-----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, NexTSbRZ1VTghcm5cCi5c7xh2wFQVApQXqpq9B+DAD6/CyolZcY7IgW+PlH7OW7G Rw0j8sg5uy4lIguq4l7cZQ== 0000811532-99-000008.txt : 19990812 0000811532-99-000008.hdr.sgml : 19990812 ACCESSION NUMBER: 0000811532-99-000008 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990627 FILED AS OF DATE: 19990811 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: 99683915 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 June 27, 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 (State or other jurisdiction of incorporation or organization) 34-1560655 (I.R.S. Employer 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 Depositary Units (Representing Limited Partner Interests) Units Outstanding As Of August 9, 1999 51,980,183 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- Analysis of Financial 10 Condition and Results of Operations Part II - Other Information Item 6. Exhibits and Reports on Form 11 8-K Signatures 12 Index to 13 Exhibits PART I - FINANCIAL INFORMATION Item 1. - Financial Statements CEDAR FAIR, L.P. CONSOLIDATED BALANCE SHEETS (In thousands)
6/27/99 12/31/98 ASSETS Current Assets: Cash $10,409 $ 1,137 Receivables 16,577 6,253 Inventories 19,911 10,245 Prepaids 5,914 3,332 52,811 20,967 Land, Buildings, Rides and Equipment: Land 130,008 127,050 Land improvements 93,617 88,924 Buildings 210,019 178,795 Rides and equipment 386,484 368,138 Construction in progress 5,880 12,691 826,008 775,598 Less accumulated depreciation (188,370) (175,554) 637,638 600,044 Intangibles, net of amortization 10,314 10,314 $ 700,763 $ 631,325 LIABILITIES AND PARTNERS' EQUITY Current Liabilities: Accounts payable $ 40,249 $ 17,031 Distribution payable to partners 18,285 16,979 Accrued interest 3,375 3,154 Accrued taxes 16,337 18,956 Accrued salaries, wages and benefits 11,886 9,170 Self-insurance reserves 8,727 8,174 Other accrued liabilities 9,670 3,767 108,529 77,231 Other Liabilities 11,305 11,753 Long-Term Debt: Revolving credit loans 178,100 100,350 Term debt 100,000 100,000 278,100 200,350 Partners' Equity: Special L.P. interests 5,290 5,290 General partner 297 492 Limited partners, 51,980 units outstanding 297,242 336,209 302,829 341,991 $ 700,763 $ 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 6/27/99 6/28/98 6/27/99 6/28/98 Net revenues $124,203 $120,545 $428,344 $322,038 Costs and expenses: Cost of products sold 14,392 14,072 48,973 34,587 Operating expenses 54,542 51,932 180,779 139,083 Selling, general and 14,962 15,637 49,994 38,677 administrative Depreciation and 12,048 10,535 34,373 26,107 amortization 95,944 92,176 314,119 238,454 Operating income 28,259 28,369 114,225 83,584 Interest expense 4,486 4,441 14,597 11,483 Income before taxes 23,773 23,928 99,628 72,101 Provision for taxes 4,534 4,155 15,065 4,816 Net income 19,239 19,773 84,563 67,285 Net income allocated to 96 99 423 336 general partner Net income allocated to $ 19,143 $ 19,674 $ 84,140 $ 66,949 limited partners Earnings per limited partner unit: Weighted average limited partner units 51,940 51,165 51,530 48,557 outstanding - basic Net income per limited $ .37 $ .38 $ 1.63 $ 1.38 partner unit - basic Weighted average limited partner units 52,381 52,582 52,375 49,416 outstanding - diluted Net income per limited $ .37 $ .37 $ 1.61 $ 1.35 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 31, $ 5,290 $ 492 $ 336,209 $ 341,991 1998 Allocation of net loss - (109) (21,722) (21,831) Distribution declared - (91) (18,194) (18,285) ($.35 per limited partner unit) Balance at March 28, 296,293 301,875 1999 5,290 292 Allocation of net - 96 19,143 19,239 income Distribution declared - (91) (18,194) (18,285) ($.35 per limited partner unit) Balance at June 27, $ 5,290 $ 297 $ 297,242 $ 302,829 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 6/27/99 6/28/98 6/27/99 6/28/98 CASH FLOWS FROM (FOR) OPERATING ACTIVITIES Net income $19,239 $19,773 $84,563 $67,285 Adjustments to reconcile net income to net cash from operating activities Depreciation and amortization 12,048 10,535 34,373 26,107 Change in assets and liabilities, net of effects from acquisitions: (Increase) in inventories (3,693) (3,223) (1,263) (1,584) (Increase) in current and other (14,378) (10,218) (1,896) (658) assets Increase in accounts payable 12,911 12,258 3,114 9,288 Increase (decrease) in accrued (3,838) 3,411 7,023 5,011 taxes Increase (decrease) in self- 392 (1,035) 1,432 (1,964) insurance reserves Increase (decrease) in other 12,314 11,589 (3,803) 3,386 current liabilities Increase (decrease) in other (465) 70 321 2,763 liabilities Net cash from operating 34,530 43,160 123,864 109,634 activities CASH FLOWS FROM (FOR) INVESTING ACTIVITIES Capital expenditures (18,567) (21,447) (62,743) (58,108) Acquisition of the Buena Park Hotel: Land, buildings, and equipment - - (17,230) - acquired Working capital acquired - - (206) - Acquisition of Knott's Berry Farm: Land, buildings, rides and - - - (263,030) equipment acquired Negative working capital assumed, - - - 11,626 net of cash acquired Net cash (for) investing (18,567) (21,447) (80,179) (309,512) activities CASH FLOWS FROM (FOR) FINANCING ACTIVITIES Net borrowings (payments) on 10,400 4,900 11,364 (26,800) revolving credit loans Refinancing of revolving credit - - - 50,000 with term debt Repayment of term debt - - - (4,500) Distributions paid to partners (18,285) (16,810) (69,086) (60,842) Withdrawal of Special General - - - (196) Partner Acquisition of the Buena Park Hotel: Borrowings on revolving credit - - 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 partnership - (1,024) (2,940) (4,524) units Net cash from (for) financing (7,885) (12,934) (43,226) 205,040 activities CASH Net increase for the period 8,078 8,779 459 5,162 Balance, beginning of period 2,331 1,171 9,950 4,788 Balance, end of period $ $ 9,950 $ $ 9,950 10,409 10,409 SUPPLEMENTAL INFORMATION Cash payments for interest $ 2,419 $ 2,365 $ 15,321 $ 9,337 expense Reduction of final purchase price $ - $ - $ 3,506 $ - 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 JUNE 27, 1999 AND JUNE 28, 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 June 27, 1999 and June 28, 1998 to accompany the quarterly results. Because amounts for the 12 months ended June 27, 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 June 27, 1999 and June 28, 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; Knott's Berry Farm located near Los Angeles in Buena Park, California; Dorney Park & Wildwater Kingdom near Allentown, Pennsylvania; Valleyfair in Shakopee, Minnesota; and Worlds of Fun / Oceans of Fun in Kansas City, Missouri. 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 also 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 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 6/27/99 6/28/98 6/27/99 6/28/98 (in thousands except per unit data) Basic weighted average 51,940 51,165 51,530 48,557 units outstanding Effect of dilutive units: Deferred units 401 346 384 323 Contingent units - 40 1,071 461 536 Knott's acquisition Diluted weighted 52,381 52,582 52,375 49,416 average units outstanding Net income per unit - $ .37 $ .38 $ 1.63 $ 1.38 basic Net income per unit - $ .37 $ .37 $ 1.61 $ 1.35 diluted
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operations: Net revenues for the quarter ended June 27, 1999, increased 3% to $124.2 million, from $120.5 million for the quarter ended June 28, 1998, and earnings before interest, taxes, depreciation and amortization (EBITDA) for the quarter increased 4% to $40.3 million from $38.9 million for the same period last year. Operating income, after a significant increase in depreciation expense, decreased slightly to $28.3 million from $28.4 million, and net income for the period remained essentially flat at $.37 per limited partner unit (diluted). The increase in depreciation expense for the quarter was the result of more than $60 million of capital expenditures put in place for the 1999 season, as well as the addition of the Buena Park Hotel, which was acquired in the first quarter of the year. Excluding depreciation, operating costs as a percent of revenues have remained level between years. For the quarter, we achieved a 4% increase in in-park guest per capita spending and a 17% increase in out-of-park revenues, including our hotels. These gains were partially offset by a 3% decrease in combined second-quarter attendance, due to some poor early-season weather. Through the first six months of 1999, net revenues were up 6% over last year on a 1% increase in combined attendance and a 5% increase in in-park guest per capita spending. Over the same period, EBITDA increased 18% between years. Included in costs and expenses are approximately $1,536,000 of incentive fees payable to the general partner relating to the 1999 second quarter distribution, which exceeds the minimum distribution as defined in the partnership agreement by 16.25 cents per unit, or $8,489,000 in the aggregate. This compares to $1,318,000 of incentive fees in the 1998 second quarter. Financial Condition: The Partnership has available through April 2002 a $200 million revolving credit facility, of which $178.1 million was borrowed and in use as of June 27, 1999. Current assets and liabilities are at normal seasonal levels at June 27, 1999, and the negative working capital ratio of 2.1 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 received assurances about readiness from its major utility and financial service providers, and we have no reason to believe that any third party with whom we have a material relationship will not be Year 2000 compliant. Year 2000 Compliance (continued): 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 Second 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: August 9, 1999 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) 1999 Second Quarter Press Release. 14 EX-27 2
5 3-MOS DEC-31-1999 JUN-27-1999 10,409 0 16,577 0 19,911 52,811 826,008 188,370 700,763 108,529 0 0 0 297,539 5,290 700,763 124,203 124,203 14,392 95,944 0 0 4,486 23,773 4,534 19,239 0 0 0 19,239 .37 .37
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