UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 FORM 10-Q
 
 (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, 2009
 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(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)
 (608) 661-4700
 þ o
 o o
  Large accelerated filer o
Accelerated filer þ
Non-accelerated filer o(Do not check if a smaller reporting company)
Smaller reporting company o o þ




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Great Wolf Resorts, Inc.
 Quarterly Report on Form 10-Q
For the Quarter Ended March 31, 2009
 INDEX
 PageNo.PART I. FINANCIAL INFORMATIONItem 1.
    
    Financial Statements (unaudited)Condensed Consolidated Balance Sheets as of March 31, 2009 and December 31, 2008
    
    3Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) for the three months
ended March 31, 2009 and 2008
    
    4Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2009 and 2008
    
    5Notes to Condensed Consolidated Financial Statements
    
    6Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    18Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    34Item 4.
    
    Controls and Procedures
    
    35PART II. OTHER INFORMATIONItem 1.
    
    Legal Proceedings
    
    36Item 1A.
    
    Risk Factors
    
    36Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    36Item 3.
    
    Defaults Upon Senior Securities
    
    36Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    36Item 5.
    
    Other Information
    
    36Item 6.
    
    Exhibits
    
    36Signatures
    
    
    
    38
 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 31,2009
    
    
    2008(Unaudited)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    18,237
    
    
    $
    14,231Accounts receivable, net of allowance for doubtful accounts of $127 and $114
    
    
    1,681
    
    
    
    2,167Accounts receivable  unconsolidated affiliates, net of allowance for
doubtful accounts of $1,428 and $1,201
    
    
    1,196
    
    
    
    925Inventory
    
    
    4,904
    
    
    
    4,265Other current assets
    
    
    7,834
    
    
    
    3,055Total current assets
    
    
    33,852
    
    
    
    24,643Property and equipment, net
    
    
    734,352
    
    
    
    716,173Investments in and advances to unconsolidated affiliates
    
    
    35,739
    
    
    
    43,855Other assets
    
    
    37,819
    
    
    
    31,561Other intangible assets
    
    
    23,829
    
    
    
    23,829Total assets
    
    $
    865,591
    
    
    $
    840,061LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Current portion of long-term debt
    
    $
    81,810
    
    
    $
    81,464Accounts payable
    
    
    22,681
    
    
    
    23,217Accounts payable  unconsolidated affiliates
    
    
    123
    
    
    
    622Accrued expenses
    
    
    23,238
    
    
    
    22,565Accrued expenses  unconsolidated affiliates
    
    
    1,335
    
    
    
    1,184Advance deposits
    
    
    11,734
    
    
    
    7,498Gift certificates payable
    
    
    4,445
    
    
    
    5,416Total current liabilities
    
    
    145,366
    
    
    
    141,966Mortgage debt
    
    
    360,695
    
    
    
    333,259Other long-term debt
    
    
    92,278
    
    
    
    92,328Deferred compensation liability
    
    
    600
    
    
    
    568Total liabilities
    
    
    598,939
    
    
    
    568,121Commitments and contingenciesStockholders equity:Common stock, $0.01 par value; 250,000,000 shares authorized;
30,996,945 and 30,982,646 shares issued and outstanding, at March
31, 2009, and December 31, 2008, respectively
    
    
    310
    
    
    
    310Additional paidin-capital
    
    
    399,998
    
    
    
    399,641Preferred stock, $0.01 par value, 10,000,000 shares authorized, no
shares issued or outstanding at March 31, 2009 and December 31, 2008
    
    
    
    
    
    
    Accumulated deficit
    
    
    (133,456
    )
    
    
    (127,811
    )Deferred compensation
    
    
    (200
    )
    
    
    (200
    )Total stockholders equity
    
    
    266,652
    
    
    
    271,940Total liabilities and stockholders equity
    
    $
    865,591
    
    
    $
    840,061
  3




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##### 



GREAT WOLF RESORTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE LOSS
(Unaudited; dollars in thousands, except share and per share data)
 Three months endedMarch 31,2009
    
    
    2008Revenues:Rooms
    
    $
    36,345
    
    
    $
    38,866Food and beverage
    
    
    9,902
    
    
    
    10,428Other hotel operations
    
    
    8,965
    
    
    
    9,570Management and other fees
    
    
    589
    
    
    
    766Management and other fees  affiliates
    
    
    1,224
    
    
    
    1,09557,025
    
    
    
    60,725Other revenue from managed properties  affiliates
    
    
    5,282
    
    
    
    3,483Total revenues
    
    
    62,307
    
    
    
    64,208Operating expenses by department:Rooms
    
    
    5,029
    
    
    
    5,147Food and beverage
    
    
    7,415
    
    
    
    7,993Other
    
    
    7,268
    
    
    
    7,277Other operating expenses:Selling, general and administrative
    
    
    14,644
    
    
    
    13,398Property operating costs
    
    
    12,342
    
    
    
    11,829Depreciation and amortization
    
    
    12,586
    
    
    
    11,019Loss on disposition of property
    
    
    191
    
    
    
    59,475
    
    
    
    56,663Other expenses from managed properties  affiliates
    
    
    5,282
    
    
    
    3,483Total operating expenses
    
    
    64,757
    
    
    
    60,146Net operating (loss) income
    
    
    (2,450
    )
    
    
    4,062Investment income  affiliates
    
    
    (384
    )
    
    
    (451
    )Interest income
    
    
    (188
    )
    
    
    (490
    )Interest expense
    
    
    6,267
    
    
    
    6,907Loss before income taxes and equity in losses of unconsolidated affiliates
    
    
    (8,145
    )
    
    
    (1,904
    )Income tax benefit
    
    
    (3,148
    )
    
    
    (805
    )Equity in losses of unconsolidated affiliates, net of tax
    
    
    648
    
    
    
    1,228Net loss
    
    $
    (5,645
    )
    
    $
    (2,327
    )Other comprehensive loss, net of tax:Unrealized loss on interest rate swaps
    
    
    
    
    
    
    407Comprehensive loss
    
    $
    (5,645
    )
    
    $
    (2,734
    )Net loss per share-basic
    
    $
    (0.18
    )
    
    $
    (0.08
    )Net loss per share-diluted
    
    $
    (0.18
    )
    
    $
    (0.08
    )Weighted average common shares outstanding:Basic
    
    
    30,982,656
    
    
    
    30,665,162Diluted
    
    
    30,982,656
    
    
    
    30,665,162
  4




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GREAT WOLF RESORTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited; dollars in thousands)
 Three months endedMarch 31,2009
    
    
    2008Operating activities:Net loss
    
    $
    (5,645
    )
    
    $
    (2,327
    )Adjustments to reconcile net loss to net cash provided by operating activities:Depreciation and amortization
    
    
    12,586
    
    
    
    11,019Bad debt expense
    
    
    260
    
    
    
    5Non-cash employee compensation and professional fees expense
    
    
    88
    
    
    
    26Loss on disposition of property
    
    
    191
    
    
    
    Equity in losses of unconsolidated affiliates
    
    
    1,056
    
    
    
    2,127Deferred tax benefit
    
    
    (3,576
    )
    
    
    (1,782
    )Changes in operating assets and liabilities:Accounts receivable and other assets
    
    
    (738
    )
    
    
    (5,240
    )Accounts payable, accrued expenses and other liabilities
    
    
    3,900
    
    
    
    1,366Net cash provided by operating activities
    
    
    8,122
    
    
    
    5,194Investing activities:Capital expenditures for property and equipment
    
    
    (29,678
    )
    
    
    (19,860
    )Loan repayment from unconsolidated affiliates
    
    
    7,363
    
    
    
    Investments in unconsolidated affiliates
    
    
    (303
    )
    
    
    (6,600
    )Investment in development
    
    
    102
    
    
    
    (1,067
    )Decrease in restricted cash
    
    
    162
    
    
    
    49Increase in escrows
    
    
    (1,511
    )
    
    
    (1,777
    )Net cash used in investing activities
    
    
    (23,865
    )
    
    
    (29,255
    )Financing activities:Principal payments on long-term debt
    
    
    (1,079
    )
    
    
    (400
    )Proceeds from issuance of long-term debt
    
    
    28,812
    
    
    
    67,335Payment of loan costs
    
    
    (7,984
    )
    
    
    (979
    )Net cash provided by financing activities
    
    
    19,749
    
    
    
    65,956Net increase in cash and cash equivalents
    
    
    4,006
    
    
    
    41,895Cash and cash equivalents, beginning of period
    
    
    14,231
    
    
    
    18,597Cash and cash equivalents, end of period
    
    $
    18,237
    
    
    $
    60,492Supplemental Cash Flow Information-Cash paid for interest, net of capitalized interest
    
    $
    6,248
    
    
    $
    6,760Cash paid for income taxes
    
    $
    1
    
    
    $
    92Non-cash items:Construction in process accruals
    
    $
    338
    
    
    $
    11,764
  5




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##### 



GREAT WOLF RESORTS, INC. AND SUBSIDIARIES
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited; dollars in thousands, except per share amounts)
 1. ORGANIZATION
  Business Summary
 ® tm
   IndoorOpened/
    
    Number of
    
    Number of
    
    EntertainmentOwnership Percentage
    
    Opening
    
    Guest Suites
    
    Condo Units (1)
    
    Area (2)(Approx. ft2)Wisconsin Dells, WI (3)
    
    
    30.26
    %
    
    
    1997
    
    
    
    308
    
    
    
    77
    
    
    
    102,000Sandusky, OH (3)
    
    
    30.26
    %
    
    
    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
    
    
    100
    %
    
    
    2005
    
    
    
    405
    
    
    
    
    
    
    
    87,000Pocono Mountains, PA
    
    
    100
    %
    
    
    2005
    
    
    
    401
    
    
    
    
    
    
    
    101,000Niagara Falls, ONT (4)
    
    
    
    
    
    
    2006
    
    
    
    406
    
    
    
    
    
    
    
    104,000Mason, OH
    
    
    100
    %
    
    
    2006
    
    
    
    401
    
    
    
    
    
    
    
    105,000Grapevine, TX (5)
    
    
    100
    %
    
    
    2007
    
    
    
    605
    
    
    
    
    
    
    
    110,000Grand Mound, WA (6)
    
    
    49
    %
    
    
    2008
    
    
    
    398
    
    
    
    
    
    
    
    74,000Concord, NC
    
    
    100
    %
    
    March 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 6




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##### 



that have such amenities.(3)
    
    These properties are owned by a joint venture. CNL Lifestyle Properties, Inc.
(CNL), a real estate investment trust focused on leisure and lifestyle
properties, owns a 69.74% interest in the joint venture, and we own a 30.26%
interest. We operate the properties and license the Great Wolf Lodge brand to
the joint venture under long-term agreements through October 2020, subject to
earlier termination in certain situations. In April 2009, we signed an
agreement to sell our 30.26% joint venture interest to CNL. The sale is
contingent upon, among other things, receiving a consent from the lender in the joint ventures two
properties.(4)
    
    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.(5)
    
    In late 2007, we began construction on an additional 203 suites and 20,000
square feet of meeting space as an expansion of this resort. The meeting space,
along with 92 rooms, was opened in December 2008, with the rest of the rooms
completed and opened in January 2009.(6)
    
    This property is owned by a joint venture. The Confederated Tribes of the
Chehalis Reservation (Chehalis) owns a 51% interest in the joint venture, and
we own a 49% interest. We operate the property and license the Great Wolf Lodge
brand to the joint venture under long-term agreements through April 2057,
subject to earlier termination in certain situations. The joint venture leases
the land for the resort from Chehalis. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 General
   Principles of Consolidation
 Investments In and Advances to Unconsolidated Affiliates
 7




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##### 



Income Taxes
 Comprehensive Income
 Segments
 
    
    resort ownership/operation-revenues derived from our consolidated owned resorts; and
    
    resort third-party management revenues derived from management, license and other related
fees from unconsolidated managed resorts.
  Resort
    
    
    Resort
    
    
    
    
    
    
    Totals perOwnership/
    
    
    Third-Party
    
    
    
    
    
    
    FinancialOperation
    
    
    Management
    
    
    Other
    
    
    StatementsThree months ended
March 31, 2009Revenues
    
    $
    55,212
    
    
    $
    7,095
    
    
    $
    
    
    
    $
    62,307Depreciation and amortization
    
    
    (12,390
    )
    
    
    
    
    
    
    (196
    )
    
    
    (12,586
    )Operating income (loss)
    
    
    1,115
    
    
    
    1,813
    
    
    
    (5,378
    )
    
    
    (2,450
    )Investment income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (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
 Resort
    
    
    Resort
    
    
    
    
    
    
    Totals perOwnership/
    
    
    Third-Party
    
    
    
    
    
    
    FinancialOperation
    
    
    Management
    
    
    Other
    
    
    StatementsThree months ended
March 31, 2008Revenues
    
    $
    58,864
    
    
    $
    5,344
    
    
    $
    
    
    
    $
    64,208Depreciation and amortization
    
    
    (10,844
    )
    
    
    
    
    
    
    (175
    )
    
    
    (11,019
    )Operating income (loss)
    
    
    7,266
    
    
    
    1,860
    
    
    
    (5,064
    )
    
    
    4,062Investment income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (451
    )Interest income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (490
    )
 8




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##### 



Resort
    
    
    Resort
    
    
    
    
    
    
    Totals perOwnership/
    
    
    Third-Party
    
    
    
    
    
    
    FinancialOperation
    
    
    Management
    
    
    Other
    
    
    StatementsInterest expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,907Loss before income taxes and
equity in losses of
unconsolidated affiliates
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (1,904
    )Additions to long-lived assets
    
    
    19,550
    
    
    
    
    
    
    
    310
    
    
    $
    19,860Total assets
    
    
    676,285
    
    
    
    9,055
    
    
    
    160,186
    
    
    $
    845,526
  Recent Accounting Pronouncements 
     9




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##### 




 3. INVESTMENT IN AFFILIATES
 CNL Joint Venture
  March 31,
    
    December 31,2009
    
    2008Balance sheet data:Total assets
    
    $
    103,610
    
    
    $
    104,712Total liabilities
    
    $
    70,138
    
    
    $
    69,612
 For the three months endedMarch 31,2009
    
    2008Operating data:Revenue
    
    $
    7,609
    
    
    $
    9,362Operating expenses
    
    $
    (10,238
    )
    
    $
    (10,878
    )Net loss
    
    $
    (2,629
    )
    
    $
    (1,516
    )
  Grand Mount Joint Venture
 10




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##### 



March 31,
    
    December 31,2009
    
    2008Balance sheet data:Total assets
    
    $
    150,893
    
    
    $
    152,215Total liabilities
    
    $
    117,478
    
    
    $
    118,636
 For the three months endedMarch 31,2009
    
    2008Operating data:Revenue
    
    $
    9,977
    
    
    $
    1,908Operating expenses
    
    $
    (8,584
    )
    
    $
    (4,672
    )Net loss
    
    $
    (164
    )
    
    $
    (3,619
    )
  4. SHARE-BASED COMPENSATION
     Stock Options
    11




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##### 



Weighted
    
    WeightedAverage
    
    AverageExercise
    
    RemainingShares
    
    Price
    
    Contractual LifeNumber of shares under option:Outstanding at beginning of period
    
    
    475,000
    
    
    $
    17.59Granted
    
    
    Exercised
    
    
    Forfeited
    
    
    (7,500
    )
    
    $
    17.00Outstanding at end of period
    
    
    467,500
    
    
    $
    17.60
    
    
    5.84 yearsExercisable at end of period
    
    
    462,500
    
    
    $
    17.65
    
    
    5.75 years
  Market Condition Share Awards
    
    
    541,863 were based on our common stocks performance in 2009 relative to a stock
index, as designated by the Compensation Committee of the Board of Directors. These
 shares vest ratably over a three-year period, 2009-2011. The per share fair value
of these market condition shares was $1.26.The fair value of these market condition shares was determined using a Monte Carlo
simulation and the following assumptions:
 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
    %
 We used an expected dividend yield of 0% as we do not currently pay a dividend and do
not contemplate paying a dividend in the foreseeable future. The weighted average,
risk free interest rate was based on the one-year T-bill rate. Our expected stock
price volatility was estimated using daily returns data of our stock for a two-year
period ending on the grant date. The expected stock price volatility for the small cap
stock index was estimated using daily returns data for a two-year period ending on the
grant date.
  
    
    84,748 were 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.
 12




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##### 



The fair value of these market condition shares was determined using a Monte Carlo
simulation and the following assumptions:
 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
    %
 We used an expected dividend yield of 0% as we did not pay a dividend and did not
contemplate paying a dividend in the foreseeable future. The weighted average, risk
free interest rate was based on the one-year T-bill rate. Our expected stock price
volatility was estimated using daily returns data of our stock for a two-year period
ending on the grant date. The expected stock price volatility for the small cap stock
index was estimated using daily returns data for a two-year period ending on the grant
date.The market condition for these shares was not met and therefore no shares related to
this grant were issued.
  
    
    81,293 were based on our common stocks absolute performance during the
three-year period 2007-2009. For shares that are earned, half of the shares vest 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.The fair value of these market condition shares was determined using a Monte Carlo
simulation and the following assumptions:
 Dividend yield
    
    
    Weighted average, risk free interest rate
    
    
    4.73
    %Expected stock price volatility
    
    
    42.13
    %
 We used an expected dividend yield of 0% as we do not currently pay a dividend and do
not contemplate paying a dividend in the foreseeable future. The weighted average,
risk free interest rate was based on the four-year T-bill rate. Our expected stock
price volatility was estimated using daily returns data of our stock for a two-year
period ending on the grant date. Due to the resignation of two senior officers in
2008, 58,628 shares were forfeited.
    
    81,293 were based on our common stocks performance in 2007-2010 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, 2009, and the
other half vest on December 31, 2010. The per share fair value of these market
condition shares was $8.24.The fair value of these market condition shares was determined using a Monte Carlo
simulation and the following assumptions:
 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
    %
 We used an expected dividend yield of 0% as we did not pay a dividend and did not
contemplate paying a dividend in the foreseeable future. The weighted average, risk
free interest rate was based on the four-
 13




---



##### 



year T-bill rate. Our expected stock price volatility was estimated using daily
returns data of our stock for a two-year period ending on the grant date. The
expected stock price volatility for the small cap stock index was estimated using
daily returns data for a two-year period ending on the grant date. Due to the
resignation of two senior officers in 2008, 58,628 shares were forfeited.
 Performance Share Awards
   Deferred Compensation Awards
   Non-vested Shares
   14




---



##### 



WeightedAverageGrant DateShares
    
    Fair ValueNon-vested shares balance at beginning of period
    
    
    300,249
    
    
    $
    9.29Granted
    
    
    18,084
    
    
    $
    7.09Forfeited
    
    
    (9,000
    )
    
    $
    9.67Vested
    
    
    (6,800
    )
    
    $
    11.62Non-vested shares balance at end of period
    
    
    302,533
    
    
    $
    9.10
   Vested Shares
  
    
    We issued 17,532 shares in February 2009 related to 2008 bonus amounts. We
valued these shares at $32 based on the closing market value of our common stock on
the date of the grant.
    
    We issued 265,908 shares in February 2008 related to 2007 bonus amounts. These
 shares were valued at $2,055 based on the closing market value of our common stock
on the date of grant.
  5. PROPERTY AND EQUIPMENT
  March 31,
    
    
    December 31,2009
    
    
    2008Land and improvements
    
    $
    60,718
    
    
    $
    51,684Building and improvements
    
    
    430,754
    
    
    
    353,537Furniture, fixtures and equipment
    
    
    374,852
    
    
    
    315,577Construction in process
    
    
    751
    
    
    
    117,063867,075
    
    
    
    837,861Less accumulated depreciation
    
    
    (132,723
    )
    
    
    (121,688
    )Property and equipment, net
    
    $
    734,352
    
    
    $
    716,173
 15




---



##### 



6. LONG-TERM DEBT
  March 31,
    
    
    December 31,2009
    
    
    2008Long-Term Debt:Traverse City/Kansas City mortgage loan
    
    $
    69,844
    
    
    $
    70,211Mason mortgage loan
    
    
    76,800
    
    
    
    76,800Pocono Mountains mortgage loan
    
    
    96,279
    
    
    
    96,571Williamsburg mortgage loan
    
    
    64,250
    
    
    
    64,625Grapevine mortgage loan
    
    
    78,709
    
    
    
    78,709Concord construction loan
    
    
    56,405
    
    
    
    27,594Junior subordinated debentures
    
    
    80,545
    
    
    
    80,545Other Debt:City of Sheboygan bonds
    
    
    8,502
    
    
    
    8,493City of Sheboygan loan
    
    
    3,449
    
    
    
    3,503534,783
    
    
    
    507,051Less current portion of long-term debt
    
    
    (81,810
    )
    
    
    (81,464
    )Total long-term debt
    
    $
    452,973
    
    
    $
    425,587
 Traverse City/Kansas City Mortgage Loan
 Mason Mortgage Loan
 Pocono Mountains Mortgage Loan 
 Williamsburg Mortgage Loan 
 16




---



##### 



Grapevine Mortgage Loan
  Concord Construction Loan
 Junior Subordinated Debentures
   17




---



##### 



City of Sheboygan Bonds
 City of Sheboygan Loan
 Future Maturities
 ThroughMarch 31,2010
    
    $
    81,8102011
    
    
    7,9632012
    
    
    143,5102013
    
    
    55,3632014
    
    
    3,746Thereafter
    
    
    242,391Total
    
    $
    534,783
 7. COMPREHENSIVE INCOME
  8. EARNINGS PER SHARE
 18




---



##### 



Three months endedMarch 31,2009
    
    2008Net loss
    
    $
    (5,645
    )
    
    $
    (2,327
    )Weighted average common shares outstanding  basic
    
    
    30,982,656
    
    
    
    30,665,162Weighted average common shares outstanding  diluted
    
    
    30,982,656
    
    
    
    30,665,162Net loss per share  basic
    
    $
    (0.18
    )
    
    $
    (0.08
    )Net loss per share  diluted
    
    $
    (0.18
    )
    
    $
    (0.08
    )
 ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 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, are in thousands.
 Overview
  Business.
 19




---



##### 



®
 ®
  NumberNumber
    
    of
    
    IndoorOwnership
    
    
    
    
    
    of Guest
    
    Condo
    
    EntertainmentPercentage
    
    Opened/Opening
    
    Suites
    
    Units (1)
    
    Area (2)(Approx. ft2)Wisconsin Dells, WI (3)
    
    
    30.26
    %
    
    
    1997
    
    
    
    308
    
    
    
    77
    
    
    
    102,000Sandusky, OH (3)
    
    
    30.26
    %
    
    
    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
    
    
    100
    %
    
    
    2005
    
    
    
    405
    
    
    
    
    
    
    
    87,000Pocono Mountains, PA
    
    
    100
    %
    
    
    2005
    
    
    
    401
    
    
    
    
    
    
    
    101,000Niagara Falls, ONT (4)
    
    
    
    
    
    
    2006
    
    
    
    406
    
    
    
    
    
    
    
    104,000Mason, OH
    
    
    100
    %
    
    
    2006
    
    
    
    401
    
    
    
    
    
    
    
    105,000Grapevine, TX (5)
    
    
    100
    %
    
    
    2007
    
    
    
    605
    
    
    
    
    
    
    
    110,000Grand Mound, WA (6)
    
    
    49
    %
    
    
    2008
    
    
    
    398
    
    
    
    
    
    
    
    74,000Concord, NC (7)
    
    
    100
    %
    
    March 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 and fitness
room, as well as our spa in the resorts that have such amenities.(3)
    
    These properties are owned by a joint venture. CNL Lifestyle Properties, Inc.
(CNL), a real estate investment trust focused on leisure and lifestyle
properties, owns a 69.74% interest in the joint venture, and we own a 30.26%
interest. We operate the properties and license the Great Wolf Lodge brand to
the joint venture under long-term agreements through October 2020, subject to
earlier termination in certain situations. In April 2009, we signed an
agreement to sell our 30.26% joint venture interest to CNL. The sale is
contingent upon, among other things, receiving a consent from the lender in the joint ventures two
properties.(4)
    
    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.(5)
    
    In late 2007, we began construction on an additional 203 suites and 20,000
square feet of meeting space as an expansion of this resort. The meeting space,
along with 92 rooms, was opened in December 2008, with the rest of the rooms
completed and opened in January 2009.(6)
    
    This property is owned by a joint venture. The Confederated Tribes of the
Chehalis Reservation (Chehalis) owns 20




---



##### 



a 51% interest in the joint venture, and
we own a 49% interest. We operate the property and license the Great Wolf Lodge
brand to the joint venture under long-term agreements through April 2057,
subject to earlier termination in certain situations. The joint venture leases
the land for the resort from Chehalis. Industry Trends.
    Outlook.
   21




---



##### 




    
    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
    
    high volatility in the stock market that led to substantial declines in leading
market averages and aggregate household savings.
  
    
    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
three years. The Michigan/Northern Ohio region includes cities that have historically been
the Traverse City and Sandusky resorts largest origin of customers. We believe the adverse
general economic circumstances in the region have negatively impacted overall discretionary
consumer spending in that region over the past few years and may continue to do so going
forward. Although we have taken steps to reduce our operating costs at these resorts, we
believe the general regional economic downturn has and may continue to have an impact on the
operating performance of our Traverse City and Sandusky resorts.
    
    Our Wisconsin Dells property has been significantly impacted by the abundance of
competing indoor waterpark resorts in that market. The Wisconsin Dells market has
approximately 16 indoor waterpark resorts that compete with us. We believe this large number
of competing properties in a relatively small tourist destination location has and will
likely continue to have an impact on the operating performance of our Wisconsin Dells
resort.
    
    We have experienced much lower-than-expected occupancy and lower-than-expected average
daily room rates at our Sheboygan, Wisconsin property since its opening in 2004. We believe
this operating weakness has been primarily attributable to the fact that the overall
development of Sheboygan as a tourist destination continues to lag materially behind our
initial expectations. We believe this has materially impacted and will likely continue to
impact the consumer demand for our indoor waterpark resort in that market and the operations
of the resort.
    
    Our Mason resort opened its first phase in December 2006 and has experienced
lower-than-expected occupancy and lower-than-expected average daily room rates. We believe
this is due, in part, to the opening of competitive properties in the region.
  22




---



##### 



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.
   
    
    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.
  23




---



##### 




    
    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 is calculated by dividing total revenue by total available rooms.
    
    Total Rev POR is calculated by dividing total revenue by total occupied rooms.
    Critical Accounting Policies and Estimates
   24




---



##### 



Recent Accounting Pronouncements
       25




---



##### 




 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;
 26




---



##### 




    
    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 31,2009
    
    
    2008Net loss
    
    $
    (5,645
    )
    
    $
    (2,327
    )Adjustments:Interest expense, net of interest
income
    
    
    6,079
    
    
    
    6,417Income tax benefit
    
    
    (3,557
    )
    
    
    (1,704
    )Depreciation and amortization
    
    
    12,586
    
    
    
    11,019EBITDA
    
    $
    9,463
    
    
    $
    13,405
 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 operating resorts; and
    
    our equity interests in three resorts in which we have ownership interests but which we
do not consolidate.
 Revenues.
 
    
    lodging revenue, which includes rooms, food and beverage, and other department revenues from
our resorts;
    
    management fee and other revenue from resorts, which includes fees received under our
management, license, development and construction management agreements; and
    
    other revenue from managed properties. We employ the staff at our managed properties
(except for the Niagara Falls resort). Under our management agreements, the resort owners
reimburse us for payroll, benefits and certain other costs related to the operations of the
managed properties. Emerging Issues Task Force, or EITF, Issue No. 01-14, Income Statement
Characteristics of Reimbursements for Out-of-Pocket Expenses (EITF 01-14), establishes
standards for accounting for reimbursable expenses in our statements of operations. Under
this
 27




---



##### 



pronouncement, the reimbursement of payroll, benefits and costs is recorded as revenue on our
statements of operations, with a corresponding expense recorded as other expenses from
managed properties.
 Operating Expenses.
  
    
    selling, general and administrative expenses, which are associated with the operations
and management of resorts and which consist primarily of expenses such as corporate payroll
and related benefits, operations management, sales and marketing, finance, legal,
information technology support, human resources and other support services, as well as
general corporate expenses;
    
    property operation and maintenance expenses, such as utility costs and property taxes;
    
    depreciation and amortization; and
    
    other expenses from managed properties, which are recorded as an expense in accordance
with EITF 01-14.
 Three months ended March 31, 2009, compared with the three months ended March 31, 2008
  All Properties (a)Three months
    
    Three monthsended
    
    ended
    
    Increase (Decrease)March 31, 2009
    
    March 31, 2008
    
    $
    
    %Occupancy
    
    
    59.2
    %
    
    
    63.9
    %
    
    
    N/A
    
    
    
    (7.4
    )%ADR
    
    $
    252.13
    
    
    $
    269.18
    
    
    $
    (17.05
    )
    
    
    (6.3
    )%RevPAR
    
    $
    149.22
    
    
    $
    171.99
    
    
    $
    (22.77
    )
    
    
    (13.2
    )%Total RevPOR
    
    $
    388.84
    
    
    $
    412.40
    
    
    $
    (23.56
    )
    
    
    (5.7
    )%Total RevPAR
    
    $
    230.12
    
    
    $
    263.51
    
    
    $
    (33.39
    )
    
    
    (12.7
    )%
 
 (a)
    
    Includes results for properties that were open for any portion of the period, for all owned
and/or managed resorts. Same Store Comparison (b)Three months
    
    Three monthsended
    
    ended
    
    Increase (Decrease)March 31, 2009
    
    March 31, 2008
    
    $
    
    %Occupancy
    
    
    60.0
    %
    
    
    64.1
    %
    
    
    N/A
    
    
    
    (6.4
    )%ADR
    
    $
    244.82
    
    
    $
    265.34
    
    
    $
    (20.52
    )
    
    
    (7.7
    )%RevPAR
    
    $
    146.95
    
    
    $
    170.00
    
    
    $
    (23.05
    )
    
    
    (13.6
    )%Total RevPOR
    
    $
    373.96
    
    
    $
    402.27
    
    
    $
    (28.31
    )
    
    
    (7.0
    )%Total RevPAR
    
    $
    224.47
    
    
    $
    257.72
    
    
    $
    (33.25
    )
    
    
    (12.9
    )%
 
 (b)
    
    Same store comparison includes properties that were open for the full periods and with
comparable number of rooms in 2009 and 2008 (that is, our Wisconsin Dells, Sandusky, Traverse
City, Kansas City, Sheboygan, Williamsburg, Poconos, Niagara Falls and Mason resorts). 28




---



##### 



Three months endedMarch 31,Increase/2009
    
    2008
    
    (Decrease)Revenues
    
    $
    62,307
    
    
    $
    64,208
    
    
    $
    (1,901
    )Operating expenses:Departmental operating expenses
    
    
    19,712
    
    
    
    20,417
    
    
    
    (705
    )Selling, general and administrative
    
    
    14,644
    
    
    
    13,398
    
    
    
    1,246Property operating costs
    
    
    12,342
    
    
    
    11,829
    
    
    
    513Depreciation and amortization
    
    
    12,586
    
    
    
    11,019
    
    
    
    1,567Net operating (loss) income
    
    
    (2,450
    )
    
    
    4,062
    
    
    
    (6,512
    )Interest expense, net of interest income
    
    
    6,079
    
    
    
    6,417
    
    
    
    (338
    )Income tax benefit
    
    
    (3,148
    )
    
    
    (805
    )
    
    
    (2,343
    )Equity in losses of unconsolidated
affiliates, net of tax
    
    
    648
    
    
    
    1,228
    
    
    
    (580
    )Net loss
    
    
    (5,645
    )
    
    
    (2,327
    )
    
    
    (3,318
    )
 Revenues.
 Operating expenses.
 
    
    Departmental expenses decreased by $705 for the three months ended March 31, 2009, as
compared to the three months ended March 31, 2008, due primarily to the shift in the Easter
holiday.
    
    Total selling, general and administrative expenses increased by $1,246 in three months
ended March 31, 2009, as compared to the three months ended March 31, 2008, due primarily to
less labor and overhead expenses being allocated to development properties.
    
    Opening-related costs (included in total property operating costs) related to our
resorts were $4,245 for the three months ended March 31, 2009, as compared to $3,580 for
the three months ended March 31, 2008, due primarily to the opening of our Concord resort
in the first quarter of March 2009.
    
    Total depreciation and amortization increased for the three months ended March 31, 2009,
as compared to the three months ended March 31, 2008, primarily due to the expansion of our
Grapevine resort.
 29




---



##### 



Net operating income (loss).
 Net loss.
  
    
    A decrease in net interest expense of $338 mainly due to lower interest rates on our
variable rate loans;
    
    An increase of $2,343 in income tax benefit recorded in the three months ended March 31,
2009, as compared to the three months ended March 31, 2008; and
    
    A decrease in equity in losses of unconsolidated affiliates, net of tax, due to our
resort in Grand Mound, which opened in March 2008. During the three months ended March 31,
2008, the loss was mainly due to opening-related costs. There were no similar
opening-related costs in the three months ended March 31, 2009.
 Segments
  
    
    resort ownership/operation-revenues derived from our consolidated owned resorts; and
    
    resort third-party management-revenues derived from management, license and other related
fees from unconsolidated managed resorts.
  Three months endedMarch 31,Increase/2009
    
    2008
    
    (Decrease)Resort Ownership/OperationRevenues
    
    $
    55,212
    
    
    
    58,864
    
    
    $
    (3,652
    )EBITDA, excluding certain items
    
    
    9,488
    
    
    
    13,834
    
    
    
    (4,346
    )Resort Third-Party MgmtRevenues
    
    
    7,095
    
    
    
    5,344
    
    
    
    1,751EBITDA, excluding certain items
    
    
    1,813
    
    
    
    1,860
    
    
    
    (47
    )OtherRevenues
    
    
    
    
    
    
    
    
    
    
    EBITDA, excluding certain items
    
    
    (1,165
    )
    
    
    (613
    )
    
    
    (552
    )
  Liquidity and Capital Resources
 30




---



##### 



March 31,
    
    December 31,2009
    
    2008Long-Term Debt:Traverse City/Kansas City mortgage loan
    
    $
    69,844
    
    
    $
    70,211Mason mortgage loan
    
    
    76,800
    
    
    
    76,800Pocono Mountains mortgage loan
    
    
    96,279
    
    
    
    96,571Williamsburg mortgage loan
    
    
    64,250
    
    
    
    64,625Grapevine mortgage loan
    
    
    78,709
    
    
    
    78,709Concord construction loan
    
    
    56,405
    
    
    
    27,594Junior subordinated debentures
    
    
    80,545
    
    
    
    80,545Other Debt:City of Sheboygan bonds
    
    
    8,502
    
    
    
    8,493City of Sheboygan loan
    
    
    3,449
    
    
    
    3,503534,783
    
    
    
    507,051Less current portion of long-term debt
    
    
    (81,810
    )
    
    
    (81,464
    )Total long-term debt
    
    $
    452,973
    
    
    $
    425,587
 Traverse City/Kansas City Mortgage Loan
 Mason Mortgage Loan
 Pocono Mountains Mortgage Loan 
 Williamsburg Mortgage Loan 
 31




---



##### 



Grapevine Mortgage Loan
  Concord Construction Loan
 Junior Subordinated Debentures
   32




---



##### 



City of Sheboygan Bonds
 City of Sheboygan Loan
 Future Maturities
 ThroughMarch 31,2010
    
    $
    81,8102011
    
    
    7,9632012
    
    
    143,5102013
    
    
    55,3632014
    
    
    3,746Thereafter
    
    
    242,391Total
    
    $
    534,783
 Short-Term Liquidity Requirements
  
    
    recurring maintenance, repairs and other operating expenses necessary to properly
maintain and operate our resorts;
 33




---



##### 




    
    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.
    34




---



##### 



Off Balance Sheet Arrangements
  
    
    Our joint venture with CNL Income Properties, Inc. (CNL) owns two resorts, Great Wolf
Lodge-Wisconsin Dells, Wisconsin and Great Wolf Lodge-Sandusky, Ohio. We are a limited
partner in the CNL joint venture with a 30.26% ownership interest. At March 31, 2009, the
joint venture had aggregate outstanding indebtedness to third parties of $63,000. This
loan is a mortgage loan that is non-recourse to us.
    
    Our joint venture with The Confederated Tribes of the Chehalis Reservation owns the
Great Wolf Lodge resort and conference center on a 39-acre land parcel in Grand Mound,
Washington. This resort opened in March 2008. This joint venture is a limited liability
company. We are a member of that limited liability company with a 49% ownership interest.
At March 31, 2009, the joint venture had aggregate outstanding indebtedness to third
parties of $102,000. As of March 31, 2009, we have made combined loan and equity
contributions, net of loan repayments, of $31,562 to the joint venture to fund a portion of
construction costs of the resort. In January 2009, the other member of the joint venture
purchased $5,991 of our loan at par.
   35




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Contractual Obligations
  Payment TermsLess Than
    
    
    
    
    
    
    
    
    
    
    More ThanTotal
    
    
    1 Year
    
    
    1-3 Years
    
    
    3-5 Years
    
    
    5 YearsDebt obligations (1)
    
    $
    606,130
    
    
    $
    92,637
    
    
    $
    172,623
    
    
    $
    79,440
    
    
    $
    261,430Operating lease obligations
    
    
    1,089
    
    
    
    508
    
    
    
    424
    
    
    
    110
    
    
    
    47Construction contracts
    
    
    2,466
    
    
    
    2,466
    
    
    
    
    
    
    
    
    
    
    
    Reserve on unrecognized tax benefits
    
    
    1,268
    
    
    
    
    
    
    
    
    
    
    
    1,268
    
    
    
    Total
    
    $
    610,953
    
    
    $
    95,611
    
    
    $
    173,047
    
    
    $
    80,818
    
    
    $
    261,477
 
 (1)
    
    Amounts include interest (for fixed rate debt) and principal. They also include $8,502 of fixed rate debt
recognized as a liability related to certain bonds issued by the City of Sheboygan and $3,449 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
  
    
    The use of cash for capital expenditures and investments in and advances to
affiliates and of our properties that were under development,
    
    Less proceeds from issuances of long-term debt, and
    
    The classification of our Mason mortgage loan maturing in November 2009 as a current
liability.
 Cash Flows
 Three months ended March 31, 2009, compared with the three months ended March 31, 2008
 Increase/2009
    
    2008
    
    (Decrease)Net cash provided by operating activities
    
    $
    8,122
    
    
    $
    5,194
    
    
    $
    2,928Net cash used in investing activities
    
    
    (23,865
    )
    
    
    (29,255
    )
    
    
    5,390Net cash provided by financing activities
    
    
    19,749
    
    
    
    65,956
    
    
    
    (46,207
    )
 Operating Activities.
 Investing Activities.
 36




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Financing Activities.
 Inflation
  ITEM 3 . QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
   
    
    $69,844 of fixed rate debt secured by two of our resorts. This debt bears interest at
6.96%.
    
    $76,800 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 425 basis points, with a minimum rate of
6.50% per annum. The effective rate was 6.50% at March 31, 2009.
    
    $96,279 of fixed rate debt secured by one of our resorts. This debt bears interest at
6.10%.
    
    $64,250 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, 2009.
    
    $78,709 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 260 basis points. The effective rate was
3.10% at March 31, 2009.
    
    $56,405 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 345 basis points during the construction
period and LIBOR plus a spread of 310 basis points once the resort is open, with a minimum
rate of 6.50% per annum. The effective rate was 6.50% at March 31, 2009.
    
    $51,550 of subordinated debentures that bear interest at a fixed rate of 7.80% through
March 2015 and then at a floating rate of LIBOR plus 310 basis points thereafter. The
securities mature in March 2035.
    
    $28,995 of subordinated debentures that bear interest at a fixed rate of 7.90% through
June 2012 and then at a floating rate of LIBOR plus 300 basis points thereafter. The
securities mature in June 2017.
    
    $8,502 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 $3,449 of noninterest bearing
debt recognized as a liability related to a loan from the City
 37




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##### 



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.
    ITEM 4. CONTROLS AND PROCEDURES
 Evaluation of Disclosure Controls and Procedures
   Changes In Internal Control
  38




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##### 



ITEM 1. LEGAL PROCEEDINGS
  ITEM 1A. RISK FACTORS
 A regional, national or global outbreak of influenza or other disease, such as the recent
international outbreak of influenza A(H1N1), could adversely affect our business and results of
operations.
   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
  39




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##### 



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 JP Morgan 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;
JP Morgan 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)4.4
    
    Junior Subordinated Debenture, dated as of June 15, 2007, between Great
Wolf Resorts, Inc. and JP Morgan 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 June 19, 2007)4.5
    
    Amended and Restated Trust Agreement, dated as of June 15, 2007, by and
among Great Wolf Resorts, Inc., as depositor, Wells Fargo Bank, N.A., as
property trustee, Wells Fargo Delaware Trust Company, as Delaware trustee,
and James A. Calder, Alex P. 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 June 19, 2007)10.1
    
    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)10.2
    
    First Amendment to 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
 40




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##### 



ExhibitNumber
    
    DescriptionBlue 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)10.3
    
    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 10.5 to the Companys
Registration Statement on Form S-1 filed December 7, 2004)10.4
    
    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. 41




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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)  42