Cedar Fair LP Reports Second Quarter Results

[The Interpreter]

http://biz.yahoo.com/prnews/060731/clm073.html?.v=37

Cedar Fair, L.P. Reports 2006 Second Quarter Results

Monday July 31, 6:26 pm ET

Comments on Attendance and Revenue Trends through July

SANDUSKY, Ohio, July 31 /PRNewswire-FirstCall/ -- Cedar Fair, L.P. (NYSE: FUN - News), a publicly traded partnership which owns and operates twelve amusement parks, five outdoor water parks, one indoor water park and six hotels, today announced results for the second quarter ended June 25, 2006. The second quarter results exclude operating results of the five Paramount Parks, which were acquired on June 30, 2006.

Net revenues for the quarter, decreased 2% to $145.4 million from $148.9 million in 2005, while net income decreased $1.2 million to $11.1 million, or $0.20 per diluted limited partner unit, compared to net income of $12.3 million, or $0.22 per unit, a year ago. Adjusted EBITDA, which management believes is a very meaningful measure of the Partnership's park-level operating results, decreased $1.8 million to $38.1 million versus $39.9 million for the same period in 2005. Adjusted EBITDA represents earnings before interest, taxes, depreciation and other non-cash items. See the attached table for a reconciliation of adjusted EBITDA to net income (loss).

"The decrease in revenues and the resulting decrease in operating income and adjusted EBITDA was primarily due to a decrease in attendance at several of our northern parks, including Cedar Point, Dorney Park and Geauga Lake, where heavy rains impacted operations in late June," said Dick Kinzel, chairman, president and chief executive officer. "In addition, economic pressures in the Ohio and Michigan areas continue to adversely affect attendance and revenues. Our attendance shortfalls were slightly offset by improved operating results at Worlds of Fun, which benefited from the successful debut of its new inverted roller coaster, Patriot. An increase in out-of-park revenues at Knott's Berry Farm, which includes results from the Knott's Berry Farm Hotel and the adjacent TGI Friday's, also contributed nicely. Over this same period, average in-park guest per capita spending at our twelve properties remained unchanged from 2005."

Excluding depreciation and other non-cash charges, total cash operating costs and expenses for the quarter decreased 2%, or $1.6 million, to $107.3 million from 108.9 million in 2005, due in large part to the later timing of the advertising program at Knott's Berry Farm, as well as the fewer operating days in the period. After depreciation and other non-cash charges, operating income for the quarter decreased to $19.9 million from $22.4 million a year ago.

Interest expense for the quarter increased approximately $1.2 million to $8.0 million, due in large part to higher short-term rates. After interest expense and a small tax provision, net income for the period was $11.1 million, or $0.20 per diluted limited partner unit, compared to net income of $12.3 million, or $0.22 per unit, a year ago.

Commenting on results through the first six months of the year, Kinzel said, "First half net revenues were down 3% from last year, on a 2%, or 82,000 visit, decrease in combined attendance, a 1%, or $230,000, increase in out-of- park revenues and average in-park guest per capita spending that remained unchanged. Over this same period, cash operating costs and expenses decreased 1%, or $1.3 million, from a year ago to $155.5 million."

Kinzel added that through July 30 combined attendance on a same-park basis was down 2%, or 140,000 visits, from 2005. Over this same period, average in- park guest per capita spending was down less than 1% and out-of-park revenues were up $250,000. Overall, combined revenues through the end of July decreased 2%, or $6.7 million, to $322.3 million in 2006 from $329.0 million through the first seven months of 2005, on a same-park basis.

Including results from the Paramount Parks since their acquisition, combined revenues through July 30 totaled $428.2 million. Over this same period, combined attendance totaled 9.7 million visits, average in-park guest per capita spending was $38.22, and out-of-park revenues totaled $56.7 million. "We are very pleased that we were able to acquire the Paramount Parks prior to the peak-season operating months of July and August," Kinzel said. "Over the last several weeks, I have had the opportunity to visit all of the Paramount Parks and they truly are beautiful properties and are a great addition to our family of parks."

"Although we have not met all of our park-level attendance objectives to this point, we remain pleased by the performance of most of our parks, particularly given the economic uncertainty and continued pressure on families due to increased prices at the gas pumps," he continued. "With almost half of our budgeted attendance still ahead of us, we are hopeful that we can improve attendance and our operating income. At this time, based on preliminary results through July and taking into consideration the operating results of the acquired Paramount Parks less estimated restructuring costs, we now expect to generate full-year revenue between $835-$855 million and full-year adjusted EBITDA between $295-$315 million."

Kinzel concluded by noting that virtually all of Cedar Fair's revenues from its seasonal amusement parks, water parks, and other seasonal resort facilities are realized during a five-month operating period beginning in early May, with the major portion concentrated in the peak vacation months of July and August. Castaway Bay and Knott's Berry Farm are the Partnership's only year-round properties, but Knott's Berry Farm operates at its highest level of attendance during the third quarter of the year.

Management will host a conference call with analysts at 11:00 a.m. Eastern Time on Tuesday, August 1, 2006, which will be web cast live in "listen only" mode via the Cedar Fair web site (www.cedarfair.com). It will be available for replay starting at approximately 1:00 p.m. ET, Tuesday, August 1, 2006, until midnight ET, Tuesday, August 15, 2006. In order to access the replay of the earnings call, please dial 1-877-519-4471 followed by the access code #7644862.

Cedar Fair, L.P. (NYSE: "FUN") is a publicly traded partnership headquartered in Sandusky, Ohio. The Partnership, which owns and operates twelve amusement parks, five outdoor water parks, one indoor water park and six hotels, is one of the largest regional amusement park operators in the world. Its parks are located in Ohio, California, North Carolina, Virginia / District of Columbia, Pennsylvania, Minnesota, Missouri, Michigan, and Toronto, Ontario. Cedar Fair also owns and operates Star Trek: The Experience, an interactive adventure located in Las Vegas, and operates the Bonfante Gardens in Gilroy, California under a management contract. Cedar Fair's flagship park, Cedar Point, has been voted the "Best Amusement Park in the World" for eight consecutive years in a prestigious annual poll conducted by Amusement Today newspaper.

Some of the statements contained in this news release constitute forward- looking statements. These statements may involve risks and uncertainties that could cause actual results to differ materially from those described in such statements. Although the Partnership believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to have been correct. Important factors, including general economic conditions, competition for consumer leisure time and spending, adverse weather conditions, unanticipated construction delays and other factors could affect attendance at our parks and cause actual results to differ materially from the Partnership's expectations. In addition, risks and uncertainties concerning the acquisition of the Paramount Parks include, but are not limited to the ability of the Partnership to combine the operations and take advantage of growth, savings and synergy opportunities.

Cedar Fair, L.P.

SUMMARY STATEMENTS OF OPERATIONS

SECOND QUARTER

(unaudited)

Three Months Ended Six Months Ended

(In thousands except per

unit) 6/25/06 6/26/05 6/25/06 6/26/05

Net revenues:

Admissions $71,434 $73,964 $79,953 $82,145

Food, merchandise and games 59,588 60,444 71,370 71,678

Accommodations and other 14,407 14,444 18,051 19,830

Total net revenues 145,429 148,852 169,374 173,653

Cash operating costs and

expenses 107,317 108,941 155,470 156,778

Adjusted EBITDA (a) 38,112 39,911 13,904 16,875

Depreciation and amortization 18,218 17,486 21,692 20,940

Non-cash unit option expense 22 64 34 1,019

Operating income (loss) 19,872 22,361 (7,822) (5,084)

Interest expense 8,040 6,848 15,241 13,349

Other (income) - - - (459)

Income (loss) before taxes 11,832 15,513 (23,063) (17,974)

Provision (credit) for taxes 772 3,243 (7,619) (5,680)

Net income (loss) $11,060 $12,270 $(15,444) $(12,294)

Weighted average units

outstanding - diluted 54,963 54,917 53,884 53,555

Per limited partner unit:

Net income (loss) - diluted $0.20 $0.22 $(0.29) $(0.23)

Cash distributions declared $0.47 $0.46 $0.94 $0.92

Balance Sheet Data:

Total assets $1,072,249 $1,072,787

Total long-term debt 561,600 556,872

Total partners' equity 368,608 310,673

Cedar Fair, L.P.

SUMMARY STATEMENTS OF OPERATIONS

SECOND QUARTER

(unaudited)

Twelve Months Ended

(In thousands except per unit) 6/25/06 6/26/05

Net revenues:

Admissions $290,216 $278,703

Food, merchandise and games 218,786 211,432

Accommodations and other 55,426 57,279

Total net revenues 564,428 547,414

Cash operating costs and expenses 373,199 378,197

Adjusted EBITDA (a) 191,229 169,217

Depreciation and amortization 56,517 52,083

Non-cash unit option expense 128 3,197

Operating income (loss) 134,584 113,937

Interest expense 28,097 26,458

Other (income) - (2,465)

Income (loss) before taxes 106,487 89,944

Provision (credit) for taxes (51,215) 18,257

Net income (loss) $157,702 $71,687

Weighted average units

outstanding - diluted 54,937 54,668

Per limited partner unit:

Net income (loss) - diluted $2.87 $1.31

Cash distributions declared $1.86 $1.82

Balance Sheet Data:

Total assets

Total long-term debt

Total partners' equity

(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.

Cedar Fair, L.P.

RECONCILIATION TO ADJUSTED EBITDA

SECOND QUARTER

(unaudited)

Three Months Ended Six Months Ended

(In thousands) 6/25/06 6/26/05 6/25/06 6/26/05

Net income (loss) $11,060 $12,270 $(15,444) $(12,294)

Interest expense 8,040 6,848 15,241 13,349

Provision (credit) for taxes 772 3,243 (7,619) (5,680)

Depreciation and amortization 18,218 17,486 21,692 20,940

Other (income) - - - (459)

Non-cash unit option expense 22 64 34 1,019

Adjusted EBITDA (a) $38,112 $39,911 $13,904 $16,875

Cedar Fair, L.P.

RECONCILIATION TO ADJUSTED EBITDA

SECOND QUARTER

(unaudited)

Twelve Months Ended

(In thousands) 6/25/06 6/26/05

Net income (loss) $157,702 $71,687

Interest expense 28,097 26,458

Provision (credit) for taxes (51,215) 18,257

Depreciation and amortization 56,517 52,083

Other (income) - (2,465)

Non-cash unit option expense 128 3,197

Adjusted EBITDA (a) $191,229 $169,217

(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.

This press release and prior releases are available on the Cedar Fair,

L.P. website at www.cedarfair.com.

Source: Cedar Fair, L.P.

[The Interpreter]

A shorter news item and summary for those who are interested:

http://toledoblade.com/apps/pbcs.dll/artic...ESS06/608010392

[jzarley]

What a yawn of a conference call... (Although, I'm sure Wooferbear would appreciate that Dick Kinzel referred to KI as "beautifully landscaped" )

I much prefer listening to the Six Flags calls...they're much more entertaining

[The Interpreter]

I can't believe how few questions were asked...or that no one asked about Son of Beast.

Also, Geauga Lake's attendance was mentioned, and not in a positive fashion. You could almost hear the disappointment and frustration. . .

In the past, when Six Flags blamed weather for poor attendance, analysts and enthusiasts both hooted.

Well, folks, that's what Cedar Fair is doing now.

[The Interpreter]

Oh, yeah. One other thing, Kinzel said Dorney was facing tough comparisons on attendance due to last year's introduction of an "inverted roller coaster." He was talking Hydra. A floorless.

[jzarley]

I can't believe how few questions were asked...or that no one asked about Son of Beast.

I know! I expected some tough analyst questions about SoB, and the disappointing results in the face of newly increased debt load...but they were all softball questions. I guess CF is still enjoying the post-acquisition honeymoon period...

I'm looking forward to SF's call tomorrow...the questions are usually a lot tougher, and Shapiro is quite a bit more animated than Kinzel

[Reclaimer]

In the past, when Six Flags blamed weather for poor attendance, analysts and enthusiasts both hooted.

Only this was totally true, and expected. Did you see the midwest's weather early this summer? I tried to plan a trip multiple times to CP and each time it got pushed back, back, back, until finally I got a somewhat dry day to go...and even then it rained a little bit in the morning and in the night.

There was one point where two weeks straight of forecast data on accuweather showed nothing but rain.

[The Interpreter]

And when Six Flags cited weather, it was also totally true.

Your point is?

[Reclaimer]

My point is Six Flags pulled that excuse so often it became funny. Sure, when they used the excuse, it was true...but with Six Flags, weather was the least of their problems causing attendence. That's all I'm saying.

Cedar Fair runs quality parks that aren't run into the ground a la Six Flags...when Cedar Fair pulls the weather card, that's probably really the main reason that was causing their issues.

That's my point.

[The Interpreter]

Well, I guess we will see how they do in the future and what they cite then...

They are facing a HUGE debt load. I think they can pull this off, but I don't think they can do it easily.

[Reclaimer]

I'm right with ya on that one. Hopefully they can pull this off.

Who knows, everyone's favorite park operator (okay, not everyone's!) might be the new Six Flags. We may be laughing at Cedar Fair and their ridiculous earnings reports here in a few years.

...I think they'll pull it off, though. The parks are all really well-established and run and so long as CF takes care of all of their parks and now just Cedar Point, they'll see the returns. These will be an interesting next few years...that's for sure!

[CoastersRZ]

That`s part of the reason why they kept stressing how they are minimizing costs. Yes, they have a hard road ahead of them. But when they pull it off, the rewards will far outweigh the costs.

[jzarley]

...and, the big difference between CF and SF is that CF is experiencing a reduction in profit (0.20 vs. 0.22 per share), as opposed to quarter-after-quarter-after quarter of losses like SF.

Granted...they still need to turn around this trend PDQ, but CF is still a profitable company and more than likely will increase the dividend once again this year.