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 28, 1997
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, 1997
(Representing Limited Partner Interests) 22,960,208
<PAGE>
CEDAR FAIR, L.P.
INDEX
Part I - Financial Information
Item 1. Financial Statements 3-8
Item 2. Management's Discussion and 9
Analysis of Financial
Condition and Results of
Operations
Part II - Other Information
Item 6. Exhibits and Reports on Form 8-K 10
8-K
Signatures 11
Exhibit Index 12
<PAGE>
<TABLE>
PART I - FINANCIAL INFORMATION
Item 1. - Financial Statements
CEDAR FAIR, L.P.
CONSOLIDATED BALANCE SHEETS
(In thousands)
<CAPTION>
<S>
ASSETS 9/28/97 12/31/96
Current Assets: <C> <C>
Cash $ 1,448 $ 1,279
Receivables 13,142 2,984
Inventories 4,738 4,446
Prepaids 931 3,021
20,259 11,730
Land, Buildings and Equipment:
Land 29,340 29,056
Land improvements 46,842 39,711
Buildings 111,627 105,545
Rides and equipment 250,427 231,457
Construction in progress 5,408 6,454
443,644 412,223
Less accumulated depreciation (149,086) (130,585)
294,558 281,638
Intangibles, net of amortization 10,559 10,736
$ 325,376 $ 304,104
LIABILITIES AND PARTNERS' EQUITY
Current Liabilities:
Accounts payable $ 7,171 $ 5,251
Distribution payable to partners 14,768 14,495
Accrued interest 491 1,555
Accrued taxes 3,124 3,604
Accrued salaries, wages and benefits 9,136 5,539
Self-insurance reserves 7,046 6,635
Other accrued liabilities 5,798 2,162
47,534 39,241
Other Liabilities 8,598 7,269
Long-Term Debt:
Revolving credit loans 11,800 33,100
Term debt 50,000 54,500
61,800 87,600
Partners' Equity:
Special L.P. interests 5,290 5,290
General partners 552 717
Limited partners, 22,960,208 201,602 163,987
units outstanding
207,444 169,994
$ 325,376 $ 304,104
The accompanying Notes to Consolidated Financial Statements are
an integral part of these balance sheets.
<PAGE>
CEDAR FAIR, L.P.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands except per unit data)
<CAPTION> Three months ended Twelve months ended
9/28/97 9/29/96 9/28/97 9/29/96
<S> <C> <C> <C> <C>
Net revenues $174,786 $ 167,503 $ 258,334 $ 249,362
Costs and expenses:
Cost of products sold 16,414 16,254 25,239 24,986
Operating expenses 45,491 40,721 106,290 95,739
Selling, general and 14,935 14,202 30,235 28,935
administrative
Depreciation and amortization 12,268 10,976 21,098 18,794
89,108 82,153 182,862 168,454
Operating income 85,678 85,350 75,472 80,908
Interest expense, net 1,733 1,470 7,430 7,058
Net income 83,945 83,880 68,042 73,850
Net income allocated to
general partners 420 839 261 739
Net income allocated to
limited partners $ 83,525 $ 83,041 $ 67,781 $ 73,111
Weighted average limited
partner units and
equivalents outstanding 23,103 23,051 23,096 23,047
Net income per limited
partner unit $ 3.62 $ 3.60 $ 2.93 $ 3.17
The accompanying Notes to Consolidated Financial Statements are
an integral part of these statements.
<PAGE>
CEDAR FAIR, L.P.
CONSOLIDATED STATEMENTS OF PARTNERS' EQUITY
(In thousands)
<CAPTION>
Special General Limited Total
L.P. Partners' Partners' Partners'
Interests Equity Equity Equity
<S> <C> <C> <C> <C>
Balance at December $ 5,290 $ 717 $ 163,987 $ 169,994
31, 1996
Allocation of net - (170) (16,788) (16,958)
loss
Distribution declared - (145) (14,350) (14,495)
($.625 per limited
partner unit)
Balance at March 30, 5,290 402 132,849 138,541
1997
Allocation of net - 144 14,273 14,417
income
Distribution declared - (145) (14,350) (14,495)
($.625 per limited
partner unit)
Balance at June 29, 5,290 401 132,772 138,463
1997
Withdrawal of the - (196) - (196)
Special General Partner
Allocation of net - 420 83,525 83,945
income
Distribution declared - (73) (14,695) (14,768)
($.64 per limited
partner unit)
Balance at September $ 5,290 $ 552 $ 201,602 $ 207,444
28, 1997
The accompanying Notes to Consolidated Financial Statements are
an integral part of these statements.
<PAGE>
CEDAR FAIR, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
<CAPTION> Three months ended Twelve months ended
9/28/97 9/29/96 9/28/97 9/29/96
<S> <C> <C> <C> <C>
CASH FLOWS FROM (FOR) OPERATING
ACTIVITIES
Net income $ 83,945 $ 83,880 $ 68,042 $ 73,850
Adjustments to reconcile net
income to net cash from
operating activities
Depreciation and amortization 12,268 10,976 21,098 18,794
Change in assets and liabilities
net of effects from acquisition
of JHW Limited Partnership:
Decrease (increase) in inventories 6,616 7,258 (168) (280)
Decrease (increase) in current and 1,280 (1,254) 1,797 (1,871)
other assets
Increase (decrease) in accounts (12,606) (11,660) 1,113 (1,721)
payable
Increase (decrease) in self- 77 887 (281) 912
insurance reserves
Increase (decrease) in other (783) (1,359) 406 937
current liabilities
Increase in other liabilities 377 777 2,974 1,913
Net cash from operating activities 91,174 89,505 94,981 92,534
CASH FLOWS FROM (FOR) INVESTING
ACTIVITIES
Capital expenditures (5,523) (3,190) (38,270) (30,573)
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 activities (5,523) (3,190) (54,123) (30,573)
CASH FLOWS FROM (FOR) FINANCING
ACTIVITIES
Net payments on revolving credit (74,300) (71,200) (4,175) (3,200)
loans and term debt
Distributions paid to partners (14,495) (13,335) (57,980) (53,342)
Withdrawal of the Special General (196) - (196) -
Partner
Acquisition of JHW Limited
Partnership:
Borrowings on revolving credit - - 11,475 -
loans
Long-term debt of JHW Limited - - 4,500 -
Partnership
Net cash (for) financing activities (88,991) (84,535) (46,376) (56,542)
Cash:
Net increase (decrease) for the (3,340) 1,780 (5,518) 5,419
period
Balance, beginning of period 4,788 5,186 6,966 1,547
Balance, end of period $ 1,448 $ 6,966 $ 1,448 $ 6,966
SUPPLEMENTAL INFORMATION
Cash payments for interest expense $ 3,195 $ 2,682 $ 7,400 $ 7,128
The accompanying Notes to Consolidated Financial Statements are
an integral part of these statements.
</TABLE>
<PAGE>
CEDAR FAIR, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE QUARTERS ENDED
SEPTEMBER 28, 1997 AND SEPTEMBER 29, 1996
(1) Interim Reporting:
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.
The Partnership operates four seasonal amusement parks: Cedar
Point, located on Lake Erie between Cleveland and Toledo;
Valleyfair, near Minneapolis/St. Paul; Dorney Park & Wildwater
Kingdom, near Allentown, Pennsylvania; and Worlds of Fun and
Oceans of Fun, in Kansas City, Missouri. These parks generate
virtually all of the Partnership's revenue during an operating
season which starts in April or May and ends in October, with the
major portion concentrated in the third quarter during the peak
vacation months of July and August.
Due to the highly seasonal nature of the Partnership's
operations, the results for any interim period are not indicative
of the results to be expected for the full year. Accordingly,
the Partnership has elected to present financial information
regarding operations for the preceding twelve month periods ended
September 28, 1997 and September 29, 1996 to accompany the
quarterly results. Because amounts for the 12 months ended
September 28, 1997 include actual 1996 fourth quarter operations,
they are not necessarily indicative of 1997 full calendar year
operations.
(2) Significant Accounting and Reporting Policies:
The Partnership's consolidated financial statements for the
quarters ended September 28, 1997 and September 29, 1996 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, 1996, which
were included in the Form 10-K filed on March 27, 1997. 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.
<PAGE>
To assure that its 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 and 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 1996 Annual Report to
Unitholders, on December 31, 1996 the Partnership acquired
substantially all of the equity of JHW Limited Partnership, which
owns a 237-room Radisson hotel and a TGI Friday's restaurant near
Cedar Point in Sandusky, Ohio. In the third quarter of 1997, the
Partnership acquired the remaining small equity interest in JHW
for no additional consideration.
In addition, on October 21, 1997, the Partnership announced that
it had reached agreement in principle for the acquisition of
Knott's Berry Farm, a privately held partnership 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. This acquisition is expected to be
completed by the end of 1997.
(4) Partnership Tax Status:
The Partnership announced on September 25, 1997, that it had
decided to remain a publicly traded partnership under the terms
of recently enacted tax legislation. The new law provides for
the payment by the Partnership of a 3.5% tax on gross income
beginning in 1998 in place of corporate income taxes.
(5) Two-for-One Unit Split:
On September 25, 1997, the Partnership declared a two-for-one
split of its limited partnership units distributable November 17,
1997, to holders of record October 31. This split is not
reflected in these financial statements.
(6) Special General Partner Withdrawal:
Effective July 1, 1997, the Special General Partner voluntarily
withdrew from the Partnership and, in accordance with the
Partnership Agreement, received $400,000 as final payment of the
balance of its 1997 fees. After this transaction, the
Partnership's limited partner units represent, in the aggregate,
a 99.5% interest in the income, losses, and cash distributions of
the Partnership, compared with a 99.0% interest in prior periods.
Cedar Fair Management Company remains the Managing General
Partner of the Partnership with a 0.5% partnership interest.
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations:
Net revenues for the third quarter ended September 28, 1997
increased 4% to $174.8 million from $167.5 million for the
quarter ended September 29, 1996. On a combined basis, a 4%
increase in in-park guest per capita spending and new revenues
from the Radisson / TGI Friday's operations acquired last
December offset a 2% decrease in attendance for the quarter. Net
income for the period was relatively flat at $83.9 million, or
$3.62 per limited partner unit, compared with $3.60 per unit in
1996.
We are satisfied with our third quarter results, particularly
given the unusually cool and wet weather experienced at both
Cedar Point and Valleyfair during the peak vacation months of
July and August. For the entire 1997 operating season, combined
attendance totaled 6.8 million, the second highest in the
Partnership's history. In addition, combined guest per capita
spending continued to rise to a record $32.73 in 1997 from $31.75
in 1996.
Included in costs and expenses are approximately $1,200,000 of
incentive fees payable to the managing general partner relating
to the 1997 third quarter distribution, which exceeded the
minimum distribution as defined in the partnership agreement by
28.75 cents per unit, or $6.6 million in the aggregate. This
compares to $1,179,000 of incentive fees in the 1996 third
quarter.
Financial Condition:
Current assets and liabilities are at normal seasonal levels at
September 28, 1997. The negative working capital ratio of 2.3 at
September 28, 1997 is the result of the Partnership's highly
seasonal business and careful management of cash flow.
The Partnership has available through April 1999, a $95 million
revolving credit facility, of which $11.8 million was borrowed
and in use as of September 28, 1997. Seasonal cash flow and this
credit facility are expected to be adequate to meet current
working capital needs, planned capital expenditures and quarterly
distributions to partners.
<PAGE>
Partnership Tax Status:
Prompted by a recent change in federal tax laws, the Partnership
has announced its intention to remain a publicly traded
partnership. Through a provision in the tax bill signed into law
in August 1997, the exemption of existing publicly traded limited
partnerships from federal income taxes was made permanent, and a
new 3.5% tax is payable on partnership gross income beginning
January 1, 1998. The annual impact of the new tax is estimated
at $5-10 million. Under the prior law, the Partnership would
have been required to pay corporate income taxes beginning in
1998.
Acquisition:
The pending acquisition of Knott's Berry Farm will have a
material effect on the Partnership's financial condition and
results of operations in periods after the acquisition is
completed. The Partnership will need to significantly expand its
existing credit facilities and expects to issue a substantial
number of limited partnership units in the transaction. The new
park's operations are expected to generate sufficient cash flow
to adequately fund planned capital expenditures, additional
interest expense resulting from the acquisition, and cash
distributions on the units issued.
<PAGE>
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
Exhibits:
(a) Exhibit (20) 1997 Third Quarter Report and Cash Distribution Notice.
(b) Reports on None.
Form 8-K.
<PAGE>
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
Managing General Partner
Date: November 11, 1997 By: Bruce A. Jackson
Bruce A. Jackson
Vice President
(Chief Financial Officer)
By: Charles M. Paul
Charles M. Paul
Corporate Controller
(Chief Accounting Officer)
<PAGE>
EXHIBIT INDEX
Exhibit Page
20 Report to Unitholders, November 11, 1997 13
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-28-1997
<CASH> 1,488
<SECURITIES> 0
<RECEIVABLES> 13,142
<ALLOWANCES> 0
<INVENTORY> 4,738
<CURRENT-ASSETS> 20,259
<PP&E> 443,644
<DEPRECIATION> 149,086
<TOTAL-ASSETS> 325,376
<CURRENT-LIABILITIES> 47,534
<BONDS> 0
<COMMON> 201,602
0
0
<OTHER-SE> 5,842
<TOTAL-LIABILITY-AND-EQUITY> 325,376
<SALES> 174,786
<TOTAL-REVENUES> 174,786
<CGS> 16,414
<TOTAL-COSTS> 89,108
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,733
<INCOME-PRETAX> 83,945
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 83,945
<EPS-PRIMARY> 3.62
<EPS-DILUTED> 0
</TABLE>
