- Comments on Revenue and Attendance Trends Through October
SANDUSKY, Ohio, Nov. 3 /PRNewswire-FirstCall/ -- Cedar Fair
Entertainment Company (NYSE:FUN), a leader in regional amusement
parks, water parks and active entertainment, today announced
results through the third quarter ended September 27, 2009 and
provided attendance and revenue trends through November 1, 2009.
Nine Month Results Net revenues for the nine months ended September
27, 2009, which included 25 additional operating days compared with
2008, decreased $66.5 million to $810.5 million from $877.0 million
a year ago. Net income for the first nine months of 2009 decreased
$0.8 million to $61.7 million, or $1.10 per diluted limited partner
unit, from net income of $62.5 million, or $1.12 per diluted
limited partner unit, for the same period in 2008. Adjusted EBITDA
for the nine months ended September 27, 2009, which management
believes is a meaningful measure of the Company's park-level
operating results, decreased $37.9 million to $296.7 million from
$334.6 million for the same period a year ago. See the attached
table for a reconciliation of adjusted EBITDA to net income. "As
anticipated, 2009 has been a challenging year for us," said Dick
Kinzel, Cedar Fair chairman, president and chief executive officer.
"In spite of 25 additional operating days during the first nine
months of the year, our parks have entertained 1.2 million less
visitors compared to this time last year. Through the end of the
third quarter combined attendance across our parks totaled 18.8
million visits, average in-park guest per capita spending was
$39.73 and out-of-park revenues totaled $86.4 million. This
compares with attendance of 20.0 million visits, average in-park
guest per capita spending of $40.28 and out-of-park revenues of
$94.0 million through the first nine months of 2008. "The decrease
in attendance was the result of a sharp decline in group sales
business, which continues to be negatively affected by the poor
economy and spending cuts at many businesses, schools and
organizations," added Kinzel. "Our attendance figures were also
negatively impacted by a decrease in season pass visits resulting
from a decline in total pass sales, and by poor weather,
particularly cooler than normal temperatures throughout much of the
season at our northern and southern region parks." Kinzel continued
by noting that the 8% decrease in out-of-park revenues, which
represent the sale of hotel rooms, food, merchandise and other
complementary activities located outside of the park gates, was
primarily due to declines in hotel occupancy at most of the
Company's hotel properties during the first nine months of the
year. Excluding depreciation, amortization and other non-cash
costs, operating costs and expenses for the nine months decreased
5%, or $28.6 million, to $513.8 million compared with $542.4
million for the same period a year ago. "The decrease in operating
costs is the direct result of the successful implementation of
numerous cost savings initiatives across our parks, as a proactive
step to partially offset the impact of the negative attendance
trends, and to a lesser extent the closing of Star Trek in late
2008," said Kinzel. He also noted that in late August 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
as part of its ongoing efforts to reduce debt. Net proceeds from
this sale totaled $53.8 million and resulted in the recognition of
a $23.1 million gain during the nine-month period. After the gain
on the sale of the Canadian land, depreciation, amortization, loss
(gain) on impairment / retirement of fixed assets, and all other
non-cash costs, operating income for the first nine months
decreased $7.9 million to $205.4 million in 2009 compared with
$213.3 million in 2008. Interest expense over this same period
decreased $7.9 million to $91.0 million, primarily due to lower
interest rates on the Company's variable-rate debt, along with a
reduction in average borrowings. Since the beginning of the year,
the Company has retired $101.2 million of term debt through
regularly scheduled debt amortization payments, as well as the use
of available cash from the reduction in the annual distribution
rate and the net proceeds from the sale of land at Canada's
Wonderland. A provision for taxes of $48.3 million was recorded for
the nine-months ended September 27, 2009 to account for the tax
attributes of the Company's corporate subsidiaries and publicly
traded partnership (PTP) taxes. This compares with a $52.1 million
provision for taxes for the same period in 2008. Third Quarter
Results Net revenues for the third quarter ended September 27,
2009, which included 64 additional operating days compared with
2008, decreased 4% to $519.9 million from $540.3 million last year.
Net income for the quarter was $107.6 million, or $1.92 per diluted
limited partner unit, versus net income of $91.5 million, or $1.65
per diluted limited partner unit a year ago. "In spite of 64
additional operating days in the period, third-quarter revenues
fell $20.4 million between years," said Kinzel. "This decrease
reflects a 3%, or 324,000-visit, decline in attendance, a 7%, or
$3.6 million, decrease in out-of-park revenues, and a less than 1%
decrease in average in-park guest per capita spending." October
Operations Based on preliminary October results, revenues for the
first ten months of the year, on a same-park basis (excluding the
impact of Star Trek: The Experience which closed in September
2008), were $912.7 million compared with $983.2 million for the
same period a year ago, on 28 more operating days. This is a result
of a 6% decrease in attendance to 20.6 million visitors compared
with 22.0 million in 2008, a decrease of less than one percent in
average in-park guest per capita spending to $39.65, and a decrease
in out-of-park revenues of $8.0 million to $94.5 million, due to
declines in hotel occupancy. For the month of October, revenues
decreased 11%, or $10.2 million. This was in large part the result
of a 255,000-visit shortfall in attendance and $315,000, or 4%,
decrease in out-of-park revenues. Average in-park guest per capita
spending was comparable to the same period last year. "Despite our
best efforts, most of the same challenges we faced during the first
nine months of the year continued to negatively impact our business
in the month of October," continued Kinzel. "In particular,
unseasonably cool temperatures and heavy rain over the past four
weekends have softened the positive impact we had expected to get
from the very popular Halloween events we had in place at our
parks. Over this same period, however, our parks maintained their
focus on controlling operating costs, and we're confident that we
were able to offset some of the revenue shortfalls." Distribution
Outlook Kinzel stated that based on trailing twelve month results
as of September 27, 2009, preliminary October results and a
tightening at December 31st of the maximum consolidated leverage
ratio within the credit agreement, it is expected that the Company
will suspend distributions beginning in 2010 and the cash flow be
redirected to retire term debt. "Over the past 12 months we have
accomplished initiatives that have reduced debt by approximately
$110 million and addressed our capital structure," said Kinzel.
"This has been done through the reduction of our annual
distribution rate, the sale of 87 acres of surplus land in Toronto,
regular amortization payments and an extension of $900 million of
our term debt. We have also considered several alternatives
including the sale of selected assets, issuing additional equity in
a public or private offering, as well as others, but concluded
that, in the current market environment, these are not executable
on terms that would be beneficial to the Company and the
unitholders. "Our actions, although successful, have not been
enough to offset the decrease in operating performance we have
experienced in 2009," continued Kinzel. "We will be reviewing
alternatives to improve operating performance and enable
unitholders to realize value consistent with our financial
performance, including changes to capital structure, corporate
structure, the Company's debt and other strategic options. We will
pursue those alternatives that we believe are in the best interest
of the Company and the unitholders." The Company previously
announced that a cash distribution of $0.25 per limited partner
unit will be paid on November 16, 2009 to unitholders of record on
November 4, 2009. 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
130- to 140-day operating period beginning in early May, with the
major portion concentrated in the peak vacation months of July and
August. Only Knott's Berry Farm and Castaway Bay are open
year-round, with Knott's Berry Farm operating at its highest level
of attendance during the third and fourth quarters of the year.
Management will host a conference call with analysts today,
November 3, 2009, at 10:00 a.m. Eastern Time, which will be web
cast live in "listen only" mode via the Cedar Fair web site
(http://www.cedarfair.com/). It will also be available for replay
starting at approximately 1:00 p.m. ET, Tuesday, November 3, 2009,
until 11:59 p.m. ET, Tuesday, November 17, 2009. In order to access
the replay of the earnings call, please dial 1-800-406-7325
followed by the access code 4151550. Cedar Fair is a publicly
traded partnership headquartered in Sandusky, Ohio, and one of the
largest regional amusement-resort operators in the world. The
Company 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. All statements other than statements of
historical facts included in this release, including those
regarding our future financial position and results, business
strategy, plans and objectives of management for future operations,
and distribution policy, are forward-looking statements. These
statements may involve risk and uncertainties that 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, 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 Company's expectations. The Company
further cautions that the important factors identified herein are
not exclusive. CEDAR FAIR SUMMARY STATEMENTS OF OPERATIONS THIRD
QUARTER (unaudited) (In thousands Three Months Nine Months Twelve
Months except Ended Ended Ended per unit) 9/27/2009 9/28/2008
9/27/2009 9/28/2008 9/27/2009 9/28/2008 Net revenues: Admissions
$307,011 $312,626 $467,874 $493,872 $540,268 $564,170 Food,
merchandise and games 175,591 189,490 283,072 319,342 319,647
357,205 Accommodations and other 37,311 38,206 59,559 63,744 69,864
71,030 Total net revenues 519,913 540,322 810,505 876,958 929,779
992,405 Cash operating costs and expenses 255,292 257,778 513,801
542,369 611,774 648,405 Adjusted EBITDA (a) 264,621 282,544 296,704
334,589 318,005 344,000 Depreciation and amortization 66,413 60,986
113,604 111,258 128,184 124,706 Gain on sale of other assets
(23,098) - (23,098) - (23,098) - Loss on impairment of goodwill and
other intangibles - - - - 86,988 - (Gain) loss on impairment/
retirement of fixed assets, net 188 6,125 218 9,390 (747) 25,070
Equity-based compensation 154 181 613 639 690 814 Operating income
220,964 215,252 205,367 213,302 125,988 193,410 Interest expense
31,183 31,849 90,994 98,912 121,643 133,588 Net change in fair
value of swaps 3,084 - 3,084 - 3,084 - Other (income) expense, net
1,508 240 1,303 (208) 1,102 (3,010) Income before taxes 185,189
183,163 109,986 114,598 159 62,832 Provision (benefit) for taxes
77,575 91,614 48,265 52,143 (4,813) 9,406 Net income $107,614
$91,549 $61,721 $62,455 $4,972 $53,426 Weighted average units
outstanding - diluted 55,924 55,453 55,887 55,808 55,804 55,861 Per
limited partner unit: Net income - diluted $1.92 $1.65 $1.10 $1.12
$0.09 $0.96 Cash distributions paid $0.25 $0.48 $0.98 $1.44 $1.46
$1.91 Balance Sheet Data: Total assets $2,209,093 $2,435,260 Total
debt 1,600,159 1,710,100 Total partners' equity 150,152 275,110 (a)
Adjusted EBITDA represents earnings before interest, taxes,
depreciation, amortization and other non-cash items. The Company
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
RECONCILIATION TO ADJUSTED EBITDA THIRD QUARTER (unaudited) Three
Months Ended Nine Months Ended Twelve Months Ended (In thousands)
9/27/09 9/28/08 9/27/09 9/28/08 9/27/09 9/28/08 Net income $107,614
$91,549 $61,721 $62,455 $4,972 $53,426 Provision (benefit) for
taxes 77,575 91,614 48,265 52,143 (4,813) 9,406 Interest expense
31,183 31,849 90,994 98,912 121,643 133,588 Depreciation and
amortization 66,413 60,986 113,604 111,258 128,184 124,706 Gain on
sale of other assets (23,098) - (23,098) - (23,098) - Equity-based
compensation 154 181 613 639 690 814 Loss on impairment of goodwill
and other intangibles - - - - 86,988 - (Gain) loss on impairment/
retirement of fixed assets, net 188 6,125 218 9,390 (747) 25,070
Net change in fair value of swaps 3,084 - 3,084 - 3,084 - Other
(income) expense, net 1,508 240 1,303 (208) 1,102 (3,010) Adjusted
EBITDA (a) $264,621 $282,544 $296,704 $334,589 $318,005 $344,000
(a) Adjusted EBITDA represents earnings before interest, taxes,
depreciation, amortization and other non-cash items. The Company
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
news release and prior releases are available on the Cedar Fair
website at http://www.cedarfair.com/. Contact: Stacy Frole (419)
627-2227 DATASOURCE: Cedar Fair Entertainment Company CONTACT:
Stacy Frole of Cedar Fair Entertainment Company, +1-419-627-2227
Web Site: http://www.cedarfair.com/
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