FUN 2010 Q2 Results

[PhantomTheater]

http://www.cedarfair...ry&story_id=249

Attendance up from last year, in park spending is down again.

[The Interpreter]

...For the first six months, excluding depreciation, amortization and other non-cash expenses, cash operating costs and expenses increased $17.9 million, to $276.4 million for the period ended June 27, 2010 versus $258.5 million for the period ended June 28, 2009. This increase was largely attributable to $10.3 million of costs incurred in connection with the terminated merger and $2.5 million of legal and other costs incurred with efforts to refinance debt. After depreciation, amortization and all other non-cash costs, operating loss for the first six months was $22.8 million in 2010 compared with an operating loss of $15.6 million in 2009....

Per cap spending....down.

$10.3 million wasted plus the distraction of management...all for an attempted $11.50 per unit buyout to enrich senior management while getting rid of pesky unit owners. And even with all this, the units continue to trade at much more than Mr. Kinzel and the Board had recommended the unit holders bow out for...

And still making a loss in the first six months, even if there had been no attempted "merger" or refi...

Yes, attendance is up...but people continue to spend less and less per cap in the parks. Somewhere, there is a message here...

[Dieseltech20]

How long until they pay attention to that message?

[The Interpreter]

That is the......Q!

[thekidd33]

I honestly believe current management would/will run the company into the ground before prices in the parks are lowered. For whatever reason, lower costs translating to higher sales does not seem to compute with them. I honestly fear a "No pass outs" rule being instituted before we see prices adjusted.

[DaveStroem]

On our 14 park trip, we ate at the car for most of our meals. The exceptions were the parks with reasonable food prices. When we were at MiA a few weeks ago it was like a tailgate party in the parking lot.

[The Interpreter]

In the last two years, they have managed to lose $1.95 in park spending per cap...so far...

And this is without taking into account inflation...doing so, the loss is actually more than $2...and that is based on the economy's general inflation rate, not the rate of inflation of Cedar Fair in park pricing, which is much higher than the overall economy, even though Mr. Kinzel would assure us that in park pricing has only gone up by a nickel or so...

[flightoffear1996]

I found my-self actually spending more in the parks. When I got a park I am there for a day and not want to go back to the car to eat.

[jzarley]

And, what's ironic is that increasing per cap spending at the former Paramount Parks was how CF management said they would pay for the acquisition...

[The Interpreter]

That and diminishing the importance of season pass sales by maintaining pricing integrity!

Now, in this recent press release, they trumpet the importance of increased season pass attendance and group sales!

My, how the world has changed.

Al Weber seems smarter every day...Kinzel let him go, I wonder where he is now?

[jzarley]

Have they named Weber the permanent CEO yet, or is he still the "interim"?

[The Interpreter]

He's still the President and Interim CEO. They are interviewing candidates for the permanent position, of which I suggest he is likely one...

Meanwhile, over at the FUN place, it looks more and more likely the current incumbent is there for the interim...

[KIfan73]

I'm sure I'll be able to hear a collective gasp of horror from this, but I just don't think the prices at Kings Island are out of line at all. Even when compared to the cheapest fast food restaurants, I don't think their food prices are out of line-and yes, I find the quality to be normally as good as if I had ordered it in just about any other restaurant. I find their souvenirs (shirts, hats, mugs) to be in line with anywhere else you find that stuff. Prices are higher everywhere you go (and will continue to do so). Amusement parks definitely aren't going to be any different.

On a typical trip, I normally buy pizza. I think it's what, $6 for two slices? But, my goodness, look at where I'm at when I'm buying it...a beautiful park filled with millions and millions of dollars worth of rides - and I may be watching a wonderfully put together stage show while I'm eating it. Sure, I can run over to Taco Bell and get my lunch for $3 or $4...and sit and stare at other cars in a hot parking lot, or sit inside a, well, Taco Bell.

I think people are spending less everywhere; just take a look at almost any industry. I think that pointing the finger at Kings Island without looking at the big picture is a just little narrow in scope.

[The Interpreter]

But it is not pointing the finger at Kings Island, it's pointing the finger at Cedar Fair. Other park chains are NOT seeing this dip in in park per cap spending. Cedar Fair is...

[KIfan73]

I'm not foolish enough - well, at least I think I'm not - to try to speculate any reasons for that. My only perspective is as a person that frequents many restaurants, malls, stores, movie theaters, etc. There are many things I would list as overpriced over Kings Island.

[thekidd33]

The food prices at KI (and the other CF parks I've been to) have on more than one occasion helped determine our trip schedules. We plan to be in the park for only one meal (or less sometimes) because the prices are so high. I can echo Dave's observation of MiA's parking lot looking something like a massive group picnic. Thats a lot of $6 pizza slices and $4 drinks they aren't selling. Would they make more selling $4 pizza slices and $2 drinks? Maybe, maybe not. (Though Mr. Kinzel would certainly get more of my nickles.)

[KIfan1980]

Yes, attendance is up...but people continue to spend less and less per cap in the parks. Somewhere, there is a message here...

I'm sure I'll be able to hear a collective gasp of horror from this, but I just don't think the prices at Kings Island are out of line at all. Even when compared to the cheapest fast food restaurants

So I just went on a trip where I visited a CF park (one day ~10 hours at KBF) and another park (two days ~ 7 hours once, ~ 4 hours once at Legoland). What happened:

• At KBF - we ate lunch in the car, had a minimal shared dinner at the park, and then ate at In-N-Out Burger when we left
• At Legoland - we ate lunch in the park both times

What was the difference

• At KBF, the Hamburger I shared with my son was ~$6 and to make it a combo (Fries and Drink) was +$8 = $14. Water tastes pretty good.
• At Legoland, the combo meal (Hamburger, Fries, and Drink) was ~$8. We got 4

I'm willing to pay a little more than normal when at an amusement park, but there is a limit - and CF has exceeded that limit.

[KIfan73]

How do admission and parking prices compare?

[KIfan1980]

How do admission and parking prices compare?

We used the San Diego GOCard for admission to all attractions so I don't have specifics for each, but from what I remember seeing while in line.

• Legoland admission was higher (~$70 adult and $60 kid per day) versus KBF (~$55 adult and $30 kid), however discounts were widely available for Legoland (I saw free kid with adult and half price coupons). I heard someone ask about a AAA discount at KBF and think they got a better deal.
• Parking was $12 at Legoland and similar at Knotts (my son's platinum pass paid off here)

[Dieseltech20]

The prices in park are crazy high, like most every where else. I'll never forget my trip to KY Speedway, yikes. Hands down a movie theater is the biggest rip off around though, cheaper to buy the Blu Ray, lol.

That said, the last few times I have been to the park, the food stands/buildings have been PACKED. More than one line has been packed in each as well. I notice lots of people drinking the free water though so perhaps they are off setting the food prices with that. Still, the per caps are down, so I imagine they would pop right back up if they dropped the prices even slightly. I hear plenty say "Are they crazy" when people look at the prices. I figure these are first time visitors that had no clue about the food pricing and will not be returning any time soon

I couldn't imagine standing in one of those lines when the prices were lower.

[The Interpreter]

...Investors were not thrilled with the earnings report, released in the morning. Cedar Fair stock closed 12 cents a share lower yesterday at $13.61 on the New York Stock Exchange.

http://toledoblade.com/article/20100804/BUSINESS03/8030337/-1/BUSINESS04

[The Interpreter]

And the market remains unimpressed...on a generally up day, FUN closed at $13.37, down 24 cents or 1.76%...

[TH13TEEN]

Were food prices ever that high during the Paramount days?

[The Interpreter]

Yes, by comparison to the economy. It was CBS who had raised the pricing to stratospheric levels. Meanwhile, that very same year, Cedar Fair had attempted to roll back pricing...including, among other things, 25 cent cotton candy. When Cedar Fair saw the profit levels that CBS had generated, they adjusted pricing strategy. Per caps have been falling steadily for some time now...

I do not doubt that the new pricing levels are more profitable, but are they driving away visitors?

[The Interpreter]

The transcript has been posted:

http://www.thestreet.com/story/10830232/1/cedar-fair-lp-q2-2010-earnings-call-transcript.html?cm_ven=GOOGLEFI

Some things of interest there, but not much. There is a fight between "AN" investor and management over distributions. It can be presumed that investor is Q, but it isn't clear that it is. For distributions, other than a minor one this year and next to avoid tax problems for unit holders, the company must do splendidly indeed.