-----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, UgFHyoK8Kfx9bTgyJSQ17twL/sm44sv0z7xsQ+OkfQckdDAOZDgXknhee2naQjPi d+7qYaEMatWXwSD/z3eVwA== 0000811532-99-000010.txt : 19991111 0000811532-99-000010.hdr.sgml : 19991111 ACCESSION NUMBER: 0000811532-99-000010 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990926 FILED AS OF DATE: 19991110 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: 99745434 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 26, 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.) One Cedar Point Drive, Sandusky, Ohio 44870-5259 (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, 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)
9/26/99 12/31/98 ASSETS Current Assets: Cash $ 5,882 $ 1,137 Receivables 19,911 6,253 Inventories 12,877 10,245 Prepaids 2,025 3,332 40,695 20,967 Land, Buildings, Rides and Equipment: Land 130,009 127,050 Land improvements 94,398 88,924 Buildings 209,606 178,795 Rides and equipment 385,935 368,138 Construction in progress 18,434 12,691 838,382 775,598 Less accumulated depreciation (197,767) (175,554) 640,615 600,044 Intangibles, net of amortization 10,226 10,314 $ 691,536 $ 631,325 LIABILITIES AND PARTNERS' EQUITY Current Liabilities: Accounts payable $ 30,881 $ 17,031 Distribution payable to partners 18,937 16,979 Accrued interest 1,062 3,154 Accrued taxes 21,048 18,956 Accrued salaries, wages and benefits 14,816 9,170 Self-insurance reserves 9,072 8,174 Other accrued liabilities 8,051 3,767 103,867 77,231 Other Liabilities 10,814 11,753 Long-Term Debt: Revolving credit loans 96,800 100,350 Term debt 100,000 100,000 196,800 200,350 Partners' Equity: Special L.P. interests 5,290 5,290 General partner 684 492 Limited partners, 51,980 units outstanding 374,081 336,209 380,055 341,991 $ 691,536 $ 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 9/26/99 9/27/98 9/26/99 9/27/98 Net revenues $240,674 $234,226 $434,792 $381,478 Costs and expenses: Cost of products sold 24,641 24,610 49,004 42,783 Operating expenses 70,414 66,866 184,327 160,458 Selling, general and 21,527 21,253 50,268 44,995 administrative Depreciation and 15,759 15,875 34,257 29,714 amortization 132,341 128,604 317,856 277,950 Operating income 108,333 105,622 116,936 103,528 Interest expense 3,723 3,378 14,942 13,128 Income before taxes 104,610 102,244 101,994 90,400 Provision for taxes 8,447 7,939 15,573 12,755 Net income 96,163 94,305 86,421 77,645 Net income allocated to 481 472 432 388 general partner Net income allocated to $ 95,682 $ 93,833 $ 85,989 $ 77,257 limited partners Earnings per limited partner unit: Weighted average limited partner units 51,940 51,098 51,742 49,851 outstanding - basic Net income per limited $ 1.84 $ 1.84 $ 1.66 $ 1.55 partner unit - basic Weighted average limited partner units 52,388 52,508 52,381 50,993 outstanding - diluted Net income per limited $ 1.83 $ 1.79 $ 1.64 $ 1.52 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) ($.35 per limited partner unit) Balance at March 28, 5,290 292 296,293 301,875 1999 Allocation of net income - 96 19,143 19,239 Distribution declared - (91) (18,194) (18,285) ($.35 per limited partner unit) Balance at June 27, 5,290 297 297,242 302,829 1999 Allocation of net income - 481 95,682 96,163 Distribution declared - (94) (18,843) (18,937) ($.3625 per limited partner unit) Balance at September $ 5,290 $ 684 $ 374,081 $ 380,055 26, 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 Twelve months ended ended 9/26/99 9/27/98 9/26/99 9/27/98 CASH FLOWS FROM (FOR) OPERATING ACTIVITIES Net income $96,163 $94,305 $86,421 $77,645 Adjustments to reconcile net income to net cash from operating activities Depreciation and amortization 15,759 15,875 34,257 29,714 Change in assets and liabilities, net of effects from acquisitions: (Increase) decrease in inventories 7,034 7,154 (1,383) (1,046) (Increase) decrease in current and 555 (168) (1,172) (2,107) other assets Increase (decrease) in accounts (9,368) (13,601) 7,347 8,293 payable Increase in accrued taxes 4,711 8,304 3,430 13,613 Increase (decrease) in self- 345 460 1,317 (1,581) insurance reserves Increase (decrease) in other (1,002) (1,296) (3,521) 2,575 current liabilities Increase (decrease) in other (491) (258) 88 2,128 liabilities Net cash from operating 113,706 110,775 126,784 129,234 activities CASH FLOWS FROM (FOR) INVESTING ACTIVITIES Capital expenditures (18,648) (11,110) (70,270) (63,694) 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 - - - (263,042) equipment acquired Negative working capital assumed, - - - 11,638 net of cash acquired Net cash (for) investing (18,648) (11,110) (87,706) (315,098) activities CASH FLOWS FROM (FOR) FINANCING ACTIVITIES Net borrowings (payments) on (81,300) (84,150) 14,214 (41,150) revolving credit loans Refinancing of revolving credit - - - 50,000 with term debt Distributions paid to partners (18,285) (16,797) (70,574) (63,144) 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 - (2,940) - (7,464) units Net cash from (for) financing (99,585) (103,887) (38,924) 190,144 activities CASH Net increase (decrease) for the (4,527) (4,222) 154 4,280 period Balance, beginning of period 10,409 9,950 5,728 1,448 Balance, end of period $ 5,882 $ 5,728 $ 5,882 $ 5,728 SUPPLEMENTAL INFORMATION Cash payments for interest expense $ 6,036 $ 6,347 $15,010 $12,489 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 SEPTEMBER 26, 1999 AND SEPTEMBER 27, 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 September 26, 1999 and September 27, 1998 to accompany the quarterly results. Because amounts for the 12 months ended September 26, 1999 include actual 1998 fourth quarter operating results, they may not be indicative of 1999 full calendar year operations. (1) Significant Accounting and Reporting Policies: The Partnership's consolidated financial statements for the quarters ended September 26, 1999 and September 27, 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. In addition, on October 14, 1999, the Partnership announced that it had reached agreement in principle for the acquisition of White Water Canyon, a seasonal water park located near San Diego in Chula Vista, California. The acquisition is expected to be completed by the end of 1999. (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 9/26/99 9/27/98 9/26/99 9/27/98 (in thousands except per unit data) Basic weighted average 51,940 51,098 51,742 49,851 units outstanding Effect of dilutive units: Deferred units 408 339 401 339 Contingent units - 40 1,071 238 803 Knott's acquisition Diluted weighted 52,388 52,508 52,381 50,993 average units outstanding Net income per unit - $ 1.84 $ 1.84 $ 1.66 $ 1.55 basic Net income per unit - $ 1.83 $ 1.79 $ 1.64 $ 1.52 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 26, 1999, increased 3% to $240.7 million, from $234.2 million for the quarter ended September 27, 1998, and earnings before interest, taxes, depreciation and amortization (EBITDA) for the quarter increased 2% to $124.1 million from $121.5 million for the same period last year. Operating income for the period increased 3% to $108.3 million from $105.6 million, and net income increased 2% to $96.2 million, or $1.83 per limited partner unit (diluted), from $94.3 million, or $1.79 per unit, in 1998. For the quarter, we achieved a 3% increase in in-park guest per capita spending and a 27% increase in out-of-park revenues, including our hotels. These gains were partially offset by a 4% decrease in combined third-quarter attendance, due to inconsistent weather and the lack of a major new thrill ride at several of our parks. Through the first nine months of 1999, net revenues were up 4% over last year on a 4% increase in in-park guest per capita spending and a 20% increase in out-of-park revenues, which were offset slightly by a 2% decrease in combined attendance. Over the same period, EBITDA increased 5% between years. Included in costs and expenses are approximately $1,654,000 of incentive fees payable to the general partner relating to the 1999 third quarter distribution, which exceeds the minimum distribution as defined in the partnership agreement by 17.5 cents per unit, or $9,142,000 in the aggregate. This compares to $1,362,000 of incentive fees in the 1998 third quarter. Financial Condition: The Partnership has available through April 2002 a $200 million revolving credit facility, of which $96.8 million was borrowed and in use as of September 26, 1999, and has reached agreement with its bank group for an additional $90 million short-term credit facility. Current assets and liabilities are at normal seasonal levels at September 26, 1999, 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 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 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 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 Third Quarter Press Release. 14 EX-27 2
5 3-MOS DEC-31-1999 SEP-26-1999 5,882 0 19,911 0 12,877 40,695 838,382 197,767 691,536 103,867 0 0 0 374,765 5,290 691,536 240,674 240,674 24,641 132,341 0 0 3,723 104,610 8,447 96,163 0 0 0 96,163 1.84 1.83
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