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 25, 2000
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.)
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
Depositary Units
(Representing Limited Partner
Interests)
Units Outstanding As Of
August 1, 2000
51,157,205
<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
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> <C> <C>
6/25/00 12/31/99
ASSETS
Current Assets:
Cash $ 10,547 $ 638
Receivables 15,730 7,457
Inventories 21,560 11,951
Prepaids 6,728 4,138
54,565 24,184
Land, Buildings, Rides and Equipment:
Land 135,238 134,884
Land improvements 112,147 95,240
Buildings 230,707 207,973
Rides and equipment 456,998 391,312
Construction in progress 7,219 44,484
942,309 873,893
Less accumulated depreciation (214,018) (199,253)
728,291 674,640
Intangibles, net of amortization 9,961 10,137
$792,817 $ 708,961
LIABILITIES AND PARTNERS' EQUITY
Current Liabilities:
Accounts payable $ 44,272 $ 21,563
Distribution payable to partners 19,437 18,860
Short-term borrowings 57,650 -
Accrued interest 3,253 2,789
Accrued taxes 25,216 20,176
Accrued salaries, wages and benefits 13,467 10,831
Self-insurance reserves 8,833 9,371
Other accrued liabilities 10,674 2,969
182,802 86,559
Other Liabilities 10,917 11,216
Long-Term Debt:
Revolving credit loans 200,000 161,200
Term debt 100,000 100,000
300,000 261,200
Partners' Equity:
Special L.P. interests 5,290 5,290
General partner 317 549
Limited partners, 51,573 and 51,798 units
outstanding at June 25, 2000 and December
31, 1999, respectively 293,491 344,147
299,098 349,986
$792,817 $ 708,961
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 Twelve months ended
ended
6/25/00 6/27/99 6/25/00 6/27/99
<S> <C> <C> <C> <C>
Net revenues:
Admissions $62,682 $60,253 $218,597 $218,527
Food, merchandise and games 55,909 54,569 184,248 181,900
Accommodations and other 10,913 9,381 37,808 27,917
129,504 124,203 440,653 428,344
Costs and expenses:
Cost of products sold 14,671 14,392 49,136 48,973
Operating expenses 57,851 54,542 191,929 180,779
Selling, general and 16,371 14,962 51,713 49,994
administrative
Depreciation and 11,831 12,048 34,825 34,373
amortization
100,724 95,944 327,603 314,119
Operating income 28,780 28,259 113,050 114,225
Interest expense 5,710 4,486 17,162 14,597
Income before taxes 23,070 23,773 95,888 99,628
Provision for taxes 4,427 4,534 15,401 15,065
Net income 18,643 19,239 80,487 84,563
Net income allocated to 93 96 402 423
general partner
Net income allocated to $18,550 $19,143 $80,085 $84,140
limited partners
Earnings per limited partner
unit:
Weighted average limited
partner units 51,573 51,940 51,769 51,530
outstanding - basic
Net income per limited $ .36 $ .37 $1.55 $ 1.63
partner unit - basic
Weighted average limited
partner units 52,053 52,381 52,250 52,375
outstanding - diluted
Net income per limited $ .36 $ .37 $1.53 $ 1.61
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 $ 549 $344,147 $349,986
31, 1999
Units Repurchased - - (4,105) (4,105)
Allocation of net - (133) (26,419) (26,552)
loss
Distribution - (96) (19,341) (19,437)
declared
($.375 per limited
partner unit)
Balance at March 26, 5,290 320 294,282 299,892
2000
Allocation of net - 93 18,550 18,643
income
Distribution - (96) (19,341) (19,437)
declared
($.375 per limited
partner unit)
Balance at June 25, $ 5,290 $ 317 $293,491 $299,098
2000
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)
Three months Twelve months ended
ended
6/25/00 6/27/99 6/25/00 6/27/99
CASH FLOWS FROM (FOR) OPERATING
ACTIVITIES
Net income $18,643 $19,239 $80,487 $84,563
Adjustments to reconcile net
income to net cash from
operating activities
Depreciation and amortization 11,831 12,048 34,825 34,373
Change in assets and
liabilities, net of effects
from acquisitions:
(Increase) in inventories (4,019) (3,693) (1,649) (1,263)
(Increase) decrease in current (14,355) (14,378) 57 (1,896)
and other assets
Increase in accounts payable 15,502 12,911 3,992 3,114
Increase (decrease) in accrued 3,730 (3,838) 8,879 7,023
taxes
Increase in self-insurance 58 392 106 1,432
reserves
Increase (decrease) in other 13,104 12,314 2,250 (3,803)
current liabilities
Increase (decrease) in other (100) (465) (388) 321
liabilities
Net cash from operating 44,394 34,530 128,559 123,864
activities
CASH FLOWS FROM (FOR) INVESTING
ACTIVITIES
Capital expenditures (40,260) (18,567) (113,336) (62,743)
Acquisition of the Buena Park
Hotel:
Land, buildings, and equipment - - - (17,230)
acquired
Working capital acquired - - - (206)
Acquisition of White Water
Canyon:
Land, buildings, rides and - - (11,796) -
equipment acquired
Negative working capital - - 227 -
assumed
Net cash (for) investing (40,260) (18,567) (124,905) (80,179)
activities
CASH FLOWS FROM (FOR) FINANCING
ACTIVITIES
Net borrowings on revolving 23,300 10,400 67,981 11,364
credit loans
Distributions paid to partners (19,437) (18,285) (75,518) (69,086)
Repurchase of limited - - (7,548) -
partnership units
Acquisition of the Buena Park
Hotel:
Borrowings on revolving credit - - - 17,436
loans
Acquisition of White Water
Canyon:
Borrowings on revolving credit - - 11,569 -
loans
Acquisition of Knott's Berry
Farm:
Redemption of limited - - - (2,940)
partnership units
Net cash from (for) financing 3,863 (7,885) (3,516) (43,226)
activities
CASH
Net increase for the period 7,997 8,078 138 459
Balance, beginning of period 2,550 2,331 10,409 9,950
Balance, end of period $10,547 $10,409 $10,547 $ 10,409
SUPPLEMENTAL INFORMATION
Cash payments for interest
expense $3,556 $2,419 $17,284 $15,321
Interest capitalized 745 - 2,025 -
Cash payments for income taxes 870 7,608 7,838 7,608
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
JUNE 25, 2000 AND JUNE 27, 1999
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 25, 2000
and June 27, 1999 to accompany the quarterly results. Because amounts
for the 12 months ended June 25, 2000 include actual 1999 peak season
operating results, they may not be indicative of 2000 full calendar
year operations.
(1) Significant Accounting and Reporting Policies:
The Partnership's consolidated financial statements for the quarters
ended June 25, 2000 and June 27, 1999 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, 1999, which were included in the Form 10-K
filed on March 30, 2000. 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. The Partnership also owns and
operates four seasonal water parks in Sandusky, Ohio; Buena Park,
California; Chula Vista, California, near San Diego; and Kansas City,
Missouri, and operates Knott's Camp Snoopy at the Mall of America in
Bloomington, under a management contract. Virtually all of the
Partnership's revenues from its four seasonal amusement parks, as well
as its four water 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.
<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
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 (7) in the 1999 Annual Report to unitholders, on
December 7, 1999, the Partnership acquired White Water Canyon, a water
park located near San Diego in Chula Vista, California, for a cash
purchase price of $11.6 million. The purchase price has been
allocated to assets and liabilities acquired based on their relative
fair values at the date of acquisition. White Water Canyon's assets,
liabilities and non-operating period expenses since December 7, 1999
are included in the accompanying consolidated financial statements.
On February 19, 1999, the Partnership acquired the 320-room Buena Park
Hotel, which is located adjacent to Knott's Berry Farm in Buena Park,
California. The purchase price of $17.4 million has been allocated to
the assets and liabilities acquired based on their relative fair
values at the date of acquisition. The hotel's assets, liabilities
and results of operations since February 19, 1999 are included in the
accompanying consolidated financial statements.
(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 ended Twelve months
ended
6/25/00 6/27/99 6/25/00 6/27/99
(in thousands except per unit data)
<S> <C> <C> <C> <C>
Basic weighted average 51,573 51,940 51,769 51,530
units outstanding
Effect of dilutive
units:
Deferred units 480 401 461 384
Contingent units - - 40 20 461
Knott's acquisition
Diluted weighted average 52,053 52,381 52,250 52,375
units outstanding
Net income per unit -
basic $ .36 $ .37 $ 1.55 $ 1.63
Net income per unit -
diluted $.36 $.37 $ 1.53 $ 1.61
</TABLE>
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations:
Net revenues for the quarter ended June 25, 2000, increased 4% to
$129.5 million from $124.2 million for the quarter ended June 27,
1999, and earnings before interest, taxes, depreciation and
amortization (EBITDA) increased 1% to $40.6 million from $40.3 million
for the same period last year. Operating income for the period
increased slightly to $28.8 million from $28.3 million, and net
income, after a significant rise in interest expense, decreased 3% to
$18.6 million, or $.36 per limited partner unit (diluted), from $19.2
million, or $.37 per unit, in 1999.
The increase in interest expense for the quarter was primarily the
result of higher interest rates, as well as increased borrowings from
the 1999 acquisitions of a hotel and water park in California and
significant capital expenditures at several parks for the 2000 season.
All other costs as a percent of revenues have remained relatively
level between years.
At our five amusement parks, we achieved a 5% increase in in-park
guest per capita spending for the quarter, offset slightly by a 1%
decrease in combined early-season attendance. Meanwhile, early-season
water park attendance was up strongly due to our two new California
water parks.
Early-season attendance at the Partnership's four seasonal amusement
parks has been below expectations due in part to cool and rainy
weather, and attendance at these parks has generally remained below
expected levels as the season has progressed. While guest response to
the new rides and attractions we introduced for the 2000 season has
been excellent, including Millennium Force at Cedar Point which has
received the highest guest-satisfaction ratings of any new ride we
have ever introduced, we have not yet seen the expected impact on
attendance.
Included in costs and expenses are approximately $1,711,000 of
incentive fees payable to the general partner relating to the 2000
second quarter distribution, which exceeds the minimum distribution as
defined in the partnership agreement by 18.25 cents per unit, or
$9,459,000 in the aggregate. This compares to $1,536,000 of incentive
fees in the second quarter of 1999.
A special meeting of the limited partners has been called on August
25, 2000 to seek approval of a plan to revise the Partnership's
general partner fee and executive compensation systems. The effect of
this plan, if approved, will be significant in the period it is
implemented and in subsequent reporting periods.
<PAGE>
Financial Condition:
The Partnership has available through April 2002 a $200 million
revolving credit facility and an additional $90 million revolving
credit facility is available through November 2000. Borrowings under
these credit facilities were $257.65 million as of June 25, 2000.
Current assets and liabilities are at normal seasonal levels at June
25, 2000, and the negative working capital ratio of 3.4 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 through the end of 2000. The Partnership expects to arrange
appropriate revolving credit facilities sufficient to fund any
additional seasonal cash requirements beyond the current year.
<PAGE>
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
Exhibits:
(a) Exhibit (20) - 2000 Second 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: August 9, 2000 Bruce A. Jackson
Bruce A. Jackson
Corporate Vice President -
Finance
(Chief Financial Officer)
Charles M. Paul
Charles M. Paul
Corporate Controller
(Chief Accounting Officer)
<PAGE>
INDEX TO EXHIBITS
Page Number
Exhibit (20) 2000 Second Quarter Press Release. 13
