-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, RF4uEOFVPnDekFJvXuDz3as2WUMh8NhWxct2NJkE5ZiWRfEPlIa6jADLNdNpgyes s0xsy53YM4QY1MkXUurw0g== 0000811532-98-000015.txt : 19981113 0000811532-98-000015.hdr.sgml : 19981113 ACCESSION NUMBER: 0000811532-98-000015 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980927 FILED AS OF DATE: 19981112 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CEDAR FAIR L P CENTRAL INDEX KEY: 0000811532 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MISCELLANEOUS AMUSEMENT & RECREATION [7990] IRS NUMBER: 341560655 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-09444 FILM NUMBER: 98744055 BUSINESS ADDRESS: STREET 1: P O BOX 5006 CITY: SANDUSKY STATE: OH ZIP: 44871 BUSINESS PHONE: 4196260830 10-Q 1 FORM 10 - Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 (Mark One) [x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 27, 1998 OR [ ] 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 1-9444 CEDAR FAIR, L.P. (Exact name of Registrant as specified in its charter) DELAWARE 34-1560655 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) P.O. Box 5006, Sandusky, Ohio 44871-5006 (Address of principal executive offices) (zip code) (419) 626-0830 (Registrant's telephone number, including area code) Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No Title of Class Units Outstanding As Of Depositary Units November 1, 1998 (Representing Limited Partner 52,124,566 Interests) CEDAR FAIR, L.P. INDEX FORM 10 - Q Part I - Financial Information Item 1. Financial Statements 3-8 Item 2. Management's Discussion and 9-10 Analysis of Financial Condition and Results of Operations Part II - Other Information Item 6. Exhibits and Reports on Form 11 8-K Signatures 12 Index to Exhibits 13 PART I - FINANCIAL INFORMATION Item 1. - Financial Statements CEDAR FAIR, L.P. CONSOLIDATED BALANCE SHEETS (In thousands)
9/27/98 12/31/97 ASSETS Current Assets: Cash $ 5,728 $ 2,520 Receivables 18,925 6,530 Inventories 10,179 9,055 Prepaids 1,634 3,849 36,466 21,954 Land, Buildings, Rides and Equipment: Land 127,049 123,550 Land improvements 84,065 84,134 Buildings 179,205 158,550 Rides and equipment 356,026 331,342 Construction in progress 17,905 17,333 764,250 714,909 Less accumulated depreciation (172,351) (147,772) 591,899 567,137 Intangibles, net of amortization 10,401 10,528 $ 638,766 $ 599,619 LIABILITIES AND PARTNERS' EQUITY Current Liabilities: Accounts payable $ 23,398 $ 15,644 Distribution payable to partners 17,026 14,768 Accrued interest 1,130 1,576 Accrued taxes 17,618 4,602 Accrued salaries, wages and benefits 14,217 11,305 Self-insurance reserves 7,755 8,946 Other accrued liabilities 12,121 5,585 93,265 62,426 Other Liabilities 10,726 10,312 Long-Term Debt: Revolving credit loans 65,150 139,750 Term debt 100,000 50,000 165,150 189,750 Redeemable Limited Partnership Units 12,500 51,750 Partners' Equity: Special L.P. interests 5,290 5,290 General partner 614 413 Limited partners, 52,125 and 52,403 units outstanding at September 27, 1998 and December 31, 1997, respectively 351,221 279,678 357,125 285,381 $ 638,766 $ 599,619 The accompanying Notes to Consolidated Financial Statements are an integral part of these balance sheets. CEDAR FAIR, L.P. CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands except per unit data) Three months ended Twelve months ended 9/27/98 9/28/97 9/27/98 9/28/97 Net revenues $ 234,226 $ 174,786 $ 381,478 $ 258,334 Costs and expenses: Cost of products sold 24,610 16,414 42,783 25,239 Operating expenses 66,866 45,491 160,458 106,290 Selling, general and 21,253 14,935 44,995 30,235 administrative Depreciation and 15,875 12,268 29,714 21,098 amortization 128,604 89,108 277,950 182,862 Operating income 105,622 85,678 103,528 75,472 Interest expense, net 3,378 1,733 13,128 7,430 Net income before taxes 102,244 83,945 90,400 68,042 Provision for taxes 7,939 - 12,755 - Net income 94,305 83,945 77,645 68,042 Net income allocated to general partner 472 420 388 261 Net income allocated to limited partners $ 93,833 $ 83,525 $ 77,257 $ 67,781 Earnings per limited partner unit: Weighted average limited partner units outstanding - basic 51,098 45,920 49,851 45,920 Net income per limited partner unit - basic $ 1.84 $ 1.82 $ 1.55 $ 1.48 Weighted average limited partner units outstanding - diluted 52,508 46,203 50,993 46,190 Net income per limited partner unit - diluted $ 1.79 $ 1.81 $ 1.52 $ 1.47 The accompanying Notes to Consolidated Financial Statements are an integral part of these statements. CEDAR FAIR, L.P. CONSOLIDATED STATEMENTS OF PARTNERS' EQUITY (In thousands) Special General Limited Total L.P. Partner's Partners' Partners' Interests Equity Equity Equity Balance at December $ 5,290 $ 413 $ 279,678 $ 285,381 31, 1997 Expiration of redemption rights on limited partnership units - - 7,187 7,187 Allocation of net loss - (117) (23,370) (23,487) Distribution declared - (84) (16,726) (16,810) ($.32 per limited partner unit) Balance at March 29, 5,290 212 246,769 252,271 1998 Expiration of redemption rights on limited partnership units - - 11,852 11,852 Allocation of net income - 99 19,674 19,773 Distribution declared - (84) (16,713) (16,797) ($.32 per limited partner unit) Balance at June 28, 5,290 227 261,582 267,099 1998 Expiration of redemption rights on limited partnership units - - 12,747 12,747 Allocation of net income - 472 93,833 94,305 Distribution declared - (85) (16,941) (17,026) ($.325 per limited partner unit) Balance at September $ 5,290 $ 614 $ 351,221 $ 357,125 27, 1998 The accompanying Notes to Consolidated Financial Statements are an integral part of these statements. CEDAR FAIR, L.P. CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) Three months ended Twelve months ended 9/27/98 9/28/97 9/27/98 9/28/97 CASH FLOWS FROM (FOR) OPERATING ACTIVITIES Net income $94,305 $ 83,945 $77,645 $68,042 Adjustments to reconcile net income to net cash from operating activities Depreciation and amortization 15,875 12,268 29,714 21,098 Change in assets and liabilities, net of effects from acquisitions: (Increase) decrease in inventories 7,154 6,616 (1,046) (168) (Increase) decrease in current and (168) 1,280 (2,107) 1,797 other assets Increase (decrease) in accounts (13,601) (12,606) 8,293 1,113 payable Increase (decrease) in accrued 8,304 (298) 13,613 154 taxes Increase (decrease) in self- 460 77 (1,581) (281) insurance reserves Increase (decrease) in other (1,296) (485) 2,575 252 current liabilities Increase (decrease) in other (258) 377 2,128 2,974 liabilities Net cash from operating 110,775 91,174 129,234 94,981 activities CASH FLOWS FROM (FOR) INVESTING ACTIVITIES Capital expenditures (11,110) (5,523) (63,694) (38,270) Acquisition of Knott's Berry Farm: Land, buildings, rides and - - (263,042) - equipment acquired Negative working capital assumed, - - 11,638 - net of cash acquired Acquisition of JHW Limited Partnership: Land, buildings and equipment - - - (16,295) acquired Negative working capital assumed, - - - 442 net of cash acquired Net cash (for) investing (11,110) (5,523) (315,098) (54,123) activities CASH FLOWS FROM (FOR) FINANCING ACTIVITIES Net payments on revolving credit (84,150) (74,300) (41,150) (4,175) loans Refinancing of revolving credit - - 50,000 - with term debt Distributions paid to partners (16,797) (14,495) (63,144) (57,980) Withdrawal of Special General - (196) - (196) Partner Acquisition of Knott's Berry Farm: Borrowings on revolving credit - - 94,500 - loans Issuance of limited partnership - - 157,402 - units Redemption of limited partnership (2,940) - (7,464) - units Acquisition of JHW Limited Partnership: Borrowings on revolving credit - - - 11,475 loans Long-term debt of JHW Limited - - - 4,500 Partnership Net cash from (for) financing (103,887) (88,991) 190,144 (46,376) activities CASH Net increase (decrease) for the (4,222) (3,340) 4,280 (5,518) period Balance, beginning of period 9,950 4,788 1,448 6,966 Balance, end of period $ 5,728 $ 1,448 $ 5,728 $ 1,448 SUPPLEMENTAL INFORMATION Cash payments for interest $ 6,347 $ 3,195 $ 12,489 $ 7,400 expense The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
CEDAR FAIR, L.P. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE QUARTERS ENDED SEPTEMBER 27, 1998 AND SEPTEMBER 28, 1997 The accompanying consolidated financial statements have been prepared from the financial records of Cedar Fair, L.P. (the Partnership) without audit and reflect all adjustments which are, in the opinion of management, necessary to fairly present the results of the interim periods covered in this report. Due to the highly seasonal nature of the Partnership's amusement park operations, the results for any interim period are not indicative of the results to be expected for the full fiscal year. Accordingly, the Partnership has elected to present financial information regarding operations for the preceding twelve month periods ended September 27, 1998 and September 28, 1997 to accompany the quarterly results. Because amounts for the 12 months ended September 27, 1998 include actual 1997 fourth quarter operating results and exclude Knott's Berry Farm's results prior to its acquisition on December 29, 1997, they are not indicative of 1998 full calendar year operations. (1) Significant Accounting and Reporting Policies: The Partnership's consolidated financial statements for the quarters ended September 27, 1998 and September 28, 1997 included in this Form 10-Q report have been prepared in accordance with the accounting policies described in the Notes to Consolidated Financial Statements for the year ended December 31, 1997, which were included in the Form 10-K filed on March 31, 1998. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission. These financial statements should be read in conjunction with the financial statements and the notes thereto included in the Form 10-K referred to above. (2) Interim Reporting: The Partnership owns and operates five amusement parks: Cedar Point in Sandusky, Ohio; Valleyfair in Shakopee, Minnesota; Dorney Park & Wildwater Kingdom near Allentown, Pennsylvania; Worlds of Fun / Oceans of Fun in Kansas City, Missouri; and Knott's Berry Farm in Buena Park, California. Virtually all of the Partnership's revenues from its four seasonal parks are realized during a 130-day operating period beginning in early May, with the major portion concentrated in the third quarter during the peak vacation months of July and August. Knott's Berry Farm is open year-round but operates at its highest level of attendance during the third quarter of the year. To assure that these highly seasonal operations will not result in misleading comparisons of current and subsequent interim periods, the Partnership has adopted the following reporting procedures: (a) depreciation, advertising and certain seasonal operating costs are expensed ratably during the operating season, including certain costs incurred prior to the season at the seasonal parks which are amortized over the season and (b) all other costs are expensed as incurred or ratably over the entire year. (3) Acquisitions: As discussed in Note (7) in the 1997 Annual Report to unitholders, on December 29, 1997 the Partnership acquired all of the partnership interests in Knott's Berry Farm, which owns and operates Knott's Berry Farm theme park in Buena Park, California and manages Knott's Camp Snoopy at the Mall of America in Bloomington, Minnesota. Knott's Berry Farm's results of operations are included in these consolidated financial statements for periods following the acquisition. Under terms of the acquisition, the Partnership agreed to repurchase during 1998 up to an aggregate of 500,000 limited partnership units per quarter at market prices upon demand from the partners of Knott's Berry Farm. In the third quarter, the Partnership repurchased 105,000 units at an aggregate price of $2.94 million, and the redemption rights on 395,000 units expired without exercise. The table below summarizes the unaudited consolidated pro forma results of operations assuming the acquisition of Knott's Berry Farm had occurred at the beginning of the three-month period ended September 28, 1997. Net revenues $212,963,000 Net income 89,509,000 Net income per limited partner unit - diluted $ 1.68 These pro forma results have been prepared for comparative purposes only and do not purport to be indicative of what would have occurred had the acquisition been made at the beginning of the period presented, or of results which may occur in the future. (4) Provision for Taxes: Beginning in 1998, the Partnership is subject to a new federal tax of 3.5% of its gross income (net revenues less cost of products sold) plus an additional 1% state tax on California-source gross income. (5) Earnings per Unit: Net income per limited partner unit is calculated based on the following unit amounts:
Three months ended Twelve months ended 9/27/98 9/28/97 9/27/98 9/28/97 (in thousands except per unit data) Basic weighted average units outstanding 51,098 45,920 49,851 45,920 Effect of dilutive units: Deferred units 339 283 339 270 Contingent units - Knott's acquisition 1,071 - 803 - Diluted weighted average units outstanding 52,508 46,203 50,993 46,190 Net income per unit - $ 1.84 $ 1.82 $ 1.55 $ 1.48 basic Net income per unit - $ 1.79 $ 1.81 $ 1.52 $ 1.47 diluted Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operations: Net revenues for the quarter ended September 27, 1998, increased 34% to $234.2 million, from $174.8 million for the quarter ended September 28, 1997. Operating income increased 23% to $105.6 million from $85.7 million, and net income for the period increased 12% to $94.3 million, or $1.79 per limited partner unit, from $83.9 million, or $1.81 per unit, in 1997. Operating results for the third quarter were significantly impacted by a $7.9 million, or $.15 per unit, charge related to the new tax on publicly traded partnerships, and by the addition of Knott's Berry Farm, which was acquired in late December 1997. Without the new tax, earnings per limited partner unit would have increased 7% to $1.94 in the quarter ended September 27, 1998. Excluding operations at Knott's Berry Farm, net revenues and operating income for the period increased 11% and 16%, respectively, on a 7% increase in combined attendance, a 4% increase in combined in-park guest per capita spending, and a 10% increase in out-of-park revenues at the Partnership's original four parks. These gains were partially offset by higher interest expense resulting from the acquisition of Knott's Berry Farm. Combined attendance was up, due to the very successful debuts of Cedar Point's new world-class thrill ride, Power Tower, and Worlds of Fun's new super-coaster, Mamba, as well as improved weather at Cedar Point compared with the cool and wet weather experienced during the peak vacation months of July and August last year. In addition, Dorney Park continued to perform strongly and contributed another record year in 1998. Although attendance at Knott's Berry Farm has not completely caught up from its disappointing early-season performance caused by an unusually rainy spring on the West Coast, it has shown signs of improvement since early June, and the Partnership remains hopeful that it can regain what is left of the attendance shortfall. Financial Condition: The Partnership has available through April 2002 a $200 million revolving credit facility, of which $65.15 million was borrowed and in use as of September 27, 1998. Current assets and liabilities are at normal seasonal levels at September 27, 1998, and the negative working capital ratio of 2.6 is the result of the Partnership's highly seasonal business and careful management of cash flow. Seasonal cash flow and available credit facilities are expected to be adequate to fund current working capital needs, planned capital expenditures and quarterly distributions to partners. Year 2000 Compliance: The Year 2000 issue is the result of many computer programs being written using two digits rather than four digits to define a year. Such programs may recognize a year containing "00" as the year 1900 rather than the year 2000. This could result in equipment or system failures or miscalculations causing disruptions of daily operations for some organizations. The Partnership has completed its assessment of its computer-dependent rides and equipment and its internal information systems that support business applications, and believes that with minor modifications to existing hardware and software, the Year 2000 issue will pose no significant internal operational problems. The Partnership is also assessing the readiness of its major utility and financial service providers to be Year 2000 compliant. Information requests have been distributed and replies are being evaluated. These efforts should be substantially complete during the first quarter of 1999, which is well before any anticipated impact on operations. Based upon the information obtained and accomplishments to date, no contingency plans are expected to be necessary and therefore none have been developed. In addition, as daily operations at the Partnership's four seasonal parks will not begin until April and May of 2000, the Partnership believes adequate time will be available if necessary to insure alternative plans can be developed, assessed and implemented prior to the Year 2000 issue having any unforeseen significant negative impact on most of its principal operations. However, if these system modifications are not properly made or are not completed on a timely basis, or if one or more of our principal suppliers of utilities or financial services fail to achieve compliance, the Year 2000 issue could have a material impact on our operations. Both internal and external resources are being used to reprogram and/or replace non-compliant hardware and software, and to appropriately test Year 2000 modifications, all funded through current operating cash flows. The estimated total cost associated with required modifications to become Year 2000 compliant is not expected to exceed $1 million and thus will not be material to the Partnership's financial position. The cost of the project and the date on which the Partnership believes it will substantially complete the Year 2000 modifications are based on management's best estimates, which were derived from numerous assumptions of future events, including the continued availability of computer programming expertise and other factors. Because none of these estimates can be guaranteed, actual results could differ materially from those anticipated. Specific factors that might cause material differences include, but are not limited to, the availability and cost of trained personnel, the ability to locate and correct all relevant computer codes, and similar uncertainties. PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K Exhibits: (a) Exhibit (20) - 1998 Third Quarter Press Release (b) Reports on Form 8-K: None SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. CEDAR FAIR, L.P. (Registrant) By Cedar Fair Management Company General Partner Date: November 10, 1998 Bruce A. Jackson Bruce A. Jackson Corporate Vice President - Finance (Chief Financial Officer) Charles M. Paul Charles M. Paul Corporate Controller (Chief Accounting Officer) INDEX TO EXHIBITS Page Number Exhibit (20) 1998 Third Quarter Press Release. 13
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5 3-MOS DEC-31-1998 SEP-27-1998 5,728 0 18,925 0 10,179 36,466 764,250 172,351 638,766 93,265 0 0 0 351,835 5,290 638,766 234,226 234,226 24,610 128,604 0 0 3,378 102,244 7,939 94,305 0 0 0 94,305 1.84 1.79
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