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 26, 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 34-1560655
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Cedar Point Drive, Sandusky, Ohio 44870-5529
(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 8, 2000
(Representing Limited Partner 51,572,525
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
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>
3/26/00 12/31/99
ASSETS
Current Assets:
Cash $2,550 $ 638
Receivables 2,446 7,457
Inventories 17,541 11,951
Prepaids 5,650 4,138
28,187 24,184
Land, Buildings, Rides and Equipment:
Land 134,896 134,884
Land improvements 96,610 95,240
Buildings 214,231 207,973
Rides and equipment 399,219 391,312
Construction in progress 56,277 44,484
901,233 873,893
Less accumulated depreciation (201,459) (199,253)
699,774 674,640
Intangibles, net of amortization 10,056 10,137
$ 738,017 $ 708,961
LIABILITIES AND PARTNERS' EQUITY
Current Liabilities:
Accounts payable $28,770 $21,563
Distribution payable to partners 19,437 18,860
Accrued interest 1,099 2,789
Accrued taxes 21,486 20,176
Accrued salaries, wages and benefits 9,463 10,831
Self-insurance reserves 8,775 9,371
Other accrued liabilities 3,728 2,969
92,758 86,559
Other Liabilities 11,017 11,216
Long-Term Debt:
Revolving credit loans 234,350 161,200
Term debt 100,000 100,000
334,350 261,200
Partners' Equity:
Special L.P. interests 5,290 5,290
General partner 320 549
Limited partners, 51,573 and 51,798 units
outstanding at
March 26, 2000 and December 31, 294,282 344,147
1999, respectively
299,892 349,986
$ 738,017 $ 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 ended Twelve months ended
3/26/00 3/28/99 3/26/00 3/28/99
<S> <C> <C> <C> <C>
Net revenues:
Admissions $8,524 $9,855 $216,168 $216,517
Food, merchandise and 10,225 11,507 182,908 180,962
games
Accommodations and other 1,799 1,835 36,276 27,207
20,548 23,197 435,352 424,686
Costs and expenses:
Cost of products sold 3,090 3,637 48,857 48,653
Operating expenses 29,308 26,595 188,620 178,169
Selling, general and 6,585 7,134 50,304 50,669
administrative
Depreciation and 3,249 3,289 35,042 32,860
amortization
42,232 40,655 322,823 310,351
Operating income (loss) (21,684) (17,458) 112,529 114,335
Interest expense 4,100 3,533 15,938 14,552
Income (loss) before (25,784) (20,991) 96,591 99,783
taxes
Provision for taxes 768 840 15,508 14,686
Net income (loss) (26,552) (21,831) 81,083 85,097
Net income (loss) (133) (109) 405 425
allocated to general
partner
Net income (loss) $(26,419) $(21,722) $80,678 $84,672
allocated to limited
partners
Earnings per limited
partner unit:
Weighted average limited
partner units 51,658 51,940 51,861 51,335
outstanding - basic
Net income per limited $ (.51) $ (.42) $ 1.56 $ 1.65
partner unit - basic
Weighted average limited
partner units 52,162 52,384 52,340 52,389
outstanding -
diluted
Net income per limited $ (.51) $ (.41) $ 1.54 $ 1.62
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 $ 5,290 $ 549 $ 344,147 $ 349,986
December 31, 1999
Units - - (4,105) (4,105)
Repurchased
Allocation of net - (133) (26,419) (26,552)
loss
Distribution - (96) (19,341) (19,437)
declared
($.375 per
limited partner
unit)
Balance at March $ 5,290 $ 320 $ 294,282 $ 299,892
26, 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)
<CAPTION>
Three months ended Twelve months ended
3/26/00 3/28/99 3/26/00 3/28/99
<S> <C> <C> <C> <C>
CASH FLOWS FROM (FOR)
OPERATING ACTIVITIES
Net income (loss) $(26,552) $(21,831) $81,083 $85,097
Adjustments to reconcile
net income (loss) to net
cash from (for) operating
activities
Depreciation and 3,249 3,289 35,042 32,860
amortization
Change in assets and
liabilities, net of
effects from acquisitions:
(Increase) in inventories (5,590) (5,928) (1,323) (793)
Decrease in current and 3,499 1,677 33 2,265
other assets
Increase in accounts 7,207 10,190 1,401 2,461
payable
Increase in accrued taxes 1,310 1,219 1,311 14,272
Increase (decrease) in (596) 161 440 5
self-insurance reserves
Increase (decrease) in (2,299) (3,475) 1,460 (4,528)
other current liabilities
Increase (decrease) in (199) 17 (753) 856
other liabilities
Net cash from (for) (19,971) (14,681) 118,694 132,495
operating activities
CASH FLOWS FROM (FOR)
INVESTING ACTIVITIES
Capital expenditures (28,302) (17,060) (91,642) (65,624)
Acquisition of White Water
Canyon:
Land, buildings, rides and - - (11,796) -
equipment acquired
Negative working capital - - 227 -
assumed
Acquisition of the Buena
Park Hotel:
Land, buildings, and - (17,230) - (17,230)
equipment acquired
Working capital acquired - (206) - (206)
Net cash (for) investing (28,302) (34,496) (103,211) (83,060)
activities
CASH FLOWS FROM (FOR)
FINANCING ACTIVITIES
Net borrowings on 73,150 49,914 55,081 5,864
revolving credit loans
Distributions paid to (18,860) (16,979) (74,366) (67,611)
partners
Repurchase of limited (4,105) - (7,548) -
partnership units
Acquisition of White Water
Canyon:
Borrowings on revolving - - 11,569 -
credit loans
Acquisition of the Buena
Park Hotel:
Borrowings on revolving - 17,436 - 17,436
credit loans
Acquisition of Knott's
Berry Farm:
Redemption of limited - - - (3,964)
partnership units
Net cash from (for) 50,185 50,371 (15,264) (48,275)
financing activities
CASH
Net increase for the 1,912 1,194 219 1,160
period
Balance, beginning of 638 1,137 2,331 1,171
period
Balance, end of period $ 2,550 $ 2,331 $ 2,550 $ 2,331
SUPPLEMENTAL INFORMATION
Cash payments for interest $ 5,790 $ 5,379 $ 16,147 $
expense 15,267
Interest capitalized 880 - 1,280 -
Cash payments for income 126 - 14,634 -
taxes
Reduction of final - - -
purchase price of Knott's 3,506
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 26, 2000 AND MARCH 28, 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 and cash flows for the preceding twelve month periods ended
March 26, 2000 and March 28, 1999 to accompany the quarterly results.
Because amounts for the 12 months ended March 26, 2000 include actual
1999 peak season operating results, they are not indicative of 2000
full calendar year operations.
(1) Significant Accounting and Reporting Policies:
The Partnership's consolidated financial statements for the quarters
ended March 26, 2000 and March 28, 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 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 operates
Knott's Camp Snoopy at the Mall of America in Bloomington, Minnesota
under a management contract. 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 (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 has undergone a
significant renovation throughout the past six months, and its 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 Twelve months
ended ended
3/26/00 3/28/99 3/26/00 3/28/99
(in thousands except per unit data)
<S> <C> <C> <C> <C>
Basic weighted 51,658 51,940 51,861 51,335
average units
outstanding
Effect of dilutive
units:
Deferred units 504 404 449 370
Contingent units - - 40 30 684
Knott's acquisition
Diluted weighted 52,162 52,384 52,340 52,389
average units
outstanding
Net income per unit - $(.51) $(.42) $ 1.56 $ 1.65
basic
Net income per unit - $(.51) $(.41) $ 1.54 $ 1.62
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 2000 decreased to $20.5 million
from $23.2 million in 1999, principally due to decreased early-season
attendance at Knott's Berry Farm compared to last year's first
quarter, which benefited significantly from the very successful debut
of the GhostRider roller coaster and an earlier Easter season.
However, April attendance at Knott's Berry Farm improved significantly
and the park is now nearly on pace with 1999's record level. 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. Operating expenses increased in
the first quarter of 2000 due in part to the renovation of the Knott's
Radisson Resort Hotel and the acquisition of the White Water Canyon
water park late in 1999. The operating loss for the quarter was $21.7
million compared with $17.5 million in 1999, and net loss for the
quarter was $26.6 million, or $.51 per limited partner unit, compared
with a net loss of $21.8 million, or $.41 per unit, in 1999.
Included in costs and expenses are approximately $1,711,000 of
incentive fees payable to the general partner relating to the 2000
first 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 1999 first quarter.
Financial Condition:
The Partnership has available through April 2002 a $200 million
revolving credit facility and an additional $90 million revolving
credit facility available through November 2000. Borrowings under
these credit facilities were $234.35 million as of March 26, 2000.
Current assets and liabilities are at normal seasonal levels at March
26, 2000, 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 through the end of 2000. The Partnership expects to arrange
appropriate revolving credit facilities sufficient to fund its cash
requirements beyond the current year.
<PAGE>
Year 2000 Compliance:
The Partnership implemented all changes it believed to be needed for
its computer-dependent rides and equipment and its internal
information systems, and did not experience any significant
malfunctions or errors in its operating or business systems when the
year changed from 1999 to 2000. Based on operations since January 1,
2000, the Partnership does not expect any significant impact to its
ongoing business as a result of the Year 2000 issue. However, as
daily operations at the Partnership's seasonal parks have just begun
in April and May of 2000, it is still possible that the full impact of
the date change has not been fully recognized. The Partnership
believes that any future problems, not yet recognized, are likely to
be minor and correctable.
In addition, the Partnership's parks could be negatively impacted if
its major utility or financial service providers are adversely
affected by the Year 2000 issue. The Partnership currently is not
aware of any significant Year 2000 problems that have arisen for its
principal suppliers of essential utilities or financial services.
The Partnership expended less than $1 million in Year 2000 readiness
efforts from 1997 to 1999. These efforts included replacing some
outdated, noncompliant hardware and reprogramming or replacing some
noncompliant software.
<PAGE>
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
Exhibits:
(a) Exhibit (20) - 2000 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, 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 First Quarter Press Release. 13
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<PERIOD-END> MAR-26-2000
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<RECEIVABLES> 2446
<ALLOWANCES> 0
<INVENTORY> 17541
<CURRENT-ASSETS> 28187
<PP&E> 901233
<DEPRECIATION> 201459
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0
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<COMMON> 294602
<OTHER-SE> 5290
<TOTAL-LIABILITY-AND-EQUITY> 738017
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<TOTAL-REVENUES> 20548
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<TOTAL-COSTS> 42232
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</TABLE>
