SANDUSKY, Ohio, Feb. 11 /PRNewswire-FirstCall/ -- Cedar Fair
(NYSE:FUN), a leader in regional amusement parks, water parks and
active entertainment, today announced results for its fourth
quarter and year ended December 31, 2009. Cedar Fair's operations
generated full-year net revenues of $916.1 and net income of $35.4
million, or $0.63 per diluted limited partner (LP) unit. In 2008,
the Company achieved net revenues of $996.2 million and reported
net income of $5.7 million, or $0.10 per diluted LP unit. Adjusted
EBITDA, which management believes is a meaningful measure of the
Company's park-level operating results, decreased 15.7% to $299.9
million from $355.9 million a year ago. See the attached table for
a reconciliation of adjusted EBITDA to net income. Included in the
2009 adjusted EBITDA of $299.9 million is approximately $5.6
million of cash costs related to the proposed merger with
affiliates of Apollo Global Management. In addition, the 2009
results reflect a $9.0 million settlement of a California
class-action lawsuit and a $2.0 million settlement of a licensing
dispute with Paramount Pictures. Excluding these non-recurring
charges, our adjusted EBITDA for 2009 would have totaled $316.5
million, down $39.4 million, or 11%, from 2008. The decrease in
revenues and adjusted EBITDA is a result of a 1.6 million-visit, or
7%, decrease in attendance to 21.1 million guests in 2009. "The
decrease in attendance was primarily the result of a sharp decline
in group sales business, which was negatively affected by the poor
economy; a decrease in season pass visits due to a decline in
season pass sales during the year; and poor weather, particularly
cooler than normal temperatures throughout much of the season in
both our northern and southern regions," said Dick Kinzel, Cedar
Fair's chairman, president and chief executive officer. "During
this same period average in-park guest per capita spending
decreased 1%, or $0.57. Out-of-park revenues, which represent the
sale of hotel rooms, food, merchandise and other complementary
activities located outside the park gates, decreased 7%, or $7.3
million, between years, due primarily to lower occupancy rates at
most of our hotel properties." Cash operating costs decreased $24.1
million, or 3.8%, to $616.2 million versus $640.3 million in the
prior year. The decrease is the result of the successful
implementation of numerous cost-savings initiatives, a reduction in
variable costs due to a decrease in attendance, and the closing of
Star Trek: The Experience in late 2008. Together, these items
reduced core operating costs by approximately $40.7 million, or
6.4%, in 2009. This reduction in operating costs was offset
somewhat by $16.6 million of non-recurring charges during the year,
including the deal-related costs and litigation settlements
discussed above. In late August, as part of its ongoing efforts to
reduce debt, the Company completed the sale of 87 acres of surplus
land at Canada's Wonderland to the Vaughan Health Campus of Care in
Ontario, Canada. Net proceeds from this sale totaled $53.8 million
and resulted in the recognition of a $23.1 million gain during the
period. After the gain on the sale of the Canadian land,
depreciation, amortization, loss on impairment of trade-names and
all other non-cash costs, operating income for the period increased
$51.6 million to $185.5 million in 2009 compared with $133.9
million in 2008. The increase in operating income was affected by
the recording in 2008 of non-cash charges of $79.9 million and $7.1
million for impairment of goodwill and trade-names, respectively,
that were originally recorded when the Company acquired the
Paramount Parks in 2006. "Although the Paramount Parks acquisition
continues to meet our collective operating and profitability goals,
the performance of certain acquired parks has fallen below our
original expectation, which when coupled with a higher cost of
capital, resulted in these impairment charges," added Kinzel. "It
is important to note that each of the acquired parks remains cash
flow positive, and that the goodwill and trade-name write-downs do
not affect cash, EBITDA or liquidity." In 2009, depreciation and
amortization increased $6.9 million from 2008, due to an increase
in amortization expense of $8.4 million. The increase in
amortization expense reflects the accelerated amortization of the
intangible asset related to the Nickelodeon licensing agreement.
During the year, management determined it would not be renewing the
licensing agreement, which expired on December 31, 2009, thus
triggering the accelerated amortization in 2009. For the year,
interest expense decreased $4.9 million to $124.7 million due to
lower interest rates on the Company's variable-rate outstanding
borrowings along with lower average debt balances, offset slightly
by a 200 basis point increase in interest costs on $900 million of
term-debt borrowings that were extended by two years in August.
"During 2009, we retired $161.3 million of term debt," added
Kinzel. "This was done through the use of available cash from the
reduction in our annual distribution, the net proceeds from the
sale of excess land at Canada's Wonderland, as well as regularly
scheduled debt amortization payments and the use of our revolving
credit facility." In 2009, the net change in fair value of swaps
and other (income) expense, net, increased $10.8 million compared
with 2008. This increase was primarily a result of recording a $9.2
million non-cash charge to income for the change in the
mark-to-market valuations of the Company's swaps that had gone
ineffective for hedge accounting during the year, as well as the
related amortization of amounts previously recorded in Other
Comprehensive Loss. In the prior year, the swaps were highly
effective and the change in the mark-to-market valuations were
appropriately recorded in Other Comprehensive Loss. For the year, a
provision for taxes of $15.0 million was recorded to account for
the tax attributes of the Company's corporate subsidiaries and
publicly traded partnership (PTP) taxes, compared to a benefit of
$935,000 in 2008. After interest expense and the provision
(benefit) for taxes, combined net income for the year totaled $35.4
million, or $0.63 per LP unit. In 2008, the Company reported net
income of $5.7 million, or $0.10 per LP unit. Fourth Quarter
Results For the fourth quarter, net revenues decreased $13.7
million to $105.6 million from $119.3 million a year ago. The 11.5%
decrease in net revenues is a result of a 12% decrease, or 328,000
visits, in attendance. "Most of the same challenges we faced during
the first nine months of the year continued to negatively impact
our business during the fourth quarter," said Kinzel. "In
particular, unseasonably cool temperatures and heavy rain during
the month of October softened the positive impact we had expected
to get from the Halloween events we had in place at our parks,
which are traditionally very popular." The operating loss for this
same period was $19.8 million compared with an operating loss of
$79.4 million in the fourth quarter a year ago. The decrease in
operating loss is primarily attributable to the $87.0 million
non-cash charge for impairment of goodwill and other intangible
assets recognized during the fourth quarter of 2008. After interest
expense, which increased $3.1 million between years due to the
increase in interest costs on the debt extension in August, a $6.1
million non-cash charge for the net change in fair value of swaps,
and a benefit for taxes in the period, net loss for the quarter was
$26.3 million, or $0.47 per LP unit, in 2009 compared with a net
loss of $56.7 million, or $1.02 per LP unit, last year. Balance
Sheet At year end, total debt outstanding was $1.54 billion of
variable-rate term debt, $16.0 million of which is classified as
current, and $86.3 million of which reflects borrowings under the
revolving credit facilities. As of December 31, 2009, $1.2 billion
of the Company's outstanding variable rate long-term debt has been
converted to fixed-rate debt through the use of several interest
rate swap agreements. Based on interest rates in effect at year-end
for variable-rate debt, the Company expects its aggregate average
cost of debt to approximate 8.4% in 2010. The 2009 Amended Credit
Agreement includes customary covenants to monitor operating
performance, as well as liquidity ratios that govern the Company's
distributions. The most restrictive of these ratios is the Maximum
Consolidated Leverage Ratio, which applies only to the ability to
declare and pay distributions. Pursuant to the 2009 Amended
Agreement, this ratio decreased to 4.75x debt-to-EBITDA at December
31, 2009. Based on its 2009 results, the Company does not meet this
ratio and therefore suspended distributions as of December 31,
2009. The Company was in compliance with all other terms of the
credit agreement as of year-end. Merger Transaction As previously
announced on December 16, 2009, the Company entered into a
definitive merger agreement to be acquired by an affiliate of
Apollo Global Management, a leading global alternative asset
manager. Under the terms of the agreement, Cedar Fair unitholders
will receive $11.50 in cash for each Cedar Fair LP unit that they
hold, representing a 28% premium over the closing unit price on
December 15, 2009. The board of directors of Cedar Fair Management,
Inc. has unanimously approved the merger agreement and recommends
that Cedar Fair limited partnership unitholders adopt the
agreement. The Company has scheduled a Special Meeting of
Unitholders to be held on March 16, 2010, at which unitholders as
of the close of business on February 12, 2010 will be entitled to
vote. The Company has commenced mailing proxy materials to Cedar
Fair unitholders. About Cedar Fair Cedar Fair is a publicly traded
partnership headquartered in Sandusky, Ohio, and one of the largest
regional amusement-resort operators in the world. The Partnership
owns and operates 11 amusement parks, six outdoor water parks, one
indoor water park and five hotels. Amusement parks in the Company's
northern region include two in Ohio: Cedar Point, consistently
voted "Best Amusement Park in the World" in Amusement Today polls
and Kings Island; as well as Canada's Wonderland, near Toronto;
Dorney Park, PA; Valleyfair, MN; and Michigan's Adventure, MI. In
the southern region are Kings Dominion, VA; Carowinds, NC; and
Worlds of Fun, MO. Western parks in California include: Knott's
Berry Farm; California's Great America; and Gilroy Gardens, which
is managed under contract. Forward Looking Statements Some of the
statements contained in this news release (including information
included or incorporated by reference herein) may constitute
"forward-looking statements" within the meaning of the safe harbor
provisions of the United States Private Securities Litigation
Reform Act of 1995, including statements as to the Company's
expectations, beliefs and strategies regarding the future. These
forward-looking statements may involve risks and uncertainties that
are difficult to predict, may be beyond the Company's control and
could cause actual results to differ materially from those
described in such statements. Although the Company believes 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 general economic
conditions, competition for consumer leisure time and spending,
adverse weather conditions, unanticipated construction delays and
the risk factors discussed from time to time by the Company in
reports filed with the Securities and Exchange Commission (the
"SEC") could affect attendance at our parks and cause actual
results to differ materially from the Company's expectations. In
addition, there are uncertainties associated with the acquisition
of the Paramount Parks, including the ability of the Company to
combine the operations and take advantage of growth, savings and
synergy opportunities, and the proposed sale of the Company to an
affiliate of Apollo Global Management, including the anticipated
timing of filings and approvals relating to the transaction, the
ability of third parties to fulfill their obligations relating to
the proposed transaction and the ability of the parties to satisfy
the conditions to closing of the merger agreement to complete the
transaction. Additional information on risk factors that may affect
the business and financial results of the Company can be found in
the Company's Annual Report on Form 10-K and in the filings of the
Company made from time to time with the SEC. The Company undertakes
no obligation to correct or update any forward-looking statements,
whether as a result of new information, future events or otherwise.
Cedar Fair, L.P. SUMMARY STATEMENTS OF OPERATIONS (unaudited) Three
Months Ended Twelve Months Ended (In thousands except per unit)
12/31/09 12/31/08 12/31/09 12/31/08 Net revenues: Admissions
$64,940 $72,394 $532,814 $566,266 Food, merchandise and games
33,314 36,575 316,386 355,917 Accommodations and other 7,316 10,305
66,875 74,049 Total net revenues 105,570 119,274 916,075 996,232
Cash operating costs and expenses 101,727 97,973 616,167 640,342
Adjusted EBITDA (a) 3,843 21,301 299,908 355,890 Depreciation and
amortization 19,141 14,580 132,745 125,838 Equity-based
compensation - 77 (26) 716 Loss on impairment of goodwill and other
intangibles 4,500 86,988 4,500 86,988 (Gain) loss on impairment/
retirement of fixed assets 26 (965) 244 8,425 (Gain) on sale of
other assets - - (23,098) - Operating income (loss) (19,824)
(79,379) 185,543 133,923 Interest expense 33,712 30,649 124,706
129,561 Net change in fair value of swaps 6,086 - 9,170 - Other
(income) expense (43) (201) 1,260 (409) Income (loss) before taxes
(59,579) (109,827) 50,407 4,771 Provision (benefit) for taxes
(33,287) (53,078) 14,978 (935) Net income (loss) $(26,292)
$(56,749) $35,429 $5,706 Weighted average units outstanding -
diluted 55,945 55,859 55,906 55,747 Per limited partner unit: Net
income (loss) - diluted $(0.47) $(1.02) $0.63 $0.10 Cash
distributions paid $0.25 $0.48 $1.23 $1.92 Balance Sheet Data:
Total assets $2,147,418 $2,186,083 Total debt 1,626,346 1,724,075
Total partners' equity 129,421 106,786 Cedar Fair, L.P.
RECONCILIATION TO ADJUSTED EBITDA (unaudited) (In thousands) Three
Months Ended Twelve Months Ended 12/31/09 12/31/08 12/31/09
12/31/08 Net income (loss) $(26,292) $(56,749) $35,429 $5,706
Interest expense 33,712 30,649 124,706 129,561 Net change in fair
value of swaps 6,086 - 9,170 - Provision (benefit) for taxes
(33,287) (53,078) 14,978 (935) Depreciation and amortization 19,141
14,580 132,745 125,838 Other (income) expense (43) (201) 1,260
(409) Equity-based compensation - 77 (26) 716 Loss on impairment of
goodwill and other intangibles 4,500 86,988 4,500 86,988 (Gain)
loss on impairment / retirement of fixed assets 26 (965) 244 8,425
(Gain) on sale of other assets - - (23,098) - Adjusted EBITDA (a)
$3,843 $21,301 $299,908 $355,890 (a) Adjusted EBITDA represents
earnings before interest, taxes, depreciation, and other non-cash
items. The Partnership believes adjusted EBITDA is a meaningful
measure of park-level operating profitability. Adjusted EBITDA is
not a measurement of operating performance computed in accordance
with generally accepted accounting principles and is not intended
to be a substitute for operating income, net income or cash flow
from operating activities, as defined under generally accepted
accounting principles. In addition, adjusted EBITDA may not be
comparable to similarly titled measures of other companies.
DATASOURCE: Cedar Fair Entertainment Company CONTACT: Stacy Frole,
+1-419-627-2227 Web Site: http://www.cedarfair.com/
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