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)
<PAGE>
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
<PAGE>
<TABLE>
PART I - FINANCIAL INFORMATION
Item 1. - Financial Statements
CEDAR FAIR, L.P.
CONSOLIDATED BALANCE SHEETS
(In thousands)
<CAPTION>
<S> <C> <C>
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.
<PAGE>
CEDAR FAIR, L.P.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands except per unit data)
<CAPTION>
Three months ended Twelve months ended
3/28/99 3/29/98 3/28/99 3/29/98
<S> <C> <C> <C> <C>
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.
<PAGE>
CEDAR FAIR, L.P.
CONSOLIDATED STATEMENTS OF PARTNERS' EQUITY
(In thousands)
<CAPTION>
Special General Limited Total
L.P. Partner's Partners' Partners'
Interests Equity Equity Equity
<S> <C> <C> <C> <C>
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.
<PAGE>
CEDAR FAIR, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
<CAPTION>
Three months ended Twelve months ended
3/28/99 3/29/98 3/28/99 3/29/98
<S> <C> <C> <C> <C>
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.
</TABLE>
<PAGE>
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.
<PAGE>
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:
<TABLE>
<CAPTION>
Three months Twelve months ended
ended
3/28/99 3/29/98 3/28/99 3/29/98
(in thousands except per unit data)
<S> <C> <C> <C> <C>
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
</TABLE>
<PAGE>
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.
<PAGE>
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.
<PAGE>
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.
<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
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)
<PAGE>
INDEX TO EXHIBITS
Page Number
Exhibit (20) 1999 First Quarter Press Release. 14
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-28-1999
<CASH> 2,331
<SECURITIES> 0
<RECEIVABLES> 3,080
<ALLOWANCES> 0
<INVENTORY> 16,218
<CURRENT-ASSETS> 26,662
<PP&E> 809,788
<DEPRECIATION> 178,756
<TOTAL-ASSETS> 668,095
<CURRENT-LIABILITIES> 86,750
<BONDS> 0
0
0
<COMMON> 296,585
<OTHER-SE> 5,290
<TOTAL-LIABILITY-AND-EQUITY> 668,095
<SALES> 23,197
<TOTAL-REVENUES> 23,197
<CGS> 3,637
<TOTAL-COSTS> 40,655
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,533
<INCOME-PRETAX> (20,991)
<INCOME-TAX> 840
<INCOME-CONTINUING> (21,831)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (21,831)
<EPS-PRIMARY> (.42)
<EPS-DILUTED> (.41)
</TABLE>
