CEDAR FAIR 10-K
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
10 - K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended: December 31, 2006
Commission file number 1-9444
CEDAR FAIR, L.P.
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| State of incorporation: DELAWARE
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I.R.S. Employer Identification
No.: 34-1560655 |
Principal executive offices: One Cedar Point Drive, Sandusky, Ohio 44870-5259
Registrant’s telephone number: (419) 626-0830
Securities registered pursuant to Section 12(b) of the Act:
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| Title of each class
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Name of each exchange on which registered |
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| Depositary Units (Representing Limited Partner Interests)
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New York Stock Exchange |
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of
the Securities Act. Yes þ No o
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or
Section 15(d) of the Act. Yes o No þ
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 þ No o
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is
not contained herein, and will not be contained, to the best of registrant’s knowledge, in
definitive proxy or information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer,
or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in
Rule 12b-2 of the Exchange Act.
Large accelerated filer þ Accelerated filer o Non-accelerated filer o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act. Yes o No þ
The aggregate market value of Depositary Units held by non-affiliates of the Registrant based on
the closing price of such units on June 25, 2006 of $26.62 per unit was approximately
$1,401,014,000.
Number of Depositary Units representing limited partner interests outstanding as of February 1,
2007: 54,110,743
DOCUMENTS INCORPORATED BY REFERENCE
Part III of this Form 10-K incorporates by reference certain information from the Registrant’s
definitive proxy statement for its annual meeting of unitholders to be held in May 2007, which will
be filed by the Registrant within 120 days after the close of its 2006 fiscal year.
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The Exhibit Index is located on page 48
Page 1 of 105 pages
PART I
ITEM 1. BUSINESS.
Introduction
Cedar Fair, L.P., together with its affiliated companies, (the “Partnership”) is a publicly traded
Delaware limited partnership formed in 1987 and managed by Cedar Fair Management, Inc., an Ohio
corporation whose shares are held by an Ohio trust (the “General Partner”). The Partnership is one
of the largest regional amusement park operators in the world and owns 12 amusement parks, five
outdoor water parks, one indoor water park and six hotels.
On June 30, 2006, the Partnership completed the acquisition of all of the outstanding shares of
capital stock of Paramount Parks, Inc. (“PPI”) from a subsidiary of CBS Corporation. Upon closing
of the transaction, the Partnership acquired, indirectly through its wholly owned subsidiary Magnum
Management Corporation, the following amusement parks: Canada’s Wonderland near Toronto, Canada;
Kings Island near Cincinnati, Ohio; Kings Dominion near Richmond, Virginia; Carowinds in Charlotte,
North Carolina; and Great America located in Santa Clara, California. The Partnership also
acquired Star Trek: The Experience, an interactive adventure in Las Vegas, and a management
contract for Gilroy Gardens Family Theme Park in Gilroy, California. The acquisition represents a
major strategic event in Cedar Fair’s history and is expected to result in cost synergies as well
as future growth opportunities. The results of PPI operations have been included in the
Consolidated Financial Statements from the date of acquisition. Further discussion of the PPI
transaction can be found under Note 3 to the Consolidated Financial Statements.
In 2006, including the PPI parks since their acquisition, the Partnership entertained approximately
19.3 million visitors. The amusement parks include: Cedar Point, located on Lake Erie between
Cleveland and Toledo in Sandusky, Ohio; Knott’s Berry Farm, located near Los Angeles in Buena Park,
California; Dorney Park & Wildwater Kingdom (“Dorney Park”), located near Allentown in South
Whitehall Township, Pennsylvania; Valleyfair, located near Minneapolis/St. Paul in Shakopee,
Minnesota; Worlds of Fun located in Kansas City, Missouri; Geauga Lake & Wildwater Kingdom (“Geauga
Lake”), located near Cleveland in Aurora, Ohio; Michigan’s Adventure located near Muskegon,
Michigan; and the five recently acquired parks noted above.
The parks are family-oriented, with recreational facilities for people of all ages, and provide
clean and attractive environments with exciting rides and entertainment. The Partnership also owns
and operates the Castaway Bay Indoor Waterpark Resort in Sandusky, Ohio, and five separate-gated
outdoor water parks. Three of the outdoor water parks are located adjacent to Cedar Point, Knott’s
Berry Farm and Worlds of Fun, the fourth is located near San Diego, and the fifth is in Palm
Springs, California. All rides and attractions at the amusement and water parks are owned and
operated by the Partnership.
The Partnership’s seasonal amusement parks are generally open during weekends beginning in April or
May, and then daily from Memorial Day until Labor Day, after which they are open during weekends in
September and, in some cases, October. The five water parks also operate seasonally, generally
from Memorial Day to Labor Day, plus some additional weekends before and after this period. As a
result, virtually all of the operating revenues of these parks are generated during an approximate
130 to 140-day operating season. Both Knott’s Berry Farm and Castaway Bay are open daily on a
year-round basis. Each park charges a basic daily admission price, which allows unlimited use of
most rides and attractions.
The demographic groups that are most important to the parks are young people ages 12 through 24 and
families. Families are believed to be attracted by a combination of rides and live entertainment
and the clean, wholesome atmosphere. Young people are believed to be attracted by the
action-packed rides. During their operating seasons, the parks conduct active television, radio,
newspaper and internet advertising campaigns in their major market areas geared toward these two
groups.
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Description of Parks
Cedar Point
Cedar Point, which was first developed as a recreational area in 1870, is located on a peninsula in
Sandusky, Ohio bordered by Lake Erie and Sandusky Bay, approximately 60 miles west of Cleveland and
100 miles southeast of Detroit. Cedar Point is believed to be the largest seasonal amusement park
in the United States, measured by the number of rides and attractions and the hourly ride capacity,
and has been named the Best Amusement Park in the World for nine consecutive years by Amusement
Today’s international survey. It serves a six-state region in the midwestern United States, which
includes nearly all of Ohio and Michigan, western Pennsylvania and New York, northern West Virginia
and Indiana, and southwestern Ontario, Canada. The park’s total market area includes approximately
26 million people, and the major areas of dominant influence in this market area, which are
Cleveland, Detroit, Toledo, Akron, Columbus, Grand Rapids, Flint, and Lansing, include
approximately 15 million people.
Located adjacent to the park is “Soak City,” a separate-gated water park that features more than 20
water rides and attractions, as well as “Challenge Park,” which includes extra-charge attractions
“RipCord,” a free-fall ride from a height of more than 15 stories, “X-Treme Trampoline,” two
18-hole themed miniature golf courses and two go-kart tracks.
Cedar Point also owns and operates four hotel facilities. The park’s only year-round hotel is
Castaway Bay, an indoor water park resort, which is located at the Causeway entrance to the park.
Castaway Bay features a tropical Caribbean theme with 237 hotel rooms centered around a
38,000-square-foot indoor water park. The park’s largest hotel, the historic Hotel Breakers, has
more than 600 guest rooms. Hotel Breakers has various dining and lounge facilities, a private
beach, lake swimming, a conference/meeting center and two outdoor pools. Located near the Causeway
entrance to the park is Breakers Express, a 350-room, limited-service seasonal hotel. In addition
to the Hotel Breakers and Breakers Express, Cedar Point offers the lakefront Sandcastle Suites
Hotel, which features 187 suites, a courtyard pool, tennis courts and a contemporary waterfront
restaurant.
Cedar Point also owns and operates the Cedar Point Marina, Castaway Bay Marina and Camper Village.
Cedar Point Marina is one of the largest full-service marinas on the Great Lakes and provides
dockage facilities for more than 740 boats, including floating docks and full guest amenities. In
addition, Cedar Point Marina features a Famous Dave’s Bar-B-Que restaurant and an upscale seafood
restaurant, called Bay Harbor, both of which are accessible by the general public. Castaway Bay
Marina is a full-service marina featuring 160 slips and full guest amenities. Camper Village
includes campsites for more than 100 recreational vehicles and Lighthouse Point, an upscale camping
area designed in a nautical New England style, which offers a total of 64 lakefront cottages, 40
cabins and 97 full-service recreation vehicle campsites.
The Partnership, through a wholly owned subsidiary, owns and operates the Cedar Point Causeway
across Sandusky Bay. This Causeway is a major access route to Cedar Point. The Partnership also
owns dormitory facilities located near the park that house up to 2,800 of the park’s approximately
4,200 seasonal and part-time employees.
Knott’s Berry Farm
Knott’s Berry Farm, located near Los Angeles in Buena Park, California, first opened in 1920 and
was acquired by the Partnership late in 1997. The park is one of several year-round theme parks in
Southern California and serves a total market area of approximately 20 million people centered in
Orange County and a large national and international tourism population.
The park is renowned for its seasonal events, including a special Christmas promotion, “Knott’s
Merry Farm,” and a Halloween event called “Knott’s Scary Farm,” which has been held for more than
30 years and was named Best Halloween Event in the industry by Amusement Today’s international
survey in 2005.
The Partnership also owns and operates three water parks in California. Adjacent to the theme park
is “Knott’s Soak City-Orange County,” a separate-gated seasonal water park that features more than
20 water rides and attractions. Just south of San Diego in Chula Vista, California is “Knott’s
Soak City-San Diego,” a seasonal water park which
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offers its guests more than 20 water rides and
attractions. “Knott’s Soak City-Palm Springs” is a 16-acre seasonal water park, located in Palm
Springs, California, that offers 20 separate water rides and attractions, including 13 water
slides, a giant wave pool, a lazy river inner tube ride and a children’s activity area, as well as
various food and merchandise shops.
The Partnership also owns and operates the Knott’s Berry Farm Resort Hotel, a 320-room,
full-service hotel located adjacent to the park, which features a pool, tennis courts and
meeting/banquet facilities.
Kings Island
Kings Island, a combination amusement and water park located near Cincinnati, Ohio, first opened in
1972 and was acquired by the Partnership in June of 2006. Kings Island is one of the largest
seasonal amusement parks in the United States, measured by the number of rides and attractions and
the hourly ride capacity. The park has received recognition for the Best Kids’ Area in the World
for six consecutive years by Amusement Today’s international survey.
The park’s total market area includes approximately 15 million people, and the major areas of
dominant influence in this market area, which are Cincinnati, Dayton and Columbus, Ohio, Louisville
and Lexington, Kentucky, and Indianapolis, Indiana, include approximately 8 million people.
Canada’s Wonderland
Canada’s Wonderland, a combination amusement and water park located near Toronto in Vaughn,
Ontario, first opened in 1981 and was acquired by the Partnership in June of 2006. It is one of
the most attended regional amusement parks in North America. Canada’s Wonderland is in a
culturally diverse metropolitan market with large populations of different ethnicities and national
origins, and more than 20 cultural festivals featuring renowned music artists from across the world
perform every year in the Kingswood Music Theatre, located within the park. The park’s total
market area includes approximately 9 million people.
Kings Dominion
Kings Dominion, a combination amusement and water park located near Richmond, Virginia, first
opened in 1975 and was acquired by the Partnership in June of 2006. The parks total market area
includes approximately 19 million people and the major areas of dominant influence in this market
area, which are Richmond and Norfolk, Virginia, Raleigh, North Carolina, Baltimore, Maryland and
Washington, D.C, include approximately 12 million people.
Carowinds
Carowinds, a combination amusement and water park located in Charlotte, North Carolina, first
opened in 1973 and was acquired by the Partnership in June of 2006. Carowinds’ major markets
include Charlotte, Greensboro, and Raleigh, North Carolina as well as Greenville and Columbia,
South Carolina. The park’s total market area includes approximately 14 million people.
Great America
Great America, a combination amusement and water park located in Santa Clara, California, first
opened in 1976 and was acquired by the Partnership in June of 2006. The parks total market area
includes approximately 13 million people and draws its visitors primarily from San Jose, San
Francisco, Sacramento, Modesto and Monterey, among other cities in northern California.
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Dorney Park
Dorney Park, a combination amusement and water park located near Allentown in South Whitehall
Township, Pennsylvania, was first developed as a summer resort area in 1884 and was acquired by the
Partnership in 1992. Dorney Park is one of the largest amusement parks in the Northeast and serves
a total market area of approximately 35 million people. The park’s major markets include
Philadelphia, New Jersey, New York City, Lancaster, Harrisburg, York, Scranton, Wilkes-Barre,
Hazleton and the Lehigh Valley.
Valleyfair
Valleyfair, which opened in 1976 and was acquired by the Partnership’s predecessor in 1978, is a
combination amusement and water park located near Minneapolis-St. Paul in Shakopee, Minnesota. It
is the largest amusement park in Minnesota. Valleyfair’s market area is centered in
Minneapolis-St. Paul, which has a population of approximately 3 million, but the park also draws
visitors from other areas in Minnesota and surrounding states with a combined population base of 9
million people.
Worlds of Fun
Worlds of Fun, which opened in 1973, and Oceans of Fun, the adjacent separate-gated water park that
opened in 1982, were acquired by the Partnership in 1995. Located in Kansas City, Missouri, Worlds
of Fun serves a total market area of approximately 7 million people centered in Kansas City, but
also including most of Missouri, as well as portions of Kansas and Nebraska.
The park also features Worlds of Fun Village, an upscale camping area that offers overnight guest
accommodations next to the park in 20 wood-side cottages, 22 log cabins and 80 deluxe RV sites.
Also, included within the Village is a clubhouse with a swimming pool and arcade games.
Oceans of Fun, which requires a separate admission fee, is located adjacent to Worlds of Fun and
features a wide variety of water attractions.
Michigan’s Adventure
Michigan’s Adventure, which was acquired by the Partnership in 2001, is the largest amusement park
in Michigan. The combination amusement and water park located near Muskegon, Michigan serves a
total market area of approximately 5 million people, principally from central and western Michigan
and eastern Indiana.
Geauga Lake
Geauga Lake, near Cleveland, Ohio, was first developed as a recreational area in 1888, and was
acquired by the Partnership in April of 2004. This family-oriented amusement/water park serves a
total market area of approximately 17 million people. The park’s major markets include
Cleveland/Akron, Youngstown and Pittsburgh.
Located adjacent to the park are the 145-room Geauga Lake Hotel and the Geauga Lake Campgrounds,
which features 300 developed campsites. Both the hotel and campgrounds are owned and operated by
the Partnership.
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WORKING CAPITAL AND CAPITAL EXPENDITURES
During the operating season, the Partnership carries significant receivables and inventories of
food and merchandise, as well as payables and payroll-related accruals. Amounts are substantially
reduced in non-operating periods. Seasonal working capital needs are funded with revolving credit
facilities, which are established at levels sufficient to accommodate the Partnership’s peak
borrowing requirements in April and May as the seasonal parks complete preparations for opening.
Revolving credit borrowings are reduced daily with the Partnership’s strong positive cash flow
during the seasonal operating period.
The Partnership believes that annual park attendance is influenced to some extent by the investment
in new attractions from year to year. Capital expenditures are planned on a seasonal basis with
the majority of such capital expenditures made in the period from October through May, prior to the
beginning of the peak operating season. Capital expenditures made in a calendar year may differ
materially from amounts identified with a particular operating season because of timing
considerations such as weather conditions, site preparation requirements and availability of ride
components, which may result in accelerated or delayed expenditures around calendar year-end.
COMPETITION
In general, the Partnership competes with all phases of the recreation industry within its primary
market areas, including several destination and regional amusement parks. The Partnership
also competes with other forms of entertainment and recreational activities, including movies,
sports events, restaurants and vacation travel.
The principal competitive factors in the amusement park industry include the uniqueness and
perceived quality of the rides and attractions in a particular park, its proximity to metropolitan
areas, the atmosphere and cleanliness of the park, and the quality and variety of the food and
entertainment available. The Partnership believes that its amusement parks feature a sufficient
quality and variety of rides and attractions, restaurants, gift shops and family atmosphere to make
them highly competitive with other parks and forms of entertainment.
GOVERNMENT REGULATION
All rides are run and inspected daily by both the Partnership’s maintenance and ride operations
personnel before being put into operation. The parks are also periodically inspected by the
Partnership’s insurance carrier and, at Cedar Point, Knott’s Berry Farm, Kings Island, Kings
Dominion, Carowinds, Great America, Dorney Park, Geauga Lake, Worlds of Fun and Michigan’s
Adventure, by state ride-safety inspectors.
EMPLOYEES
The Partnership has approximately 1,850 full-time employees. During the peak operating season, we
have approximately 30,000 seasonal and part-time employees, most of whom are high school and
college students. Approximately 2,800 of Cedar Point’s seasonal employees and 400 of Valleyfair’s
seasonal employees live in dormitories owned by the Partnership. The Partnership maintains
training programs for all new employees and believes that its relations with its employees are
good.
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SUPPLEMENTAL ITEM. EXECUTIVE OFFICERS
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Position with General Partner |
Richard L. Kinzel
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Dick Kinzel has served as Chairman since 2003 and President and Chief Executive Officer since 1986. Mr. Kinzel has been employed by the Partnership or its predecessor since 1972, and from 1978 to 1986 he served as vice president and general manager of Valleyfair. |
Jacob T. Falfas
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Jack Falfas has served as Chief Operating Officer since April 2005. Prior to that, he served as Vice President & General Manager of West Coast Operations from 2001 through 2005 and as Vice President & General Manager of Knott’s Berry Farm from December 1997 through 2000. |
Peter J. Crage
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Peter Crage has served as Corporate Vice President of Finance and Chief Financial Officer since July 2005. In August 2004, he rejoined Cedar Fair to serve as Vice President and Corporate Controller after having served as Vice President of Finance at Delaware North Companies in their
Parks and Resorts Division. Prior to that Mr. Crage served as Corporate Treasurer of Cedar Fair from 1999 to 2002. |
Robert A. Decker
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Rob Decker has served as Corporate Vice President of Planning & Design since the end of 2002. Prior to that, he served as Corporate Director of Planning and Design since 1999. |
Craig J. Freeman
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Craig Freeman has served as Vice President of Administration since September 2005. Prior to that, he served as Vice President and General Manager of Knott’s Camp Snoopy at the Mall of America from 1996 through 2005. |
Brian C. Witherow
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Brian Witherow has served as Vice President and Corporate Controller since July 2005. Prior to that, he served as Corporate Treasurer from May 2004 to June 2005 and as Corporate Director of Investor Relations from 1995 through 2004. |
H. Philip Bender
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Phil Bender has served as a Regional Vice President since June of 2006. Prior to that, he served as Vice President & General Manager of Worlds of Fun / Oceans of Fun since the end of 2000. |
AVAILABLE INFORMATION
Copies of the Partnership’s annual report on Form 10-K, quarterly reports on Form 10-Q, and current
reports on Form 8-K and all amendments to those reports as filed or furnished with the Securities
and Exchange Commission are available without charge upon written request to the Partnership’s
Investor Relations Office or through our web site
(www.cedarfair.com).
You may read and copy any materials filed with the SEC at the SEC’s Public Reference Room at 450
Fifth Street, NW, Washington, DC 20549. You may obtain information on the operation of the Public
Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site at
http://www.sec.gov that contains the Partnership’s reports, proxy statements and other information.
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ITEM 1A. RISK FACTORS.
Risks Related to Our Business
We compete with many other entertainment alternatives and are subject to factors that generally
affect the recreation and leisure industry.
Our parks compete with other amusement, water and theme parks and with other types of recreational
activities and forms of entertainment, including movies, sports events, restaurants and vacation
travel. Our business is also subject to factors that generally affect the recreation and leisure
industries and are not within our control. Such factors include, but are not limited to, general
economic conditions and changes in consumer tastes and spending habits. Difficult regional economic
conditions can adversely impact attendance figures and guest spending patterns at our parks, and
disproportionately affect different segments of our target customers within our core markets. Both
attendance and guest per capita spending at our parks are key drivers of our revenues and
profitability, and reductions in either can directly and negatively affect revenues and
profitability.
Bad or extreme weather conditions can adversely impact attendance at our parks, which in turn would
reduce our revenues.
Because most of the attractions at our parks are outdoors, attendance at our parks can be adversely
affected by continuous bad or extreme weather and also can be adversely affected by forecasts of
bad or mixed weather conditions.
The operating season at most of our parks is of limited duration, which can magnify the impact of
adverse conditions or events occurring within that operating season.
Eleven of our amusement parks are seasonal, generally operating during a portion of April or May,
then daily from Memorial Day through Labor Day, and during weekends in September and, in most
cases, October. Our water parks also operate seasonally, generally from Memorial Day through Labor
Day and during some additional weekends before and after that period. Most of our revenues are
generated during this 130 to 140-day annual operating season. As a result, when conditions or
events described as risk factors occur during the operating season, particularly during the peak
months of July and August, there is only a limited period of time during which the impact of those
conditions or events can be mitigated. Accordingly, such conditions or events may have a
disproportionately adverse effect upon our revenues.
Unanticipated construction delays in completing capital improvement projects in our parks and
resort facilities can adversely affect our revenues.
A principal competitive factor for an amusement park is the uniqueness and perceived quality of its
rides and attractions in a particular market area. Accordingly, the regular addition of new rides
and attractions is important, and a key element of our revenue growth is strategic capital spending
on new rides and attractions. Any construction delays or ride down-time can adversely affect our
attendance and our ability to realize revenue growth.
Other factors, including local events, natural disasters and terrorist activities, can adversely
impact park attendance and our revenues.
Lower attendance may result from various local events, natural disasters or terrorist activities,
all of which are outside of our control.
There is a risk of accidents occurring at amusement parks, which may reduce attendance and
negatively impact our revenues.
All of our amusement parks feature thrill rides. Although we are safety conscious, there are
inherent risks involved with these attractions, and an accident or a serious injury at any of our
amusement parks may reduce attendance and result in decreased revenues. In addition, accidents or
injuries at parks operated by our competitors may influence the general attitudes of amusement park
patrons and adversely affect attendance at our amusement parks.
If we lose key personnel, our business may be adversely affected.
Our success depends in part upon a number of key employees, including our senior management team,
whose members have been involved in the amusement park industry for an average of more than 20
years. The loss of the services of our key employees could have a materially adverse effect on our
business. With the exception of four executive officers, we do not have employment agreements with
our key employees.
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The terms of our debt agreements could, under certain circumstances, impose limitations upon our
activities.
The agreement governing our term debt and our revolving credit facilities include covenants that
under some circumstances could limit, among other things, our ability to: incur additional debt;
pay distributions to our unitholders; create liens; make certain investments; consolidate or
transfer assets; and enter into certain transactions with our affiliates.
Our debt agreement also requires us to maintain specified financial ratios and satisfy certain
other financial tests. A breach of any of these covenants could result in an event of default
under our debt agreement. If an event of default occurs, our lenders could elect to cause our
outstanding debt to become immediately due and payable, requiring it to be refinanced under market
conditions at that time.
Rising interest rates could adversely affect the market price of our Units, which in turn may limit
our ability to raise capital for future expansion or acquisitions.
As a result of our historically strong cash flow and the increasing cash distributions to our
unitholders since our initial public offering in 1987, we believe that investors value our Units
based on their yield. In the event of a rise in the prevailing interest rates for similar
securities or in general, our Units may be perceived to become less attractive and the market price
of our Units may be affected. This in turn could limit our ability to use our Units to raise
capital for future expansion or acquisitions.
If the acquisition of the Paramount Parks does not generate the results we anticipate, then the
debt we incurred to finance the acquisition could limit our earnings and cash available for
distributions.
Our ability to service our debt and maintain our distributions depends in part upon achieving
anticipated results from the acquisition of the Paramount Parks. If the acquisition of the
Paramount Parks does not generate the anticipated savings from integration, or the acquired parks
do not generate the anticipated cash flows from operations, then the debt we put in place to
finance the acquisition could limit our earnings and cash available for distribution.
ITEM 1B. UNRESOLVED STAFF COMMENTS.
None.
ITEM 2. PROPERTIES.
Cedar Point and Soak City are located on approximately 365 acres owned by the Partnership on the
Cedar Point peninsula in Sandusky, Ohio. The Partnership also owns approximately 100 acres of
property on the mainland adjoining the approach to the Cedar Point Causeway. The Breakers Express
hotel, the Castaway Bay Waterpark Resort and adjoining TGI Friday’s restaurant, Castaway Bay Marina
and two seasonal-employee housing complexes are located on this property.
The Partnership controls, through ownership or an easement, a six-mile public highway and owns
approximately 38 acres of vacant land adjacent to this highway, which is a secondary access route
to Cedar Point and serves about 250 private residences. The roadway is maintained by the
Partnership pursuant to deed provisions. The Cedar Point Causeway, a four-lane roadway across
Sandusky Bay, is the principal access road to Cedar Point and is owned by a subsidiary of the
Partnership.
Knott’s Berry Farm and Knott’s Soak City are situated on approximately 160 acres and 13 acres,
respectively, virtually all of which have been developed. Knott’s Soak City-San Diego is located
on 65 acres, of which 32 acres have been developed and 33 acres remain available for future
expansion. Knott’s Soak City-Palm Springs is located on 21 acres, of which 16 acres have been
developed and 5 acres remain available for future expansion.
Kings Island is situated on approximately 680 acres, of which 365 acres have been developed and 315
acres remain available for future expansion.
Canada’s Wonderland is situated on approximately 375 acres, of which 310 acres have been developed
and 65 remain available for future expansion. The Partnership also owns approximately 80 acres of
property adjacent to the park that is also available for future expansion or other uses.
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Kings Dominion is situated on approximately 875 acres, of which 280 acres have been developed and
595 acres remain available for future expansion.
At Carowinds, approximately 110 acres have been developed, and approximately 70 additional acres
remain available for future expansion.
Great America is situated on approximately 100 acres, virtually all of which have been developed.
Dorney Park is situated on approximately 200 acres, of which 170 acres have been developed and 30
acres remain available for future expansion.
At Valleyfair, approximately 115 acres have been developed, and approximately 75 additional acres
remain available for future expansion.
Worlds of Fun is located on approximately 350 acres, of which 253 acres have been developed and 97
acres remain available for future expansion or other uses.
Geauga Lake is situated on approximately 670 acres, of which 375 acres have been developed,
approximately 200 acres are restricted from use under environmental conditions, and 75 acres remain
available for future expansion.
Michigan’s Adventure is situated on approximately 235 acres, of which 80 acres have been developed
and 155 acres remain available for future expansion.
The Partnership, through its subsidiary Cedar Point of Michigan, Inc., also owns approximately 450
acres of land in southern Michigan.
All of the Partnership’s property is owned in fee simple without encumbrance, with the exception of
Great America in Santa Clara, California. The Partnership leases this land from the City of Santa
Clara through a long-term lease agreement that automatically renews through 2039 with options to
terminate at the Partnership’s discretion. The Partnership considers its properties to be well
maintained, in good condition and adequate for its present uses and business requirements.
ITEM 3. LEGAL PROCEEDINGS.
The Partnership is involved in various claims and routine litigation incidental to its business.
The Partnership believes that these claims and proceedings are unlikely to have a material adverse
effect on the Partnership’s financial statements.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
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PART II
ITEM
5. MARKET FOR REGISTRANT’S DEPOSITARY UNITS AND RELATED UNITHOLDER MATTERS.
Cedar Fair, L.P. Depositary Units representing limited partner interests are listed for trading on
The New York Stock Exchange under the symbol “FUN.” As of January 31, 2007, there were
approximately 9,500 registered holders of Cedar Fair, L.P. Depositary Units, representing limited
partner interests, including 4,950 participants in the Partnership’s distribution reinvestment
plan. Attention is directed to Note 7 in “Notes to Consolidated Financial Statements” for
information regarding the Partnership’s equity incentive plans. The cash distributions declared
and the high and low prices of the Partnership’s units are shown in the table below:
| |
|
|
|
|
|
|
|
|
|
|
|
|
| 2006 |
|
Distribution |
|
High |
|
Low |
| |
4th Quarter (1) |
|
$ |
— |
|
|
$ |
28.23 |
|
|
$ |
26.01 |
|
3rd Quarter |
|
|
0.47 |
|
|
|
26.75 |
|
|
|
24.12 |
|
2nd Quarter |
|
|
0.47 |
|
|
|
29.50 |
|
|
|
25.62 |
|
1st Quarter |
|
|
0.47 |
|
|
|
29.90 |
|
|
|
27.81 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| 2005 |
|
Distribution |
|
High |
|
Low |
| |
4th Quarter |
|
$ |
0.46 |
|
|
$ |
30.58 |
|
|
$ |
25.66 |
|
3rd Quarter |
|
|
0.46 |
|
|
|
33.01 |
|
|
|
28.34 |
|
2nd Quarter |
|
|
0.46 |
|
|
|
32.49 |
|
|
|
29.50 |
|
1st Quarter |
|
|
0.46 |
|
|
|
34.00 |
|
|
|
30.00 |
|
NOTE 1 – The declaration of the 2006 fourth quarter distribution, which was payable February 15,
2007, did not occur until January 2007.
ITEM 6. SELECTED FINANCIAL DATA.
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
2006(1) |
|
2005 |
|
2004(2) |
|
2003 |
|
2002 |
| |
|
|
(In thousands, except per unit and per capita amounts) |
Operating Data |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenues |
|
$ |
831,389 |
|
|
$ |
568,707 |
|
|
$ |
541,972 |
|
|
$ |
509,976 |
|
|
$ |
502,851 |
|
Operating income |
|
|
219,496 |
|
|
|
137,322 |
|
|
|
117,830 |
|
|
|
125,149 |
|
|
|
121,192 |
|
Income before taxes |
|
|
126,564 |
|
|
|
111,576 |
|
|
|
97,030 |
|
|
|
103,806 |
|
|
|
88,576 |
|
Net income |
|
|
87,477 |
|
|
|
160,852 |
|
|
|
78,315 |
|
|
|
85,888 |
|
|
|
71,417 |
|
Net income per unit – basic |
|
|
1.62 |
|
|
|
3.00 |
|
|
|
1.51 |
|
|
|
1.70 |
|
|
|
1.41 |
|
Net income per unit – diluted |
|
|
1.59 |
|
|
|
2.93 |
|
|
|
1.47 |
|
|
|
1.67 |
|
|
|
1.39 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial Position |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets |
|
$ |
2,510,921 |
|
|
$ |
1,024,794 |
|
|
$ |
993,208 |
|
|
$ |
819,341 |
|
|
$ |
822,257 |
|
Working capital (deficit) |
|
|
(54,750 |
) |
|
|
(90,123 |
) |
|
|
(88,557 |
) |
|
|
(81,917 |
) |
|
|
(77,101 |
) |
Long-term debt |
|
|
1,777,163 |
|
|
|
470,850 |
|
|
|
462,084 |
|
|
|
368,647 |
|
|
|
375,150 |
|
Partners’ equity |
|
|
410,615 |
|
|
|
434,234 |
|
|
|
370,483 |
|
|
|
308,891 |
|
|
|
305,320 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distributions |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Declared per limited partner unit (3) |
|
$ |
1.41 |
|
|
$ |
1.84 |
|
|
$ |
1.80 |
|
|
$ |
1.76 |
|
|
$ |
1.66 |
|
Paid per limited partner unit |
|
$ |
1.87 |
|
|
$ |
1.83 |
|
|
$ |
1.79 |
|
|
$ |
1.74 |
|
|
$ |
1.65 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Data |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
$ |
90,703 |
|
|
$ |
55,765 |
|
|
$ |
50,690 |
|
|
$ |
44,693 |
|
|
$ |
41,682 |
|
Adjusted EBITDA (4) |
|
|
310,274 |
|
|
|
194,200 |
|
|
|
173,018 |
|
|
|
175,707 |
|
|
|
170,103 |
|
Capital expenditures |
|
|
59,458 |
|
|
|
75,655 |
|
|
|
75,878 |
|
|
|
39,789 |
|
|
|
55,279 |
|
Combined attendance (5) |
|
|
19,317 |
|
|
|
12,738 |
|
|
|
12,635 |
|
|
|
12,245 |
|
|
|
12,380 |
|
Combined guest per capita
spending (6) |
|
$ |
38.71 |
|
|
$ |
37.68 |
|
|
$ |
36.59 |
|
|
$ |
35.48 |
|
|
$ |
34.50 |
|
12
| |
|
|
NOTE 1 –
|
|
Operating results for the Paramount Parks are included for the period subsequent to their acquisition date in June 2006. |
|
|
|
NOTE 2 –
|
|
Operating results for Geauga Lake are included for the period subsequent to the acquisition date in April 2004. |
|
|
|
NOTE 3 –
|
|
The declaration of the 2006 fourth quarter distribution, which was payable February 15, 2007, did not occur until January 2007. Therefore, 2006 distributions declared reflect only three quarterly distribution declarations, while four quarterly payments were made in the year. |
|
|
|
NOTE 4 –
|
|
Adjusted EBITDA represents earnings before interest, taxes, depreciation, and certain other non-cash costs. Adjusted EBITDA is not a measurement of operating performance computed in accordance with GAAP and should not be considered as a substitute for operating income, net
income or cash flows from operating activities computed in accordance with GAAP. We believe that adjusted EBITDA is a meaningful measure of park-level operating profitability because we use it for measuring returns on capital investments, evaluating potential acquisitions,
determining awards under incentive compensation plans, and calculating compliance with certain loan covenants. Adjusted EBITDA may not be comparable to similarly titled measures of other companies. A reconciliation of adjusted EBITDA to operating income (the most
comparable financial measure) is provided below. |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
2006 |
|
|
2005 |
|
|
2004 |
|
|
2003 |
|
|
2002 |
|
| |
|
|
|
|
|
(in thousands) |
|
|
|
|
|
|
|
Operating income |
|
$ |
219,496 |
|
|
$ |
137,322 |
|
|
$ |
117,830 |
|
|
$ |
125,149 |
|
|
$ |
121,192 |
|
Depreciation and amortization |
|
|
90,703 |
|
|
|
55,765 |
|
|
|
50,690 |
|
|
|
44,693 |
|
|
|
41,682 |
|
Non-cash unit option expense |
|
|
75 |
|
|
|
1,113 |
|
|
|
4,498 |
|
|
|
5,865 |
|
|
|
4,029 |
|
Provision for loss on asset retirement |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
3,200 |
|
| |
|
|
Adjusted EBITDA |
|
$ |
310,274 |
|
|
$ |
194,200 |
|
|
$ |
173,018 |
|
|
$ |
175,707 |
|
|
$ |
170,103 |
|
| |
|
|
| |
|
|
NOTE 5 –
|
|
Combined attendance includes attendance figures from the twelve amusement parks, five separately gated outdoor water parks, and Star Trek: The Experience. |
|
|
|
NOTE 6 –
|
|
Combined guest per capita spending includes all amusement park, outdoor water park, causeway tolls and parking revenues for the amusement park and water park operating seasons. Revenues from indoor water park, hotel, campground, marina and other out-of-park operations are excluded from these statistics. |
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
Business Overview
We generate our revenues primarily from sales of (1) admission to our parks, (2) food, merchandise
and games inside our parks, and (3) hotel rooms, food and other attractions outside our parks. Our
principal costs and expenses, which include salaries and wages, advertising, maintenance, operating
supplies, utilities and insurance, are relatively fixed and do not vary significantly with
attendance.
On June 30, 2006, we completed the acquisition of all outstanding shares of capital stock of
Paramount Parks, Inc. (“PPI”) from a subsidiary of CBS Corporation. Upon closing of the
transaction, we acquired, indirectly through our wholly owned subsidiary Magnum Management
Corporation the following amusement parks: Canada’s Wonderland near Toronto, Canada; Kings Island
near Cincinnati, Ohio; Kings Dominion near Richmond, Virginia; Carowinds near Charlotte, North
Carolina; and Great America located in Santa Clara, California. We also acquired Star Trek: The
Experience, an interactive adventure in Las Vegas, and a management contract for Gilroy Gardens
Family Theme Park in Gilroy,
13
California. The acquisition represents a major strategic event in
Cedar Fair’s history and is expected to result in cost synergies as well as future growth
opportunities. The results of PPI operations have been included in the Consolidated Financial
Statements from June 30, 2006, the date of acquisition. Further discussion of the PPI transaction
can be found under Note 3 to the Consolidated Financial Statements. Results of operations also
include Geauga Lake since its acquisition in April of 2004.
With the acquisition of PPI, we are now 18 distinct locations, covering a much larger and
diversified footprint. In order to efficiently manage our properties and communicate our results,
we have created regional designations for our parks. The Northern Region, which is the largest,
includes Cedar Point and the adjacent Soak City water park, Kings Island, Canada’s Wonderland,
Dorney Park, Valleyfair, Geauga Lake and Michigan’s Adventure. The Southern Region includes Kings
Dominion, Carowinds, Worlds of Fun and Oceans of Fun. Finally, our Western Region includes Knott’s
Berry Farm, Great America and the Soak City water parks located in Palm Springs, San Diego and
adjacent to Knott’s Berry Farm. This region also includes Star Trek: The Experience, an
interactive adventure in Las Vegas and the management contract with Gilroy Gardens Family Theme
Park in Gilroy, California.
The table below presents certain financial data expressed as a percent of total net revenues and
selective statistical information for the periods indicated.
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| For the years ended December 31, |
|
2006 |
|
|
|
2005 |
|
|
|
2004 |
|
| |
|
(In millions) |
|
|
|
|
|
|
|
(In millions) |
|
|
|
|
|
|
|
(In millions) |
|
|
|
|
|
Net revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Admissions |
|
$ |
459.5 |
|
|
|
55.3 |
% |
|
|
$ |
292.4 |
|
|
|
51.4 |
% |
|
|
$ |
276.8 |
|
|
|
51.1 |
% |
Food, merchandise and games |
|
|
306.9 |
|
|
|
36.9 |
% |
|
|
|
219.1 |
|
|
|
38.5 |
% |
|
|
|
211.2 |
|
|
|
38.9 |
% |
Accommodations and other |
|
|
65.0 |
|
|
|
7.8 |
% |
|
|
|
57.2 |
|
|
|
10.1 |
% |
|
|
|
54.0 |
|
|
|
10.0 |
% |
| |
|
|
|
|
|
|
Net revenues |
|
|
831.4 |
|
|
|
100.0 |
% |
|
|
|
568.7 |
|
|
|
100.0 |
% |
|
|
|
542.0 |
|
|
|
100.0 |
% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash operating costs and expenses |
|
|
521.1 |
|
|
|
62.7 |
% |
|
|
|
374.5 |
|
|
|
65.9 |
% |
|
|
|
369.0 |
|
|
|
68.1 |
% |
| |
|
|
|
|
|
|
Adjusted EBITDA (1) |
|
|
310.3 |
|
|
|
37.3 |
% |
|
|
|
194.2 |
|
|
|
34.1 |
% |
|
|
|
173.0 |
|
|
|
31.9 |
% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
90.7 |
|
|
|
10.9 |
% |
|
|
|
55.8 |
|
|
|
9.8 |
% |
|
|
|
50.7 |
|
|
|
9.4 |
% |
Other non-cash costs |
|
|
0.1 |
|
|
|
0.0 |
% |
|
|
|
1.1 |
|
|
|
0.2 |
% |
|
|
|
4.5 |
|
|
|
0.8 |
% |
| |
|
|
|
|
|
|
Operating income |
|
|
219.5 |
|
|
|
26.4 |
% |
|
|
|
137.3 |
|
|
|
24.1 |
% |
|
|
|
117.8 |
|
|
|
21.7 |
% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest and other expense, net |
|
|
88.2 |
|
|
|
10.6 |
% |
|
|
|
25.7 |
|
|
|
4.5 |
% |
|
|
|
20.8 |
|
|
|
3.8 |
% |
Loss on early extinguishment of debt |
|
|
4.7 |
|
|
|
0.6 |
% |
|
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
| |
|
|
|
|
|
|
Provision (benefit) for taxes |
|
|
39.1 |
|
|
|
4.7 |
% |
|
|
|
(49.3 |
) |
|
|
(8.7 |
%) |
|
|
|
18.7 |
|
|
|
3.4 |
% |
| |
|
|
|
|
|
|
Net income |
|
$ |
87.5 |
|
|
|
10.5 |
% |
|
|
$ |
160.9 |
|
|
|
28.3 |
% |
|
|
$ |
78.3 |
|
|
|
14.5 |
% |
| |
|
|
|
|
|
|
Selective Statistical Information: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Combined attendance (in thousands) |
|
|
|
|
|
|
19,317 |
|
|
|
|
|
|
|
|
12,738 |
|
|
|
|
|
|
|
|
12,635 |
|
Combined in-park guest per capita
spending |
|
|
|
|
|
$ |
38.71 |
|
|
|
|
|
|
|
$ |
37.68 |
|
|
|
|
|
|
|
$ |
36.59 |
|
| |
|
|
|
|
|
|
|
|
|
| (1) |
|
Adjusted EBITDA represents earnings before interest, taxes, depreciation, and certain other
non-cash costs. For additional information regarding adjusted EBITDA, including a
reconciliation of adjusted EBITDA to operating income (the most comparable financial measure),
see Note 4 in Item 6, “Selected Financial Data,” on page 13. |
Critical Accounting Policies
Management’s Discussion and Analysis of Financial Condition and Results of Operations is based upon
our Consolidated Financial Statements, which were prepared in accordance with accounting principles
generally accepted in the United States of America. These principles require us to make judgments,
estimates and assumptions during the normal course of business that affect the amounts reported in
the consolidated financial statements and related notes. The following discussion addresses our
critical accounting policies, which are those that are most important to the portrayal of our
financial condition and operating results or involve a higher degree of judgment and
14
complexity
(see Note 2 to our Consolidated Financial Statements for a complete discussion of our significant
accounting policies). Application of the critical accounting policies described below involves the
exercise of judgment and the use of assumptions as to future uncertainties, and, as a result,
actual results could differ from these estimates and assumptions. In addition, other companies may
utilize different estimates and assumptions, which may impact the comparability of our results of
operations to similar businesses.
Accounting for Business Combinations
Business combinations are accounted for under the purchase method of accounting. The amounts
assigned to the identifiable assets acquired and liabilities assumed in connection with
acquisitions are based on estimated fair values as of the date of the acquisition, with the
remainder, if any, recorded as goodwill. The fair values are determined by management, taking into
consideration information obtained during the due diligence process, valuations supplied by
independent appraisal experts and other relevant information. The valuations are generally based
upon future cash flow projections for the acquired assets, discounted to present value. The
determination of fair values requires significant judgment both by management and outside experts
engaged to assist in this process.
Property and Equipment
Property and equipment are recorded at cost. Expenditures made to maintain such assets in their
original operating condition are expensed as incurred, and improvements and upgrades are
capitalized. Depreciation is computed on a straight-line basis over the estimated useful lives of
the assets. The composite method is used for the group of assets acquired as a whole in 1983, as
well as for the groups of like assets of each subsequent business acquisition. The unit method is
used for all individual assets purchased.
Self-Insurance Reserves
Reserves are recorded for the estimated amounts of guest and employee claims and expenses incurred
each period that are not covered by insurance. These estimates are established based upon
historical claims data and third-party estimates of settlement costs for incurred claims. These
reserves are periodically reviewed for changes in these factors and adjustments are made as needed.
Revenue Recognition
Revenues on multi-day admission tickets are recognized over the estimated number of visits expected
for each type of ticket, and are adjusted at the end of each seasonal period. All other revenues
are recognized on a daily basis based on actual guest spending at our facilities, or over the park
operating season in the case of certain marina dockage revenues and certain sponsorship revenues.
Derivative Financial Instruments
Derivative financial instruments are only used within our overall risk management program to manage
certain interest rate and foreign currency risks from time to time. We only have limited
involvement with derivative financial instruments and do not use them for trading purposes.
The use of derivative financial instruments is accounted for according to SFAS No. 133, “Accounting
for Derivative Instruments and Hedging Activities” and related amendments. For derivative
instruments that are designated and qualify as cash flow hedges, the effective portion of the
change in fair value of the derivative instrument is reported as a component of “Other
comprehensive income (loss)” and reclassified into earnings in the period during which the hedged
transaction affects earnings. Derivative financial instruments used in hedging transactions are
assessed both at inception and quarterly thereafter to ensure they are effective in offsetting
changes in the cash flows of the related underlying exposures.
15
Results of Operations
2006 vs. 2005
Our results for 2006 are not directly comparable to the prior year due to the acquisition of PPI on
June 30, 2006. Since material changes to our statements of operations are primarily due to this
acquisition, we will also discuss operating results for 2006 on a same-park basis compared to 2005.
The following table presents key operating and financial information for the years ended December
31, 2006 and 2005.
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
All Properties (a) |
|
|
Same Park Comparison (b) |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase (Decrease) |
|
| |
|
12/31/06 |
|
|
12/31/06 |
|
|
12/31/05 |
|
|
$ |
|
|
% |
|
| |
|
(Amounts in thousands except per capita spending) |
|
Attendance |
|
|
19,317 |
|
|
|
12,618 |
|
|
|
12,738 |
|
|
|
(120 |
) |
|
|
(0.9 |
) |
Per capita spending |
|
$ |
38.71 |
|
|
$ |
37.82 |
|
|
$ |
37.68 |
|
|
$ |
0.14 |
|
|
|
0.4 |
|
Out-of-park revenues |
|
$ |
103,553 |
|
|
$ |
98,104 |
|
|
$ |
97,091 |
|
|
$ |
1,013 |
|
|
|
1.0 |
|
| |
Net revenues |
|
$ |
831,389 |
|
|
$ |
566,480 |
|
|
$ |
568,707 |
|
|
$ |
(2,227 |
) |
|
|
(0.4 |
) |
Cash operating costs and expenses |
|
|
521,115 |
|
|
|
376,130 |
|
|
|
374,507 |
|
|
|
1,623 |
|
|
|
0.4 |
|
Depreciation and amortization |
|
|
90,703 |
|
|
|
57,492 |
|
|
|
55,765 |
|
|
|
1,727 |
|
|
|
3.1 |
|
Non-cash compensation expense |
|
|
75 |
|
|
|
75 |
|
|
|
1,113 |
|
|
|
(1,038 |
) |
|
|
(93.3 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income |
|
$ |
219,496 |
|
|
$ |
132,783 |
|
|
$ |
137,322 |
|
|
$ |
(4,539 |
) |
|
|
(3.3 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (a) |
|
Includes results for all owned and/or managed properties as of December 31, 2006. |
| |
| (b) |
|
Same park comparison includes properties owned and operated for the full year
in 2006 and 2005 and excludes the acquired parks. |
Same-Park Comparison:
Consolidated net revenues in 2006 on a same-park basis decreased slightly to $566.5 million from
$568.7 million in 2005. The decrease in net revenues was the result of a 1% decrease in combined
attendance, a 1% increase in out-of-park revenues and average guest per capita spending which
increased slightly. The small decrease in attendance and revenues is primarily due to performance
at some of our Northern Region parks. This region was impacted by a continued soft economy coupled
with higher gas prices throughout the 2006 operating season. This decrease was partially offset by
increased attendance and per capita spending at other parks within the region. The Southern
Region, which benefited from a world-class roller coaster introduced at Worlds of Fun, increased
attendance and revenues over 10%, while the Western Region parks increased their in-park and
out-of-park revenues on relatively steady attendance.
Excluding depreciation, amortization and other non-cash charges, total cash operating costs and
expenses, on a same-park basis, increased slightly to $376.1 million from $374.5 million in 2005.
The increase was attributable to higher operating costs in our Southern Region due in part to
higher attendance, somewhat offset by reduced operating costs at Geauga Lake.
After higher depreciation, offset by lower non-cash charge for unit options, operating income for
2006 on a same-park basis decreased 3% to $132.8 million from $137.3 million a year ago.
16
Because we strongly emphasize generating cash flow for distributions to our unitholders, a
meaningful measure of our operating results is adjusted EBITDA, which represents earnings before
interest, taxes, depreciation, and other non-cash charges and credits (for additional information
regarding adjusted EBITDA and a reconciliation to net income, see Note 4 in Item 6, “Selected
Financial Data,” on page 13). In 2006, adjusted EBITDA on a same-park basis decreased 2%, or $3.8
million, to $190.4 million, in large part due to a decrease in operating profits from some of our
Northern Region parks. This decrease was offset slightly by improved results at other parks within
the Northern Region, our Southern Region parks, where a new world-class roller coaster was
introduced at Worlds of Fun, and our Western parks, where in-park and out-of-park spending
increased year-over-year. Based on these results, our consolidated adjusted EBITDA margin in 2006
on a same-park basis decreased to 33.6% from 34.1% in 2005.
All Properties:
On a combined basis including the newly acquired parks, consolidated net revenues for 2006 were
$831.4 million. Excluding depreciation and other non-cash charges, combined operating costs and
expenses were $521.1 million. After depreciation and a small non-cash charge for unit options,
operating income for 2006, was $219.5 million compared with $137.3 million in 2005.
Interest expense for the year increased $62.1 million to $88.3 million, due to the acquisition
financing and refinancing of existing debt. As part of the refinancing of existing debt, we
recognized a loss on the early extinguishment of debt of $4.7 million. Further discussion of this
transaction can be found in the “Liquidity and Capital Resources” section and in Note 3 to the
Consolidated Financial Statements.
A provision for taxes of $39.1 million was recorded to account for the tax attributes of our
corporate subsidiaries ($31.2 million) and publicly traded partnership (PTP) taxes ($7.9 million).
This compares with a benefit for taxes of $49.3 for 2005, when we reversed $62.6 million of
contingent liabilities related to PTP taxes.
After interest expense and provision for taxes, combined net income for the period totaled $87.5
million, or $1.59 per diluted limited partner unit, compared with net income of $160.9 million, or
$2.93 per unit, a year ago.
2005 vs. 2004
Consolidated net revenues in 2005 increased 5%, or $26.7 million, to $568.7 million. The increase
in net revenues was the result of a 1% increase in combined attendance across our 12 properties (to
12.7 million from 12.6 million in 2004), a 3% increase in average in-park guest per capita spending
(to $37.68 from $36.59 in 2004), and a 12%, or $10.2 million, increase in out-of-park revenues.
Although combined attendance increased only 1%, or approximately 100,000 visits, in-park revenues
increased approximately $16.5 million on the strength of improved average in-park guest per capita
spending. The increase in out-of-park revenues was due to the first full-year performance of the
Castaway Bay Indoor Waterpark resort, as well as improved results at our Knott’s Berry Farm Resort
Hotel and the introduction of a new T.G.I. Friday’s restaurant at Knott’s in July of 2005.
The increase in attendance in 2005 was led by strong performances from Dorney Park and Michigan’s
Adventure, both of which introduced successful new attractions this season, and our two Midwest
water parks, which benefited from a hot, dry summer. These gains helped offset attendance
shortfalls at our Cedar Point, Valleyfair and Worlds of Fun amusement parks. For the year,
combined attendance at our seven amusement parks was unchanged at 11.3 million guests, and
attendance at our five water parks totaled 1.5 million guests, up 7% between years. The 3%
increase in our average in-park guest per capita spending level in 2005 was principally due to
increased admission revenues at our amusement parks.
Excluding depreciation and all other non-cash charges, total operating costs and expenses in 2005
increased 1.5%, or $5.5 million, to $374.5 million from $369.0 million in 2004. This was primarily
due to the additional operating costs and expenses of Geauga Lake, which was acquired in April
2004, and the incremental operating costs of Castaway Bay, which opened in November 2004. As a
percent of revenues, operating costs decreased between years. After depreciation and a $1.1
million non-cash charge for unit options, operating income in 2005 increased
17
17% to $137.3 million
from $117.8 million a year ago. This increase is primarily attributable to the strong results at
Knott’s Berry Farm and Dorney Park.
In 2005, adjusted EBITDA increased 12%, or $21.2 million, to $194.2 million, in large part due to
improved operating results at Knott’s Berry Farm. Increased attendance and strong operating
results at Dorney Park and Michigan’s Adventure also contributed nicely. Our consolidated adjusted
EBITDA margin in 2005 increased to 34.1% from 31.9% in 2004, with adjusted EBITDA margins improving
at all of our parks due to a continued focus on controlling operating costs and expenses.
In 2002, we recorded a $7.6 million non-cash charge related to the change in fair value of two of
our interest rate swap agreements that could not be designated as effective hedges under the
applicable accounting rules. This amount reversed into income over the life of the swaps as they
continued to serve the purpose of leveling cash interest costs. In 2005, we recognized a non-cash
credit of $459,000 for the change in fair value of the swaps as they expired in the first quarter.
This compared to a non-cash credit of $4.5 million in 2004. These amounts are aggregated with
interest expense in the accompanying table.
After non-cash credits, interest expense and provision for taxes, net income for 2005 totaled
$160.9 million, or $2.93 per diluted limited partner unit, compared to net income of $78.3 million,
or $1.47 per unit, in 2004.
Reflected in the 2005 provision for taxes is the reversal of $62.6 million of contingent
liabilities recorded from 1998 through 2004 related to PTP taxes. The accrual was established when
the PTP taxes first came into effect, because we could not be certain at that time how the taxes
would be applied. Now after a number of years of filing returns, we have more complete evidence as
to how the taxes are imposed, including the completion of examinations of our tax filings. Based
on this evidence, we determined that the accrual was no longer required and reversed the $62.6
million of contingent liabilities back into income in 2005. The adjustment to the PTP tax accrual,
which was partially offset by PTP taxes payable for the year and the impact of the tax attributes
of our corporate subsidiaries, resulted in a 2005 net credit for taxes of $49.3 million, which is
composed of a $53.6 million credit and a $4.3 million provision, for the PTP tax and income taxes,
respectively. It is important to note that since this is a reversal of a previously recorded
accrual, it has no affect on our cash flow in the current period. Excluding the impact of
reversing the PTP tax accrual and computing a 2005 accrual consistent with the treatment applied in
2004, net income for the year would have been $87.6 million, or $1.59 per diluted limited partner
unit, up $9.3 million, or 12%, from 2004.
Liquidity and Capital Resources
We ended 2006 in sound financial condition in terms of both liquidity and cash flow. The negative
working capital ratio (current liabilities divided by current assets) of 1.5 at December 31, 2006
is the result of our highly seasonal business offset somewhat by the recent refinancing of debt due
to the acquisition of PPI on June 30, 2006. Further discussion of this transaction can be found in
Note 3 to the Consolidated Financial Statements. Receivables and inventories are at normally low
seasonal levels and credit facilities are in place to fund current liabilities, capital
expenditures and pre-opening expenses as required.
Operating Activities
Net cash from operating activities in 2006 increased $5.9 million to $166.4 million compared with
$160.5 million in 2005. The increase in operating cash flows is primarily attributable to the
operation of the newly acquired parks, substantially offset by higher cash interest payments.
In 2005, net cash from operating activities increased $12.3 million to $160.5 million from $148.2
million in 2004. This increase reflects an increase in operating profit of $19.5 million between
years, offset by changes in working capital and higher cash interest payments.
18
Investing Activities
Investing activities consist principally of acquisitions and capital investments we make in our
park and resort properties. During 2006, net cash used for investing activities totaled $1,312.9
million, compared to $75.7 million in 2005 and
$220.1 million in 2004. The significant increase in net cash for
investing activities in 2006 is
primarily attributable to the acquisition of PPI. The amount reported
in 2004 includes the acquisition of Geauga Lake.
Historically, we have been able to improve our revenues and profitability by continuing to make
substantial investments in our park and resort facilities. This has enabled us to maintain or
increase attendance levels, as well as generate increases in guest per capita spending and revenues
from guest accommodations, while carefully controlling operating and administrative expenses.
For the 2007 operating season, we are investing approximately $83 million in capital improvements
at our 18 properties, including the addition of world-class roller coasters at Cedar Point, Kings
Island and Valleyfair. The 2007 program will also include new water attractions at Kings Dominion
and a new spinning coaster at Knott’s Berry Farm.
In addition to adding great new thrill rides, we are also investing in other capital improvements
across our parks, including additional rides and attractions, restaurant renovations, new games and
other general improvements.
We believe the combination of a strong capital program, our first full year of operating the newly
acquired parks, and our continued focus on guest service, will improve attendance, per capita and
operating results company wide in 2007. However, stable population trends in the parks’ market
areas and uncontrollable factors, such as weather, the economy, and competition for leisure time
and spending, preclude us from anticipating significant long-term increases in attendance.
Financing Activities
Net cash from financing activities totaled $1,173.3 million in 2006, compared to net cash utilized
of $83.8 million in 2005 and net cash from financing activities of $73.1 million in 2004. The
significant increase in cash from financing activities is attributable to higher borrowings to fund
the PPI acquisition.
Capital Resources
In
June 2006, and as amended in August 2006, in connection with the
acquisition of PPI we entered into a new $2,090 million credit
agreement with several banks and certain “Lenders” party
thereto (the “Credit Agreement”). In February 2007, we took
advantage of favorable market conditions and amended the Credit
Agreement, reducing interest rate spreads on the term borrowings by
50 basis points (bps). The 50 bps reduction in interest rate is
expected to save us approximately $8.0 million in cash interest
costs annually.
The credit
facilities provided under the Credit Agreement include a $1,475 million U.S. term loan,
$310 million in U.S. revolving loan commitments, a $270 million Canadian term loan and $35 million
in Canadian revolving loan commitments.
Under the amended agreement, U.S. denominated loans made under the U.S. and Canadian revolving loan
commitments currently bear interest at a rate based on LIBOR plus 250 bps. Canadian denominated
loans made under the Canadian revolving commitments currently bear interest at a rate based on
Bankers’ Acceptance plus 250 bps. All term debt currently bears interest at either a rate based on
LIBOR plus 200 bps or a rate based on a prime rate plus 100 bps. The U.S. term loan matures on
August 30, 2012 and amortizes at a rate of $14.8 million per year. The Canadian term loan matures
on February 17, 2012 and amortizes at a rate of $2.7 million per year. The U.S. revolving
commitment and the Canadian revolving commitment expire on August 30, 2011. The credit agreement
also provides for the issuance of documentary and standby letters of credit.
19
At December 31, 2006, we had $1,736.3 million of variable-rate term debt and $40.9 million in
borrowings under the revolving credit facility. During 2006, we entered into several interest rate
swap agreements which effectively converted $1.0 billion of our variable-rate debt to a fixed-rate
of 7.6%, after taking into account the February 2007 amendment to the credit agreement. During
2006 we also entered into two cross-currency swap agreements to manage our foreign currency risk
exposure on term debt borrowings related to our wholly owned Canadian subsidiary. In February
2007, we terminated the two cross-currency swaps and received $3.9 million in cash upon
termination. We replaced these swaps with two new cross-currency swap agreements, which
effectively convert $268.7 million of term debt, and the associated interest payments, from U.S.
dollar denominated debt at a rate of LIBOR plus 200 bps to 6.3% fixed-rate Canadian dollar
denominated debt.
Of the total term debt, $17.5 million is scheduled to mature in 2007. Based on interest rates in
effect at year-end for variable-rate debt, cash interest payments for 2007 would total
approximately $136 million, 54% higher than interest paid in 2006, which included only six months
of interest payments from the acquisition of the Paramount Parks. In addition, cash distributions
in 2007, at the current rate of $1.88 per unit, would total approximately $102 million, 1% higher
than the distributions paid in 2006.
Credit facilities and cash flow from operations are expected to be adequate to meet working capital
needs, debt service, planned capital expenditures and regular quarterly cash distributions for the
foreseeable future.
Contractual Obligations
The following table summarizes certain obligations (on an undiscounted basis) at December 31, 2006
(in millions):
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Payments Due by Period |
| |
|
|
|
|
|
Less than |
|
|
|
|
|
|
|
|
|
More than |
| |
|
Total |
|
1 year |
|
1-3 years |
|
3-5 years |
|
5 years |
| |
|
|
Long-term debt (1) |
|
$ |
2,491.9 |
|
|
$ |
148.5 |
|
|
$ |
293.0 |
|
|
$ |
327.7 |
|
|
$ |
1,722.7 |
|
Capital expenditures (2) |
|
|
41.6 |
|
|
|
35.6 |
|
|
|
6.0 |
|
|
|
— |
|
|
|
— |
|
Lease & other obligations (3) |
|
|
34.3 |
|
|
|
19.7 |
|
|
|
12.8 |
|
|
|
0.6 |
|
|
|
1.2 |
|
| |
|
|
Total |
|
$ |
2,567.8 |
|
|
$ |
203.8 |
|
|
$ |
311.8 |
|
|
$ |
328.3 |
|
|
$ |
1,723.9 |
|
| |
|
|
|
|
|
| (1) |
|
Represents maturities on long-term debt obligations, plus contractual interest payments on
all debt. See Note 5 in “Notes to Consolidated Financial Statements” for further information. |
| |
| (2) |
|
Represents contractual obligations in place at year-end for the purchase of new rides and
attractions. Obligations not denominated in U.S. dollars have been converted based on the
exchange rates existing on December 31, 2006. |
| |
| (3) |
|
Represents contractual lease and purchase obligations in place at year-end. |
Off-Balance Sheet Arrangements
We have no significant off-balance sheet financing arrangements.
Quantitative and Qualitative Disclosures about Market Risk
We are exposed to market risks from fluctuations in interest rates and currency exchange rates.
The objective of our financial risk management is to reduce the potential negative impact of
interest rate and foreign currency exchange rate fluctuations to acceptable levels. We do not
acquire market risk sensitive instruments for trading purposes.
20
At December 31, 2006, $1,268.7 million or 71% of our outstanding long-term debt had been converted
to fixed-rate debt through the use of interest rate swap agreements and cross-currency interest
rate swap agreements (as discussed in “Capital Resources” above) and $508.5 million represented
variable-rate debt. Assuming an average balance on our revolving credit borrowings, the cash flow
impact of a hypothetical one percentage point change in the applicable interest rates on our
variable-rate debt would be approximately $5.3 million as of December 31, 2006.
Except for its cross-currency interest rate swap agreements, which hedge a substantial portion of
its Canadian subsidiary’s debt, the Partnership is exposed to foreign currency translation on its
operations in Canada. The Partnership does not expect currency translation will have a material
adverse effect on its financial condition, results of operations or cash flows.
Impact of Inflation
Substantial increases in costs and expenses could impact our operating results to the extent such
increases could possibly not be passed along to our guests. In particular, increases in labor,
supplies, taxes and utility expenses could have an impact on our operating results. The majority
of our employees are seasonal and are paid hourly rates, which although not tied directly to
federal and state minimum wage laws, do follow those wage trends. Historically, we have been able
to pass along cost increases to guests through increases in admission, food, merchandise and other
prices, and we believe that we will continue to have the ability to do so over the long term. We
believe that the effects of inflation, if any, on our operating results and financial condition
have been and will continue to be minor.
Forward Looking Statements
Some of the statements contained in this report (including the “Management’s Discussion and
Analysis of Financial Condition and Results of Operations” section) that are not historical in
nature are forward-looking statements within the meaning of Section 27A of the Securities and
Exchange Act of 1933 and Section 21E of the Securities and Exchange Act of 1934, including
statements as to our expectations, beliefs and strategies regarding the future. These
forward-looking statements may involve risks and uncertainties that are difficult to predict, may
be beyond our control and could cause actual results to differ materially from those described in
such statements. Although we believe that the expectations reflected in such forward-looking
statements are reasonable, we can give no assurance that such expectations will prove to be
correct. Important factors, including those listed under Item 1A in this Form 10-K, could
adversely affect our future financial performance and cause actual results to differ materially
from our expectations.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Reference is made to the information appearing under the subheading “Quantitative and Qualitative
Disclosures About Market Risk” under the heading “Management’s Discussion and Analysis of Financial
Condition and Results of Operations” on page 20 of this Report.
21
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
Quarterly operating results for 2006 and 2005, are presented in the table below (in thousands,
except per unit amounts):
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
Net income |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
(loss) per |
|
(loss) per |
| |
|
|
|
|
|
Operating income |
|
Net income |
|
limited partner |
|
limited partner |
| (Unaudited) |
|
Net revenues |
|
(loss) |
|
(loss) |
|
unit-basic |
|
unit-diluted |
| |
2006 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1st Quarter |
|
$ |
23,945 |
|
|
$ |
(27,694 |
) |
|
$ |
(26,504 |
) |
|
$ |
(0.49 |
) |
|
$ |
(0.49 |
) |
2nd Quarter |
|
|
145,429 |
|
|
|
19,872 |
|
|
|
11,060 |
|
|
|
0.21 |
|
|
|
0.20 |
|
3rd Quarter |
|
|
542,149 |
|
|
|
229,201 |
|
|
|
132,903 |
|
|
|
2.46 |
|
|
|
2.42 |
|
4th Quarter |
|
|
119,866 |
|
|
|
(1,883 |
) |
|
|
(29,982 |
) |
|
|
(0.55 |
) |
|
|
(0.55 |
) |
| |
|
|
$ |
831,389 |
|
|
$ |
219,496 |
|
|
$ |
87,477 |
|
|
$ |
1.62 |
|
|
$ |
1.59 |
|
| |
2005 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1st Quarter |
|
$ |
24,801 |
|
|
$ |
(27,445 |
) |
|
$ |
(24,564 |
) |
|
$ |
(0.46 |
) |
|
$ |
(0.46 |
) |
2nd Quarter |
|
|
148,852 |
|
|
|
22,361 |
|
|
|
12,270 |
|
|
|
0.23 |
|
|
|
0.22 |
|
3rd Quarter |
|
|
317,025 |
|
|
|
136,173 |
|
|
|
170,831 |
|
|
|
3.18 |
|
|
|
3.11 |
|
4th Quarter |
|
|
78,029 |
|
|
|
6,233 |
|
|
|
2,315 |
|
|
|
0.04 |
|
|
|
0.04 |
|
| |
|
|
$ |
568,707 |
|
|
$ |
137,322 |
|
|
$ |
160,852 |
|
|
$ |
3.00 |
|
|
$ |
2.93 |
|
| |
|
|
|
| Note: |
|
To assure that our highly seasonal operations will not result in misleading comparisons of
interim periods, the Partnership has adopted the following reporting procedures: (a) seasonal
operating costs are expensed over the operating season, including some costs incurred prior to
the season, which are deferred and amortized over the season, and (b) all other costs are
expensed as incurred or ratably over the entire year. |
22
Report of Independent Registered Public Accounting Firm
To the Partners of Cedar Fair, L.P.:
We have audited the accompanying consolidated balance sheets of Cedar Fair, L.P. and subsidiaries
(the “Partnership”) as of December 31, 2006 and 2005, and the related consolidated statements of
operations, partners’ equity, and cash flows for each of the three years in the period ended
December 31, 2006. These financial statements are the responsibility of the Partnership’s
management. Our responsibility is to express an opinion on these financial statements based on our
audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight
Board (United States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all material respects,
the financial position of Cedar Fair, L.P. and subsidiaries as of December 31, 2006 and 2005, and
the results of their operations and their cash flows for each of the three years in the period
ended December 31, 2006, in conformity with accounting principles generally accepted in the United
States of America.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight
Board (United States), the effectiveness of the Partnership’s internal control over financial
reporting as of December 31, 2006, based on the criteria established in Internal Control—Integrated
Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our
report dated February 28, 2007 expressed an unqualified opinion on management’s assessment of the
effectiveness of the Partnership’s internal control over financial reporting and an unqualified
opinion on the effectiveness of the Partnership’s internal control over financial reporting.
DELOITTE & TOUCHE LLP
Cleveland, Ohio
February 28, 2007
23
CEDAR FAIR, L.P.
CONSOLIDATED BALANCE SHEETS
(In thousands)
| |
|
|
|
|
|
|
|
|
| |
|
12/31/06 |
|
|
12/31/05 |
|
ASSETS |
|
|
|
|
|
|
|
|
Current Assets: |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
30,203 |
|
|
$ |
4,421 |
|
Receivables |
|
|
21,796 |
|
|
|
7,259 |
|
Inventories |
|
|
26,377 |
|
|
|
17,678 |
|
Prepaids and other current assets |
|
|
26,132 |
|
|
|
11,252 |
|
|
|
|
|
|
|
|
|
|
|
104,508 |
|
|
|
40,610 |
|
|
|
|
|
|
|
|
|
|
Property and Equipment: |
|
|
|
|
|
|
|
|
Land |
|
|
325,617 |
|
|
|
174,081 |
|
Land improvements |
|
|
315,406 |
|
|
|
163,952 |
|
Buildings |
|
|
580,588 |
|
|
|
308,748 |
|
Rides and equipment |
|
|
1,237,790 |
|
|
|
714,862 |
|
Construction in progress |
|
|
25,288 |
|
|
|
23,434 |
|
|
|
|
|
|
|
|
|
|
|
2,484,689 |
|
|
|
1,385,077 |
|
Less accumulated depreciation |
|
|
(498,980 |
) |
|
|
(417,821 |
) |
|
|
|
|
|
|
|
|
|
|
1,985,709 |
|
|
|
967,256 |
|
Goodwill |
|
|
314,057 |
|
|
|
9,061 |
|
Other Intangibles, net |
|
|
64,837 |
|
|
|
985 |
|
Other Assets |
|
|
41,810 |
|
|
|
6,882 |
|
|
|
|
|
|
|
|
|
|
$ |
2,510,921 |
|
|
$ |
1,024,794 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND PARTNERS’ EQUITY |
|
|
|
|
|
|
|
|
Current Liabilities: |
|
|
|
|
|
|
|
|
Current maturities of long-term debt |
|
$ |
17,450 |
|
|
$ |
20,000 |
|
Accounts payable |
|
|
19,764 |
|
|
|
16,590 |
|
Distribution payable to partners |
|
|
— |
|
|
|
24,747 |
|
Deferred revenue |
|
|
19,490 |
|
|
|
10,794 |
|
Accrued interest |
|
|
1,345 |
|
|
|
6,698 |
|
Accrued taxes |
|
|
38,632 |
|
|
|
21,395 |
|
Accrued salaries, wages and benefits |
|
|
27,537 |
|
|
|
14,021 |
|
Self-insurance reserves |
|
|
22,124 |
|
|
|
14,386 |
|
Other accrued liabilities |
|
|
12,916 |
|
|
|
2,102 |
|
|
|
|
|
|
|
|
|
|
|
159,258 |
|
|
|
130,733 |
|
Deferred Tax Liability |
|
|
146,801 |
|
|
|
— |
|
Other Liabilities |
|
|
34,534 |
|
|
|
8,977 |
|
Long-Term Debt: |
|
|
|
|
|
|
|
|
Revolving credit loans |
|
|
40,888 |
|
|
|
105,850 |
|
Term debt |
|
|
1,718,825 |
|
|
|
345,000 |
|
|
|
|
|
|
|
|
|
|
|
1,759,713 |
|
|
|
450,850 |
|
|
|
|
|
|
|
|
|
|
Partners’ Equity: |
|
|
|
|
|
|
|
|
Special L.P. interests |
|
|
5,290 |
|
|
|
5,290 |
|
General partner |
|
|
1 |
|
|
|
1 |
|
Limited partners, 54,092 and 53,797 units outstanding at
December 31, 2006 and December 31, 2005, respectively |
|
|
440,516 |
|
|
|
428,943 |
|
Accumulated other comprehensive loss |
|
|
(35,192 |
) |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
410,615 |
|
|
|
434,234 |
|
|
|
|
|
|
|
|
|
|
$ |
2,510,921 |
|
|
$ |
1,024,794 |
|
|
|
|
|
|
|
|
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
24
CEDAR FAIR, L.P.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per unit amounts)
| |
|
|
|
|
|
|
|
|
|
|
|
|
| For the years ended December 31, |
|
2006 |
|
|
2005 |
|
|
2004 |
|
Net revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
Admissions |
|
$ |
459,475 |
|
|
$ |
292,408 |
|
|
$ |
276,761 |
|
Food, merchandise, and games |
|
|
306,914 |
|
|
|
219,094 |
|
|
|
211,260 |
|
Accommodations and other |
|
|
65,000 |
|
|
|
57,205 |
|
|
|
53,951 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
831,389 |
|
|
|
568,707 |
|
|
|
541,972 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs and expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
Cost of food, merchandise and
games revenues |
|
|
80,202 |
|
|
|
57,606 |
|
|
|
56,721 |
|
Operating expenses |
|
|
340,264 |
|
|
|
243,643 |
|
|
|
242,062 |
|
Selling, general and administrative |
|
|
100,724 |
|
|
|
74,371 |
|
|
|
74,669 |
|
Depreciation and amortization |
|
|
90,703 |
|
|
|
55,765 |
|
|
|
50,690 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
611,893 |
|
|
|
431,385 |
|
|
|
424,142 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income |
|
|
219,496 |
|
|
|
137,322 |
|
|
|
117,830 |
|
Interest expense |
|
|
88,294 |
|
|
|
26,205 |
|
|
|
25,263 |
|
Loss on early extinguishment of debt |
|
|
4,697 |
|
|
|
— |
|
|
|
— |
|
Other income |
|
|
(59 |
) |
|
|
(459 |
) |
|
|
(4,463 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before taxes |
|
|
126,564 |
|
|
|
111,576 |
|
|
|
97,030 |
|
Provision (benefit) for taxes |
|
|
39,087 |
|
|
|
(49,276 |
) |
|
|
18,715 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
87,477 |
|
|
$ |
160,852 |
|
|
$ |
78,315 |
|
Net income (loss) allocated to general partner |
|
|
1 |
|
|
|
2 |
|
|
|
(32 |
) |
|
|
|
|
|
|
|
|
|
|
Net income allocated to limited partners |
|
$ |
87,476 |
|
|
$ |
160,850 |
|
|
$ |
78,347 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings Per Limited Partner Unit: |
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average limited partner units
outstanding — basic |
|
|
53,957 |
|
|
|
53,659 |
|
|
|
51,968 |
|
Net income per limited partner unit — basic |
|
$ |
1.62 |
|
|
$ |
3.00 |
|
|
$ |
1.51 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average limited partner units
outstanding — diluted |
|
|
54,872 |
|
|
|
54,950 |
|
|
|
53,315 |
|
Net income per limited partner unit — diluted |
|
$ |
1.59 |
|
|
$ |
2.93 |
|
|
$ |
1.47 |
|
|
|
|
|
|
|
|
|
|
|
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
25
CEDAR FAIR, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
| |
|
|
|
|
|
|
|
|
|
|
|
|
| For the years ended December 31, |
|
2006 |
|
|
2005 |
|
|
2004 |
|
CASH FLOWS FROM (FOR) OPERATING ACTIVITIES |
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
87,477 |
|
|
$ |
160,852 |
|
|
$ |
78,315 |
|
Adjustments to reconcile net income to net cash from operating activities: |
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
90,703 |
|
|
|
55,765 |
|
|
|
50,690 |
|
Non-cash unit option expense |
|
|
75 |
|
|
|
1,113 |
|
|
|
4,498 |
|
Loss on early extinguishment of debt |
|
|
4,697 |
|
|
|
— |
|
|
|
— |
|
Other non-cash (income) expense |
|
|
3,486 |
|
|
|
76 |
|
|
|
(4,432 |
) |
Deferred income taxes |
|
|
12,573 |
|
|
|
(3,071 |
) |
|
|
— |
|
Excess tax benefit from unit-based compensation expense |
|
|
(946 |
) |
|
|
— |
|
|
|
— |
|
Change in assets and liabilities, net of effects from acquisitions: |
|
|
|
|
|
|
|
|
|
|
|
|
(Increase) decrease in current assets |
|
|
34,467 |
|
|
|
(3,511 |
) |
|
|
(976 |
) |
(Increase) decrease in other assets |
|
|
1,731 |
|
|
|
(5,915 |
) |
|
|
(550 |
) |
Increase (decrease) in accounts payable |
|
|
(26,582 |
) |
|
|
5,786 |
|
|
|
(1,047 |
) |
Increase (decrease) in accrued taxes |
|
|
10,280 |
|
|
|
(49,906 |
) |
|
|
12,735 |
|
Increase in self-insurance reserves |
|
|
523 |
|
|
|
128 |
|
|
|
3,357 |
|
Increase (decrease) in deferred revenue and other current liabilities |
|
|
(46,980 |
) |
|
|
(538 |
) |
|
|
2,083 |
|
Increase (decrease) in other liabilities |
|
|
(5,080 |
) |
|
|
(231 |
) |
|
|
3,488 |
|
|
|
|
|
|
|
|
|
|
|
Net cash from operating activities |
|
|
166,424 |
|
|
|
160,548 |
|
|
|
148,161 |
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS (FOR) INVESTING ACTIVITIES |
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition of Paramount Parks, net of cash acquired |
|
|
(1,253,461 |
) |
|
|
— |
|
|
|
— |
|
Acquisition of Geauga Lake assets |
|
|
— |
|
|
|
— |
|
|
|
(144,269 |
) |
Capital expenditures |
|
|
(59,458 |
) |
|
|
(75,655 |
) |
|
|
(75,878 |
) |
|
|
|
|
|
|
|
|
|
|
Net cash (for) investing activities |
|
|
(1,312,919 |
) |
|
|
(75,655 |
) |
|
|
(220,147 |
) |
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM (FOR) FINANCING ACTIVITIES |
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition of Paramount Parks: |
|
|
|
|
|
|
|
|
|
|
|
|
Term debt borrowings |
|
|
1,745,000 |
|
|
|
— |
|
|
|
— |
|
Payment of debt issuance costs |
|
|
(27,842 |
) |
|
|
— |
|
|
|
— |
|
Net proceeds from public offering of limited partnership units |
|
|
— |
|
|
|
— |
|
|
|
73,268 |
|
Net borrowings (payments) on revolving credit loans |
|
|
(64,962 |
) |
|
|
30,450 |
|
|
|
37,650 |
|
Term debt borrowings |
|
|
— |
|
|
|
— |
|
|
|
75,000 |
|
Term debt payments, including early termination penalties |
|
|
(379,778 |
) |
|
|
(20,000 |
) |
|
|
(20,000 |
) |
Distributions paid to partners |
|
|
(100,830 |
) |
|
|
(98,122 |
) |
|
|
(92,151 |
) |
Termination of interest rate swap agreements |
|
|
— |
|
|
|
2,981 |
|
|
|
— |
|
Exercise of limited partnership unit options |
|
|
749 |
|
|
|
866 |
|
|
|
86 |
|
Excess tax benefit from unit-based compensation expense |
|
|
946 |
|
|
|
— |
|
|
|
— |
|
Cash paid in repurchase of 0.1% general partner interest |
|
|
— |
|
|
|
— |
|
|
|
(708 |
) |
|
|
|
|
|
|
|
|
|
|
Net cash from (for) financing activities |
|
|
1,173,283 |
|
|
|
(83,825 |
) |
|
|
73,145 |
|
|
|
|
|
|
|
|
|
|
|
EFFECT OF EXCHANGE RATE CHANGES ON CASH |
|
|
(1,006 |
) |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS |
|
|
|
|
|
|
|
|
|
|
|
|
Net increase for the year |
|
|
25,782 |
|
|
|
1,068 |
|
|
|
1,159 |
|
Balance, beginning of year |
|
|
4,421 |
|
|
|
3,353 |
|
|
|
2,194 |
|
|
|
|
|
|
|
|
|
|
|
Balance, end of year |
|
$ |
30,203 |
|
|
$ |
4,421 |
|
|
$ |
3,353 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL INFORMATION |
|
|
|
|
|
|
|
|
|
|
|
|
Cash payments for interest expense |
|
$ |
90,886 |
|
|
$ |
26,364 |
|
|
$ |
24,027 |
|
Interest capitalized |
|
|
1,158 |
|
|
|
602 |
|
|
|
1,214 |
|
Cash payments for income taxes |
|
|
9,736 |
|
|
|
8,752 |
|
|
|
8,832 |
|
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
26
CEDAR FAIR, L.P.
CONSOLIDATED STATEMENTS OF PARTNERS’ EQUITY
(In thousands, except per unit amounts)
| |
|
|
|
|
|
|
|
|
|
|
|
|
| For the years ended December 31, |
|
2006 |
|
|
2005 |
|
|
2004 |
|
Limited Partnership Units Outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
Beginning balance |
|
|
53,797 |
|
|
|
53,480 |
|
|
|
50,673 |
|
Limited partnership unit options exercised |
|
|
281 |
|
|
|
294 |
|
|
|
150 |
|
Issuance of limited partnership units as compensation |
|
|
14 |
|
|
|
23 |
|
|
|
1 |
|
Issuance of limited partnership units to repurchase
0.1% general partner interest |
|
|
— |
|
|
|
— |
|
|
|
89 |
|
Sale of limited partnership units |
|
|
— |
|
|
|
— |
|
|
|
2,567 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
54,092 |
|
|
|
53,797 |
|
|
|
53,480 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Limited Partners’ Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning balance |
|
$ |
428,943 |
|
|
$ |
365,193 |
|
|
$ |
303,536 |
|
Net income |
|
|
87,476 |
|
|
|
160,850 |
|
|
|
78,347 |
|
Partnership distribution declared (2006 - $1.41;
2005 - $1.84; 2004 - $1.80 per limited partner unit) |
|
|
(76,098 |
) |
|
|
(98,802 |
) |
|
|
(93,874 |
) |
Expense recognized for limited partnership unit options |
|
|
75 |
|
|
|
1,113 |
|
|
|
4,498 |
|
Limited partnership unit options exercised |
|
|
749 |
|
|
|
866 |
|
|
|
86 |
|
Tax effect of units involved in option exercises and
treasury unit transactions |
|
|
(1,040 |
) |
|
|
(1,031 |
) |
|
|
— |
|
Issuance of limited partnership units as compensation |
|
|
411 |
|
|
|
754 |
|
|
|
31 |
|
Repurchase of 0.1% general partner interest |
|
|
— |
|
|
|
— |
|
|
|
(699 |
) |
Net proceeds from sale of limited partnership units |
|
|
— |
|
|
|
— |
|
|
|
73,268 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
440,516 |
|
|
|
428,943 |
|
|
|
365,193 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General Partner’s Equity |
|
|
|
|
|
|
|
|
|
|
|
|
Beginning balance |
|
|
1 |
|
|
|
— |
|
|
|
65 |
|
Net income (loss) |
|
|
1 |
|
|
|
2 |
|
|
|
(32 |
) |
Partnership distribution declared |
|
|
(1 |
) |
|
|
(1 |
) |
|
|
(24 |
) |
Repurchase of 0.1% general partner interest |
|
|
— |
|
|
|
— |
|
|
|
(9 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
1 |
|
|
|
1 |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Special L.P. Interests |
|
|
5,290 |
|
|
|
5,290 |
|
|
|
5,290 |
|
|
|
|
|
|
|
|
|
|
|
| |
Accumulated Other Comprehensive Loss |
|
|
|
|
|
|
|
|
|
|
|
|
Cumulative foreign currency translation adjustment: |
|
|
|
|
|
|
|
|
|
|
|
|
Beginning balance |
|
|
— |
|
|
|
— |
|
|
|
— |
|
Current year activity, net of tax ($1,167) |
|
|
(2,039 |
) |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2,039 |
) |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
Unrealized loss on cash flow hedging derivatives: |
|
|
|
|
|
|
|
|
|
|
|
|
Beginning balance |
|
|
— |
|
|
|
— |
|
|
|
— |
|
Current year activity, net of tax ($3,026) |
|
|
(33,153 |
) |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(33,153 |
) |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(35,192 |
) |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
Total Partners’ Equity |
|
$ |
410,615 |
|
|
$ |
434,234 |
|
|
$ |
370,483 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Summary of Comprehensive Income |
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
87,477 |
|
|
$ |
160,852 |
|
|
$ |
78,315 |
|
Other comprehensive loss |
|
|
(35,192 |
) |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
Total Comprehensive Income |
|
$ |
52,285 |
|
|
$ |
160,852 |
|
|
$ |
78,315 |
|
|
|
|
|
|
|
|
|
|
|
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
27
Notes To Consolidated Financial Statements
(1) Partnership Organization:
Cedar Fair, L.P. (the “Partnership”) is a Delaware limited partnership that commenced operations in
1983 when it acquired Cedar Point, Inc., and became a publicly traded partnership in 1987. The
Partnership’s general partner is Cedar Fair Management, Inc., an Ohio corporation whose shares are
held by an Ohio trust (the “General Partner”). The General Partner owns a 0.001% interest in the
Partnership’s income, losses and cash distributions, except in defined circumstances, and has full
control over all activities of the Partnership. At December 31, 2006, there were 54,091,712
outstanding limited partnership units registered on The New York Stock Exchange, net of 270,271
units held in treasury.
The General Partner may, with the approval of a specified percentage of the limited partners, make
additional capital contributions to the Partnership, but is only obligated to do so if the
liabilities of the Partnership cannot otherwise be paid or there exists a negative balance in its
capital account at the time of its withdrawal from the Partnership. The General Partner, in
accordance with the terms of the Partnership Agreement, is required to make regular cash
distributions on a quarterly basis of all the Partnership’s available cash, as defined.
(2) Summary of Significant Accounting Policies:
The following policies are used by the Partnership in its preparation of the accompanying
consolidated financial statements.
Principles of Consolidation The consolidated financial statements include the accounts of the Partnership and its subsidiaries, all of which are wholly owned. All significant intercompany transactions and balances are eliminated in consolidation.
Foreign Currency The financial statements of the Partnership’s Canadian subsidiary are measured using the Canadian dollar as its functional currency. Assets and liabilities are translated into U.S. dollars at current exchange rates, while income and expenses are translated at average monthly exchange rates. Translation gains and losses are included as components of accumulated other comprehensive income in partners’
equity. Transaction gains and losses included in the consolidated statements of operations were not material.
Segment Reporting Although the Partnership manages its parks with a high degree of autonomy, each park offers similar products and services to similar customers. Therefore, the Partnership operates within the single reportable segment of amusement/water parks with accompanying resort facilities.
Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during each period. Actual results could differ from those estimates.
Reclassifications Certain prior year balances have been reclassified to conform with current year presentation.
Inventories The Partnership’s inventories primarily consist of purchased products, such as merchandise and food, for sale to its customers. All inventories are valued at the lower of first-in, first-out (FIFO) cost or market.
Property and Equipment Property and equipment are recorded at cost. Expenditures made to maintain
such assets in their original operating condition are expensed as incurred, and improvements and
upgrades are capitalized. Depreciation is computed on a straight-line basis over the estimated
useful lives of the assets. The composite method is used for the group of assets acquired as a
whole in 1983, as well as for the groups of like assets of each subsequent business acquisition.
The unit method is used for all individual assets purchased. Depreciation expense totaled $90.0
million in 2006, $55.2 million in 2005, and $50.1 million in 2004.
28
Under the composite depreciation method, assets with similar estimated lives are grouped together
and the several pools of assets are depreciated on an aggregate basis. No gain or loss is
recognized on normal retirements of composite assets. Instead, the acquisition cost of a retired
asset reduces accumulated depreciation for the composite group. Abnormal retirements of composite
assets could result in the recognition of a gain or loss. Management periodically reviews the
composite groups to ensure that retirements have not extended the asset lives beyond their
estimated remaining economic life.
Under the unit method of depreciation, individual assets are depreciated over their estimated
useful lives, with gains and losses on all asset retirements recognized currently in income.
The weighted average useful lives combining both methods are approximately:
| |
|
|
Land improvements
|
|
21 Years |
Buildings
|
|
24 Years |
Rides
|
|
17 Years |
Equipment
|
|
9 Years |
Impairment of Long-Lived Assets Effective January 1, 2002, the Partnership adopted Statement of
Financial Accounting Standards (SFAS) No. 144, “Accounting for the Impairment or Disposal of
Long-Lived Assets,” which requires that long-lived assets be reviewed for impairment upon the
occurrence of events or changes in circumstances that would indicate that the carrying value of the
assets may not be recoverable. An impairment loss may be recognized when estimated undiscounted
future cash flows expected to result from the use of the asset, including disposition, are less
than the carrying value of the asset. The measurement of the impairment loss to be recognized is
based on the difference between the fair value and the carrying amounts of the assets. Fair value
is generally determined based on a discounted cash flow analysis. In order to determine if an
asset has been impaired, assets are grouped and tested at the lowest level for which identifiable,
independent cash flows are available.
Goodwill Effective January 1, 2002, the Partnership adopted SFAS No. 142, “Goodwill and Other
Intangible Assets,” which requires that goodwill no longer be amortized, but instead be tested for
impairment. An impairment charge would be recognized for the amount, if any, by which the carrying
amount of goodwill exceeds its implied fair value. The fair value of a reporting unit and the
related implied fair value of its respective goodwill are established through independent
fair-market appraisals. Goodwill is reviewed annually for impairment. Goodwill related to parks
acquired prior to 2006 is tested for impairment as of October 1st. The Partnership
completed this review during the fourth quarter in 2006 and determined that goodwill is not
impaired. Goodwill related to the Paramount Parks acquisition (see Note 3) will be tested for
impairment as of April 1, 2007.
Intangible Assets The Partnership’s intangible assets consist primarily of trade-names. The
Partnership assesses the indefinite-lived trade-names for impairment separately from goodwill.
After considering the expected use of the trade-names and reviewing any legal, regulatory,
contractual, obsolescence, demand, competitive or other economic factors that could limit the
useful lives of the trade-names, in accordance with SFAS No. 142, the Partnership determined that
the trade-names had indefinite lives. Pursuant to SFAS No. 142, indefinite-lived intangible assets
are no longer amortized, but rather are reviewed annually or more frequently if impairment
indicators arise. The trade-names relate to the acquisition of Paramount Parks and will be tested
for impairment as of April 1, 2007.
Self-Insurance Reserves Reserves are recorded for the estimated amounts of guest and employee claims and expenses incurred each period that are not covered by insurance. These estimates are established based upon historical claims data and third-party estimates of settlement costs for incurred claims. These reserves are periodically reviewed for changes in these factors and adjustments are made as needed.
Derivative Financial Instruments The Partnership is exposed to market risks, primarily resulting from changes in interest rates and currency exchange rates. To manage these risks, it may enter into derivative transactions pursuant to its overall financial risk management program. The Partnership has only limited involvement with derivative financial instruments and does not use them for trading purposes.
29
The Partnership accounts for the use of derivative financial instruments according to SFAS No. 133,
“Accounting for Derivative Instruments and Hedging Activities,” and related amendments. For
derivative instruments that hedge the exposure of variability in short-term rates, designated as
cash flow hedges, the effective portion of the change in fair value of the derivative instrument is
reported as a component of “Other comprehensive income (loss)” and reclassified into earnings in
the period during which the hedged transaction affects earnings. For derivative instruments that
hedge the exposure to changes in the fair value of certain fixed-rate debt, designated as fair
value hedges, the effective portion of the change in fair value of the derivative instrument is
reported in “Other assets” or “Other liabilities” with a corresponding adjustment to the liability
being hedged. For the ineffective portion of a derivative, the change in fair value, if any, is
recognized currently in earnings together with the changes in fair value of derivatives not
designated as hedges. Derivative financial instruments used in hedging transactions are assessed
both at inception and quarterly thereafter to ensure they are effective in offsetting changes in
either the fair value or cash flows of the related underlying exposures.
Revenue Recognition Revenues on multi-day admission tickets are recognized over the estimated number of visits expected for each type of ticket and are adjusted at the end of each seasonal period. All other revenues are recognized on a daily basis based on actual guest spending at our facilities, or over the park operating season in the case of certain marina dockage revenues.
Advertising Costs The Partnership expenses all costs associated with its advertising, promotion and marketing programs over each park’s operating season, including certain costs incurred prior to the season that are amortized over the season. Advertising expense totaled $41.4 million in 2006, $35.4 million in 2005 and $34.5 million in 2004. Amounts incurred through year-end for the following year’s
advertising programs are included in prepaid expenses.
Unit-Based Compensation Effective January 1, 2003, the Partnership began to account for unit
options under the fair value recognition provisions of SFAS No. 123, “Accounting for Stock-Based
Compensation.” In December 2004, SFAS No. 123 was reissued as SFAS No. 123R, “Share-Based
Payment,” which requires measurement of compensation cost for all equity-based awards at fair value
on the date of grant and recognition of compensation over the service period for awards expected to
vest. Generally, the approach in SFAS No. 123R is similar to the fair value approach described in
SFAS No. 123. The Partnership adopted SFAS No. 123R effective January 1, 2006 following the
modified prospective method. Because the vast majority of its outstanding unit options were
already fully vested, the adoption of this standard did not have a material effect on its financial
statements. The Partnership uses a binomial option-pricing model for all grant date estimations of
fair value under SFAS No. 123 and SFAS No. 123R.
Income Taxes The Partnership’s legal structure includes both partnerships and corporate
subsidiaries. The Partnership itself is not subject to corporate income taxes; rather the
Partnership’s tax attributes (except those of its corporate subsidiaries) are included in the tax
returns of its partners. The Partnership’s corporate subsidiaries are subject to entity-level
income taxes.
Neither the Partnership’s financial reporting income, nor the cash distributions to unitholders,
can be used as a substitute for the detailed tax calculations that the Partnership must perform
annually for its partners. Net income from the Partnership is not treated as “passive income” for
federal income tax purposes. As a result, partners subject to the passive activity loss rules are
not permitted to offset income from the Partnership with passive losses from other sources.
30
Earnings Per Unit For purposes of calculating the basic and diluted earnings per limited partner
unit, no adjustments have been made to the reported amounts of net income. The unit amounts used
are as follows:
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
2006 |
|
2005 |
|
2004 |
| (In thousands except per unit amounts) |
|
|
|
|
|
|
|
|
|
|
|
|
Basic weighted average units outstanding |
|
|
53,957 |
|
|
|
53,659 |
|
|
|
51,968 |
|
Effect of dilutive units: |
|
|
|
|
|
|
|
|
|
|
|
|
Unit options (Note 7) |
|
|
743 |
|
|
|
1,123 |
|
|
|
1,163 |
|
Phantom units (Note 7) |
|
|
171 |
|
|
|
168 |
|
|
|
184 |
|
| |
Diluted weighted average units outstanding |
|
|
54,872 |
|
|
|
54,950 |
|
|
|
53,315 |
|
| |
Net income per unit – basic |
|
$ |
1.62 |
|
|
$ |
3.00 |
|
|
$ |
1.51 |
|
| |
Net income per unit – diluted |
|
$ |
1.59 |
|
|
$ |
2.93 |
|
|
$ |
1.47 |
|
| |
Weighted average unit options of 30,950 in 2006 were excluded from the diluted earnings per unit
calculation, as they were anti-dilutive. No unit options were excluded from the 2005 or 2004
calculations.
(3) Acquisitions:
On June 30, 2006, the Partnership completed the acquisition of all of the outstanding shares of
capital stock of Paramount Parks, Inc. (“PPI”) from a subsidiary of CBS Corporation in a cash
transaction valued at an aggregate cash purchase price of $1,243 million, prior to direct
acquisition costs and certain adjustments per the purchase agreement related to working capital,
which have yet to be finalized. Upon closing of the transaction, the Partnership acquired,
indirectly through Magnum Management Corporation, its wholly owned subsidiary, the following
amusement parks: Canada’s Wonderland near Toronto, Canada; Kings Island near Cincinnati, Ohio;
Kings Dominion near Richmond, Virginia; Carowinds near Charlotte, North Carolina; and Great America
located in Santa Clara, California. The Partnership also acquired Star Trek: The Experience, an
interactive adventure located in Las Vegas, and a management contract for Gilroy Gardens Family
Theme Park in Gilroy, California.
The PPI results of operations since June 30, 2006 are included in the accompanying consolidated
financial statements. The acquisition has been accounted for as a purchase, and accordingly the
purchase price has been allocated to assets and liabilities acquired based upon their estimated
fair values at the date of acquisition. The Partnership is in the process of obtaining third-party
valuations of certain tangible and intangible assets, as well as developing its plan of
integration; thus the allocation of the purchase price to assets and liabilities is subject to
adjustment.
The following table shows the preliminary total purchase cost allocation and resulting goodwill:
| |
|
|
|
|
| (In thousands) |
|
June 30, 2006 |
| |
Current assets |
|
$ |
68,448 |
|
Property and equipment |
|
|
1,065,258 |
|
Goodwill |
|
|
309,905 |
|
Intangibles and other assets |
|
|
77,160 |
|
Current liabilities |
|
|
119,557 |
|
Deferred taxes and other liabilities |
|
|
146,985 |
|
In connection with the acquisition of PPI, the Partnership terminated its existing term debt and
revolving credit agreements and entered into a new $2,090 million credit agreement with several
banks and certain “Lenders” party thereto (the “Credit Agreement”). For additional information
regarding the Credit Agreement, see the discussion on Long-Term Debt in Note 5.
31
The Partnership’s consolidated financial statements include the results of operations of PPI since
June 30, 2006, the date of acquisition. The following unaudited summary information presents the
consolidated results of operations of the Partnership on a pro forma basis, as if the PPI
acquisition had occurred at the beginning of the periods presented.
| |
|
|
|
|
|
|
|
|
| (In thousands, except per unit amounts) |
|
12/31/06 |
|
12/31/05 |
Net revenues |
|
$ |
991,584 |
|
|
$ |
994,518 |
|
Operating income |
|
|
214,201 |
|
|
|
182,630 |
|
Income before taxes |
|
|
59,706 |
|
|
|
36,296 |
|
Net income |
|
|
35,427 |
|
|
|
91,103 |
|
Net income per unit – diluted |
|
$ |
0.65 |
|
|
$ |
1.66 |
|
The pro forma results include depreciation and amortization of fair value adjustments on property
and newly created definite-lived intangibles and post-acquisition related charges. The pro forma
results presented do not reflect cost savings, or revenue enhancements anticipated from the
acquisition, and are not necessarily indicative of what actually would have occurred if the
acquisition had been completed as of the beginning of the periods presented, nor are they
necessarily indicative of future consolidated results. Reflected in the 2005 results is a one time
reversal of $62.6 million in contingent liabilities related to publicly traded partnership (PTP)
taxes.
On April 8, 2004, the Partnership completed the acquisition of Six Flags Worlds of Adventure,
located near Cleveland, Ohio, from Six Flags, Inc., in a cash transaction valued at $144.3 million.
The transaction involved the acquisition of substantially all of the assets of the park, including
the adjacent hotel and campground, but excluded all animals located at the park, all personal
property assets directly related to those animals, the use of the name “Six Flags” and the
intellectual property related to that name, and the license to use Warner Bros. characters, all of
which were retained by Six Flags. The Partnership assumed the complete operations and management
of the park as of April 9, 2004 and renamed the park “Geauga Lake.” The transaction was financed
with $75 million of term debt borrowings at a fixed rate of 4.72% and an average term of nine
years, with the balance initially financed through the Partnership’s expanded revolving credit
agreement with a group of banks.
On July 20, 2004, the Partnership completed a public offering of 2,400,000 limited partner units at
$30.00 per unit, and an additional 167,000 units were sold to the underwriters on August 17, 2004
to cover over-allotments. The Partnership used the net proceeds from the sale of the units
(approximately $73.3 million) to repay borrowings under its revolving credit facility principally
related to the acquisition of Geauga Lake.
Geauga Lake’s assets, liabilities and results of operations since April 9, 2004 are included in the
accompanying consolidated financial statements. The acquisition has been accounted for as a
purchase, and accordingly the purchase price has been allocated to property and equipment ($144.2
million), inventories ($1.0 million) and current liabilities ($0.9 million) based upon their
estimated fair values at the date of acquisition. Pro forma information related to this
acquisition has not been presented in the financial statements as the effect of the acquisition was
deemed not to be significant.
(4) Goodwill and Other Intangible Assets:
As further described in Note 3, goodwill acquired during 2006 was the result of the completion of
the acquisition of PPI. In accordance with FASB Statement No. 142, “Goodwill and Other Intangible
Assets,” goodwill is not amortized, but is evaluated for impairment on an annual basis. A summary
of changes in the Partnership’s carrying value of goodwill is as follows:
| |
|
|
|
|
Balance at December 31, 2004 |
|
$ |
9,061 |
|
|
|
|
|
Balance at December 31, 2005 |
|
|
9,061 |
|
Acquisition |
|
|
309,905 |
|
Translation and other adjustments |
|
|
(4,909 |
) |
|
|
|
|
Balance at December 31, 2006 |
|
$ |
314,057 |
|
|
|
|
|
32
The Partnership’s other intangible assets consisted of the following at December 31, 2006:
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Weighted |
|
|
|
|
|
|
|
|
| |
|
Average |
|
Gross |
|
|
|
|
|
Net |
| |
|
Amortization |
|
Carrying |
|
Accumulated |
|
Carrying |
| (In thousands) |
|
Period |
|
Amount |
|
Amortization |
|
Value |
Other intangible assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade names |
|
|
— |
|
|
$ |
51,526 |
|
|
$ |
— |
|
|
$ |
51,526 |
|
License / franchise agreements |
|
10.0 |
years |
|
|
14,146 |
|
|
|
1,015 |
|
|
|
12,057 |
|
Non-compete agreements |
|
5.0 |
years |
|
|
200 |
|
|
|
20 |
|
|
|
180 |
|
| |
|
|
Total other intangible assets |
|
9.9 |
years |
|
$ |
65,872 |
|
|
$ |
1,035 |
|
|
$ |
64,837 |
|
| |
|
|
Amortization expense of other intangible assets for 2006 was $703,000. Amortization expense of
other intangible assets at December 31, 2006, is expected to total $1.3 million from 2007 through
2011.
(5) Long-Term Debt:
Long-term debt at December 31, 2006 and 2005 consisted of the following:
| |
|
|
|
|
|
|
|
|
| (In thousands) |
|
2006 |
|
2005 |
| |
Revolving credit loans |
|
$ |
40,888 |
|
|
$ |
105,850 |
|
Term debt: |
|
|
|
|
|
|
|
|
June 2006 U.S. term loan at 8.16% average rate (due 2007-2012) |
|
|
1,467,625 |
|
|
|
— |
|
June 2006 Canadian term loan at 7.85% average rate (due 2007-2012) |
|
|
268,650 |
|
|
|
— |
|
August 1994 senior notes at 8.43% (due 2006) |
|
|
— |
|
|
|
10,000 |
|
January 1998 senior notes at 6.68% (due 2007-2011) |
|
|
— |
|
|
|
50,000 |
|
August 2001 senior notes at 6.40% (due 2006-2008) |
|
|
— |
|
|
|
30,000 |
|
February 2002 senior notes at 6.44% average rate (due 2007-2015) |
|
|
— |
|
|
|
100,000 |
|
December 2003 senior notes at 5.38% average rate (due 2009-2018) |
|
|
— |
|
|
|
100,000 |
|
April 2004 senior notes at 4.72% (due 2011-2015) |
|
|
— |
|
|
|
75,000 |
|
| |
|
|
|
1,777,163 |
|
|
|
470,850 |
|
Less current portion |
|
|
17,450 |
|
|
|
20,000 |
|
| |
|
|
$ |
1,759,713 |
|
|
$ |
450,850 |
|
| |
In June 2006, and as amended in August 2006, in connection with the acquisition of PPI, the
Partnership entered into a new $2,090 million credit agreement with several banks and certain
“Lenders” party thereto (the “Credit Agreement”). On February 15, 2007 the Partnership amended the
Credit Agreement reducing interest rate spreads on term borrowings under the agreement by 50 basis
points (bps) and extending the maturity of the Canadian term loan six months. The facilities
provided under the Credit Agreement are collateralized by substantially all of the assets of the
Partnership.
Revolving Credit Loans Under the amended Credit Agreement the Partnership has available a $310.0
million U.S. revolving loan commitments and a $35.0 million Canadian revolving loan commitments
through August 30, 2011. As of December 31, 2006, borrowings under the credit facilities were
$40.9 million at an effective rate of 7.3%. The maximum outstanding revolving credit balance
during 2006 was $228.3 million under the credit facilities.
U.S. denominated borrowings under the U.S. revolving loan commitments and the Canadian revolving
loan commitments bear interest at either a rate based on LIBOR plus a margin ranging from 175 to
250 basis points (bps) per annum or a rate based prime plus a margin ranging from 75 to 150 bps.
Canadian denominated borrowings under the Canadian revolving loan commitments bear interest at
either a rate based on Bankers’ Acceptance plus a margin ranging
33
from 75 to 250 bps per annum or a
rate based on the Canadian Prime Rate plus a margin ranging from 75 to 150 bps. The agreement also
requires the Partnership to pay a commitment fee of 50 bps per annum on the unused portion of the
credit facilities. The amended Credit Agreement also provides for the issuance of documentary and
standby letters of credit.
Term Debt The credit facilities provided under the amended Credit Agreement also include a $1,467.6
million U.S. term loan and a $268.7 million Canadian term loan as of December 31, 2006. All term
debt bears interest at either a rate based on LIBOR plus 200 bps or a rate based on the prime rate
plus 100 bps. The U.S. term loan matures on August 30, 2012, and amortizes at a rate of $14.8
million per year. The Canadian term loan matures on February 17, 2012, and amortizes at a rate of
$2.7 million per year.
At December 31, 2006, taking into account the effect of the February 2007 amendment to the Credit
Agreement, the scheduled annual maturities of term debt were as follows (in thousands):
| |
|
|
|
|
2007 |
|
$ |
17,450 |
|
2008 |
|
|
17,450 |
|
2009 |
|
|
17,450 |
|
2010 |
|
|
17,450 |
|
2011 |
|
|
17,450 |
|
Thereafter |
|
|
1,649,025 |
|
|
|
|
|
|
|
$ |
1,736,275 |
|
|
|
|
|
The fair value of the aggregate future repayments on term debt at December 31, 2006, was
approximately $1,688.2 million, based on borrowing rates currently available to the Partnership on
long-term debt with similar terms and average maturities. The Partnership may prepay its debt
without premium or penalty at any time.
The Partnership’s policy is to capitalize interest on major construction projects. Interest of
$1.2 million, $0.6 million and $1.2 million was capitalized in 2006, 2005 and 2004, respectively.
Covenants Under the terms of the amended Credit Agreement, the Partnership, among other
restrictions, is required to remain below a specified level of leverage, and above a minimum fixed
charge coverage ratio. It is also required to comply with certain distribution coverage ratios.
The Partnership was in compliance with all covenants as of December 31, 2006.
(6) Derivative Financial Instruments:
During 2006, the Partnership entered into several interest rate swap agreements which effectively
converted $1.0 billion of its variable-rate debt to a fixed-rate of 7.6% after the February 2007
amendment to the Credit Agreement. Cash flows related to these interest rate swap agreements are
included in interest expense over the term of the agreements, which are set to expire in 2012. The
Partnership has designated these interest rate swap agreements and hedging relationships as cash
flow hedges. The fair market value of these agreements at December 31, 2006, which was obtained
from broker quotes, was recorded as a liability of $27.8 million in “Other Liabilities” on the
balance sheet. No ineffectiveness was recorded in 2006.
In October 2006, the Partnership entered into two cross-currency swap agreements to manage its
foreign currency risk exposure on term debt borrowings related to its wholly owned Canadian
subsidiary. The cross-currency swaps effectively convert $268.7 million of debt, and the
associated interest payments, from variable U.S. dollar denominated debt at a rate of LIBOR plus
200 bps to 6.9% fixed-rate Canadian dollar denominated debt. The terms of the cross-currency swaps
mirror the terms of the underlying term debt. The Partnership designated the cross currency swaps
as foreign currency cash flow hedges. The fair value of the cross-currency swaps was an asset of
$4.3 at December 31, 2006. This asset was recorded in “Other Assets” on the balance sheet. No
ineffectiveness was recorded in 2006. The Partnership subsequently terminated these two swaps in
February 2007 and received $3.9 million in cash upon termination. The swaps were replaced with two
new cross-currency swap agreements, which effectively convert the variable U.S. dollar denominated
debt, and the associated interest payments, to 6.3% fixed-rate Canadian dollar denominated debt.
34
(7) Partners’ Equity:
Special L.P. Interests In accordance with the Partnership Agreement, certain partners were
allocated $5.3 million of 1987 and 1988 taxable income (without any related cash distributions) for
which they received Special L.P. Interests. The Special L.P. Interests do not participate in cash
distributions and have no voting rights. However, the holders of Special L.P. Interests will
receive in the aggregate $5.3 million upon liquidation of the Partnership.
Equity-Based Incentive Plans In August 2000, the Partnership’s unitholders approved the
establishment of an Equity Incentive Plan (the “Plan”) allowing the award of up to 4.8 million unit
options and other forms of equity as determined by the Compensation Committee of the Board of
Directors as an element of compensation to senior management and other key employees. Grants are
generally made by the Compensation Committee during regularly scheduled meetings. As of December
31, 2006, 1.5 million units remained available for issuance under the Plan.
Unit Options Options are issued with an exercise price no less than the market price of the
Partnership’s units on the date of grant. Variable-price options have an exercise price that
declines by the value of cash distributions declared on the underlying limited partnership units.
All options vest ratably over a five-year period, or when other conditions are met, and have a
maximum term of ten years. As of December 31, 2006, the Partnership had 1,034,900 variable-price
options and 432,950 fixed-price options outstanding under the Plan. There were no unit options
granted in 2006, 2005 or 2004.
Approximately $75,000, $1.1 million and $4.5 million in non-cash compensation expense related to
unit options was recognized in 2006, 2005 and 2004, respectively. These amounts are included in
“Selling, General and Administrative Expense” in the accompanying consolidated statements of
operations.
Prior to the adoption of SFAS No. 123(R), the Partnership presented all tax benefits of deductions
resulting from the exercise of stock options as operating cash flows in the consolidated statements
of cash flows. SFAS No. 123(R) requires the cash flows from tax benefits resulting from tax
deductions in excess of compensation costs recognized for those options (excess tax benefits) to be
classified as financing cash flows. As a result, the benefit of tax deductions in excess of
recognized compensation cost included in net financing cash flows for the year ended December 31,
2006 was $946,000.
The Partnership has a policy of issuing limited partnership units from treasury to satisfy option
exercises and expects its treasury unit balance to be sufficient for 2007, based on estimates of
option exercises for that period. A summary of unit option activity is presented below:
| |
|
|
|
|
|
|
|
|
| |
|
2006 |
| |
|
|
|
|
|
Weighted |
| |
|
|
|
|
|
Average |
| |
|
|
|
|
|
Exercise |
| |
|
Unit Options |
|
Price |
| |
Outstanding, beginning of year |
|
|
1,894,330 |
|
|
$ |
13.59 |
|
Granted |
|
|
— |
|
|
|
— |
|
Exercised |
|
|
(424,080 |
) |
|
|
10.67 |
|
Forfeited |
|
|
(2,400 |
) |
|
|
22.34 |
|
| |
|
|
|
|
|
|
|
|
|
Outstanding, end of year |
|
|
1,467,850 |
|
|
$ |
12.77 |
|
| |
|
|
|
|
|
|
|
|
|
Options exercisable, end of year |
|
|
1,401,850 |
|
|
$ |
12.21 |
|
| |
Cash received from unit option exercises totaled $749,000 in 2006, $866,000 in 2005, and $86,000 in
2004.
35
The following table summarizes information about unit options outstanding at December 31, 2006:
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Options Outstanding |
|
|
Options Vested |
| |
|
|
|
|
|
|
|
|
|
Weighted |
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
Average |
|
Weighted |
|
|
|
|
|
|
Weighted |
| |
|
|
|
|
|
|
|
|
|
Remaining |
|
Average |
|
|
|
|
|
|
Average |
| |
|
Range of |
|
|
|
|
|
Contractual |
|
Exercise |
|
|
|
|
|
|
Exercise |
| Type |
|
Exercise Prices |
|
Unit Options |
|
Life |
|
Price |
|
|
Unit Options |
|
Price |
| |
|
|
|
Variable |
|
$ |
7.39 - $22.96 |
|
|
|
1,034,900 |
|
|
3.2 years |
|
$ |
8.55 |
|
|
|
|
1,030,573 |
|
|
$ |
8.49 |
|
Fixed |
|
$ |
17.85 - $28.45 |
|
|
|
432,950 |
|
|
4.9 years |
|
|
22.86 |
|
|
|
|
410,515 |
|
|
|
22.69 |
|
| |
|
|
|
Outstanding at year-end |
|
$ |
7.39 - $28.45 |
|
|
|
1,467,850 |
|
|
3.7 years |
|
$ |
12.77 |
|
|
|
|
1,441,088 |
|
|
$ |
12.53 |
|
| |
|
|
|
Aggregate intrinsic value |
|
|
|
|
|
$ |
22,094,166 |
|
|
|
|
|
|
|
|
|
|
|
$ |
22,031,570 |
|
|
|
|
|
| |
|
|
|
The total intrinsic value of options exercised during the years ended December 31, 2006, 2005 and
2004 was $6.8 million, $8.2 million, and $4.8 million, respectively.
A summary of the status of the Partnership’s nonvested unit options at December 31, 2006 is
presented below:
| |
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
Weighted Average |
|
| |
|
|
|
|
|
Grant-Date |
|
| |
|
Unit Options |
|
|
Fair Value |
|
| |
Nonvested, beginning of year |
|
|
96,877 |
|
|
$ |
2.98 |
|
Granted |
|
|
— |
|
|
|
— |
|
Vested |
|
|
(68,565 |
) |
|
|
2.83 |
|
Forfeited |
|
|
(1,550 |
) |
|
|
2.68 |
|
| |
Nonvested, end of year |
|
|
26,762 |
|
|
$ |
3.41 |
|
| |
As of December 31, 2006, unrecognized compensation cost related to unit options totaled
approximately $91,300. The cost is expected to be recognized over a weighted-average period of 1.4
years. The total fair value of units vested during 2006 was approximately $193,800.
Senior Management Long-Term Incentive Compensation In 2002, the Partnership established a long-term
incentive compensation plan for senior management, under which annual awards of “phantom units” are
made based upon the Partnership’s operating performance. The awards accrue additional “phantom
units” on the date of each quarterly distribution paid by the Partnership, calculated at the NYSE
closing price on that date. Awards vest over a four-year period and can be paid with cash, limited
partnership units, or a combination of both. The effect for outstanding “phantom units” has been
included in the diluted earnings per unit calculation, as half of the awards are expected to be
settled in limited partnership units. Approximately $2.3 million, $1.4 million and $1.1 million in
compensation expense related to “phantom units” was recognized in 2006, 2005 and 2004,
respectively. These amounts are included in “Selling, General and Administrative Expense” in the
accompanying consolidated statements of operations.
During 2006, 74,862 “phantom units” were awarded at a grant price of $28.96 per unit. At year-end,
the Partnership had 240,632 phantom units outstanding, 206,188 of which were vested, at a weighted
average price of $27.82 per unit. The aggregate market value of the “phantom units” vested at
year-end, which has been reflected on the balance sheet in “Other liabilities,” was $5.7 million in
2006 and $5.5 million in 2005. At December 31, 2006, unamortized compensation related to unvested
phantom unit awards totaled $958,221, which is expected to be amortized over a weighted average
period of 2.7 years.
(8) Retirement Plans:
The Partnership has trusteed, noncontributory retirement plans for the majority of its full-time
employees. Contributions are discretionary and amounts accrued were $3,411,000 in 2006, $2,742,000
in 2005 and $3,556,000
36
in 2004. These plans also permit employees to contribute specified
percentages of their salary, matched up to a limit by the Partnership. Matching contributions, net
of forfeitures, approximated $1,489,000 in 2006, $1,246,000 in 2005 and $754,000 in 2004.
In addition, approximately 135 employees are covered by union-sponsored, multi-employer pension
plans for which approximately $767,000, $660,000 and $654,000 were contributed for the years ended
December 31, 2006, 2005, and 2004, respectively. The Partnership believes that, as of December 31,
2006, it would have no withdrawal liability as defined by the Multi-employer Pension Plan
Amendments Act of 1980.
(9) Income and Partnership Taxes
Federal and state tax legislation in 1997 provided a permanent income tax exemption to existing
publicly traded partnerships (PTP), such as Cedar Fair, L.P., with a new tax (the PTP tax) levied
on partnership gross income (net revenues less cost of food, merchandise and games) beginning in
1998. Also, under SFAS No. 109, “Accounting for Income Taxes,” income taxes are recognized for the
amount of taxes payable by the Partnership’s corporate subsidiaries for the current year and for
the impact of deferred tax assets and liabilities, which represent future tax consequences of
events that have been recognized differently in the financial statements than for tax purposes. As
such, the Partnership’s total provision for taxes includes amounts for both the PTP tax and for
income taxes on the Partnership’s corporate subsidiaries. The Partnership’s 2006 tax provision is
$39.1 million, which is composed of $7.9 million and $31.2 million, for the PTP tax and income
taxes, respectively.
Reflected in the 2005 provision for taxes is the reversal of $62.6 million of contingent
liabilities recorded from 1998 through 2004 related to PTP taxes. The accrual was established when
the PTP taxes first came into effect, because the Partnership could not be certain at that time how
the taxes would be applied. Now after a number of years of filing returns, management has more
complete evidence as to how the taxes are imposed, including the completion of examinations of the
Partnership’s tax filings. Based on this evidence, management determined that the accrual was no
longer required and reversed the $62.6 million of contingent liabilities into income in 2005. The
adjustment to the PTP tax accrual, which was partially offset by PTP taxes payable for the year and
the impact of the tax attributes of the Partnership’s corporate subsidiaries, resulted in a 2005
net credit for taxes of $49.3 million, which is composed of a $53.7 million credit and $4.4 million
provision, for the PTP tax and income taxes, respectively.
The Partnership provides reserves for liabilities that may arise from tax exposures that result
from specific positions taken in its tax returns or from tax planning strategies employed to
minimize its tax liabilities. Management determines tax exposure items based on positions asserted
by tax authorities, as well as management’s own assessment of exposures from unasserted items. The
calculation of the provision for taxes involves significant estimates and assumptions and actual
results could differ from those estimates.
The tax returns of the Partnership are subject to examination by state and federal tax authorities.
If such examinations result in changes to taxable income, the tax liability of the partners could
be changed accordingly. The tax returns of the Partnership and its corporate subsidiaries have
been examined through December 2003 and March 1999, respectively.
Significant components of income before income taxes are as follows:
| |
|
|
|
|
|
|
|
|
| (In thousands) |
|
2006 |
|
2005 |
| |
Domestic |
|
$ |
102,717 |
|
|
$ |
111,576 |
|
Foreign |
|
|
23,847 |
|
|
|
— |
|
| |
|
|
$ |
126,564 |
|
|
$ |
111,576 |
|
| |
37
The provision (benefit) for income taxes is comprised of the following:
| |
|
|
|
|
|
|
|
|
| (In thousands) |
|
2006 |
|
2005 |
| |
Income taxes: |
|
|
|
|
|
|
|
|
Current federal |
|
$ |
6,924 |
|
|
$ |
5,967 |
|
Current state and local |
|
|
2,197 |
|
|
|
1,475 |
|
Current foreign |
|
|
9,470 |
|
|
|
— |
|
| |
Total current |
|
|
18,591 |
|
|
|
7,442 |
|
| |
|
|
|
|
|
|
|
|
|
Deferred federal, state and local |
|
|
13,204 |
|
|
|
(3,071 |
) |
Deferred foreign |
|
|
(631 |
) |
|
|
— |
|
| |
Total deferred |
|
|
12,573 |
|
|
|
(3,071 |
) |
| |
|
|
$ |
31,164 |
|
|
$ |
4,371 |
|
| |
The provision for income taxes for the Partnership’s corporate subsidiaries was not material in
2004.
The provision for income taxes for the Partnership’s corporate subsidiaries differs from the amount
computed by applying the U.S. federal statutory income tax rate of 35% to the Partnership’s income
before provision for income taxes.
The sources and tax effects of the differences are as follows:
| |
|
|
|
|
|
|
|
|
| (In thousands) |
|
2006 |
|
2005 |
| |
Income tax expense based on the U.S. federal statutory tax rate |
|
$ |
44,297 |
|
|
$ |
39,052 |
|
Partnership income not subject to corporate income taxes |
|
|
(20,921 |
) |
|
|
(34,776 |
) |
State and local taxes, net of federal income tax benefit |
|
|
4,560 |
|
|
|
238 |
|
Valuation allowance |
|
|
2,895 |
|
|
|
— |
|
Nondeductible expenses and other |
|
|
641 |
|
|
|
58 |
|
Tax credits |
|
|
(308 |
) |
|
|
(201 |
) |
| |
|
|
$ |
31,164 |
|
|
$ |
4,371 |
|
| |
Deferred income taxes reflect the net tax effects of temporary differences between the carrying
amounts of assets and liabilities for financial reporting purposes and the amounts used for income
tax purposes.
Significant components of deferred tax assets and liabilities as of December 31, 2006 and 2005 are
as follows:
| |
|
|
|
|
|
|
|
|
| (In thousands) |
|
2006 |
|
2005 |
| |
Deferred tax assets: |
|
|
|
|
|
|
|
|
Options and deferred compensation |
|
$ |
13,348 |
|
|
$ |
12,258 |
|
Accrued expenses |
|
|
7,582 |
|
|
|
2,017 |
|
Foreign tax credits |
|
|
4,454 |
|
|
|
— |
|
Derivatives and foreign currency translation |
|
|
5,761 |
|
|
|
— |
|
Other, net |
|
|
689 |
|
|
|
866 |
|
| |
Deferred tax assets |
|
|
31,834 |
|
|
|
15,141 |
|
| |
Valuation allowance |
|
|
(2,895 |
) |
|
|
— |
|
| |
Net deferred tax assets |
|
|
28,939 |
|
|
|
15,141 |
|
| |
|
|
|
|
|
|
|
|
|
Deferred tax liabilities: |
|
|
|
|
|
|
|
|
Property |
|
|
(147,636 |
) |
|
|
6,546 |
|
Intangibles |
|
|
(10,908 |
) |
|
|
— |
|
| |
Deferred tax liabilities |
|
|
(158,544 |
) |
|
|
6,546 |
|
| |
Net deferred tax asset (liability) |
|
|
($129,605 |
) |
|
$ |
8,595 |
|
| |
38
As of December 31, 2006, the Partnership has $4.5 million of foreign tax credit carryforwards
available for U.S. federal income tax purposes. A valuation allowance has been recorded in the
current year to reflect uncertainties regarding the use of these foreign tax credits before they
begin expiring in 2016. The valuation allowance is based on estimates of taxable income from the
foreign jurisdictions in which it operates and the period over which its deferred tax assets will
be realized.
The net current and non-current components of deferred taxes recognized as of December 31, 2006 and
2005 in the consolidated balance sheets are as follows:
| |
|
|
|
|
|
|
|
|
| (In thousands) |
|
2006 |
|
2005 |
| |
Net current deferred tax asset |
|
$ |
17,196 |
|
|
$ |
3,077 |
|
Net non-current deferred tax asset (liability) |
|
|
(146,801 |
) |
|
|
5,518 |
|
| |
Net deferred tax asset (liability) |
|
($ |
129,605 |
) |
|
$ |
8,595 |
|
| |
The net current deferred tax asset amounts are included in “Prepaids and other current assets,” and
the net non-current deferred tax asset and liability amounts are reported separately in “Other
Assets” and “Deferred Tax Liability,” respectively, in the accompanying consolidated balance
sheets.
In June 2006, the Financial Accounting Standards Board issued Interpretation No. 48, Accounting for
Uncertainty in Income Taxes, an interpretation of FAS 109, Accounting for Income Taxes (FIN 48), to
create a single model to address accounting for uncertainty in tax positions. FIN 48 clarifies the
accounting for income taxes, by prescribing a minimum recognition threshold a tax position is
required to meet before being recognized in the financial statements. FIN 48 also provides
guidance on de-recognition, measurement, classification, interest and penalties, accounting in
interim periods, disclosure and transition. FIN 48 is effective for fiscal years beginning after
December 15, 2006. The Partnership will adopt FIN 48 as of January 1, 2007, as required. The
cumulative effect, if any, of adopting FIN 48 will be recorded in retained earnings and other
accounts, such as goodwill, as applicable. The Partnership does not expect that the adoption of
FIN 48 will have a significant impact on the Partnership’s financial position and results of
operations.
(10) Operating Lease Commitments and Contingencies:
The Partnership has commitments under various operating leases at its parks. Minimum lease
payments under non-cancelable operating leases as of December 31, 2006 are as follows:
| |
|
|
|
|
2007 |
|
$ |
7,444 |
|
2008 |
|
|
6,670 |
|
2009 |
|
|
6,111 |
|
2010 |
|
|
378 |
|
2011 |
|
|
223 |
|
Thereafter |
|
|
1,162 |
|
|
|
|
|
|
|
$ |
21,988 |
|
|
|
|
|
The Partnership is also a party to a number of lawsuits arising in the normal course of business.
In the opinion of management, these matters will not have a material effect in the aggregate on the
Partnership’s financial statements.
39
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE.
None.
ITEM 9A. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
The Partnership maintains a system of controls and procedures designed to ensure that information
required to be disclosed in reports filed or submitted under the Securities Exchange Act of 1934,
as amended (the “Exchange Act”), is recorded, processed, summarized and reported on a timely basis.
Disclosure controls and procedures include, without limitation, controls and procedures designed
to ensure that information required to be disclosed by an issuer in the reports that it files or
submits under the Act is accumulated and communicated to the issuer’s management, including its
principal executive and principal financial officers, or persons performing similar functions, as
appropriate to allow timely decisions regarding required disclosure.
The Partnership has evaluated the effectiveness of the design and operation of its disclosure
controls and procedures under supervision of management, including the Partnership’s chief
executive officer and chief financial officer, as of December 31, 2006. Based upon that
evaluation, the chief executive officer and chief financial officer have concluded that, as of
December 31, 2006, the Partnership’s disclosure controls and procedures were effective in timely
alerting them to information required to be included in the Partnership’s periodic SEC filings.
Management’s Report on Internal Control over Financial Reporting
The Partnership’s management is responsible for establishing and maintaining adequate internal
controls over financial reporting, as defined in Rule 13a or 15(f) under the Exchange Act. The
Partnership’s internal control system over financial reporting is a process designed to provide
reasonable assurance to management and the General Partner’s board of directors regarding the
reliability of financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles. Management assessed the
effectiveness of the Partnership’s internal control over financial reporting as of December 31,
2006. In making this assessment, it used the criteria described in “Internal Control – Integrated
Framework” issued by the Committee of Sponsoring Organizations (COSO) of the Treadway Commission.
Management excluded from its assessment the internal controls over financial reporting at Paramount
Parks, Inc., which was acquired on June 30, 2006, because it was
not required to be assessed in 2006 under
the criteria. As a result of its assessment, management concluded that, as of December 31, 2006,
the Partnership’s internal control over financial reporting was effective in providing reasonable
assurance regarding the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted accounting principles.
Management’s assessment of the effectiveness of the Partnership’s internal control over financial
reporting as of December 31, 2006 has been audited by Deloitte & Touche LLP, an independent
registered public accounting firm, and their report is included herein.
Changes in Internal Control over Financial Reporting
There were no changes in the Partnership’s internal controls over financial reporting that occurred
during the fourth quarter of 2006 that have materially affected, or are reasonably likely to
materially affect, the Partnership’s internal controls over financial reporting.
40
Report of Independent Registered Public Accounting Firm
To the Partners of Cedar Fair, L.P.:
We have audited management’s assessment, included in the accompanying Management’s Report on
Internal Control over Financial Reporting, that Cedar Fair, L.P. and subsidiaries (the
“Partnership”) maintained effective internal control over financial reporting as of December 31,
2006, based on criteria established in Internal Control—Integrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission. As described in Management’s
Report on Internal Control over Financial Reporting, management excluded from its assessment the
internal control over financial reporting at Paramount Parks, Inc. which was acquired on June 30,
2006 and whose financial statements constitute 58 percent of total assets and 32 percent of
revenues of the consolidated financial statement amounts as of and for the year ended December 31,
2006. Accordingly, our audit did not include the internal control over financial reporting at
Paramount Parks, Inc. The Partnership’s management is responsible for maintaining effective
internal control over financial reporting and for its assessment of the effectiveness of internal
control over financial reporting. Our responsibility is to express an opinion on management’s
assessment and an opinion on the effectiveness of the Partnership’s internal control over financial
reporting based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight
Board (United States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether effective internal control over financial reporting was
maintained in all material respects. Our audit included obtaining an understanding of internal
control over financial reporting, evaluating management’s assessment, testing and evaluating the
design and operating effectiveness of internal control, and performing such other procedures as we
considered necessary in the circumstances. We believe that our audit provides a reasonable basis
for our opinions.
A company’s internal control over financial reporting is a process designed by, or under the
supervision of, the company’s principal executive and principal financial officers, or persons
performing similar functions, and effected by the company’s board of directors, management, and
other personnel to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles. A company’s internal control over financial reporting includes
those policies and procedures that (1) pertain to the maintenance of records that, in reasonable
detail, accurately and fairly reflect the transactions and dispositions of the assets of the
company; (2) provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting principles,
and that receipts and expenditures of the company are being made only in accordance with
authorizations of management and directors of the company; and (3) provide reasonable assurance
regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the
company’s assets that could have a material effect on the financial statements.
Because of the inherent limitations of internal control over financial reporting, including the
possibility of collusion or improper management override of controls, material misstatements due to
error or fraud may not be prevented or detected on a timely basis. Also, projections of any
evaluation of the effectiveness of the internal control over financial reporting to future periods
are subject to the risk that the controls may become inadequate because of changes in conditions,
or that the degree of compliance with the policies or procedures may deteriorate.
In our opinion, management’s assessment that the Partnership maintained effective internal control
over financial reporting as of December 31, 2006, is fairly stated, in all material respects, based
on the criteria established in Internal Control—Integrated Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission. Also in our opinion, the Partnership
maintained, in all material respects, effective internal control over financial reporting as of
December 31, 2006, based on the criteria established in Internal Control—Integrated Framework
issued by the Committee of Sponsoring Organizations of the Treadway Commission.
41
We have also audited, in accordance with the standards of the Public Company Accounting Oversight
Board (United States), the consolidated financial statements as of and for the year ended December
31, 2006 of the Partnership and our report dated February 28, 2007 expressed an unqualified opinion
on those financial statements.
DELOITTE & TOUCHE LLP
Cleveland, Ohio
February 28, 2007
ITEM 9B. OTHER INFORMATION
None.
42
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
Cedar Fair Management, Inc., an Ohio corporation owned by an Ohio trust, is the General Partner of
the Partnership and has full responsibility for the management of the Partnership. For additional
information, attention is directed to Note 1 in “Notes to Consolidated Financial Statements” on
page 28 of this Report.
A. Identification of Directors:
The information required by this item is incorporated by reference to the material in our Proxy
Statement for the annual meeting of limited partner unitholders to be held on or about May 17, 2007
(the “Proxy Statement”) under the captions “Election of Directors,” “Board Committees” and “Section
16(a) Beneficial Ownership Reporting Compliance.”
B. Identification of Executive Officers:
Information regarding executive officers of the Partnership is included in this Annual Report on
Form 10-K under the caption “Supplemental Item. Executive Officers” in Item I of Part I and is
incorporated herein by reference.
C. Code of Ethics:
In accordance with Section 406 of the Sarbanes-Oxley Act of 2002 and Item 406 of Regulation S-K,
the Partnership has adopted a Code of Conduct and Ethics (the “Code”), which applies to all
directors, officers and employees of the Partnership, including the Chief Executive Officer and the
Senior Financial Officers. A copy of the Code is available on the Internet at the Investor
Relations section of our web site (www.cedarfair.com).
The Partnership submitted an unqualified Section 303A.12(a) Chief Executive Officer certification
to the New York Stock Exchange on April 13, 2006, stating that the Partnership was in compliance
with the NYSE’s Corporate Governance Listing Standards. The Chief Executive Officer and Chief
Financial Officer certifications under Section 302 of the Sarbanes-Oxley Act are included as
exhibits to this Form 10-K.
ITEM 11. EXECUTIVE COMPENSATION.
The information required by this item is incorporated by reference to the material in our Proxy
Statement under the captions “Executive Compensation,” “Compensation Committee Interlocks and
Insider Participation,” and “Compensation Committee Report.”
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT AND RELATED UNITHOLDER MATTERS.
The information required by this item is incorporated by reference to the material in our Proxy
Statement under the caption “Security Ownership of Certain Beneficial Owners and Management.”
Attention is directed to Note 7 in “Notes to Consolidated Financial Statements” for information
regarding the Partnership’s equity incentive plans.
43
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.
The information required by this item is incorporated by reference to the material in our Proxy
Statement under the captions “Certain Relationships and Related Transactions,” “The Board of
Directors,” and “Board Committees.”
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
The information required by this item is incorporated by reference to the material in our Proxy
Statement under the caption “Independent Registered Public Accounting Firm.”
44
PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
A. 1. Financial Statements
The following consolidated financial statements of the Registrant, the notes thereto and the
related Report of Independent Registered Public Accounting Firm are filed under Item 8 of this
Report:
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Page |
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(i)
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Report of Independent Registered Public Accounting Firm.
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23 |
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(ii)
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Consolidated Balance Sheets — December 31, 2006 and 2005.
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24 |
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(iii)
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Consolidated Statements of Operations — Years ended December 31, 2006, 2005, and 2004.
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25 |
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(iv)
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Consolidated Statements of Cash Flows — Years ended December 31, 2006, 2005, and 2004.
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26 |
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(v)
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Consolidated Statements of Partners’ Equity — Years ended December 31, 2006, 2005, and 2004.
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27 |
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(vi)
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Notes to Consolidated Financial Statements — December 31, 2006, 2005, and 2004.
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28-39
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A. 2. Financial Statement Schedules
All Schedules are omitted, as the information is not required or is otherwise furnished.
A. 3. Exhibits
The exhibits listed below are incorporated herein by reference to prior SEC filings by Registrant
or are included as exhibits in this Form 10-K.
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| Exhibit |
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| Number |
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Description |
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2.1
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Asset Purchase Agreement between Cedar Fair, L.P. and Six Flags, Inc., Funtime, Inc.,
Aurora Campground, Inc., Ohio Campgrounds Inc., and Ohio Hotel LLC, dated April 8, 2004.
Incorporated herein by reference to Exhibit 2 to the Registrant’s Form 8-K filed on April 23, 2004. |
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2.2
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Stock Purchase Agreement between Cedar Fair, L.P. and CBS Corporation, dated May 22, 2006.
Incorporated herein by reference to Exhibit 2.1 to the Registrant’s Form 8-K filed on July 7, 2006. |
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2.3
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Amendment No. 1 to the Stock Purchase Agreement between Cedar Fair, L.P. and CBS Corporation, dated
June 30, 2006. Incorporated herein by reference to Exhibit 2.2 to the Registrant’s Form 8-K filed on July 7, 2006. |
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3.1
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Fifth Amended and Restated Agreement of Limited Partnership of Cedar Fair, L.P.
Incorporated herein by reference to Exhibit A to the Registrant’s Proxy Statement
on Schedule 14A filed March 23, 2004. |
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4*
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Form of Deposit Agreement. |
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10.1
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Cedar Fair, L.P. Executive Severance Plan dated as of July 26, 1995. |
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10.2
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Cedar Fair, L.P. 2000 Equity Incentive Plan. |
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10.3
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Cedar Fair, L.P. 2000 Senior Executive Management Incentive Plan. |
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10.4
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Senior Management Long-Term Incentive Compensation Plan approved November 7, 2002.
Incorporated herein by reference to Exhibit 10.31 to the Registrant’s Annual Report on
Form 10-K for the year ended December 31, 2002. |
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10.5
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Employment Agreement with Richard L. Kinzel. |
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10.6
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Employment Agreement with Jacob T. Falfas. |
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10.7
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Employment Agreement with Peter J. Crage. |
45
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| Exhibit |
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| Number |
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Description |
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10.8
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Amended and Restated Credit Agreement dated as of February 17, 2007 among Cedar Fair, L.P.
and Subsidiaries as co-borrowers, and several banks and certain “Lenders” party thereto.
Incorporated herein by reference to Exhibit 10.1 to the Registrant’s Form 8-K filed on February 21, 2007. |
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21
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Subsidiaries of Cedar Fair, L.P. |
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23.1
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Consent of Independent Registered Public Accounting Firm |
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31.1
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Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
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31.2
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Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
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32.1
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Certifications of Chief Executive Officer and Chief Financial Officer pursuant
to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
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| * |
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Incorporated herein by reference to the Registration Statement on Form S-1 of Cedar
Fair, L.P., Registration No. 1-9444, filed April 23, 1987. |
46
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
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CEDAR FAIR, L.P.
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(Registrant) |
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DATED: March 1, 2007 |
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/S/ Richard L. Kinzel |
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Richard L. Kinzel |
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Chairman, President and Chief Executive Officer |
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Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been executed
below by the following persons on behalf of the Registrant and in the capacities and on the dates
indicated.
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Signature |
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Title |
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Date |
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/S/
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Richard L. Kinzel
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Chairman, President and Chief
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March 1, 2007 |
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Richard L. Kinzel
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Executive Officer, Director |
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/S/
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Peter J. Crage
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Corporate Vice President-Finance
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March 1, 2007 |
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Peter J. Crage
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(Chief Financial Officer) |
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/S/
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Brian C. Witherow
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Vice President and Corporate Controller
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March 1, 2007 |
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Brian C. Witherow
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(Chief Accounting Officer) |
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/S/
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Darrel D. Anderson
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Director
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March 1, 2007 |
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Darrel D. Anderson |
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/S/
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Richard S. Ferreira
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Director
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March 1, 2007 |
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Richard S. Ferreira |
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/S/
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Michael D. Kwiatkowski
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Director
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March 1, 2007 |
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Michael D. Kwiatkowski |
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/S/
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David L. Paradeau
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Director
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March 1, 2007 |
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David L. Paradeau |
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/S/
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Steven H. Tishman
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Director
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March 1, 2007 |
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Steven H. Tishman |
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/S/
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Thomas A. Tracy
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Director
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March 1, 2007 |
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Thomas A. Tracy |
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47
ANNUAL REPORT ON FORM 10-K
CEDAR FAIR, L.P.
For the Year Ended December 31, 2006
EXHIBIT INDEX
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| Exhibit |
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| Number |
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Description |
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Page |
|
|
|
|
|
|
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|
|
2.1
|
|
Asset Purchase Agreement between Cedar Fair, L.P. and Six Flags, Inc.,
Funtime, Inc., Aurora Campground, Inc., Ohio Campgrounds Inc., and Ohio
Hotel LLC, dated April 8, 2004. Incorporated herein by reference to
Exhibit 2 to the Registrant’s Form 8-K filed on April 23, 2004.
|
|
* |
|
|
|
|
|
|
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|
|
2.2
|
|
Stock Purchase Agreement between Cedar Fair, L.P. and CBS Corporation,
dated May 22, 2006. Incorporated herein by reference to Exhibit 2.1 to the
Registrant’s Form 8-K filed on July 7, 2006.
|
|
* |
|
|
|
|
|
|
|
|
|
2.3
|
|
Amendment No, 1 to the Stock Purchase Agreement between
Cedar Fair, L.P. and CBS Corporation, dated June 30, 2006. Incorporated
herein by reference to Exhibit 2.2 to the Registrant’s Form 8-K filed on July 7, 2006.
|
|
* |
|
|
|
|
|
|
|
|
|
3.1
|
|
Fifth Amended and Restated Agreement of Limited Partnership of Cedar Fair,
L.P. Incorporated herein by reference to Exhibit A to the Registrant’s Proxy
Statement on Schedule 14A filed March 23, 2004.
|
|
* |
|
|
|
|
|
|
|
|
|
4*
|
|
Form of Deposit Agreement.
|
|
* |
|
|
|
|
|
|
|
|
|
10.1
|
|
Cedar Fair, L.P. Executive Severance Plan dated as of July 26, 1995.
|
|
50-53 |
|
|
|
|
|
|
|
|
|
10.2
|
|
Cedar Fair, L.P. 2000 Equity Incentive Plan.
|
|
54-64 |
|
|
|
|
|
|
|
|
|
10.3
|
|
Cedar Fair, L.P. 2000 Senior Executive Management Incentive Plan.
|
|
65-71 |
|
|
|
|
|
|
|
|
|
10.4
|
|
Senior Management Long-Term Incentive Compensation Plan approved November 7, 2002.
Incorporated herein by reference to Exhibit 10.31 to the Registrant’s Annual Report on
Form 10-K for the year ended December 31, 2002.
|
|
* |
|
|
|
|
|
|
|
|
|
10.5
|
|
Employment Agreement with Richard L. Kinzel.
|
|
72-82 |
|
|
|
|
|
|
|
|
|
10.6
|
|
Employment Agreement with Jacob T. Falfas.
|
|
83-91 |
|
|
|
|
|
|
|
|
|
10.7
|
|
Employment Agreement with Peter J. Crage.
|
|
92-100 |
|
|
|
|
|
|
|
|
|
10.8
|
|
Amended and Restated Credit Agreement dated as of February 17, 2007 among Cedar Fair,
L.P. and Subsidiaries as co-borrowers, and several banks and certain “Lenders”
party thereto. Incorporated herein by reference to Exhibit 10.1 to the
Registrant’s Form 8-K filed on February 21, 2007.
|
|
* |
|
|
48
EXHIBIT INDEX (continued)
| |
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| Exhibit |
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| Number |
|
Description |
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Page |
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21
|
|
Subsidiaries of Cedar Fair, L.P.
|
|
|
101 |
|
|
|
|
|
|
|
|
|
|
|
|
23.1
|
|
Consent of Independent Registered Public Accounting Firm
|
|
|
102 |
|
|
|
|
|
|
|
|
|
|
|
|
31.1
|
|
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
103 |
|
|
|
|
|
|
|
|
|
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|
|
31.2
|
|
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
104 |
|
|
|
|
|
|
|
|
|
|
|
|
32.1
|
|
Certifications of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
105 |
|
|
|
49