial Statements
    
    
    7Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    15Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    27Item 4. Controls and Procedures
    
    
    27PART II. OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    29Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    29Item 3. Defaults Upon Senior Securities
    
    
    29Item 4. Submission of Matters to a Vote of Security Holders
    
    
    29Item 5. Other Information
    
    
    30Item 6. Exhibits
    
    
    30Revolving Credit AgreementCertification of Chief Executive OfficerCertification of Chief Financial OfficerCertification of Chief Executive OfficerCertification of Chief Financial Officer
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EXPLANATORY NOTE
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##### Table of Contents



PART I. FINANCIAL INFORMATION
 
 ITEM 1. FINANCIAL STATEMENTS
 GREAT WOLF RESORTS, INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
 March 31,
    
    
    December 31,2005
    
    
    2004(as restated,see Note 9)(Dollars in thousands, exceptper share amounts)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    65,241
    
    
    $
    79,409Accounts receivable, net of allowance for doubtful accounts of $267 and $183
    
    
    1,380
    
    
    
    881Inventory
    
    
    2,295
    
    
    
    1,848Condominiums
under development
    
    
    8,854
    
    
    
    2,412Other current assets
    
    
    8,704
    
    
    
    5,929Total current assets
    
    
    86,474
    
    
    
    90,479Property and equipment, net
    
    
    398,498
    
    
    
    347,374Equity escrow
    
    
    6
    
    
    
    Other assets
    
    
    10,591
    
    
    
    9,862Other intangible assets
    
    
    19,114
    
    
    
    19,114Goodwill
    
    
    136,856
    
    
    
    155,196Total assets
    
    $
    651,539
    
    
    $
    622,025LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Current portion of long-term debt
    
    $
    1,834
    
    
    $
    27,794Accounts payable
    
    
    23,265
    
    
    
    31,506Accrued expenses
    
    
    10,068
    
    
    
    10,075Advance deposits
    
    
    5,227
    
    
    
    3,129Other current liabilities
    
    
    1,776
    
    
    
    2,138Total current liabilities
    
    
    42,170
    
    
    
    74,642Long-term debt
    
    
    155,620
    
    
    
    102,813Other long-term debt
    
    
    11,981
    
    
    
    12,058Other long-term liabilities
    
    
    391
    
    
    
    391Deferred tax liability
    
    
    52,134
    
    
    
    40,909Deferred compensation liability
    
    
    3,260
    
    
    
    2,891Total liabilities
    
    
    265,556
    
    
    
    233,704Commitments and contingencies
Stockholders Equity:Common stock, $0.01 par value, 250,000,000 shares authorized,
30,262,308 shares issued and outstanding
    
    
    303
    
    
    
    303Additional paid in capital
    
    
    394,060
    
    
    
    394,060Preferred stock, $0.01 par value, 10,000,000 shares authorized, no
shares issued or outstanding
    
    
    
    
    
    
    Accumulated deficit
    
    
    (6,180
    )
    
    
    (3,842
    )Shares of common stock held in deferred compensation plan
    
    
    (2,200
    )
    
    
    (2,200
    )Total stockholders equity
    
    
    385,983
    
    
    
    388,321Total liabilities and stockholders equity
    
    $
    651,539
    
    
    $
    622,025
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GREAT WOLF RESORTS, INC. AND SUBSIDIARIES AND
GREAT LAKES PREDECESSOR
 
 CONDENSED CONSOLIDATED AND COMBINED STATEMENTS OF OPERATIONS
 Great WolfResorts, Inc.
    
    
    PredecessorThree months endedMarch 31,2005
    
    
    2004(as restated,see Note 9)(Unaudited,dollars in thousands,except per share data)Revenues:Rooms
    
    $
    18,076
    
    
    $
    7,243Food and beverage
    
    
    4,695
    
    
    
    1,787Other resort operations
    
    
    4,225
    
    
    
    1,617Management fees  related parties
    
    
    
    
    
    
    405Development and other fees  related parties
    
    
    
    
    
    
    36026,996
    
    
    
    11,412Other revenue from managed properties
    
    
    
    
    
    
    3,340Total revenues
    
    
    26,996
    
    
    
    14,752Operating expenses by department:Rooms
    
    
    2,638
    
    
    
    1,049Food and beverage
    
    
    3,763
    
    
    
    1,461Other
    
    
    3,268
    
    
    
    1,277Other operating expenses:Selling, general and administrative
    
    
    7,238
    
    
    
    3,206Property operating costs
    
    
    6,057
    
    
    
    1,787Depreciation and amortization
    
    
    7,148
    
    
    
    2,71630,112
    
    
    
    11,496Other expenses from managed properties
    
    
    
    
    
    
    3,340Total operating expenses
    
    
    30,112
    
    
    
    14,836Net operating loss
    
    
    (3,116
    )
    
    
    (84
    )Interest income
    
    
    (292
    )
    
    
    (78
    )Interest expense
    
    
    1,056
    
    
    
    1,283Gain on sale of investments
    
    
    
    
    
    
    (1,072
    )Interest on mandatorily redeemable shares
    
    
    
    
    
    
    1,692Loss before income taxes and minority interests
    
    
    (3,880
    )
    
    
    (1,909
    )Income tax benefit
    
    
    (1,542
    )
    
    
    Minority interests
    
    
    
    
    
    
    29Loss from continuing operations
    
    
    (2,338
    )
    
    
    (1,938
    )Income from discontinued operations
    
    
    
    
    
    
    20Net loss
    
    $
    (2,338
    )
    
    $
    (1,918
    )Basic loss per share
    
    $
    (0.08
    )Diluted loss per share
    
    $
    (0.08
    )Weighted average common shares outstanding:Basic
    
    
    30,132,896Diluted
    
    
    30,132,896
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GREAT WOLF RESORTS, INC. AND SUBSIDIARIES AND
GREAT LAKES PREDECESSOR
 
 CONDENSED CONSOLIDATED AND COMBINED STATEMENTS OF CASH FLOWS
 Great WolfResorts, Inc.
    
    
    PredecessorThree months endedMarch 31,2005
    
    
    2004(as restated,see Note 9)(Unaudited, dollars in thousands)Operating activities:Net loss
    
    $
    (2,338
    )
    
    $
    (1,918
    )Adjustments to reconcile net loss to net cash provided by (used in) operating activities:Depreciation and amortization
    
    
    7,148
    
    
    
    3,043Non-cash employee compensation expense
    
    
    338
    
    
    
    Gain on sale of investments
    
    
    
    
    
    
    (1,072
    )Minority interests
    
    
    
    
    
    
    29Deferred tax benefit
    
    
    (1,542
    )
    
    
    Changes in operating assets and liabilities:Prepaid expenses and other assets
    
    
    (10,870
    )
    
    
    (392
    )Accounts payable, accrued expenses and other liabilities
    
    
    (2,023
    )
    
    
    1,353Net cash (used in) provided by operating activities
    
    
    (9,287
    )
    
    
    1,043Investing activities:Capital expenditures for property and equipment
    
    
    (30,229
    )
    
    
    (21,281
    )Proceeds from sale of assets
    
    
    
    
    
    
    7,925Increase in equity escrow
    
    
    
    
    
    
    (14,593
    )Increase in restricted cash
    
    
    (96
    )
    
    
    Decrease in escrows
    
    
    248
    
    
    
    Net cash used in investing activities
    
    
    (30,077
    )
    
    
    (27,949
    )Financing activities:Principal payments on long-term debt
    
    
    (48,715
    )
    
    
    (6,608
    )Proceeds from issuance of long-term debt
    
    
    75,483
    
    
    
    16,049Payment of loan costs
    
    
    (1,572
    )
    
    
    (2,283
    )Member contributions
    
    
    
    
    
    
    25,191Member distributions
    
    
    
    
    
    
    (4,415
    )Changes in mandatorily redeemable ownership interests
    
    
    
    
    
    
    1,692Net distributions to minority investors
    
    
    
    
    
    
    635Net cash provided by financing activities
    
    
    25,196
    
    
    
    30,261Net increase (decrease) in cash and cash equivalents
    
    
    (14,168
    )
    
    
    3,355Cash and cash equivalents, beginning of period
    
    
    79,409
    
    
    
    3,553Cash and cash equivalents, end of period
    
    $
    65,241
    
    
    $
    6,908Supplemental Cash Flow Information- Cash paid for interest, net of capitalized interest
    
    $
    552
    
    
    $
    1,294
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GREAT WOLF RESORTS, INC. AND SUBSIDIARIES AND
GREAT LAKES PREDECESSOR
 
 NOTES TO THE CONDENSED CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
 1. ORGANIZATION
 Background
   
    
    The Great Lakes Companies, Inc. (GLC), and its consolidated subsidiaries;
    
    Great Wolf Lodge of Traverse City, LLC;
    
    Great Wolf Lodge of Kansas City, LLC;
    
    Blue Harbor Resort Sheboygan, LLC;
    
    Great Wolf Lodge of Williamsburg, LLC; and
    
    Great Wolf Lodge of the Poconos, LLC.
     
    
    The Predecessor contributed its hotel management and multifamily housing management and
development assets, which were unrelated to the resort business, to two subsidiaries of the
Predecessor and then distributed the interests in those subsidiaries to the former
shareholders of GLC.
    
    We effected, through our Operating Partnership, the acquisition of GLC and each
resort-owning entity. Pursuant to these acquisitions, investors of GLC and the resort-owning
entities received cash, unregistered shares of our common stock or a combination of cash and
unregistered shares of our common stock. We issued 13,901,947 shares of our common stock and
paid approximately $97,600 in cash in connection with these acquisitions.
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
    
    We issued an aggregate of 130,949 shares of unregistered common stock to holders of
tenant in common interests in two of our resorts.
    Business Summary
    IndoorOpened/Target
    
    
    
    EntertainmentLocation
    
    Opening
    
    Rooms
    
    Area(1)(Approx. ft(2))Existing Resorts:Wisconsin Dells, WI
    
    May 1997(2)
    
    309(3)
    
    64,000Sandusky, OH(4)
    
    March 2001
    
    271
    
    41,000Traverse City, MI
    
    March 2003
    
    281
    
    51,000Kansas City, KS
    
    May 2003
    
    281
    
    49,000Sheboygan, WI(5)
    
    June 2004
    
    183(6)
    
    54,000Williamsburg, VA
    
    March 2005
    
    301
    
    66,000Resorts Under Construction:Pocono Mountains, PA
    
    Fall 2005
    
    400
    
    91,000Niagara Falls, ONT(7)
    
    Spring 2006
    
    404
    
    94,000
 
 (1)
    
    Our indoor entertainment areas generally include our indoor waterpark, game arcade,
childrens activity room and fitness room, as well as our Aveda concept spa, 3D virtual
reality theatre, Wileys Woods and party room in the resorts that have such amenities.(2)
    
    We purchased this property in November 1999. 8




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(3)
    
    Our Wisconsin Dells property also features 77 condominium units currently under construction.(4)
    
    Prior to May 2004, we operated this resort as a Great Bear Lodge.(5)
    
    Our Sheboygan property is branded as a Blue Harbor Resort. This resort is subject to a
98-year and 11-month ground lease with the Redevelopment Authority of the City of Sheboygan.(6)
    
    Our Sheboygan resort includes an additional 64 individually owned two and four bedroom
condominium units.(7)
    
    Ripleys, our licensee, owns this resort. We are assisting Ripleys with construction
management and other pre-opening matters related to the Great Wolf Lodge in Niagara Falls. We
have granted Ripleys a license to use the Great Wolf Lodge name for this resort and other
intellectual property for ten years after opening. We have agreed to enter into a management
agreement, pursuant to which we expect to operate the resort on behalf of Ripleys for five
years, and a central reservations agreement. In conjunction with this project, we expect to
receive a one-time construction fee and ongoing license, central reservation and management
fees. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 General
  Income Taxes
 Stock Based Compensation
 Net loss, as reported
    
    $
    (2,338
    )Compensation expense, SFAS 123 fair value method
    
    
    (328
    )Pro forma net loss
    
    $
    (2,666
    )Pro forma net loss per share  Basic
    
    $
    (0.09
    )Pro forma net loss per share  Diluted
    
    $
    (0.09
    )
  Dividend yield
    
    
    Weighted-average, risk free interest rate
    
    
    3.65
    %Weighted-average, expected life of option
    
    6.0 yearsExpected stock price volatility
    
    
    40
    %
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Segments
 Recent Accounting Pronouncements
   Other Intangible Assets 
 3. PURCHASE ACCOUNTING IN CONNECTION WITH THE IPO
   
    
    Recorded property and equipment, other assets, debt and other liabilities at their
preliminarily estimated fair values;
    
    Recorded a deferred tax liability resulting from the difference between the preliminarily
estimated fair values and the tax bases of assets acquired from the
five resort-owning
entities. We recorded this liability at our anticipated effective tax rate of 40%;
    
    Eliminated mandatorily redeemable interests of the Predecessor due to the conversion of
those ownership interests to our common stock in conjunction with the Formation
Transactions; and
    
    Recorded as goodwill the excess of consideration in the purchase transaction over the
fair value of net tangible assets acquired from the five resort-owning entities.
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Balance, December 31, 2004
    
    $
    155,196Change due to adjustments to the estimated
fair market values of property in first quarter
2005
    
    
    (18,340
    )Balance, March 31, 2005
    
    $
    136,856
    
    
    Recorded all identifiable tangible and intangible assets at their estimated fair values
as of December 20, 2004;
    
    Allocated the excess consideration paid over the estimated fair value of the net assets
acquired to all identifiable tangible and intangible assets pro rata based on their
estimated fair values;
    
    Recorded a deferred tax liability resulting from the difference between the total
estimated fair values (including the excess amount described in the previous item) and the
tax bases of the assets acquired from the two resort-owning entities. We recorded this
liability at our anticipated effective tax rate of 40%.
 4. PROPERTY AND EQUIPMENT
  March 31,
    
    
    December 31,2005
    
    
    2004Land
    
    $
    38,115
    
    
    $
    12,064Building and improvements
    
    
    133,212
    
    
    
    89,294Furniture, fixtures and equipment
    
    
    135,986
    
    
    
    82,470Construction in process
    
    
    96,647
    
    
    
    164,160403,960
    
    
    
    347,988Less accumulated depreciation
    
    
    (5,462
    )
    
    
    (614
    )Property and equipment, net
    
    $
    398,498
    
    
    $
    347,374
  5. LONG-TERM DEBT AND OTHER LONG-TERM LIABILITIES
  March 31,
    
    
    December 31,2005
    
    
    2004Long-Term Debt:Senior credit facility
    
    $
    
    
    
    $
    Traverse City/Kansas City Mortgage Loan
    
    
    74,794
    
    
    
    75,000Sheboygan Mortgage Loan
    
    
    29,391
    
    
    
    29,475Junior Subordinated Debentures
    
    
    51,550
    
    
    
    Other mortgage debt
    
    
    1,523
    
    
    
    1,523Williamsburg Construction Loan
    
    
    
    
    
    
    19,011
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March 31,
    
    
    December 31,2005
    
    
    2004Poconos Construction Loan
    
    
    
    
    
    
    5,598Other Long-Term Liabilities:City of Sheboygan bonds
    
    
    8,098
    
    
    
    8,063City of Sheboygan loan
    
    
    4,079
    
    
    
    3,995169,435
    
    
    
    142,665Less current portion of long-term debt
    
    
    (1,834
    )
    
    
    (27,794
    )$
    167,601
    
    
    $
    114,871
 Senior Credit Facility
 Traverse City/Kansas City Mortgage Loan
 Sheboygan Mortgage Loan
 Junior Subordinated Debentures
    Williamsburg Construction Loan
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Poconos Construction Loan
 City of Sheboygan bonds
 City of Sheboygan loan
 Future Maturities
 ThroughMarch 31,2006
    
    $
    1,8342007
    
    
    2,0082008
    
    
    29,5692009
    
    
    1,5592010
    
    
    1,696Thereafter
    
    
    132,769Total
    
    $
    169,435
 6. EARNINGS PER SHARE
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Three monthsendedMarch 31,2005(as restated,see Note 9)Net loss attributable to common shares
    
    $
    (2,338
    )Weighted average common shares outstanding  basic and diluted
    
    
    30,133Net loss per share  basic and diluted
    
    $
    (0.08
    )
 7. DISCONTINUED OPERATIONS
    Three monthsendedMarch 31,2004Revenues
    
    $
    1,501Expenses
    
    
    (1,481
    )Income (loss) from discontinued operations
    
    $
    20
 8. SUBSEQUENT EVENTS
  9. RESTATEMENT
  
    
    The acquisition of each of our Williamsburg and Pocono Mountains resorts in
conjunction with the Formation Transactions in December 2004 did not constitute an
acquisition of a business, as that term is defined in
Emerging Issues Task Force (EITF) Issue No. 98-3,
Determining Whether a Non-Monetary Transaction Involves Receipt
of Productive Assets of a Business, and that we
should have recorded each of those acquisitions as a purchase of assets, rather than a
purchase of a business. As a result, the amounts previously recorded as goodwill in
connection with the Williamsburg and Poconos resorts have now been recorded as increases
to identifiable intangible assets, and property and equipment.
    
    The provisions of EITF Issue No. 04-1, Accounting
for Preexisting Relationships between the Parties to a Business
Combination, were applicable to us as of the date of the
Formation Transactions in December 2004, and that some portion of the amounts previously
recorded as goodwill in connection with the five operating resorts purchased at that
time should have been recorded as increases to identifiable intangible assets.
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As PreviouslyMarch 31, 2005:
    
    Reported
    
    
    As RestatedCash and
cash equivalents
    
    $
    67,344
    
    
    $
    65,241Condominiums
under development
    
    
    
    
    
    
    8,854Other
current assets
    
    
    6,601
    
    
    
    8,704Property and equipment, net
    
    
    333,345
    
    
    
    398,498Other intangible assets
    
    
    
    
    
    
    19,114Goodwill
    
    
    200,387
    
    
    
    136,856Total assets
    
    
    621,949
    
    
    
    651,539Deferred tax liability
    
    
    22,531
    
    
    
    52,134Total liabilities
    
    
    235,953
    
    
    
    265,556Total stockholders equity
    
    
    385,996
    
    
    
    385,983Three Months Ended March 31, 2005:Statement of operations:Depreciation and amortization
    
    
    7,127
    
    
    
    7,148Loss from continuing operations
    
    
    (2,325
    )
    
    
    (2,338
    )Net loss
    
    
    (2,325
    )
    
    
    (2,338
    )Statement of cash flows:Net loss
    
    
    (2,325
    )
    
    
    (2,338
    )Depreciation and amortization
    
    
    7,127
    
    
    
    7,148Deferred tax benefit
    
    
    (1,534
    )
    
    
    (1,542
    )Change in prepaid expenses and other assets
    
    
    (5,738
    )
    
    
    (10,870
    )Change in accounts payable, accrued expenses and
other liabilities
    
    
    (6,512
    )
    
    
    (2,023
    )Net cash used in operating activities
    
    
    (8,644
    )
    
    
    (9,287
    )Capital expenditures for property and equipment
    
    
    (32,183
    )
    
    
    (30,229
    )Decrease in equity escrow
    
    
    1,558
    
    
    
    Increase in restricted cash
    
    
    
    
    
    
    (96
    )Decrease in escrows
    
    
    
    
    
    
    248Net cash used in investing activities
    
    
    (30,625
    )
    
    
    (30,077
    )
 
 ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 As
described in Note 9 to the condensed consolidated and combined financial statements, subsequent to the
issuance of the consolidated and combined financial statements for the year ended December 31, 2004, we
determined that it was necessary to restate our previously issued financial statements for changes
in our application of purchase accounting for certain transaction entered into in December 2004.
Due to errors in the application of purchase accounting for those transactions, and due to other
reclassifications of assets, we have recorded adjustments (the Adjustments) to restate the
previously issued financial statements for the quarterly period ended March 31, 2005. The
Adjustments result primarily from the application of Emerging Issues Task Force (EITF) Issues No.
98-3 and No. 04-1 with regard to our recording of our formation transactions in December 2004. We
recorded the formation transactions by applying the purchase method of accounting in connection
with the acquisition of seven resort-owning entities. This accounting was presented in our filings
with the SEC for the quarterly period ended March 31, 2005. The Adjustments had the effect of
decreasing our cash and cash equivalents by $2.1 million, increasing condominiums under
development by $8.9 million, increasing other current assets by $2.1 million, increasing property
and equipment by $65.2 million, increasing other intangible assets by $19.1 million, decreasing
goodwill by $63.5 million, and increasing deferred tax liability by $29.6 million as of March 31,
2005, increasing our previously reported net loss by $13.0 thousand for the three months ended
March 31, 2005, and increasing net cash used in operating activities by $0.6 million and decreasing
net cash used in investing activities by $0.5 million for the three month period ended March 31,
2005.
 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/A entitled, Forward-Looking Statements. All dollar amounts in this discussion, except for per
share data and operating statistics, are in thousands.
 Overview
 Formation.
  
    
    The Great Lakes Companies, Inc. (GLC) and its consolidated subsidiaries;
    
    Great Wolf Lodge of Traverse City, LLC;
    
    Great Wolf Lodge of Kansas City, LLC;
    
    Blue Harbor Resort Sheboygan, LLC;
    
    Great Wolf Lodge of Williamsburg, LLC; and
    
    Great Wolf Lodge of the Poconos, LLC.
   15




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##### Table of Contents




    
    The Predecessor contributed its hotel management and multifamily housing management and
development assets, which were unrelated to the resort business, to two subsidiaries of the
Predecessor and then distributed the interests in those subsidiaries to the former
shareholders of the Predecessor.
    
    We effected, through our Operating Partnership, the acquisition of GLC and each
resort-owning entity. Pursuant to these acquisitions, investors of GLC and the resort-owning
entities received cash, unregistered shares of our common stock or a combination of cash and
unregistered shares of our common stock. We issued 13,901,947 shares of our common stock and
paid approximately $97,600 in cash in connection with these acquisitions.
    
    We issued an aggregate of 130,949 shares of unregistered common stock to holders of
tenant in common interests in two of our resorts.
    Business.
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##### Table of Contents



IndoorOpened/Target
    
    
    
    
    
    
    EntertainmentLocation
    
    Opening
    
    
    Rooms
    
    
    Area(1)(Approx. ft(2))Existing Resorts:Wisconsin Dells, WI
    
    May 1997(2)
    
    
    309
    (3)
    
    
    64,000Sandusky, OH(4)
    
    March 2001
    
    
    271
    
    
    
    41,000Traverse City, MI
    
    March 2003
    
    
    281
    
    
    
    51,000Kansas City, KS
    
    May 2003
    
    
    281
    
    
    
    49,000Sheboygan, WI(5)
    
    June 2004
    
    
    183
    (6)
    
    
    54,000Williamsburg, VA
    
    March 2005
    
    
    301
    
    
    
    66,000Resorts Under Construction:Pocono Mountains, PA
    
    Fall 2005
    
    
    400
    
    
    
    91,000Niagara Falls, ONT(7)
    
    Spring 2006
    
    
    404
    
    
    
    94,000
 
 (1)
    
    Our indoor entertainment areas generally include our indoor waterpark, game arcade,
childrens activity room and fitness room, as well as our Aveda concept spa, 3D virtual
reality theatre, Wileys Woods and party room in the resorts that have such amenities.(2)
    
    We purchased this property in November 1999.(3)
    
    Our Wisconsin Dells property also features 77 condominium units currently under construction.(4)
    
    Prior to May 2004, we operated this resort as a Great Bear Lodge.(5)
    
    Our Sheboygan property is branded as a Blue Harbor Resort. This resort is subject to a
98-year and 11-month ground lease with the Redevelopment Authority of the City of Sheboygan.(6)
    
    Our Sheboygan resort includes an additional 64 individually owned two and four bedroom
condominium units.(7)
    
    Ripleys, our licensee, owns this resort. We are assisting Ripleys with construction
management and other pre-opening matters related to the Great Wolf Lodge in Niagara Falls. We
have granted Ripleys a license to use the Great Wolf Lodge name for this resort and other
intellectual property for ten years after opening. We have agreed to enter into a management
agreement, pursuant to which we expect to operate the resort on behalf of Ripleys for five
years, and a central reservations agreement. In conjunction with this project, we expect to
receive a one-time construction fee and ongoing license, central reservation and management
fees. Subsequent Event.
 Industry Trends and Outlook.
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##### Table of Contents



Revenue and Key Performance Indicators.
  
    
    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
    
    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.
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##### Table of Contents



Recent Accounting Pronouncements
  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.
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##### Table of Contents



Great WolfResorts
    
    
    PredecessorThree months ended March 31,2005
    
    
    2004Net loss
    
    $
    (2,338
    )
    
    $
    (1,918
    )Adjustments:Interest expense, net
    
    
    764
    
    
    
    1,518Income tax benefit
    
    
    (1,542
    )
    
    
    Depreciation and amortization
    
    
    7,148
    
    
    
    3,043EBITDA
    
    $
    4,032
    
    
    $
    2,643
 Results of Operations
 General
  Great Wolf Resorts Financial Information
  
    
    our corporate entity that provides resort development and management services;
    
    our Wisconsin Dells, Sandusky, Traverse City, Kansas City, Sheboygan, and Williamsburg operating resorts; and
    
    our Pocono Mountains resort that is under construction.
 Revenues.
 Operating Expenses.
  
    
    selling, general and administrative expenses, which are associated with the 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; and
    
    depreciation and amortization.
 Great Lakes Predecessor Financial Information
  
    
    The Great Lakes Companies, Inc. and its consolidated subsidiaries, including development
of, ownership interests in, and
management contracts with respect to, resorts and certain non-resort hotels and multifamily
housing development and management assets;
    
    the entities that owned our Traverse City, Kansas City and Sheboygan operating resorts; and
    
    the entities that owned our Williamsburg and Pocono Mountains resorts that were under construction.
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##### Table of Contents



Revenues.
 
    
    lodging revenue, which consists of rooms, food and beverage and other department revenues
from its consolidated and combined hotels and resorts;
    
    management fee revenue from both resort activity and non-resort activity, which includes
fees received under its management agreements; and
    
    other revenue, which consists of accounting fees, development fees, central reservation
fees, construction management fees and other fees.
  Operating Expenses.
  
    
    selling, general and administrative expenses, which were associated with the management
of hotels and 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;
    
    depreciation and amortization; and
    
    other expenses from managed properties, which are recorded as an expense in accordance with EITF 01-14.
 Three months ended March 31, 2005 for Great Wolf Resorts, Inc. compared with the three months ended
March 31, 2004 for the Predecessor
  All Properties
    
    
    
    
    
    Same Store Comparison (a)First Quarter
    
    First Quarter
    
    First Quarter
    
    Increase (Decrease)2005
    
    2005
    
    2004
    
    $
    
    %Occupancy
    
    
    69.9
    %
    
    
    71.7
    %
    
    
    68.0
    %
    
    
    N/A
    
    
    
    5.4
    %ADR
    
    $
    211.17
    
    
    $
    216.58
    
    
    $
    209.67
    
    
    $
    6.91
    
    
    
    3.3
    %RevPAR
    
    $
    147.55
    
    
    $
    155.33
    
    
    $
    142.66
    
    
    $
    12.67
    
    
    
    8.9
    %Total RevPOR
    
    $
    315.04
    
    
    $
    311.44
    
    
    $
    304.44
    
    
    $
    7.00
    
    
    
    2.3
    %Total RevPAR
    
    $
    220.13
    
    
    $
    223.36
    
    
    $
    207.14
    
    
    $
    16.22
    
    
    
    7.8
    %
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##### Table of Contents



(a)
    
    Same store comparison includes properties that were open for the full periods in 2004 and
2005 (that is, the Wisconsin Dells, Sandusky, Traverse City and Kansas City resorts).   Three months endedMarch 31,Great WolfResorts
    
    Predecessor
    
    Increase2005
    
    2004
    
    (Decrease)Revenues
    
    $
    26,996
    
    
    $
    14,752
    
    
    $
    12,244Departmental operating expenses
    
    
    9,669
    
    
    
    3,787
    
    
    
    5,882Selling, general and administrative
    
    
    7,238
    
    
    
    3,206
    
    
    
    4,032Property operating costs
    
    
    6,057
    
    
    
    1,787
    
    
    
    4,270Depreciation and amortization
    
    
    7,148
    
    
    
    2,716
    
    
    
    4,432Net operating loss
    
    
    (3,116
    )
    
    
    (84
    )
    
    
    (3,032
    )Net interest expense
    
    
    764
    
    
    
    1,205
    
    
    
    (441
    )Gain on sale of investments
    
    
    
    
    
    
    (1,072
    )
    
    
    1,072Interest on mandatorily redeemable shares
    
    
    
    
    
    
    1,692
    
    
    
    (1,692
    )Income tax benefit
    
    
    (1,542
    )
    
    
    
    
    
    
    (1,542
    )Loss from continuing operations
    
    
    (2,338
    )
    
    
    (1,938
    )
    
    
    (400
    )Net loss
    
    $
    (2,338
    )
    
    $
    (1,918
    )
    
    $
    (420
    )
 Revenues.
 Operating expenses.
  
    
    Selling, general and administrative expenses for the resorts in Wisconsin Dells, Sandusky
and Sheboygan were $1,039, $1,146 and $1,087, respectively, for the three months ended March
31, 2005.
    
    Property operating costs for the resorts in Wisconsin Dells, Sandusky and Sheboygan were
$701, $644 and $348, respectively, for the three months ended March 31, 2005. We also
incurred $2,600 of pre-opening costs related to our Williamsburg resort.
    
    Depreciation and amortization for the resorts in Wisconsin Dells, Sandusky and Sheboygan
were $809, $899 and $1,061, respectively, for the three months ended March 31, 2005. Loan
fees of $731 and $1,385 for Williamsburg and Poconos, respectively, were written off to
amortization expense at the time the construction loans were paid off during the three
months ended March 31, 2005.
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##### Table of Contents



Net loss.
 
    
    Our increased operating loss in the 2005 period.
    
    A gain on sale of investments in the 2004 period (we did not have any comparable sales in the 2005 period).
  
    
    Interest on mandatorily redeemable shares incurred in the 2004 period was not incurred in
the 2005 period due to the conversion of the mandatorily redeemable interests to common
stock in conjunction with the Formation Transactions.
    
    Income tax benefit in the 2005 period with no income tax benefit in the 2004 period,
reflecting our structure after the IPO as a C Corporation that pays income taxes, as opposed
to the Predecessors pass-through entities with no income tax obligations in the 2004
period.
 Liquidity and Capital Resources
  March 31,2005Long-Term Debt:Senior credit facility
    
    $
    Traverse City/Kansas City Mortgage Loan
    
    
    74,794Sheboygan Mortgage Loan
    
    
    29,391Junior Subordinated Debentures
    
    
    51,550Other mortgage debt
    
    
    1,523Other Long-Term Liabilities:City of Sheboygan bonds
    
    
    8,098City of Sheboygan loan
    
    
    4,079169,435Less current portion of long-term debt
    
    
    (1,834
    )$
    167,601
 Senior Credit Facility
 Traverse City/Kansas City Mortgage Loan
 Sheboygan Mortgage Loan
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##### Table of Contents



Junior Subordinated Debentures
    City of Sheboygan bonds
 City of Sheboygan loan
 Short-Term Liquidity Requirements
  
    
    recurring maintenance, repairs and other operating expenses necessary to properly maintain our resorts;
    
    property taxes and insurance expenses;
    
    interest expense and scheduled principal payments on outstanding indebtedness; and
    
    general and administrative expenses.
  Long-Term Liquidity Requirements
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Contractual Obligations
  Payment TermsLess Than
    
    
    
    
    
    
    
    
    
    
    More ThanTotal
    
    
    1 Year
    
    
    1-3 Years
    
    
    3-5 Years
    
    
    5 YearsLong-Term Debt Obligations(1)
    
    $
    169,435
    
    
    $
    1,834
    
    
    $
    31,577
    
    
    $
    3,255
    
    
    $
    132,769Operating Lease Obligations
    
    
    1,869
    
    
    
    401
    
    
    
    820
    
    
    
    648
    
    
    
    Construction Contracts
    
    
    28,621
    
    
    
    28,621
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    199,925
    
    
    
    30,856
    
    
    $
    32,297
    
    
    $
    3,903
    
    
    $
    132,769
 
 (1)
    
    Includes $8,098 of fixed rate debt recognized as a liability related to certain bonds issued
by the City of Sheboygan and $4,079 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, 2005 for Great Wolf Resorts, Inc. compared with the three months ended
March 31, 2004 for the Predecessor
 Increase2005
    
    2004
    
    (Decrease)Net cash (used in) provided by operating activities
    
    $
    (9,287
    )
    
    $
    1,043
    
    
    $
    (10,330
    )Net cash used in investing activities
    
    
    (30,077
    )
    
    
    (27,949
    )
    
    
    (2,128
    )Net cash provided by financing activities
    
    
    25,196
    
    
    
    30,261
    
    
    
    (5,065
    )
 Operating Activities.
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##### Table of Contents



Investing Activities.
 Financing Activities.
 Inflation
  
 ITEM 3 . QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
   
    
    $74,794 of fixed rate debt secured by two of our resorts. This debt bears interest at
6.96%.
    
    $29,391 of variable rate debt secured by one of our resorts. This debt bears interest at
a floating rate equal to prime plus 200 basis points. The total rate was 7.75% at March 31,
2005.
    
    $51,550 of debentures that bear interest at a fixed rate of 7.80% through March 2015 and
then at a floating rate of LIBOR + 310 basis points thereafter. The securities mature in
March 2035.
    
    $8,098 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 $4,079 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; and
    
    $1,523 of other fixed rate debt.
   
 ITEM 4. CONTROLS AND PROCEDURES
 Evaluation of Disclosure Controls and Procedures
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##### Table of Contents



Material Weakness in Internal Control Over Financial Reporting
     Changes In Internal Control
  Remediation Measures for Identified Material Weakness
  1.
    
    We will require continuing education over the next 12 months for our accounting and
finance staff who are responsible for financial reporting to ensure compliance with current
and emerging financial reporting and compliance practices.2.
    
    We will utilize outside consultants, other than our Independent Registered Public
Accounting Firm, to assist us in our evaluation of complex accounting transactions and
related reporting, specifically in the area of purchase accounting,
in cases where we believe such additional expertise is appropriate.
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##### Table of Contents



3.
    
    We will assess staff expertise in our accounting and finance areas and take any steps
necessary to staff our accounting and finance departments appropriately.4.
    
We and our Audit Committee, as necessary, will consider additional items, or will alter the planned
steps above, in order to remediate further the material weakness described above.
 29




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##### Table of Contents



PART II. OTHER INFORMATION
 
 ITEM 1. LEGAL PROCEEDINGS
  
 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
  
 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
December 20, 2004 (incorporated herein by reference to Exhibit 3.2 to the
Companys Registration Statement on Form S-1 filed August 12, 2004)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)
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##### Table of Contents



ExhibitNumber
    
    Description10.1
    
    Revolving Credit Agreement, by and among Great Wolf Resorts, Inc., GWR
Operating Partnership, L.L.L.P., the Subsidiary Guarantors named therein,
Citicorp North America, Inc., Societe Generale, Citigroup Global Markets,
Inc., SG Americas Securities LLC and Calyon New York Branch (incorporated
herein by reference to Exhibit 10.15 to the Companys Registration
Statement on Form S-1 filed January 21, 2005) as amended by First Letter
Amendment dated February 10, 2005 (filed herewith) and by Second Letter
Amendment dated as of April 25, 2005 (filed herewith).10.2
    
    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)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.+
    
    Indicated management contract or compensatory plan or arrangement required to be filed as an
exhibit pursuant to Item 15(c) of Form 10-K. 31




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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)  32