-----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, AWf/giKTRMps8ccLV4KHg1TTj8txibJz7XYMozAwObQxozGWijHBUk2TmGGHmjj5 BR/QXDW/tiQPaMWmII/D8A== 0000811532-99-000005.txt : 19990513 0000811532-99-000005.hdr.sgml : 19990513 ACCESSION NUMBER: 0000811532-99-000005 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990328 FILED AS OF DATE: 19990512 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: 99618160 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 March 28, 1999 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 May 10, 1999 (Representing Limited Partner 51,980,183 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)
3/28/99 12/31/98 ASSETS Current Assets: Cash $ 2,331 $ 1,137 Receivables 3,080 6,253 Inventories 16,218 10,245 Prepaids 5,033 3,332 26,662 20,967 Land, Buildings, Rides and Equipment: Land 130,008 127,050 Land improvements 89,337 88,924 Buildings 192,751 178,795 Rides and equipment 369,253 368,138 Construction in progress 28,439 12,691 809,788 775,598 Less accumulated depreciation (178,756) (175,554) 631,032 600,044 Intangibles, net of amortization 10,401 10,314 $ 668,095 $ 631,325 LIABILITIES AND PARTNERS' EQUITY Current Liabilities: Accounts payable $ 27,338 $ 17,031 Distribution payable to partners 18,285 16,979 Accrued interest 1,308 3,154 Accrued taxes 20,175 18,956 Accrued salaries, wages and benefits 7,443 9,170 Self-insurance reserves 8,335 8,174 Other accrued liabilities 3,866 3,767 86,750 77,231 Other Liabilities 11,770 11,753 Long-Term Debt: Revolving credit loans 167,700 100,350 Term debt 100,000 100,000 267,700 200,350 Partners' Equity: Special L.P. interests 5,290 5,290 General partner 292 492 Limited partners, 51,980 units 296,293 336,209 outstanding 301,875 341,991 $ 668,095 $ 631,325 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 3/28/99 3/29/98 3/28/99 3/29/98 Net revenues $23,197 $18,011 $424,686 $280,730 Costs and expenses: Cost of products sold 3,637 3,045 48,653 28,771 Operating expenses 26,595 27,253 178,169 123,007 Selling, general and 7,134 4,404 50,669 33,019 administrative Depreciation and 3,289 2,494 32,860 23,759 amortization 40,655 37,196 310,351 208,556 Operating income (loss) (17,458) (19,185) 114,335 72,174 Interest expense 3,533 3,641 14,552 9,584 Income (loss) before (20,991) (22,826) 99,783 62,590 taxes Provision for taxes 840 661 14,686 661 Net income (loss) (21,831) (23,487) 85,097 61,929 Net income (loss) (109) (117) 425 383 allocated to general partner Net income (loss) $(21,722) $(23,370) $84,672 $ 61,546 allocated to limited partners Earnings per limited partner unit: Weighted average limited partner units 51,940 51,218 51,335 47,246 outstanding - basic Net income per limited $ (.42) $ (.46) $ 1.65 $ 1.30 partner unit - basic Weighted average limited partner units 52,384 52,631 52,389 47,821 outstanding - diluted net income per limited $ (.41) $ (.44) $ 1.62 $ 1.29 partner unit - diluted 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 $ 492 $336,209 $ 341,991 31, 1998 Allocation of net loss - (109) (21,722) (21,831) Distribution declared - (91) (18,194) (18,285) ($.35 per limited partner unit) Balance at March $ 5,290 $ 292 $296,293 $ 301,875 28, 1999 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 3/28/99 3/29/98 3/28/99 3/29/98 CASH FLOWS FROM (FOR) OPERATING ACTIVITIES Net income (loss) $(21,831) $(23,487) $85,097 $61,929 Adjustments to reconcile net income to net cash from (for) operating activities Depreciation and amortization 3,289 2,494 32,860 23,759 Change in assets and liabilities, net of effects from acquisitions: (Increase) in inventories (5,928) (5,055) (793) (468) (Increase) decrease in current 1,677 (483) 2,265 (359) and other assets Increase in accounts payable 10,190 9,101 2,461 1,337 Increase in accrued taxes 1,219 1,301 14,272 1,444 Increase (decrease) in self- 161 (1,176) 5 (556) insurance reserves Increase (decrease) in other (3,475) (1,303) (4,528) 1,716 current liabilities Increase in other liabilities 17 368 856 3,395 Net cash from (for) operating (14,681) (18,240) 132,495 92,197 activities CASH FLOWS FROM (FOR) INVESTING ACTIVITIES Capital expenditures (17,060) (19,491) (65,624) (54,411) Acquisition of the Buena Park Hotel: Land, buildings, and equipment (17,230) - (17,230) - acquired Working capital acquired (206) - (206) - Acquisition of Knott's Berry Farm: Land, buildings, rides and - - - (263,042) equipment acquired Negative working capital - - - 11,638 assumed, net of cash acquired Net cash (for) investing (34,496) (19,491) (83,060) (305,815) activities CASH FLOWS FROM (FOR) FINANCING ACTIVITIES Net borrowings (payments) on 49,914 4,650 5,864 (21,000) revolving credit loans Refinancing of revolving credit - 50,000 - 50,000 with term debt Repayment of term debt - - - (4,500) Distributions paid to partners (16,979) (14,768) (67,611) (58,527) Withdrawal of Special General - - - (196) Partner Acquisition of the Buena Park Hotel: Borrowings on revolving credit 17,436 - 17,436 - loans Acquisition of Knott's Berry Farm: Borrowings on revolving credit - - - 94,500 loans Issuance of limited partnership - - - 157,402 units Redemption of limited - (3,500) (3,964) (3,500) partnership units Net cash from (for) financing 50,371 36,382 (48,275) 214,179 activities CASH Net increase (decrease) for the 1,194 (1,349) 1,160 561 period Balance, beginning of period 1,137 2,520 1,171 610 Balance, end of period $ 2,331 $ 1,171 $ 2,331 $ 1,171 SUPPLEMENTAL INFORMATION Cash payments for interest $ 5,379 $ 3,194 $15,267 $ 8,409 expense Reduction of final purchase $ - $ - $ 3,506 $ - price of Knott's Berry Farm 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 MARCH 28, 1999 AND MARCH 29, 1998 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 March 28, 1999 and March 29, 1998 to accompany the quarterly results. Because amounts for the 12 months ended March 28, 1999 include actual 1998 peak season operating results, they are not indicative of 1999 full calendar year operations. (1) Significant Accounting and Reporting Policies: The Partnership's consolidated financial statements for the quarters ended March 28, 1999 and March 29, 1998 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, 1998, which were included in the Form 10-K filed on March 31, 1999. 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 lowest level of attendance during the first 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 for its four seasonal parks: (a) depreciation, advertising and certain seasonal operating costs are expensed ratably during the operating season, including certain costs incurred prior to the season 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 (8) in the 1998 Annual Report to unitholders, on February 18, 1999, the Partnership acquired the 320-room Buena Park Hotel, which is located adjacent to Knott's Berry Farm in Buena Park, California, for a cash purchase price of $17.5 million. The results of the hotel's operations are included in these consolidated financial statements only for the period following the acquisition. (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 Twelve months ended ended 3/28/99 3/29/98 3/28/99 3/29/98 (in thousands except per unit data) Basic weighted average 51,940 51,218 51,335 47,246 units outstanding Effect of dilutive units: Deferred units 404 342 370 307 Contingent units - 40 1,071 684 268 Knott's acquisition Diluted weighted average 52,384 52,631 52,389 47,821 units outstanding Net income per unit - $ (.42) $ (.46) $ 1.65 $ 1.30 basic Net income per unit - $ (.41) $ (.44) $ 1.62 $ 1.29 diluted
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operations: Net revenues for the first quarter of 1999 increased to $23,197,000 from $18,011,000 in 1998, principally due to increased attendance from the addition of new rides and improved weather conditions at Knott's Berry Farm in the current year. The Partnership's four seasonal parks were not in operation during the quarter. Operating results for the first quarter include normal off-season operating, maintenance and administrative expenses at the Partnership's four seasonal parks and daily operations at Knott's Berry Farm, which is open year-round. The operating loss for the quarter was $17.5 million compared with $19.2 million in 1998, and net loss for the quarter was $21.8 million, or $.41 per limited partner unit, compared with a net loss of $23.5 million, or $.44 per unit, in 1998. Included in costs and expenses are approximately $1,536,000 of incentive fees payable to the general partner relating to the 1999 first quarter distribution, which exceeds the minimum distribution as defined in the partnership agreement by 16.25 cents per unit, or $8,447,000 in the aggregate. This compares to $1,318,000 of incentive fees in the 1998 first quarter. Financial Condition: The Partnership has available through April 2002 a $200 million revolving credit facility, of which $167.7 million was borrowed and in use as of March 28, 1999. Current assets and liabilities are at normal seasonal levels at March 28, 1999, and the negative working capital ratio of 3.3 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 seasonal working capital needs, planned capital expenditures and regular 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 activities. We believe that with minor modifications to existing hardware and software, the Year 2000 issue will pose no significant internal operational problems. In addition, the Partnership has also assessed the readiness of its major utility and financial service providers to be Year 2000 compliant, and we have no reason to believe that any third party with whom we have a material relationship will not be Year 2000 compliant. 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 system modifications are not properly made or are not completed on a timely basis, or if one or more of our principal suppliers of essential utilities or financial services fail to operate normally, particularly at Knott's Berry Farm which operates year-round, 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, the actual readiness of our major utility and financial service providers, 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) - 1999 First 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: May 10, 1999 /s/ Bruce A. Jackson Bruce A. Jackson Corporate Vice President - Finance (Chief Financial Officer) /s/ Charles M. Paul Charles M. Paul Corporate Controller (Chief Accounting Officer) INDEX TO EXHIBITS Page Number Exhibit (20) 1999 First Quarter Press Release. 14 EX-27 2
5 3-MOS DEC-31-1999 MAR-28-1999 2,331 0 3,080 0 16,218 26,662 809,788 178,756 668,095 86,750 0 0 0 296,585 5,290 668,095 23,197 23,197 3,637 40,655 0 0 3,533 (20,991) 840 (21,831) 0 0 0 (21,831) (.42) (.41)
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