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 29, 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 otherjurisdiction 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 11, 1998
(Representing Limited Partner Interests) 52,229,566
<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 10
8-K
Signatures 11
Index to 12
Exhibits
<PAGE>
<TABLE>
PART I - FINANCIAL INFORMATION
Item 1. - Financial Statements
CEDAR FAIR, L.P.
CONSOLIDATED BALANCE SHEETS
(In thousands)
<CAPTION>
<S> 3/29/98 12/31/97
ASSETS <C> <C>
Current Assets:
Cash $ 1,171 $ 2,520
Receivables 5,289 6,530
Inventories 14,110 9,055
Prepaids 4,893 3,849
25,463 21,954
Land, Buildings, Rides and Equipment
Land 127,050 123,550
Land improvements 84,134 84,134
Buildings 158,550 158,550
Rides and equipment 332,687 331,342
Construction in progress 33,324 17,333
735,745 714,909
Less accumulated depreciation (150,179) (147,772)
585,566 567,137
Intangibles, net of amortization 10,566 10,528
$ 621,595 $ 599,619
LIABILITIES AND PARTNERS' EQUITY
Current Liabilities:
Accounts payable $ 24,741 $ 15,644
Distribution payable to partners 16,810 14,768
Accrued interest 2,023 1,576
Accrued taxes 5,903 4,602
Accrued salaries, wages and benefits 7,648 11,305
Self-insurance reserves 8,330 8,946
Other accrued liabilities 7,492 5,585
72,947 62,426
Other Liabilities 10,914 10,312
Long-Term Debt:
Revolving credit loans 144,400 139,750
Term debt 100,000 50,000
244,400 189,750
Redeemable Limited Partnership Units 41,063 51,750
Partners' Equity:
Special L.P. interests 5,290 5,290
General partners 212 413
Limited partners, 52,268 and 52,403 units
outstanding at March 29, 1998 and
December 31, 1997, respectively 246,769 279,678
252,271 285,381
$ 621,595 $ 599,619
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>
<S> Three months ended Twelve months ended
3/29/98 3/30/97 3/29/98 3/30/97
<C> <C> <C> <C>
Net revenues $18,011 $ 1,418 $280,730 $251,593
Costs and expenses:
Cost of products sold 3,045 280 28,771 25,196
Operating expenses 27,253 13,046 123,007 98,184
Selling, general and
administrative 4,404 2,885 33,019 29,062
Depreciation and
amortization 2,494 263 23,759 19,236
37,196 16,474 208,556 171,678
Operating income (loss) (19,185) (15,056) 72,174 79,915
Interest expense, net 3,641 1,902 9,584 6,976
Net income (loss) before
taxes (22,826) (16,958) 62,590 72,939
Provision for taxes 661 - 661 -
Net income (loss) (23,487) (16,958) 61,929 72,939
Net income (loss) allocated
to general partners (117) (170) 383 729
Net income (loss) allocated
to limited partners $(23,370) $(16,788) $61,546 $72,210
Earnings per limited partner
unit:
Weighted average limited
partner units
outstanding - basic 51,218 45,920 47,246 45,920
Net income per limited
partner unit - basic $ (.46) $ (.37) $ 1.30 $ 1.57
Weighted average limited
partner units
outstanding - diluted 52,631 46,195 47,821 46,140
Net income per limited
partner unit - diluted $ (.44) $ (.36) $ 1.29 $ 1.57
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>
<S> Special General Limited Total
L.P. Partners' Partners' Partners'
Interests Equity Equity Equity
<C> <C> <C> <C>
Balance at December
31, 1997 $5,290 $ 413 $ 279,678 $ 285,381
Expiration of
redemption rights on -- -- 7,187 7,187
limited partnership
units
Allocation of net
loss -- (117) (23,370) (23,487)
Distribution declared
($.32 per limited -- (84) (16,726) (16,810)
partner unit)
Balance at March 29,
1998 $5,290 $ 212 $ 246,769 $ 252,271
The accompanying Notes to Consolidated Financial Statements are
an integral part of these statements.
<PAGE>
CEDAR FAIR, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOW
(In thousands)
<CAPTION>
<S> Three months ended Twelve months ended
3/29/98 3/30/97 3/29/98 3/30/97
<C> <C> <C> <C>
CASH FLOWS FROM (FOR) OPERATING
ACTIVITIES
Net income (loss) $(23,487) $(16,958) $61,929 $72,939
Adjustments to reconcile net
income to net cash from (for)
operating activities
Depreciation and amortization 2,494 263 23,759 19,236
Change in assets and
liabilities, net of effects from
acquisitions:
Increase in inventories (5,055) (4,801) (468) (336)
Decrease (increase) in current
and other assets (483) 451 (359) 171
Increase in accounts payable 9,101 10,219 1,337 1,557
Increase (decrease) in self-
insurance reserves ( 1,176) (39) (556) 55
Increase (decrease) in other
current liabilities (2) (3,291) 3,160 (815)
Increase in other liabilities 368 250 3,395 2,714
Net cash from (for) operating
activities (18,240) (13,906) 92,197 95,521
CASH FLOWS (FOR) INVESTING
ACTIVITIES
Capital expenditures (19,491) (10,068) (54,411) (29,202)
Acquisition of Knott's Berry
Farm:
Land, buildings, rides and
equipment acquired - - (263,030) -
Negative working capital
assumed, net of cash acquired - - 11,626 -
Acquisition of JHW Limited
Partnership:
Land, buildings and equipment
acquired - - - (16,295)
Negative working capital
assumed, net of cash acquired - - - 442
Net cash (for) investing
activ ities (19,491) (10,068) (305,815) (45,055)
CASH FLOWS FROM (FOR) FINANCING
ACTIVITIES
Net borrowings (payments) on
revolving credit loans 4,650 37,800 (21,000) (10,275)
Refinancing of revolving credit
with term debt 50,000 - 50,000 -
Repayment of term debt - - (4,500) -
Distributions paid to partners (14,768) (14,495) (58,527) (55,661)
Withdrawal of Special General
Partner - - (196) -
Acquisition of Knott's Berry
Farm:
Borrowings on revolving credit
loans - - 94,500 -
Issuance of limited partnership
units - - 157,402 -
Redemption of limited
partnership units (3,500) - (3,500) -
Acquisition of JHW Limited
Partnership:
Borrowings on revolving credit
loans - - - 11,475
Long-term debt of JHW Limited
Partnership - - - 4,500
Net cash from (for) financing
activities 36,382 23,305 214,179 (49,961)
CASH:
Net increase (decrease) for the
period (1,349) (669) 561 505
Balance, beginning of period 2,520 1,279 610 105
Balance, end of period $ 1,171 $ 610 $ 1,171 $ 610
SUPPLEMENTAL INFORMATION
Cash payments for interest
expense $ 3,194 $ 2,609 $ 8,409 $ 5,233
The accompanying Notes to Consolidated Financial Statements are
an integral part of these statements.
</TABLE>
<PAGE>
CEDAR FAIR, L.P.NOTES TO CONSOLIDATED FINANCIAL STATEMENTSFOR THE
QUARTERS ENDEDMARCH 29, 1998 AND MARCH 30, 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 the interim periods 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 March 29, 1998 and March 30, 1997 to accompany the
quarterly results. Because amounts for the 12 months ended March
29, 1998 include actual 1997 season 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 March 29, 1998 and March 30, 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 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: (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.
<PAGE>
(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 first quarter, the
Partnership repurchased 135,283 units at an aggregate price of
$3.5 million, and the redemption rights on 364,717 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 March 30, 1997.
Net revenues $21,142,000
Net income (22,143,000)
Net income per $ (.42)
limited partner
unit - diluted
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
3/29/98 3/30/97 3/29/98 3/30/97
(in thousands except per unit data)
Basic weighted average
units outstanding 51,218 45,920 47,246 45,920
Effect of dilutive units:
Deferred units 342 275 307 220
Contingent units -
Knott's acquisition 1,071 - 268 -
Diluted weighted average
units oustanding 52,631 46,195 47,821 46,140
Net income (loss) per
unit - basic $ (.46) $ (.37) $ 1.30 $ 1.57
Net income (loss) per
unit - diluted $ (.44) $ (.36) $ 1.29 $ 1.57
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations:
The Partnership's revenues for the first quarter from its
seasonal operations have historically been minimal and are
primarily from restaurant operations, marina rentals and the
Radisson / TGI Friday's operations at Cedar Point. Net revenues
for the quarter ended March 29, 1998 increased to $18,011,000
from $1,418,000 for the quarter ended March 30, 1997, principally
due to the acquisition of Knott's Berry Farm, which operates year-
round.
Operating results for the first quarter include normal off-season
operating, maintenance and administrative expenses at the
Partnership's original four parks and daily operations at Knott's
Berry Farm in 1998. The operating loss for the quarter was $19.2
million compared with $15.1 million in 1997, with the normal
first quarter loss at Knott's accounting for the increase in the
current period. After higher interest expense resulting from the
acquisition, and recognition of a $661,000 charge related to the
newly-enacted tax on publicly traded partnerships, the net loss
for the quarter was $23.5 million, or $.44 per limited partner
unit, compared with a net loss of $17.0 million, or $.36 per
unit, in 1997.
Included in costs and expenses are approximately $1,318,000 of
incentive fees payable to the general partner relating to the
1998 first quarter distribution, which exceeded the minimum
distribution as defined in the partnership agreement by 13.87
cents per unit, or $7,289,000 in the aggregate. This compares to
$1,137,000 of incentive fees in the 1997 first quarter.
Financial Condition:
The Partnership has available through April 2002 a $200 million
revolving credit facility, of which $144.4 million was borrowed
and in use as of March 29, 1998. The negative working capital
ratio of 2.9 at March 29, 1998 is the result of the Partnership's
highly seasonal business and careful management of cash flow.
Current assets are at normal seasonal levels and credit
facilities are in place to fund current liabilities as required.
<PAGE>
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
Exhibits:
(a) Exhibit (20) - 1998 First Quarter Results Press Release
(b) Reports on Form 8-K: None
<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: May 12, 1998 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>
INDEX TO EXHIBITS
Page Number
Exhibit (20) 1998 First Quarter Results Press
Release, May 12, 1998 13
<PAGE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> 12/31/98
<PERIOD-END> 03/29/98
<CASH> 1,171
<SECURITIES> 0
<RECEIVABLES> 5,289
<ALLOWANCES> 0
<INVENTORY> 14,110
<CURRENT-ASSETS> 25,463
<PP&E> 735,745
<DEPRECIATION> 150,179
<TOTAL-ASSETS> 621,595
<CURRENT-LIABILITIES> 72,947
<BONDS> 0
0
0
<COMMON> 246,981
<OTHER-SE> 5,290
<TOTAL-LIABILITY-AND-EQUITY> 621,595
<SALES> 18,011
<TOTAL-REVENUES> 18,011
<CGS> 3,045
<TOTAL-COSTS> 37,196
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,641
<INCOME-PRETAX> (22,826)
<INCOME-TAX> 661
<INCOME-CONTINUING> (22,487)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (22,487)
<EPS-PRIMARY> (.46)
<EPS-DILUTED> (.44)
</TABLE>
