UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
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x☑ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year ended: December 31, 20172020
OR
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o☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to .
Commission file number 1-9444
CEDAR FAIR, L.P.
(Exact name of registrant as specified in its charter)
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DELAWAREDelaware | | 34-1560655 |
(State or other jurisdiction of
incorporation or organization)
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Identification No.)
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One Cedar Point Drive, Sandusky, Ohio 44870-5259
(Address of principal executive offices) (Zip Code)
(419) 626-0830
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
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| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
Depositary Units (Representing
Limited Partner Interests) | FUN | 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 x ☐ Noo
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 ☑ Nox
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 x ☐ Noo
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). ☑ Yes x ☐ Noo
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) 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, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
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| Large accelerated filer | | ☑ | | Accelerated filer | | ☐ |
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| Non-accelerated filer | | ☐ | | Smaller reporting company | | ☐ |
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Large accelerated filer | | x | | Accelerated filer | | o |
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Non-accelerated filer | | o (Do not check if a smaller reporting company)
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| | | | Emerging growth company | | o☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☑
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes o☑ No x
The aggregate market value of Depositary Units held by non-affiliates of the Registrant based on the closing price of such units on June 23, 201726, 2020 of $70.80$28.23 per unit was approximately $3,906,234,028.$1,564,023,246.
Number of Depositary Units representing limited partner interests outstanding as of January 31, 2018: 56,364,013February 5, 2021: 56,732,553 units
DOCUMENTS INCORPORATED BY REFERENCE
Part III of this Form 10-K incorporates by reference certain information from the Registrant's definitive proxy statement to be used in connection with its annual meeting of limited partner unitholders to be held in June 2018.May 2021.
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Page 1 of 7564 pages
CEDAR FAIR, L.P.
20172020 FORM 10-K CONTENTS
PART I
Unless the context otherwise indicates, all references to "we," "us," "our," or the "Partnership" in this Annual Report on Form 10-K refer to Cedar Fair, L.P. together with its affiliated companies.
ITEM 1. BUSINESS.
Introduction
Cedar Fair, L.P. (togetherWe are one of the largest regional amusement park operators in the world with its affiliated companies, the "Partnership") is13 properties in our portfolio consisting of amusement parks, water parks and complementary resort facilities. We are a publicly traded Delaware limited partnership formed in 1987 and managed by Cedar Fair Management, Inc., an Ohio corporation (the "General Partner"), whose shares are held by an Ohio trust. The Partnership is one of the largest regional amusement park operators in the world and owns eleven amusement parks, two separately gated outdoor water parks, one indoor water park and four hotels.
In 2017, the Partnership entertained more than 25 million visitors. All of the Partnership'sOur parks are family-oriented, with recreational facilities for people of all ages, and provide clean and attractive environments with exciting rides and immersive entertainment. The amusementOur parks include: Cedar Point, located on Lake Erie between Cleveland and Toledo in Sandusky, Ohio; Knott's Berry Farm, near Los Angeles, California; Canada's Wonderland, near Toronto, Ontario, Canada; Kings Island, near Cincinnati, Ohio; Carowinds, in Charlotte, North Carolina; Kings Dominion, near Richmond, Virginia; California's Great America, in Santa Clara, California; Dorney Park & Wildwater Kingdom ("Dorney Park"), in Allentown, Pennsylvania; Kings Dominion, near Richmond, Virginia; California's Great America, in Santa Clara, California; Valleyfair, near Minneapolis/St. Paul, Minnesota; Worlds of Fun, in Kansas City, Missouri; andValleyfair, near Minneapolis/St. Paul, Minnesota; Michigan's Adventure, in Muskegon, Michigan. The Partnership managesMichigan; Schlitterbahn Waterpark & Resort New Braunfels in New Braunfels, Texas; and operatesSchlitterbahn Waterpark Galveston in Galveston, Texas. We manage and operate Gilroy Gardens Family Theme Park in Gilroy, California.
The Partnership also owns and operates two separately gated outdoor water parks located adjacent to Cedar Point and Knott's Berry Farm, three hotels at Cedar Point (including the Castaway Bay Indoor Waterpark Resort in Sandusky, Ohio) and one hotel at Knott's Berry Farm. With limited exceptions, all rides and attractions at the amusement and water parks are owned and operated by the Partnership. The Partnership owns landus.
Our parks operate seasonally except for Knott's Berry Farm, which is typically open daily on which Cedar Point Sports Center is located. The sports park is operated by a third party.
The Partnership'syear-round basis. Our seasonal amusement parks are generally open during weekends beginning in April or May, and then daily from Memorial Day until Labor Day. After Labor Day, after which theyour seasonal parks are open during select weekends in September and, in most cases, Octoberin the fourth quarter for Halloween events. The two separately gated outdoor water parks also operate seasonally, generally from Memorial Day to Labor Day, plus some additional weekends before and after this period.winter events. As a result, a substantial portion of the Partnership'sour revenues from these seasonal parks are typically generated during an approximatelyapproximate 130- to 140-day operating season with the major portion concentrated in the third quarter during the peak vacation months of July and August. In 2017, California's Great America, Carowinds, Worlds of Fun and Kings Island extended their operating seasons by approximately 20 to 25 days to include WinterFest, a holiday event operating during November and December showcasing holiday shows and festivities. In 2018, Kings Dominion will also extend its operating season by 20 to 25 days to include WinterFest. Knott's Berry Farm continues to be open daily on a year-round basis. Castaway Bay is also generally open daily from Memorial Day to Labor Day, plus a limited daily schedule for the balance of the year. 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 parksour business are families and young people ages 12 through 24. Families are believed to be attracted by a combination of rides, live entertainment and the clean, wholesome atmosphere. Young people are believed to be attracted by the action-packed rides. During their operating season, the parksWe conduct active television, radio, newspaper and internet advertising campaigns in theirour major market areas geared toward these two groups.
DescriptionIMPACT OF COVID-19 PANDEMIC
The novel coronavirus (COVID-19) pandemic has had a material impact on our business in 2020 and is expected to have a continuing negative impact into 2021. Most significantly, we closed our properties for several months in 2020 beginning on March 14. We ultimately resumed partial operations at 10 of Parksour 13 properties in 2020, operating in accordance with local and state guidelines. Due to soft demand trends upon reopening, park operating calendars were adjusted for 2020, including reduced operating days per week and operating hours within each operating day. In 2021, we anticipate reopening our seasonal parks in May 2021 and offering new culinary festivals at Knott's Berry Farm beginning in March 2021. With broad vaccination distribution efforts in process and anticipated pent-up demand for outdoor entertainment, management is focused on maximizing the seasonally weighted second half of 2021. We do not anticipate 2021 to be a normal operating year operationally or financially, and it is uncertain how long it may take us to achieve full operational potential. Our future operations are dependent on factors beyond our knowledge or control, including the duration and severity of the COVID-19 pandemic and actions taken to contain its spread and mitigate its public health effects.
DESCRIPTION OF OUR PARKS
Cedar Point
Cedar Fair's flagship park, Cedar Point, was first developed as a recreational area in 1870. Located on a peninsula in Sandusky, Ohio bordered by Lake Erie and Sandusky Bay, the park is approximately 60 miles west ofbetween Cleveland and 100 miles southeastToledo, Cedar Point is annually rated one of Detroit. Attractive to both families and thrill-seekers, the park features 18 roller coasters, including many record-breakers, and three children's areas.best amusement parks in the industry by Amusement Today's international survey. Cedar Point serves a six-state region which includes nearly all of Ohio and Michigan, western Pennsylvania and New York, northern West Virginia and Indiana, as well as southwestern Ontario, Canada. The park's market area includes Cleveland, Toledo, AkronAttractive to both families and Columbus, Ohio;thrill-seekers, the park features 18 roller coasters, including many record-breakers, and Detroit, Grand Rapids, Flint and Lansing, Michigan.
three children's areas. Located adjacent to the park is Cedar Point Shores Water Park, a separately gated water park that featuresfeaturing more than 15 water rides and attractions. Cedar Point also features four hotels, three marinas, an upscale campground, and the nearby Cedar Point Sports Center which features both indoor and outdoor sports facilities. Cedar Point's four hotels include:
The Partnership also owns and operates three hotels at Cedar Point. The park's only year-round hotel is Castaway Bay Indoor Waterpark Resort which is - a year-round hotel located adjacent to the Causeway entrance to the park. Castaway Bay featurespark featuring tropical, Caribbean themethemed hotel rooms centered around an indoor water park. Thepark, as well as a marina and dining facilities;
Hotel Breakers - the park's largest hotel and only hotel located on the historic Hotel Breakers, hasCedar Point peninsula, featuring various dining and lounge facilities, a mile-long beach, lake swimming, a conference/meeting center, an indoor pool and multiple outdoor pools. Located nearpools;
Cedar Point's Express Hotel - a limited-service seasonal hotel located adjacent to the Causeway entrance to the park, Cedar Point's Express Hotel ispark; and
Sawmill Creek Resort - a limited-service seasonal hotel.
The Partnership also owns and operates theyear-round resort lodge located near Cedar Point Marina, Castaway Bay Marinain Huron, Ohio, featuring a golf course, marina, half-mile beach, dining and Lighthouse Point. Cedar Point Marina isshopping facilities, and a full-service marina and provides dock facilities, including floating docks and full guest amenities. In addition, Cedar Point Marina features two restaurants accessible by the general public. Castaway Bay Marina is a full-service marina. Lighthouse Point offers lake-front cottages, cabins and full-service RV campsites.conference/meeting center.
The Partnership 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 approximately 4,000 of the park's seasonal employees.
Cedar Point Sports Center is an outdoor sports park consisting of various playing fields and training areas for soccer, baseball, softball and lacrosse tournaments and clinics in Sandusky, Ohio. The Partnership owns the land on which the sports park is located. The sports park is operated by a third party.
The Partnership owns the land from the former Wildwater Kingdom seasonal water-park located near Cleveland, Ohio, which ceased operations during the third quarter of 2016. The remaining land is available for sale.
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 in 1997. The park is one of several year-round theme parks in Southern California and serves a market area centered in Orange County with a large national and international tourism population.
The park is renowned for its seasonal events, including a special holiday event, Knott's Merry Farm, and a Halloween event, Knott's Scary Farm, which has been held for more than 4045 years and is annually rated one of the best Halloween events in the industry by Amusement Today's international survey.
In 2020, while Knott's Berry Farm was unable to open amusement and water park operations following the first quarter of 2020 due to the COVID-19 pandemic, Knott's Berry Farm was recognized by Amusement Today's international survey for its creative sell-out culinary festivals. Adjacent to Knott's Berry Farm is Knott's Soak City, a separately gated seasonal water park that features multiple water rides and attractions.
The Partnership Knott's Berry Farm also owns and operatesfeatures the Knott's Berry Farm Hotel, a full-service hotel located adjacent to Knott's Berry Farm which featuresfeaturing a pool, fitness facilities and meeting/banquet facilities.
Canada's Wonderland
Canada's Wonderland, a combination amusement and water park located near Toronto in Vaughan, Ontario, first opened in 1981 and was acquired by the Partnership in 2006. It contains numerous attractions, including 1617 roller coasters, and 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. Each year the park showcases an extensive entertainment and special event line-up which includes cultural festivals.
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 2006. Kings Island is also one of the most attended regional amusement parks in North America. The park features a children's area that has been consistently named one of the "Best Kids' Area in the World" by Amusement Today. The park's market area includes Cincinnati, Dayton and Columbus, Ohio; Louisville and Lexington, Kentucky; and Indianapolis, Indiana. In 2021, Kings Island Camp Cedar, a luxury campground near Kings Island, will open. Kings Island Camp Cedar will be managed by Cedar Fair and owned by a third party.
Carowinds
Carowinds, a combination amusement and water park located in Charlotte, North Carolina, first opened in 1973 and was acquired by the Partnership in 2006. Carowinds' major markets include Charlotte, Greensboro, and Raleigh, North Carolina; as well as Greenville and Columbia, South Carolina.
The park also offersfeatures Camp Wilderness Resort, an upscale camping area that includes luxury cabins, RV sites, and tent and pop-up sites. The campground, features a convenience store and a swimming pool.SpringHill Suites by Marriott hotel located adjacent to the park entrance. The SpringHill Suites is a Marriott franchise operated by Cedar Fair. The hotel is open year-round and features suites, an outdoor pool, fitness center and bar.
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 2006. The park's market area includes Richmond and Norfolk, Virginia; Raleigh, North Carolina; Baltimore, Maryland and Washington, D.C. In 2018, Kings Dominion will begin hosting WinterFest.
Additionally, the park offers Kings Dominion Camp Wilderness Campground, an upscale camping area featuring luxury cabins, RV sites, and tent and pop-up sites. The campground also features a swimming pool, playground, and convenience store.campground.
The Partnership also owns a dormitory facility located adjacent to Kings Dominion that houses approximately 400 of the park's seasonal employees.
California's Great America
California's Great America, a combination amusement and water park located in Santa Clara, California, first opened in 1976 and was acquired by the Partnership in 2006. The park draws its visitors primarily from San Jose, San Francisco, Sacramento, Modesto and Monterey, among other cities in northern California.
Dorney Park
Dorney Park, a combination amusement and water park located in Allentown, Pennsylvania, was first developed as a summer resort area in 1884 and was acquired by the Partnership in 1992. Dorney Park's major markets include Philadelphia, Lancaster, Harrisburg, York, Scranton, Wilkes-Barre, Hazleton and the Lehigh Valley, Pennsylvania; New York City; and New Jersey.
Worlds of Fun
Worlds of Fun, which opened in 1973 and was acquired by the Partnership in 1995, is a combination amusement and water park located in Kansas City, Missouri. Worlds of Fun serves a market area centered in Kansas City, as well as most of Missouri and portions of Kansas and Nebraska.
Worlds of Fun also features Worlds of Fun Village, an upscale camping area that offers overnight guest accommodations next to the park with wood-side cottages, log cabins and deluxe RV sites. Included within the Village is a clubhouse with a swimming pool and a convenience store.campground.
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. Valleyfair's market area is centered in Minneapolis-St. Paul, but the park also draws visitors from other areas in Minnesota and surrounding states.
The Partnership also owns a dormitory facility located adjacent to Valleyfair that houses approximately 400
Michigan's Adventure
Michigan's Adventure, which opened in 1956 as Deer Park and was acquired by the Partnership in 2001, is a combination amusement and water park located in Muskegon, Michigan. Michigan's Adventure serves a market area principally from central and western Michigan and eastern Indiana.
Schlitterbahn Waterpark & Resort New Braunfels
Schlitterbahn Waterpark & Resort New Braunfels began as a resort in 1966, was introduced as a water park in 1979 and was acquired by the Partnership in 2019. The park is consistently rated the best water park in the industry by Amusement Today's international survey and is one of the most attended water parks in North America. The park, located in New Braunfels, Texas, features many river rides, water slides and attractions along the Comal River. The Resort at Schlitterbahn New Braunfels includes hotel rooms, suites, cabins, luxury suites and vacation homes. Schlitterbahn Waterpark & Resort New Braunfels’ major markets include San Antonio, Austin and Houston, Texas.
Schlitterbahn Waterpark Galveston
Schlitterbahn Waterpark Galveston opened in 2006 and was acquired by the Partnership in 2019. The park is one of the most attended water parks in North America. The park, located in Galveston, Texas, features a convertible roof system creating both indoor and outdoor areas allowing the park to operate on a limited schedule year-round. The park features many water attractions including an award-winning water coaster and a one-mile long river system. Schlitterbahn Waterpark Galveston serves a market area centered in Houston, Texas, as well as the tourism population in Galveston Island, Texas, a barrier island on the Texas Gulf Coast.
CAPITAL EXPENDITURES AND WORKING CAPITAL
The Partnership believesWe believe that annual park attendance is influenced by annual investments in our properties, including new attractions.attractions and infrastructure, among other factors. Capital expenditures are planned on a seasonal basis with the majority of such capitalmost expenditures made 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. Due to the effects of the COVID-19 pandemic, some capital expenditures were suspended in order to maintain flexibility and retain liquidity. The timing and amount of capital expenditures may differ from typical calendar years while the effects of the COVID-19 pandemic continue.
During the operating season, the Partnership carrieswe carry significant receivables and inventories of food and merchandise, as well as payables and payroll-related accruals. AmountsThese amounts are typically substantially reduced in non-operating periods. Seasonal working capital needs are typically funded from current operations and revolving credit facilities. Revolving credit facilities are typically established at levels sufficient to accommodate the Partnership'sour peak borrowing requirements in April and May as the seasonal parks complete preparations for opening. Revolving credit borrowings are then typically reduced with the Partnership'sour positive cash flow during the seasonal operating period.
COMPETITION
The Partnership competesWe compete for discretionary spending with all aspects of the recreation industry within itsour primary market areas, including other destination and regional amusement parks. The PartnershipWe also competescompete 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 immersive entertainment available. The Partnership believesWe believe that its amusementour parks feature a sufficient quality and variety of high quality rides and attractions, restaurants, gift shops and family atmosphere to make them highly competitive with other parks and forms of entertainment.
GOVERNMENT REGULATION
The Partnership's properties andOur operations are subject to a varietyregulatory requirements, such as those relating to employment practices, environmental requirements, and other regulatory matters. We are subject to extensive federal and state employment laws and regulations, including wage and hour laws and other pay practices and employee record-keeping requirements. We may be required to incur costs to comply with these requirements, and the costs of compliance, investigation, remediation, litigation, and resolution of regulatory matters could be substantial.
We also are subject to federal, state and local environmental health and safety laws and regulations. regulations such as those relating to water resources; discharges to air, water and land; the handling and disposal of solid and hazardous waste; and the cleanup of properties affected by regulated materials. Under these laws and regulations, we may be required to investigate and clean up hazardous or toxic substances or chemical releases from current or formerly owned or operated facilities or to mitigate potential environmental risks. Environmental laws typically impose cleanup responsibility and liability without regard to whether the relevant entity knew of or
caused the presence of the contaminants. The costs of investigation, remediation or removal of regulated materials may be substantial, and the presence of those substances, or the failure to remediate a property properly, may impair our ability to use, transfer or obtain financing with respect to our property.
Currently, the Partnership believes it iswe believe we are in substantial compliance with applicable requirements under these laws and regulations. However, such requirements have generally become stricter over time, and there can be no assurance that new requirements, changes in enforcement policies or newly discovered conditions relating to itsour properties or operations will not require significant expenditures in the future.
All rides are operated and inspected daily by both the Partnership'sour maintenance and ride operations personnel before being placed into operation for our guests. The parks are also periodically inspected by the Partnership'sour insurance carrier and, at all parks except Valleyfair, Worlds of Fun, Schlitterbahn Waterpark New Braunfels, Schlitterbahn Waterpark Galveston and Carowinds' South Carolina rides, by state or county ride-safety inspectors. Valleyfair, Worlds of Fun, Schlitterbahn Waterpark New Braunfels, Schlitterbahn Waterpark Galveston and Carowinds each contract with a third party to inspect itsour rides pursuant to Minnesota, Missouri, Texas and South Carolina law, respectively, and submit the third-party report to the respective state agency. Additionally, all parks have added ride maintenance and operation inspections completed by third party qualified inspectors to make sure the Partnership'sour standards are being maintained.
HUMAN CAPITAL
EMPLOYEES
The Partnership hasWe employ approximately 2,2002,700 full-time employees. During the operating season, the Partnership employswe typically employ in aggregate approximately 44,70048,000 seasonal and part-time employees, many of whom are high school and college students. Approximately 4,000Due to park closures and operating calendar changes as a result of Cedar Point'sthe COVID-19 pandemic, we employed approximately 27,000 seasonal and part-time employees 400during 2020. We house some of Kings Dominion's, and 400 of Valleyfair'sour seasonal employees live in dormitories owned by us at Cedar Point, Kings Island, Carowinds, Kings Dominion and Valleyfair, or rented by us at Dorney Park, Worlds of Fun, Schlitterbahn Waterpark New Braunfels and Schlitterbahn Waterpark Galveston. Approximately 250 of our employees are represented by labor unions. We believe we maintain good relations with our employees.
In response to the Partnership. Approximately 350 of Dorney Park's seasonalCOVID-19 pandemic, we implemented safety protocols to protect our employees, 300 of Carowinds' seasonal employees, 200 of Kings Island's seasonalincluding implementing health screening and temperature-taking protocols for employees and 100guests entering our properties, staggering schedules to allow for greater social distancing, increasing hygiene, cleaning and sanitizing procedures, requiring face coverings where social distancing cannot be maintained, providing incremental personal protective equipment, enabling employees to work from home where possible, and restricting business travel and encouraging quarantine upon return.
Our employee guidelines and policies are founded on our cornerstones of Worldssafety, service, courtesy, cleanliness and integrity. We are committed to equal opportunity employment and prohibit harassment or discrimination of Fun's seasonal employees live in dormitories rented by the Partnership. The Partnership maintainsany kind. We have adopted an open door policy to encourage an honest employer-associate relationship which includes a confidential hotline available to all employees.
We maintain training programs for all new employees, including safety training specific to job responsibilities. We participate in the J-1 Visa program providing cultural and believes that it maintains good relationseducational exchange opportunities for our associates. We also have partnered with its employees.Bowling Green State University to create the Cedar Fair Resort and Attraction Management program, a bachelor's degree program, which is housed in downtown Sandusky, Ohio in a facility jointly owned by the Partnership and a third party developer. The bachelor's degree program prepares students for management careers at Cedar Fair parks or a similar establishment. We encourage a promote-from-within policy.
Our executive compensation program is designed to incentivize our key employees to drive superior results, to give key employees a vested interest in our growth and performance, and to enhance our ability to attract and retain exceptional managerial talent. Our executive compensation program rewards both successful individual performance and the consolidated operating results of the Company by directly tying compensation to Company performance.
AVAILABLE INFORMATION
Copies of the Partnership'sour 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 SEC are available without charge upon written request to the Partnership'sour Investor Relations Office or through itsour website (www.cedarfair.com).
We use our website www.cedarfair.com as a channel of distribution of the Partnership's information. The information we post through this channel may be deemed material. Accordingly, investors should monitor this channel, in addition to following our news releases, SEC filings, and public conference calls and webcasts. The contents of our website shall not be deemed to be incorporated herein by reference.
You may read and copy any materials filed with the SEC at the SEC's Public Reference Room at 100 F Street, N.E., 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'sour reports, proxy statements and other information. See Item 6 for Selected Financial Data, including net revenues, net income (loss) and total assets. See Notes 13 and 14 to the Consolidated Financial Statements for condensed financial information for Canada's Wonderland Company.
SUPPLEMENTAL ITEM. Information about our Executive Officers of Cedar Fair
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| Name | | Age | | Position(s) |
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MatthewRichard A. OuimetZimmerman | | 5960 |
| | Matt OuimetRichard Zimmerman has been thePresident and Chief Executive Chairman of the Board of DirectorsOfficer since January 2018 and a member of the Board of Directors since August 2011. Previously, he served as Chief Executive Officer from January 2012 through December 2017 and served as President from June 2011 to October 2016. Before joining Cedar Fair, he served in multiple roles from 2009 through 2010 at Corinthian Colleges, including President and Chief Executive Officer.April 2019. Prior to joining Corinthian Colleges, he served as President, Hotel Group for Starwood Hotels and Resorts Worldwide from 2006 through 2008. In addition, Matt is a 20-year veteran of the amusement park and hospitality industry, including 17 years at the Walt Disney Company, where he held positions including Senior Vice President, Finance and Business Development, and Chief Financial Officer of the Disney Development Company; Executive General Manager of Disney Vacation Club; and President of Disney Cruise Line and of Disneyland Resort. |
Richard A. Zimmerman | | 57 |
| | Richard Zimmerman has been President and Chief Executive Officer since January 2018. Prior to that,becoming CEO, he served as President and Chief Operating Officer from October 2016 through December 2017 and served as Chief Operating Officer sincefrom October 2011.2011 through October 2016. Prior to that, he servedwas appointed as Executive Vice President sincein November 2010 previously servingand as Regional Vice President sincein June 2007 and2007. He has been with Cedar Fair since 2006.2006, when Kings Dominion was acquired. Richard served as Vice President and General Manager of Kings Dominion from 1998 through 2006. |
| Brian C. Witherow | | 5154 |
| | Brian Witherow has served as Executive Vice President and Chief Financial Officer since January 2012. Prior to that, he served as Vice President and Corporate Controller beginning in July 2005. Brian has been with Cedar Fair in various other positions since 1995. |
| Tim V. Fisher | | 5760 |
| | Tim Fisher joined Cedar Fair as Chief Operating Officer in December 2017. Prior to joining Cedar Fair, he served as Chief Executive Officer of Village Roadshow Theme Parks International, an Australian-based theme park operator, since March 2017. Prior to this appointment with Village Roadshow Theme Parks International, Tim served as Chief Executive Officer of Village Roadshow Theme Parks since January 2009. |
Kelley S. Semmelroth | | 53 |
| | Kelley Semmelroth has served as Executive Vice President and Chief Marketing Officer since February 2012. Prior to joining Cedar Fair, she served as Senior Vice President, Marketing Planning Director for TD Bank from 2010 through 2012. Prior to joining TD Bank, Kelley served as Senior Vice President of Brand Strategy and Management at Bank of America from 2005 through 2010. |
| Duffield E. Milkie | | 5255 |
| | Duff Milkie has served as Executive Vice President and General Counsel since January 2015 and has served as Corporate Secretary since February 2012. He served as Corporate Vice President and General Counsel from February 2008 to January 2015. Prior to joining Cedar Fair, Duff was a partner in the law firm of Wickens, Herzer, Panza, Cook, & Batista from 1998 through 2008. |
H. Philip BenderKelley S. Semmelroth | | 6256 |
| | Phil BenderKelley Semmelroth has served as Executive Vice President Operationsand Chief Marketing Officer since November 2010, previously servingFebruary 2012. Prior to joining Cedar Fair, she served as RegionalSenior Vice President, beginning in June 2006.Marketing Planning Director for TD Bank from 2010 through 2012. Prior to that, he served as Vice President and General Manager of Worlds of Fun / Oceans of Fun from 2000 through 2006. |
Robert A. Decker | | 57 |
| | Rob Decker hasjoining TD Bank, Kelley served as Senior Vice President of Planning & Design since January 2015. Prior to that, he served as Corporate Vice PresidentBrand Strategy and Management at Bank of Planning & Design since the end of 2002, and he has been with Cedar Fair since 1999. Prior to joining Cedar Fair, Rob served as Design Director at Jack Rouse Associates, Inc., a consultant firm to the entertainment industry,America from 19892005 through 1999.2010. |
David R. HoffmanCraig A. Heckman | | 4957 |
| | Dave HoffmanCraig Heckman has served as SeniorExecutive Vice President, and Chief Accounting OfficerHuman Resources since January 2012. Prior to that,2020. Previously, he served as Vice President of Finance and Corporate Tax since November 2010. He served as Vice President of Corporate Tax from October 2006 until November 2010. Prior to joining Cedar Fair, Dave served as a business advisor with Ernst & Young from 2002 through 2006. |
Craig A. Heckman | | 54 |
| | Craig Heckman joined Cedar Fair as Senior Vice President, Human Resources insince January 2017. Prior to joining Cedar Fair, he served as Vice President, Human Resources for Vestis Retail Group, a retail operator, from December 2014 through December 2016. Prior to joining Vestis Retail Group, Craig served as Vice President, Human Resources - Stores and International for Express/L Brands, a fashion retailer, from 2006 to 2014. |
| David R. Hoffman | | 52 | | | Dave Hoffman has served as Senior Vice President and Chief Accounting Officer since January 2012. Prior to that, he served as Vice President of Finance and Corporate Tax since November 2010. He served as Vice President of Corporate Tax from October 2006 through November 2010. Prior to joining Cedar Fair, Dave served as a business advisor with Ernst & Young from 2002 through 2006. |
| Charles E. Myers | | 57 | | | Charles Myers joined Cedar Fair as Senior Vice President, Creative Development in June 2019. Prior to joining Cedar Fair, he held a variety of Senior Leadership roles including Show Design, Production Management and Producing at Walt Disney Imagineering, the research and development arm of the Walt Disney Company, from 2013 to June 2019. Prior to this, he served as Senior Vice President, Licensing, Project Development & Business Development of Paramount Pictures from 2002 to 2013. |
ITEM 1A. RISK FACTORS.
Risks Related to the COVID-19 Pandemic
The COVID-19 pandemic has adversely impacted our business and is expected to continue to adversely impact our business, as well as intensify certain risks we face. The ultimate extent to which COVID-19 and measures taken in response will impact our business, including our results of operations and financial condition, cannot be reasonably predicted due to the ongoing development and fluidity of the pandemic and its effects.
The COVID-19 pandemic is having a material negative impact on our business. On March 14, 2020, we closed our properties in response to federal and local recommendations and restrictions to mitigate the spread of COVID-19. We were ultimately able to resume partial operations, subject to capacity, social distancing mandates and other governmental restrictions, at 10 of our 13 properties on a staggered basis in 2020. Because our amusement and water parks are our primary sources of net income and operating cash flows, our business and financial results and condition have been, and will continue to be, adversely impacted by these and any future mandated closures, capacity restrictions and governmental mandates required for operating our parks. There is uncertainty as to when we will be able to resume full operations at all of our amusement and water parks, as well as whether any future mandated or voluntary closures will occur. Our parks are geographically located throughout the United States and in Canada. The duration and severity of the COVID-19 pandemic and the related restrictions at any one location could result in a potentially disproportionate amount of risk if concentrated amongst our largest properties.
Consumer behavior and preferences may change in response to the effects of the COVID-19 pandemic both in the short term and long term, including impacts on discretionary consumer spending due to significant economic uncertainty caused by the COVID-19 pandemic. In 2020, we experienced lower demand upon reopening our properties resulting in a material decrease in revenues generated. Future significant volatility or reductions in demand for, or interest in, our parks could materially adversely impact attendance, in-park per capita spending and revenue. In addition, we could experience damage to our brand and reputation due to actual or perceived health risks associated with our parks or the amusement park industry which could have a similar material adverse effect on attendance, in-park per capita spending and revenue.
We have begun and are likely to continue to experience operational risks due to the COVID-19 pandemic including increases in operating expenses as we sanitize our parks and implement additional hygiene-related protocols, limitations on our ability to recruit and train employees in sufficient numbers to fully staff our parks, and limitations on our employees' ability to work and travel. Despite our efforts to manage these impacts, their ultimate effect may be material to our financial results.
We have not previously experienced the level of disruption caused by the COVID-19 pandemic. The extent of the impact of the COVID-19 pandemic on the risks described above, as well as the other risk factors described herein, depend on factors beyond our knowledge or control, including the duration and severity of the pandemic, success and timing of vaccination programs, the emergence of new variants, as well as any future actions taken to contain the pandemic spread and mitigate public health effects. It is difficult for management to estimate future performance under these conditions, and the ultimate impact of the COVID-19 pandemic on our business, results of operations and financial condition cannot be reasonably predicted.
In order to increase our liquidity during this unprecedented and unpredictable time, we issued senior notes in April 2020 and October 2020 and expanded and extended our revolving credit facility during 2020. Other steps taken in 2020 to increase our liquidity included suspending quarterly partnership distributions and suspending a series of capital expenditures planned for the 2020 and 2021 operating seasons. We also significantly reduced operating expenses and cash outflows in 2020 during periods our parks were idle and to correspond with lower than typical attendance levels and abbreviated park operating calendars. Future additional efforts to increase liquidity, including a prolonged reduction or suspension of capital expenditures and partnership distributions, may hinder success of our strategic plans. In the event we are unable to generate sufficient revenues from our parks due to a prolonged period of closure, or experience significant declines in business volumes upon reopening, we may not have access to or may be burdened by onerous terms to acquire sufficient liquidity to meet our obligations before our operations normalize.
Risks Related to Our Capital Structure
The amount of our indebtedness could adversely affect our ability to raise additional capital to fund our operations, limit our ability to react to changes in the economy or our industry and prevent us from fulfilling our obligations under our debt agreements.
We had $3.0 billion of outstanding indebtedness as of December 31, 2020 (before reduction of debt issuance costs and original issue discount).
The amount of our indebtedness could have important consequences. For example, it could:
•limit our ability to borrow money for our working capital, capital expenditures, debt service requirements, strategic initiatives or other purposes;
•limit our flexibility in planning or reacting to changes in business and future business operations; and
•make it more difficult for us to satisfy our obligations with respect to our indebtedness, and any failure to comply with the obligations of any of our debt instruments, including restrictive covenants and borrowing conditions, could result in an event of default under the agreements governing other indebtedness.
In addition, we may not be able to generate sufficient cash flow from operations, or be able to draw under our revolving credit facility or otherwise, in an amount sufficient to fund our liquidity needs, including the payment of principal and interest on our debt obligations. If our cash flows and capital resources are insufficient to service our indebtedness, we may be forced to reduce or delay capital expenditures, sell assets, seek additional capital or restructure or refinance our indebtedness. These alternative measures may not be successful and may not permit us to meet our scheduled debt service obligations. Our ability to restructure or refinance our debt in the future will depend on the condition of the capital and credit markets and our financial condition at such time. Any refinancing of our debt could be at higher interest rates and may require us to comply with more onerous covenants, which could further restrict our business operations. In addition, the terms of our existing or future debt agreements, including our credit agreement and the indentures governing our notes, may restrict us from adopting some of these alternatives. In the absence of sufficient operating results and resources, we could face substantial liquidity problems and might be required to dispose of material assets or operations to meet our debt service and other obligations. We may not be able to consummate those dispositions for fair market value or at all. Furthermore, any proceeds that we could realize from any such dispositions may not be adequate to meet our debt service obligations then due.
Despite the amount of our indebtedness, we may be able to incur additional indebtedness, which could further exacerbate the risks associated with the amount of our indebtedness.
Our debt agreements contain restrictions that could limit our flexibility in investing in our business, including the ability to pay partnership distributions.
Our credit agreement and the indentures governing our notes contain, and any future indebtedness of ours will likely contain, a number of covenants that could impose significant financial restrictions on us, including restrictions on our and our subsidiaries' ability to, among other things:
•pay distributions on or make distributions in respect of our partnership units or make other Restricted Payments;
•incur additional debt or issue certain preferred equity;
•make certain investments;
•sell certain assets;
•create restrictions on distributions from restricted subsidiaries;
•create liens on certain assets to secure debt;
•consolidate, merge, amalgamate, sell or otherwise dispose of all or substantially all our assets;
•enter into certain transactions with our affiliates; and
•designate our subsidiaries as unrestricted subsidiaries.
The Third Amended 2017 Credit Agreement includes (i) a Senior Secured Leverage Ratio of 4.50x Total First Lien Senior Secured Debt-to-Consolidated EBITDA starting with the first quarter of 2022, which will step down to 4.00x in the second quarter of 2023 and which will step down further to 3.75x in the third quarter of 2023, with the covenant calculations for the first, second, and third quarters in 2022 to include Consolidated EBITDA from the second, third and fourth quarters of the fiscal year ended December 31, 2019 in lieu of the Consolidated EBITDA for the corresponding quarters in 2021 ("Deemed EBITDA Quarters"), (ii) a requirement that we maintain a minimum liquidity level of at least $125.0 million, tested at all times, until the earlier of December 31, 2022 or the termination of the Additional Restrictions Period (which generally includes the period from the effective date of the Second Amendment until the delivery of the compliance certificate for the fourth quarter of 2022), (iii) a suspension of certain restricted payments, including partnership distributions, under the Third Amended 2017 Credit Agreement until the termination of the Additional Restrictions Period. We may terminate the Additional Restrictions Period prior to December 31, 2022 by achieving compliance with the Senior Secured Leverage Ratio covenant as of the end of a fiscal quarter without giving effect to Deemed EBITDA Quarters for any fiscal quarter.
Our fixed rate note agreements also include Restricted Payment provisions, which could limit our ability to pay partnership distributions. Pursuant to the terms of the indenture governing the 2024 senior notes, which includes the most restrictive of these Restricted Payments provisions under our fixed rate note agreements, if our pro forma Total-Indebtedness-to-Consolidated-Cash-Flow Ratio is greater than 5.00x, we can still make Restricted Payments of $60 million annually so long as no default or event of default has occurred and is continuing. If our pro forma Total-Indebtedness-to-Consolidated-Cash-Flow Ratio is less than or equal to 5.00x, we can make Restricted Payments up to our Restricted Payment pool.
Variable rate indebtedness could subject us to the risk of higher interest rates, which could cause our future debt service obligations to increase.
As of December 31, 2020, our indebtedness under our Third Amended 2017 Credit Agreement accrues variable rate interest that has been swapped to a fixed rate. After the expiration of outstanding interest-rate swap agreements, certain of our borrowings may be at variable rates of interest and expose us to interest rate risk. If interest rates increase, our annual debt service obligations on any variable-rate indebtedness would increase even though the amount borrowed remained the same, and our net income would decrease.
Risks Related to Our Strategy
Our growth strategy, including our COVID-19 recovery strategy, may not achieve the anticipated results.
Our future success will depend on our ability to grow our business, including recovering from the effects of the COVID-19 pandemic. We grow our business through acquisitions and capital investments to improve our parks through new rides and attractions, as well as in-park product offerings and product offerings outside of our parks. Our growth and innovation strategies require significant commitments of management resources and our investments may not grow our revenues at the rate we expect or at all. As a result, we may not be able to recover the costs incurred in developing new projects and initiatives, or to realize their intended or projected benefits, which could have a material adverse effect on our business, financial condition or results of operations.
We compete for discretionary spending and discretionary free-timefree time with many other entertainment alternatives and are subject to factors that generally affect the recreation and leisure industry, including general economic conditions.
Our parks compete for discretionary spending and discretionary free-timefree time with other amusement, water and theme parks and with other types of recreational activities and forms of entertainment, including movies, sporting 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, including relative fuel prices, and changes in consumer tastes and spending habits. Uncertainty regarding regional economic conditions and deterioration in the economy generallyThere may adversely impact attendance figures and guest spending patterns at our parks, and disproportionately affect different demographics of our target customers within our core markets. For example, group sales and season pass sales, which representbe a significant portion of our revenues, are disproportionately affected by general economic conditions. Both attendance (defined as the number of guest visits to our amusement parks and separately gated outdoor water parks) and in-park per capita spending (calculated as all amusement park, outdoor water park, tolls and parking revenues for the amusement park and water park operating seasons divided by total attendance) at our parks are key drivers of our revenues and profitability, and reductions in either can directly and negatively affect revenues and profitability.
Uncertain economic conditions, such as unemployment rates, affect our guests' levels of discretionary spending. A decrease in discretionary spending due to a decline in consumer confidence in the economy, an economic slowdown or deterioration in the economy could adversely affect the frequency with which our guests choose to attend our amusement parks and the amount that our guests spendmaterial adverse effect on our products when they visit. The materializationbusiness, financial condition or results of these risks could leadoperations if we are unable to a decrease in our revenues, operating income and cash flows.effectively compete with other entertainment alternatives.
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.
TenTwelve of our amusement parksproperties are seasonal, generally operatingopen during a portion ofweekends beginning in April or May, then daily from Memorial Day through Labor Day. After Labor Day, andthe seasonal properties are open during select weekends in September and, in most cases, Octoberin the fourth quarter for Halloween events. Five of our seasonal amusement parks have or will have extended operations into November and December for winter events. Our outdoor water parks also operate seasonally, generally from Memorial Day through Labor Day and during some additional weekends before and after that period. MostAs a result, a substantial portion of our revenues are typically generated during a 130- to 140-day annual operating season. As a result,Consequently, when adverse conditions or events occur during the operating season, particularly during the peak vacation months of July and August or the important fall season, there is only a limited period of time during which the impact of those conditions or events can be mitigated. Accordingly, the timing of such conditions or events may have a disproportionate adverse effect upon our revenues.
Our growth strategy mayRisks Related to the Amusement Park Industry
The high fixed cost structure of amusement park operations can result in significantly lower margins if revenues do not achieve the anticipated results.meet expectations.
Our future success will depend on our ability to grow our business, including capital investments to improve our parks through new rides and attractions, as well as in-park product offerings and product offerings outsideA large portion of our parks. Our growthexpense is relatively fixed because the costs for full-time employees, maintenance, utilities, advertising and innovation strategies require significant commitments of management resources and capital investments andinsurance do not vary significantly with attendance. These fixed costs may not growincrease at a greater rate than our revenues at the rate we expect or at all. As a result, weand may not be able to recoverbe reduced at the costs incurredsame rate as declining revenues. If cost-cutting efforts are insufficient to offset declines in developing our new projects and initiativesrevenues or to realize their intended or projected benefits, whichare impractical, we could haveexperience a material adverse effect on our business, financial conditiondecline in margins, revenues, profitability and cash flows. Such effects can be especially pronounced during periods of economic contraction or results of operations.slow economic growth.
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 by forecasts of bad or mixed weather conditions, which would negatively affect our revenues. We believe that our ownership of many parks in different geographic locations reduces, but does not completely eliminate, the effect that adverse weather can have on our consolidated results.
Our insurance coverage may not be adequate to cover all possible losses that we could suffer, and our insurance costs may increase.
Companies engaged in the amusement park business may be sued for substantial damages in the event of an actual or alleged accident. An accident occurring at our parks or at competing parks could reduce attendance, increase insurance premiums, and negatively impact our operating results. Although we carry liability insurance to cover this risk, there can be no assurance that our coverage will be adequate to cover liabilities, that we will be able to obtain coverage at commercially reasonable rates, or that we will be able to obtain adequate coverage should a catastrophic incident occur at our parks or at other parks.
Unanticipated construction delays in completing capital improvement projects in our parks and resort facilities, significant ride downtime, or other unplanned park closures could 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, including self-imposed construction delays in response to the COVID-19 pandemic, can adversely affect our attendance and our ability to realize revenue growth. Further, when rides, attractions, or an entire park, have unplanned downtime and/or closures, our revenue could be adversely affected.
There is a risk of accidents or other incidents occurring at amusement and water parks, which may reduce attendance and negatively impact our revenues.
The safety of our guests and employees is one of our top priorities. Our amusement and water parks feature thrill rides. There are inherent risks involved with these attractions, and an accident or a serious injury at any of our parks may result in negative publicity and could reduce attendance and result in decreased revenues. In addition, accidents or injuries at parks operated by our competitors could influence the general attitudes of amusement park patrons and adversely affect attendance at our parks. Other types of incidents such as food borne illnesses which have either been alleged or proved to be attributable to our parks or our competitors could adversely affect attendance and revenues.
Risks Related to Human Capital
Increased costs of labor and employee health and welfare benefits may impact our results of operations.
Labor is a primary component in the cost of operating our business. Increased labor costs, due to competition, increased federal, state or local minimum wage requirements, and increased employee benefit costs, including health care costs, could adversely impact our operating expenses. Continued increases to both market wage rates and the statutory minimum wage rates could also materially impact our future seasonal labor rates. It is possible that these changes could significantly increase our labor costs, which would adversely affect our operating results and cash flows.
Our business depends on our ability to meet our workforce needs.
Our success depends on our ability to attract, motivate and retain qualified employees to keep pace with our needs. If we are unable to do so, our results of operations and cash flows may be adversely affected. In addition, we employ a significant seasonal workforce. We recruit year-round to fill thousands of seasonal staffing positions each season and work to manage seasonal wages and the timing of the hiring process to ensure the appropriate workforce is in place. There is no assurance that we will be able to recruit and hire adequate seasonal personnel as the business requires or that we will not experience material increases in the cost of securing our seasonal workforce in the future.future, including due to the ongoing effects of the COVID-19 pandemic.
Increased costs of labor and employee health and welfare benefitsIf we lose key personnel, our business may impactbe adversely affected.
Our success depends in part upon a few key employees, including our results of operations.
Labor is a primary componentsenior management team, whose members have been involved in the costleisure and hospitality industries for an average of operating our business. Increased labor costs, due to competition, increased minimum wage or employee benefit costs, including health care costs, or otherwise, could adversely impact our operating expenses.more than 20 years. The Patient Protection and Affordable Care Actloss of 2010 contains provisions which could impact our future health-care costs. Continued increases to both market wage rates and the statutory minimum wage rates could also materially impact our future seasonal labor rates. It is possible that these changes could significantly increase our labor costs, which would adversely affect our operating results and cash flows.
The high fixed cost structure of amusement park operations can result in significantly lower margins if revenues decline.
A large portionservices of our expenses is relatively fixed because the costs for full-timekey employees maintenance, utilities, advertisingor our inability to replace our key employees could cause disruption in important operational, financial and insurance do not vary significantly with attendance. These fixed costs may increase at a greater rate than our revenuesstrategic functions and may not be able to be reduced at the same rate as declining revenues. If cost-cutting efforts are insufficient to offset declines in revenues or are impractical, we could experiencehave a material decline in margins, revenues, profitabilityadverse effect on our business.
Risks Related to Legal, Regulatory and cash flows. Such effects can be especially pronounced during periods of economic contraction or slow economic growth.Compliance Matters
Cyber-security risks and the failure to maintain the integrity of internal or customer data could result in damages to our reputation and/or subject us to costs, fines or lawsuits.
In the normal course of business, we, or third parties on our behalf, collect and retain large volumes of internal and customer data, including credit card numbers and other personally identifiable information, which is used for target marketing and promotional purposes, and our various information technology systems enter, process, summarize and report such data. We also maintain personally identifiable information about our employees. The integrity and protection of such data is critical to our business, and our guests and employees have a high expectation that we will adequately protect their personal information. The regulatory environment, as well as the requirements imposed on us by the credit card industry, governing information, security and privacy laws is increasingly demanding and continues to evolve. Maintaining compliance with applicable security and privacy regulations may increase our operating costs and/or adversely impact our ability to market our parks, products and services to our guests. Furthermore, if a person is able tocould circumvent our security measures, he or she could destroy or steal valuable information or disrupt our operations. Any security breach could expose us to risks of data loss, which could harm our reputation and result in remedial and other costs, fines or lawsuits. Although we carry liability insurance to cover this risk, there can be no assurance that our coverage will be adequate to cover liabilities, or that we will be able to obtain adequate coverage should a catastrophic incident occur.
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 leisure and hospitality industries for an average of more than 20 years. The loss of services of our key employees could have a material adverse effect on our business.
There is a risk of incidents occurring at amusement parks, which may reduce attendance and negatively impact our revenues.
The safety of our guests and employees is one of our top priorities. All of our amusement parks feature thrill rides. There are inherent risks involved with these attractions, and an accident or a serious injury at any of our amusement parks may result in negative publicity and could reduce attendance and result in decreased revenues. In addition, accidents or injuries at parks operated by our competitors could influence the general attitudes of amusement park patrons and adversely affect attendance at our amusement parks. Other types of incidents such as food borne illnesses which have either been alleged or proved to be attributable to our parks or our competitors, could adversely affect attendance and revenues.
Our operations, our workforce and our ownership of property subject us to various laws and regulatory compliance, which may create uncertainty regarding future expenditures and liabilities.
We may be required to incur costs to comply with regulatory requirements, such as those relating to employment practices, environmental requirements, and other regulatory matters, and the costs of compliance, investigation, remediation, litigation, and resolution of regulatory matters could be substantial. We are subject to extensive federal and state employment laws and regulations, including wage and hour laws and other pay practices and employee record-keeping requirements. We periodically have had to, and may have to, defend against lawsuits asserting non-compliance. Such lawsuits can be costly, time consuming and distract management, and adverse rulings in these types of claims could negatively affect our business, financial condition or results.
We also are subject to federal, state and local environmental laws and regulations such as those relating to water resources; discharges to air, water and land; the handling and disposal of solid and hazardous waste; and the cleanup of properties affected by regulated materials. Under these laws and regulations, we may be required to investigate and clean up hazardous or toxic substances or chemical releases from current or formerly owned or operated facilities or to mitigate potential environmental risks. Environmental laws typically impose cleanup responsibility and liability without regard to whether the relevant entity knew of or caused the presence of the contaminants. The costs of investigation, remediation or removal of regulated materials may be substantial, and the presence of those substances, or the failure to remediate a property properly, may impair our ability to use, transfer or obtain financing regarding our property.
Instability in general economic conditions could impact our profitability and liquidity while increasing our exposure to counter-party risk.
The existence of unfavorable general economic conditions, such as high unemployment rates, constrained credit markets, and higher prices for consumer goods, may hinder the ability of those with which we do business, including vendors, concessionaires and customers, to satisfy their obligations to us. Our exposure to credit losses will depend on the financial condition of our vendors, concessionaires and customers and other factors beyond our control, such as deteriorating conditions in the world economy or in the theme/amusement park industry. The presence of market turmoil, coupled with a reduction of business activity, generally increases our risks related to being an unsecured creditor of most of our vendors, concessionaires and customers. Credit losses, if significant, would have a material adverse effect on our business, financial condition and results of operations. Moreover, these issues could also increase the counter-party risk inherent in our business, including with our suppliers, vendors and financial institutions with which we enter into hedging agreements and long-term debt agreements, including our credit facilities. The soundness of these counter-parties could adversely affect us. Our credit evaluations may be inaccurate and credit performance could be materially worse than anticipated, which may materially and adversely affect our business, financial position and results of operations.
Unanticipated construction delays in completing capital improvement projects in our parks and resort facilities, significant ride downtime, or other unplanned park closures could 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. Further, when rides, attractions, or an entire park, have unplanned downtime and/or closures, our revenue could be adversely affected.
The amount of our indebtedness could adversely affect our ability to raise additional capital to fund our operations, limit our ability to react to changes in the economy or our industry and prevent us from fulfilling our obligations under our debt agreements.
We had $1,700.9 million of outstanding indebtedness as of December 31, 2017 (after giving effect to $15.9 million of outstanding letters of credit under our revolving credit facility and before reduction of debt issuance costs).
The amount of our indebtedness could have important consequences. For example, it could:
limit our ability to borrow money for our working capital, capital expenditures, debt service requirements, strategic initiatives or other purposes;
limit our flexibility in planning or reacting to changes in business and future business operations; and
make it more difficult for us to satisfy our obligations with respect to our indebtedness, and any failure to comply with the obligations of any of our debt instruments, including restrictive covenants and borrowing conditions, could result in an event of default under the agreements governing other indebtedness.
In addition, we may not be able to generate sufficient cash flow from operations, or be able to draw under our revolving credit facility or otherwise, in an amount sufficient to fund our liquidity needs, including the payment of principal and interest on our debt obligations. If our cash flows and capital resources are insufficient to service our indebtedness, we may be forced to reduce or delay capital expenditures, sell assets, seek additional capital or restructure or refinance our indebtedness. These alternative measures may not be successful and may not permit us to meet our scheduled debt service obligations. Our ability to restructure or refinance our debt in the future will depend on the condition of the capital markets and our financial condition at such time. Any refinancing of our debt could be at higher interest rates and may require us to comply with more onerous covenants, which could further restrict our business operations. In addition, the terms of our existing or future debt agreements, including our credit agreement and the indentures governing our notes, may restrict us from adopting some of these alternatives. In the absence of sufficient operating results and resources, we could face substantial liquidity problems and might be required to dispose of material assets or operations to meet our debt service and other obligations. We may not be able to consummate those dispositions for fair market value or at all. Furthermore, any proceeds that we could realize from any such dispositions may not be adequate to meet our debt service obligations then due.
Despite the amount of our indebtedness, we may be able to incur significant additional amounts of debt, which could further exacerbate the risks associated with the amount of our indebtedness.
Variable rate indebtedness could subject us to the risk of higher interest rates, which could cause our future debt service obligations to increase.
As of December 31, 2017, after giving consideration to current outstanding interest-rate swap arrangements, most of our indebtedness under our term loan facility accrues interest that is either fixed or swapped to a fixed rate. After the expiration of outstanding interest-rate swap agreements, certain of our borrowings may be at variable rates of interest and expose us to interest rate risk. If interest rates increase, our annual debt service obligations on any variable-rate indebtedness would increase even though the amount borrowed remained the same, and our net income would decrease.
Our debt agreements contain restrictions that could limit our flexibility in operating our business.
Our credit agreement and the indentures governing our notes contain, and any future indebtedness of ours will likely contain, a number of covenants that could impose significant operating and financial restrictions on us, including restrictions on our and our subsidiaries' ability to, among other things:
pay distributions on or make distributions in respect of our capital stock or units or make other Restricted Payments;
incur additional debt or issue certain preferred equity;
make certain investments;
sell certain assets;
create restrictions on distributions from restricted subsidiaries;
create liens on certain assets to secure debt;
consolidate, merge, amalgamate, sell or otherwise dispose of all or substantially all of our assets;
enter into certain transactions with our affiliates; and
designate our subsidiaries as unrestricted subsidiaries.
The 2017 Credit Agreement includes a Consolidated Leverage Ratio, which if breached for any reason and not cured could result in an event of default. The ratio is set at a maximum of 5.50x Consolidated Total Debt-to-Consolidated EBITDA. As of December 31, 2017, we were in compliance with this financial condition covenant and all other covenants under the 2017 Credit Agreement.
Our long-term debt agreements include Restricted Payment provisions. Pursuant to the terms of the indenture governing the June 2014 notes, which includes the most restrictive of these Restricted Payments provisions, we can make Restricted Payments of $60 million annually so long as no default or event of default has occurred and is continuing; and we may make additional Restricted Payments if our pro forma Total-Indebtedness-to-Consolidated-Cash-Flow Ratio is less than or equal to 5.00x.
Changing tax laws could adversely affect future tax liabilities or require adjustments to provisional accounting amounts.
On December 22, 2017, the Tax Cuts and Jobs Act (the "Act") was signed into law. The Act makes significant changes to U.S. tax law and includes changes to federal tax rates, imposes limitations on the deductibility of interest, temporarily allows for the expensing of capital expenditures, puts into effect the migration from a worldwide system of taxation to a territorial system and modifies or repeals many business deductions and credits. The Act and future implementing regulations, administrative or accounting guidance or interpretations of the legislation may meaningfully impact or have adverse effects on our future tax liabilities and our business or may cause the ultimate impact of the Act to differ from or require adjustments to our provisional accounting estimates. Further analysis, changes in assumptions we have made or future actions that we take also could affect these items.
Our tax treatment is dependent on our status as a partnership for federal income tax purposes. If the tax laws were to treat us as a corporation or we become subject to a material amount of entity-level taxation, it may substantially reduce the amount of cashour available for distribution to our unitholders.cash.
We are a limited partnership under Delaware law and are treated as a partnership for federal income tax purposes. A change in current tax law may cause us to be taxed as a corporation for federal income tax purposes or otherwise subject us to taxation as an entity. If we were treated as a corporation for federal income tax purposes, we would pay federal income tax on our entire taxable income at the corporate tax rate, rather than only on the taxable income from our corporate subsidiaries, and may be subject to additional state taxes at varying rates. Further, unitholder distributions would generally be taxed again as corporate distributions or dividends and no income, gains, losses, or deductions would flow through to unitholders. Because additional entity level taxes would be imposed upon us as a corporation, our cash available for distributioncash could be substantially reduced. Although we are not currently aware of any legislative proposal that would adversely impact our treatment as a partnership, we are unable to predict whether any changes or other proposals will ultimately be enacted.
General Risk Factors
Instability in general economic conditions could impact our business, including our results of operations and financial condition.
Uncertainty regarding regional economic conditions and deterioration in the economy generally may adversely impact attendance figures and guest spending patterns at our park as uncertain economic conditions affect our guests' levels of discretionary spending. Both attendance and in-park spending at our parks are key drivers of our revenues and profitability, and reductions in either can directly and negatively affect revenues and profitability. A decrease in discretionary spending due to a decline in consumer confidence in the economy, an economic slowdown or deterioration in the economy could adversely affect the frequency with which our guests choose to attend our parks and the amount that our guests spend on our products when they visit. The materialization of these risks could lead to a decrease in our revenues, operating income and cash flows.
The existence of unfavorable general economic conditions may also hinder the ability of those with which we do business, including vendors, concessionaires and customers, to satisfy their obligations to us. Our insurance coverage may not be adequateexposure to cover all possiblecredit losses that we could suffer,will depend on the financial condition of our vendors, concessionaires and customers and other factors beyond our insurance costs may increase.
Companies engagedcontrol, such as deteriorating conditions in the world economy or in the amusement park businessindustry. Moreover, these issues could also increase the counter-party risk with financial institutions with which we enter into hedging agreements and long-term debt agreements, including our credit facilities. The soundness of these counter-parties could adversely affect us. Our credit evaluations may be sued for substantial damages in the eventinaccurate and credit performance could be materially worse than anticipated. Credit losses, if significant, would have a material adverse effect on our business, financial condition and results of an actual or alleged accident. An accident occurring at our parks or at competing parks could reduce attendance, increase insurance premiums, and negatively impact our operating results. Although we carry liability insurance to cover this risk, there can be no assurance that our coverage will be adequate to cover liabilities, that we will be able to obtain coverage at commercially reasonable rates, or that we will be able to obtain adequate coverage should a catastrophic incident occur at our parks or at other parks.operations.
Other factors, including local events, natural disasters, pandemics and terrorist activities, or threats of these events, could adversely impact park attendance and our revenues.
Lower attendance may result from various local events, natural disasters, pandemics or terrorist activities, or threats of these events, all of which are outside of our control.
ITEM 1B. UNRESOLVED STAFF COMMENTS.
None.
ITEM 2.PROPERTIES.
| | | Park | | Location | Approximate Total Acreage | Approximate Developed Acreage | Approximate Undeveloped Acreage | Park | | Location | Approximate Total
Acreage | Approximate Developed Acreage | Approximate Undeveloped Acreage |
Cedar Point Cedar Point Shores | (1), (3) | Sandusky, Ohio | 625 |
| 515 |
| 110 |
| Cedar Point
Cedar Point Shores | (1), (4) | Sandusky, Ohio | 870 | | 725 | | 145 | |
Knott's Berry Farm Knott's Soak City | | Buena Park, California | 175 |
| 175 |
| — |
| Knott's Berry Farm
Knott's Soak City | | Buena Park, California | 175 | | 175 | | — | |
| Canada's Wonderland | | Vaughan, Ontario, Canada | 295 |
| 295 |
| — |
| Canada's Wonderland | | Vaughan, Ontario, Canada | 295 | | 295 | | — | |
| Kings Island | | Mason, Ohio | 680 |
| 330 |
| 350 |
| Kings Island | | Mason, Ohio | 680 | | 330 | | 350 | |
| Carowinds | | Charlotte, North Carolina and Fort Mill, South Carolina | 400 |
| 300 |
| 100 |
| Carowinds | | Charlotte, North Carolina and Fort Mill, South Carolina | 400 | | 300 | | 100 | |
| Kings Dominion | | Doswell, Virginia | 740 |
| 280 |
| 460 |
| Kings Dominion | | Doswell, Virginia | 740 | | 280 | | 460 | |
| California's Great America | (2) | Santa Clara, California | 165 |
| 165 |
| — |
| California's Great America | (2) | Santa Clara, California | 175 | | 175 | | — | |
| Dorney Park | | Allentown, Pennsylvania | 210 |
| 180 |
| 30 |
| Dorney Park | | Allentown, Pennsylvania | 210 | | 180 | | 30 | |
Worlds of Fun Oceans of Fun | | Kansas City, Missouri | 350 |
| 250 |
| 100 |
| |
| Worlds of Fun | | Worlds of Fun | | Kansas City, Missouri | 350 | | 250 | | 100 | |
| Valleyfair | | Shakopee, Minnesota | 190 |
| 110 |
| 80 |
| Valleyfair | | Shakopee, Minnesota | 190 | | 110 | | 80 | |
| Michigan's Adventure | | Muskegon, Michigan | 260 |
| 120 |
| 140 |
| Michigan's Adventure | | Muskegon, Michigan | 260 | | 120 | | 140 | |
| Schlitterbahn Waterpark & Resort New Braunfels | | Schlitterbahn Waterpark & Resort New Braunfels | | New Braunfels, Texas | 90 | | 75 | | 15 | |
| Schlitterbahn Waterpark Galveston | | Schlitterbahn Waterpark Galveston | (3) | Galveston, Texas | 40 | | 35 | | 5 | |
(1) Cedar Point and Cedar Point Shores are located on approximately 365 acres, virtually all of which have been developed, on the Cedar Point peninsula in Sandusky, Ohio. The PartnershipWe also ownsown approximately 260505 acres of property on the mainland adjoining the approach to thenear Cedar Point Causeway with approximately 110145 acres undeveloped. Cedar Point's Express Hotel, Castaway Bay Indoor Waterpark Resort and an adjoining restaurant, Castaway Bay Marina, two seasonal-employee housing complexes, and Cedar Point Sports Center and Sawmill Creek Resort are located on this property.
The Partnership controls,We control, through ownership or an easement, a six-mile public highway and ownsown approximately 40 acres of vacant land adjacent to this highway, which is a secondary access route to Cedar Point and serves about 250 private residences. TheWe maintain this roadway is maintained by the Partnership pursuant to deed provisions. TheWe also own the Cedar Point Causeway, a four-lane roadway across Sandusky Bay, which is the principal access road to Cedar Point and is owned by a subsidiary of the Partnership.Point.
(2) The Partnership leasesOf the landtotal acres at California's Great America, approximately 60 acres represent acreage available pursuant to an easement from the City of Santa ClaraClara. The acreage contains a portion of the parking lot at the park.
(3) We lease the land at Schlitterbahn Waterpark Galveston through a long-term lease agreement thatagreement. The lease is renewable in 20392024 with options to renew at our discretion through 2049 and a right of first refusal clause to purchase the Partnership's discretion.land (see Note 13).
All of the Partnership'sour property is owned in fee simple and is encumbered by the Third Amended 2017 Credit Agreement and the 2025 senior notes, with the exception of California's Great America in Santa Clara, California, andthe land at Schlitterbahn Waterpark Galveston, portions of the six-mile public highway that serves as secondary access route to Cedar Point, and is encumbered byportions of the Partnership's 2017 Credit Agreement. The Partnership considers itsCalifornia's Great America parking lot. We consider our properties to be well maintained, in good condition and adequate for itsour present uses and business requirements.
ITEM 3.LEGAL PROCEEDINGS.
Freddie Ramos vs. Cedar Fair, L.P., Cedar Fair Management Company
The Partnership and Cedar Fair Management, Inc. are defendants in a lawsuit filed in Superior Court of the State of California for Orange County on November 23, 2016 by Freddie Ramos seeking damages and injunctive relief for claims related to certain employment and pay practices at our parks in California, including those related to certain check-out, time reporting, discharge, meal and rest period, and pay statement practices. The Partnership filed an answer on January 13, 2017 denying the allegations in the complaint and requesting a dismissal of all claims. On January 17, 2017, the Partnership filed a Notice of Removal of the case from the state court to the United State District Court for the Central District of California. The class has not been certified. On August 29, 2017, the Partnership participated in a mediation relating to the claims alleged in the lawsuit. Following this mediation, the Partnership negotiated a $4.2 million settlement with the named Plaintiff on a class wide basis. As part of the settlement, the case will be remanded back to the Superior Court of the State of California for Orange County for a preliminary hearing and final court approval of the proposed settlement. The Partnership and the named Plaintiff are required to file a brief in support of the settlement with the court. The hearing to approve the final settlement is not expected to occur until at least the first quarter of 2018. Based upon the information available, the Partnership believes the liability recorded as of December 31, 2017 is adequate and does not expect the terms of the negotiated settlement or final briefing to materially affect its financial results in future periods.None.
ITEM 4. MINE SAFETY DISCLOSURES.
Not applicable.
PART II
ITEM 5. MARKET FOR REGISTRANT'S DEPOSITARY UNITS, RELATED UNITHOLDER MATTERS AND ISSUER
PURCHASES OF DEPOSITARY UNITS.
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, 2018,February 5, 2021, there were approximately 5,3004,900 registered holders of Cedar Fair, L.P. Depositary Units, representing limited partner interests. Item 12 in this Form 10-K includes information regarding the Partnership'sour equity incentive plan, which is incorporated herein by reference.
The cashThird Amended 2017 Credit Agreement suspended restricted payments, including partnership distributions, declared anduntil the high and low pricestermination of the Partnership's unitsAdditional Restrictions Period (which generally includes the period from the effective date of the Second Amendment until the delivery of the compliance certificate for eachthe fourth quarter of the past two years are shown in the table below:2022).
|
| | | | | | | | | | | |
| Quarters | | | LP Unit Price |
| Distributions per LP Unit | | High | | Low |
| 2017 | | | | | |
| Fourth Quarter | $ | 0.890 |
| | $ | 69.45 |
| | $ | 59.66 |
|
| Third Quarter | 0.855 |
| | 72.21 |
| | 62.62 |
|
| Second Quarter | 0.855 |
| | 72.56 |
| | 67.08 |
|
| First Quarter | 0.855 |
| | 69.81 |
| | 62.00 |
|
| | | | | | |
| 2016 | | | | | |
| Fourth Quarter | $ | 0.855 |
| | $ | 64.90 |
| | $ | 56.23 |
|
| Third Quarter | 0.825 |
| | 63.40 |
| | 56.30 |
|
| Second Quarter | 0.825 |
| | 60.03 |
| | 56.17 |
|
| First Quarter | 0.825 |
| | 60.23 |
| | 48.46 |
|
The Partnership's long-term debtOur fixed rate note agreements include Restricted Payment provisions.provisions, which could limit our ability to pay partnership distributions. Pursuant to the terms of the indenture governing the Partnership's June 2014our 2024 senior notes, which includes the most restrictive of these Restricted PaymentPayments provisions the Partnershipunder our fixed rate note agreements, if our pro forma Total-Indebtedness-to-Consolidated-Cash-Flow Ratio is greater than 5.00x, we can still make Restricted Payments of $60 million annually so long as no default or event of default has occurred and is continuing; and the Partnership can make additional Restricted Payments if the Partnership'scontinuing. If our pro forma Total Indebtedness-to-Consolidated-Cash-FlowTotal-Indebtedness-to-Consolidated-Cash-Flow Ratio is less than or equal to 5.00x.5.00x, we can make Restricted Payments up to our Restricted Payment pool. Our pro forma Total-Indebtedness-to-Consolidated-Cash-Flow Ratio was greater than 5.00x as of December 31, 2020.
Unitholder Return Performance Graph
The graph below shows a comparison of the five-year cumulative total return (assuming all distributions/dividends reinvested) for Cedar Fair, L.P. limited partnership units, the S&P 500 Index, the S&P 400 Index, and the S&P - Movies and Entertainment Index, assuming investment of $100 on December 31, 2012.2015.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Base Period | | | Return |
| | | 2015 | | | 2016 | | 2017 | | 2018 | | 2019 | | 2020 |
| Cedar Fair, L.P. | | | $ | 100.00 | | | | $ | 121.43 | | | $ | 129.29 | | | $ | 100.01 | | | $ | 125.46 | | | $ | 93.83 | |
| S&P 500 | | | 100.00 | | | | 111.96 | | | 136.40 | | | 130.43 | | | 171.50 | | | 203.05 | |
| S&P 400 | | | 100.00 | | | | 120.74 | | | 140.35 | | | 124.80 | | | 157.49 | | | 179.01 | |
| S&P Movies and Entertainment | | | 100.00 | | | | 110.37 | | | 115.91 | | | 116.62 | | | 147.78 | | | 205.53 | |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | Base Period | | | Return |
| | | | 2012 | | | 2013 | | 2014 | | 2015 | | 2016 | | 2017 |
| Cedar Fair, L.P. | | | $ | 100.00 |
| | | $ | 157.27 |
| | $ | 160.71 |
| | $ | 198.13 |
| | $ | 240.59 |
| | $ | 256.15 |
|
| S&P 500 | | | 100.00 |
| | | 132.39 |
| | 150.51 |
| | 152.59 |
| | 170.84 |
| | 208.14 |
|
| S&P 400 | | | 100.00 |
| | | 133.50 |
| | 146.54 |
| | 143.35 |
| | 173.08 |
| | 201.19 |
|
| S&P Movies and Entertainment | | | 100.00 |
| | | 155.57 |
| | 183.29 |
| | 166.34 |
| | 183.60 |
| | 192.81 |
|
ITEM 6. SELECTED FINANCIAL DATA.
None.
|
| | | | | | | | | | | | | | | | | | | | |
| | | Years Ended December 31, |
| | | 2017 (1) | | 2016 | | 2015 (2) | | 2014 (3) | | 2013 (4) |
| | | (In thousands, except per unit and per capita amounts) |
| Statement of Operations | | | | | | | | | | |
| Net revenues | | $ | 1,321,967 |
| | $ | 1,288,721 |
| | $ | 1,235,778 |
| | $ | 1,159,605 |
| | $ | 1,134,572 |
|
| Operating income | | 295,211 |
| | 316,939 |
| | 295,331 |
| | 278,332 |
| | 301,761 |
|
| Income before taxes | | 216,588 |
| | 249,106 |
| | 134,414 |
| | 114,100 |
| | 128,447 |
|
| Net income | | 215,476 |
| | 177,688 |
| | 112,222 |
| | 104,215 |
| | 108,204 |
|
| Net income per unit - basic | | $ | 3.84 |
| | $ | 3.18 |
| | $ | 2.01 |
| | $ | 1.88 |
| | $ | 1.95 |
|
| Net income per unit - diluted | | $ | 3.79 |
| | $ | 3.14 |
| | $ | 1.99 |
| | $ | 1.86 |
| | $ | 1.94 |
|
| Balance Sheet Data | | | | | | | | | | |
Total assets | | $ | 2,064,159 |
| | $ | 1,973,181 |
| | $ | 1,963,020 |
| | $ | 2,004,448 |
| | $ | 1,975,406 |
|
| Working capital surplus (deficit) | | 21,489 |
| | (47,007 | ) | | (14,645 | ) | | (3,767 | ) | | 18,023 |
|
| Long-term debt | | 1,660,515 |
| | 1,534,211 |
| | 1,536,676 |
| | 1,534,244 |
| | 1,491,086 |
|
| Partners' equity | | 82,946 |
| | 60,519 |
| | 57,009 |
| | 96,217 |
| | 139,131 |
|
| Distributions | | | | | | | | | | |
| Declared per limited partner unit | | $ | 3.455 |
| | $ | 3.330 |
| | $ | 3.075 |
| | $ | 2.850 |
| | $ | 2.575 |
|
| Paid per limited partner unit | | $ | 3.455 |
| | $ | 3.330 |
| | $ | 3.075 |
| | $ | 2.850 |
| | $ | 2.575 |
|
| Other Data | | | | | | | | | | |
| Depreciation and amortization | | $ | 153,222 |
| | $ | 131,876 |
| | $ | 125,631 |
| | $ | 124,286 |
| | $ | 122,487 |
|
Adjusted EBITDA (5) | | 478,977 |
| | 481,248 |
| | 459,238 |
| | 431,280 |
| | 425,430 |
|
| Capital expenditures | | 188,084 |
| | 160,656 |
| | 175,865 |
| | 166,719 |
| | 120,488 |
|
Attendance (6) | | 25,723 |
| | 25,104 |
| | 24,448 |
| | 23,305 |
| | 23,519 |
|
In-park per capita spending (7) | | $ | 47.30 |
| | $ | 46.90 |
| | $ | 46.20 |
| | $ | 45.54 |
| | $ | 44.15 |
|
| |
(1) | Operating results for 2017 include a tax benefit of $54.2 million due to tax law changes, in particular the Tax Cuts and Jobs Act, a charge of $23.1 million for the loss on early debt extinguishment and a charge of $7.6 million for the impairment of the remaining land at Wildwater Kingdom, one of the Partnership's separately gated outdoor water parks which ceased operations in 2016. |
| |
(2) | Operating results for 2015 include a charge of $8.6 million for the impairment of a long-lived asset at Cedar Point. |
| |
(3) | Operating results for 2014 include a charge of $29.3 million for the loss on early debt extinguishment and a charge of $2.4 million for the impairment of long-lived assets at Wildwater Kingdom. |
| |
(4) | Operating results for 2013 include a charge of $34.6 million for the loss on early debt extinguishment. |
| |
(5) | Adjusted EBITDA represents earnings before interest, taxes, depreciation, amortization, other non-cash items, and adjustments as defined in the 2017 Credit Agreement and the 2013 Credit Agreement. 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 as it is widely used by analysts, investors and comparable companies in our industry to evaluate our operating performance on a consistent basis, as well as more easily compare our results with those of other companies in our industry. Further, management believes Adjusted EBITDA is a meaningful measure of park-level operating profitability and 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 is provided in the discussion of results of operations that follows as a supplemental measure of the Partnership's operating results and is not intended to be a substitute for operating income, net income or cash flows from operating activities as defined under generally accepted accounting principles. Adjusted EBITDA may not be comparable to similarly titled measures of other companies. A reconciliation of net income to Adjusted EBITDA is provided below. |
| |
(6) | Attendance includes number of guest visits to the Partnership's amusement parks and separately gated outdoor water parks. |
| |
(7) | In-park per capita spending is calculated as revenues generated within our amusement parks and separately gated outdoor water parks along with related tolls and parking revenues, excluding the expense remitted to others under concessionaire arrangements, divided by total attendance. Revenues from resort, marina, sponsorship, on-line advanced purchase transaction fees charged to customers and all other out-of-park operations are excluded from per capita statistics. |
We believe that Adjusted EBITDA (earnings before interest, taxes, depreciation, amortization, other non-cash items, and adjustments as defined in the 2017 Credit Agreement and the 2013 Credit Agreement) is a meaningful measure as it is widely used by analysts, investors and comparable companies in our industry to evaluate our operating performance on a consistent basis, as well as more easily compare our results with those of other companies in our industry. Further, management believes Adjusted EBITDA is a meaningful measure of park-level operating profitability and 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 is provided in the discussion of results of operations that follows as a supplemental measure of our operating results and is not intended to be a substitute for operating income, net income or cash flows 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.
The table below sets forth a reconciliation of Adjusted EBITDA to net income for the periods indicated:
|
| | | | | | | | | | | | | | | | | | | | |
| | | Years Ended December 31, |
| (In thousands) | | 2017 | | 2016 | | 2015 | | 2014 | | 2013 |
| Net income | | $ | 215,476 |
| | $ | 177,688 |
| | $ | 112,222 |
| | $ | 104,215 |
| | $ | 108,204 |
|
| Interest expense | | 85,603 |
| | 83,863 |
| | 86,849 |
| | 96,286 |
| | 103,071 |
|
| Interest income | | (855 | ) | | (177 | ) | | (64 | ) | | (126 | ) | | (154 | ) |
| Provision for taxes | | 1,112 |
| | 71,418 |
| | 22,192 |
| | 9,885 |
| | 20,243 |
|
| Depreciation and amortization | | 153,222 |
| | 131,876 |
| | 125,631 |
| | 124,286 |
| | 122,487 |
|
| EBITDA | | 454,558 |
| | 464,668 |
| | 346,830 |
| | 334,546 |
| | 353,851 |
|
| Loss on early debt extinguishment | | 23,121 |
| | — |
| | — |
| | 29,261 |
| | 34,573 |
|
| Net effect of swaps | | (45 | ) | | (1,197 | ) | | (6,884 | ) | | (2,062 | ) | | 6,883 |
|
| Non-cash foreign currency (gain) loss | | (29,041 | ) | | (14,345 | ) | | 80,946 |
| | 40,883 |
| | 29,085 |
|
| Non-cash equity compensation expense | | 13,789 |
| | 18,496 |
| | 15,470 |
| | 12,536 |
| | 5,535 |
|
| Loss on impairment/retirement of fixed assets, net | | 12,728 |
| | 12,587 |
| | 20,873 |
| | 9,757 |
| | 2,539 |
|
| Gain on sale of other assets | | (1,877 | ) | | — |
| | — |
| | (921 | ) | | (8,743 | ) |
| Employment practice litigation costs | | 4,867 |
| | — |
| | 259 |
| | 4,953 |
| | — |
|
Other (1) | | 877 |
| | 1,039 |
| | 1,744 |
| | 2,327 |
| | 1,707 |
|
| Adjusted EBITDA | | $ | 478,977 |
| | $ | 481,248 |
| | $ | 459,238 |
| | $ | 431,280 |
| | $ | 425,430 |
|
(1) Consists of certain costs as defined in the Partnership's 2017 Credit Agreement and prior credit agreements. These items are excluded in the calculation of Adjusted EBITDA and have included certain legal expenses, costs associated with certain ride abandonment or relocation expenses, and severance expenses. This balance also includes unrealized gains and losses on short-term investments.
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 amusement parks and water parks, (2) food, merchandise and games inside our parks, and (3) hotel rooms, extra-charge attractions, and food and other attractions, both inside and outside our parks.parks, and (3) accommodations, extra-charge products, and other revenue sources. Our principal costs and expenses, which include salaries and wages, operating supplies, maintenance, advertising utilities and insurance,utilities, are relatively fixed for an operating season and do not vary significantly with attendance.
Each of our properties is overseen by a park general manager and operates autonomously. Management reviews operating results, evaluates performance and makes operating decisions, including the allocation ofallocating resources, on a property-by-property basis.
Along with attendance and in-park per capita spending statistics, discrete financial information and operating results are prepared at the individual park level for use by the CEO, who is the Chief Operating Decision Maker (CODM), as well as by the Chief Financial Officer, the Chief Operating Officer, the Executive Vice President of Operations, Regional Vice Presidents and the park general managers.
The following table presents certain financial data expressed as a percent of total net revenues and selective statistical information for the periods indicated.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Years Ended December 31, |
| | 2020 | | 2019 | | 2018 |
| | (In thousands, except per capita spending and percentages) |
| Net revenues: | | | | | | | | | | | | |
| Admissions | | $ | 67,852 | | | 37.4 | % | | $ | 795,271 | | | 53.9 | % | | $ | 737,676 | | | 54.7 | % |
| Food, merchandise and games | | 76,921 | | | 42.4 | % | | 473,499 | | | 32.1 | % | | 433,315 | | | 32.1 | % |
| Accommodations, extra-charge products and other | | 36,782 | | | 20.3 | % | | 206,155 | | | 14.0 | % | | 177,539 | | | 13.2 | % |
| Net revenues | | 181,555 | | | 100.0 | % | | 1,474,925 | | | 100.0 | % | | 1,348,530 | | | 100.0 | % |
| Operating costs and expenses | | 483,891 | | | 266.5 | % | | 990,716 | | | 67.2 | % | | 892,416 | | | 66.2 | % |
| Depreciation and amortization | | 157,549 | | | 86.8 | % | | 170,456 | | | 11.6 | % | | 155,529 | | | 11.5 | % |
| Loss on impairment / retirement of fixed assets, net | | 8,135 | | | 4.5 | % | | 4,931 | | | 0.3 | % | | 10,178 | | | 0.8 | % |
| Loss on impairment of goodwill and other intangibles | | 103,999 | | | 57.3 | % | | — | | | — | % | | — | | | — | % |
| Gain on sale of investment | | (11) | | | — | % | | (617) | | | — | % | | (112) | | | — | % |
| Operating (loss) income | | (572,008) | | | (315.1) | % | | 309,439 | | | 21.0 | % | | 290,519 | | | 21.5 | % |
| Interest and other expense, net | | 150,222 | | | 82.7 | % | | 98,860 | | | 6.7 | % | | 84,354 | | | 6.3 | % |
| Net effect of swaps | | 15,849 | | | 8.7 | % | | 16,532 | | | 1.1 | % | | 7,442 | | | 0.6 | % |
| Loss on early debt extinguishment | | 2,262 | | | 1.2 | % | | — | | | — | % | | 1,073 | | | 0.1 | % |
| (Gain) loss on foreign currency | | (12,183) | | | (6.7) | % | | (21,107) | | | (1.4) | % | | 36,254 | | | 2.7 | % |
| (Benefit) provision for taxes | | (137,915) | | | (76.0) | % | | 42,789 | | | 2.9 | % | | 34,743 | | | 2.6 | % |
| Net (loss) income | | $ | (590,243) | | | (325.1) | % | | $ | 172,365 | | | 11.7 | % | | $ | 126,653 | | | 9.4 | % |
| Other data: | | | | | | | | | | | | |
| Attendance | | 2,595 | | | | | 27,938 | | | | | 25,912 | | | |
| In-park per capita spending | | $ | 46.38 | | | | | $ | 48.32 | | | | | $ | 47.69 | | | |
Impact of COVID-19 Pandemic
Summary
The novel coronavirus (COVID-19) pandemic has had a material impact on our business in 2020, is expected to have a continuing negative impact in 2021 and may have a longer-term negative effect. On March 14, 2020, we closed our properties in response to the spread of COVID-19 and local government mandates. We ultimately resumed only partial operations at 10 of our 13 properties in 2020. Beginning in the second quarter of 2020, we resumed partial operations at eight properties on a staggered basis with opening dates starting in mid-June and continuing through mid-July. We also reopened operations at some of our out-of-park attractions at this time, such as hotel operations. Attendance upon reopening was impacted by the ongoing effects of the pandemic and was below original expectations. However, demand steadily increased from 20-25% of comparable prior-year attendance levels upon initially reopening up to 55% of comparable prior-year attendance levels in September 2020. Due to these soft demand trends upon reopening, park operating calendars were adjusted for the remainder of 2020, including reduced operating days per week and operating hours within each operating day. In addition, some of our reopened parks closed earlier than the park's typical operating calendar. Two parks, Cedar Point and Kings Island, remained open after Labor
|
| | | | | | | | | | | | | | | | | | | | | |
| | | Years Ended December 31, |
| | | 2017 | | 2016 | | 2015 |
| | | (In thousands, except per capita spending and percentages) |
| Net revenues: | | | | | | | | | | | | |
| Admissions | | $ | 734,060 |
| | 55.5 | % | | $ | 716,189 |
| | 55.6 | % | | $ | 687,442 |
| | 55.6 | % |
| Food, merchandise and games | | 422,469 |
| | 32.0 | % | | 407,673 |
| | 31.6 | % | | 398,019 |
| | 32.2 | % |
| Accommodations, extra-charge products and other | | 165,438 |
| | 12.5 | % | | 164,859 |
| | 12.8 | % | | 150,317 |
| | 12.2 | % |
| Net revenues | | 1,321,967 |
| | 100.0 | % | | 1,288,721 |
| | 100.0 | % | | 1,235,778 |
| | 100.0 | % |
| Operating costs and expenses | | 862,683 |
| | 65.3 | % | | 827,319 |
| | 64.2 | % | | 793,943 |
| | 64.2 | % |
| Depreciation and amortization | | 153,222 |
| | 11.6 | % | | 131,876 |
| | 10.2 | % | | 125,631 |
| | 10.2 | % |
| Loss on impairment / retirement of fixed assets, net | | 12,728 |
| | 1.0 | % | | 12,587 |
| | 1.0 | % | | 20,873 |
| | 1.7 | % |
| Gain on sale of investment | | (1,877 | ) | | (0.1 | )% | | — |
| | — | % | | — |
| | — | % |
| Operating income | | 295,211 |
| | 22.3 | % | | 316,939 |
| | 24.6 | % | | 295,331 |
| | 23.9 | % |
| Interest and other expense, net | | 84,633 |
| | 6.4 | % | | 83,686 |
| | 6.5 | % | | 86,785 |
| | 7.0 | % |
| Net effect of swaps | | (45 | ) | | — | % | | (1,197 | ) | | (0.1 | )% | | (6,884 | ) | | (0.6 | )% |
| Loss on early debt extinguishment | | 23,121 |
| | 1.7 | % | | — |
| | — | % | | — |
| | — | % |
| (Gain) loss on foreign currency | | (29,086 | ) | | (2.2 | )% | | (14,656 | ) | | (1.1 | )% | | 81,016 |
| | 6.6 | % |
| Provision for taxes | | 1,112 |
| | 0.1 | % | | 71,418 |
| | 5.5 | % | | 22,192 |
| | 1.8 | % |
| Net income | | $ | 215,476 |
| | 16.3 | % | | $ | 177,688 |
| | 13.8 | % | | $ | 112,222 |
| | 9.1 | % |
| Other data: | | | | | | | | | | | | |
| Attendance | | 25,723 |
| | | | 25,104 |
| | | | 24,448 |
| | |
| In-park per capita spending | | $ | 47.30 |
| | | | $ | 46.90 |
| | | | $ | 46.20 |
| | |
A summary of 2020 park opening and closing dates following the March 14, 2020 closure of our properties follows:
| | | | | | | | | | | |
| Property | 2020 Status following March 14 (1) | 2020 Opening Date following March 14 | 2020 Closing Date following March 14 |
| Cedar Point | Opened | July 9, 2020 | November 1, 2020 |
| Knott's Berry Farm | Opened (2) | July 17, 2020 | December 6, 2020 |
| Canada's Wonderland | Did not reopen | | |
| Kings Island (3) | Opened | July 2, 2020 | November 1, 2020 |
| Carowinds | Opened | November 21, 2020 | December 20, 2020 |
| Kings Dominion | Opened | December 5, 2020 | December 27, 2020 |
| California's Great America | Did not reopen | | |
| Dorney Park (3) | Opened | July 8, 2020 | September 7, 2020 |
| Worlds of Fun (3) | Opened | June 22, 2020 | September 7, 2020 |
| Valleyfair | Did not reopen | | |
| Michigan's Adventure | Opened | July 16, 2020 | September 7, 2020 |
| Schlitterbahn Waterpark & Resort New Braunfels (3) | Opened | June 13, 2020 | September 7, 2020 |
| Schlitterbahn Waterpark Galveston (3) | Opened | June 13, 2020 | September 7, 2020 |
(1) Some of our out-of-park attractions were able to operate outside of the referenced dates, including hotel operations.
(2) Unlike the other parks classified as "Opened", Knott's Berry Farm was unable to reopen amusement park operations. Following March 14, 2020, Knott's Berry Farm's partial operations were limited to culinary festivals. These limited operations at Knott's Berry Farm were classified as out-of-park revenues. Attendance, in-park per capita spending and operating day statistics for 2020 exclude these limited operations at Knott's Berry Farm.
(3) Park closed earlier than the park's typical operating calendar.
In order to ensure our season pass holders receive a full season of access to our parks, in April 2020, we extended the usage privileges of 2020 season passes through the 2021 season and paused collections of guest payments on installment purchase products. For those parks which opened during the summer of 2020, we resumed collections of guest payments on installment purchase products as each of these parks opened for the 2020 operating season. For those parks which did not open during the summer of 2020, we will resume collections of guest payments as each of these parks opens for the 2021 operating season. For those parks that we announced on August 4, 2020 would not reopen in 2020, we also provided our season pass holders a loyalty reward to be used on purchases within the park during the 2021 operating season.
Liquidity
Following the March 14, 2020 closure of our properties and in response to the negative effects of the COVID-19 pandemic, we took steps in 2020 to secure additional liquidity and to obtain relief from certain financial covenants.
On April 27, 2020, we issued $1.0 billion of 5.500% senior secured notes due 2025 and amended the 2017 Credit Agreement to suspend and revise certain financial covenants, and to adjust the interest rate on and reflect additional commitments and capacity for our revolving credit facility. During the fourth quarter of 2020 and in response to the continuing effects of the COVID-19 pandemic, we issued an additional $300 million of 6.500% senior unsecured notes due 2028 and further amended the 2017 Credit Agreement to further suspend and revise certain of the financial covenants. The fourth quarter 2020 credit agreement amendment also extended the maturity of and adjusted the terms that apply to a portion of our senior secured revolving credit facility. See the Long-Term Debt footnote at Note 8 for further details.
Other steps taken in 2020 to secure additional liquidity included suspending quarterly partnership distributions and suspending a series of capital expenditures planned for the 2020 and 2021 operating seasons. Capital expenditures for 2020 totaled $129.1 million, reflecting a reduction of approximately $60 million from our initial budget. We also reduced operating expenses and cash outflows while all of our operations were idled by temporarily eliminating nearly all of our seasonal and part-time labor costs, suspending advertising and marketing expenses, reducing general and administrative and other park-level operating expenses,
reducing the base salaries of our CEO and other executives, deferring base salaries for all other salaried employees, reducing hours for full-time hourly employees, and suspending cash retainer fees for the Board of Directors.
Following the opening of partial operations at eight of our properties, we resumed paying full base salaries to our CEO, other executives and all other salaried employees. We also increased scheduled hours for full-time hourly employees to 40 hours per week, and resumed cash retainer fees to our Board of Directors. For those parks operating, we incurred seasonal and part-time labor expenses, park-level operating expenses and advertising expenses to correspond with lower than typical attendance levels and abbreviated park operating calendars.
Governmental Economic Assistance
During 2020, we benefited from the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act"), which was signed into law on March 27, 2020. We expect to recognize two benefits. First, we expect to carryback the 2020 losses incurred by our corporate subsidiaries, which will result in refunds of a portion of federal income taxes paid during the carryback period of approximately $55.4 million as of December 31, 2020. Second, as of December 31, 2020, the annual effective tax rate included a net benefit of $18.1 million from carrying back the projected 2020 losses of the corporate subsidiaries. This tax benefit represents an estimated $34.2 million incremental benefit of tax loss carrybacks for periods when the federal income tax rate was greater than the current 21% rate. The estimated $34.2 million benefit was decreased by $16.1 million for a projected valuation allowance on foreign tax credits originally utilized during the carryback period which would be released as a result of the loss carryback but which are not expected to be utilized.
Additional benefits from the CARES Act included an $8.2 million deferral of the employer's share of Social Security taxes due in 50% increments in the fourth quarter of 2021 and the fourth quarter of 2022, and $3.7 million in tax benefits from the Employee Retention Credit program.
We also received $5.0 million from the Canada Emergency Wage Subsidy ("CEWS"), which provides cash payments to Canadian employers that experienced a decline in revenues related to the COVID-19 pandemic.
Impairment
Due to the negative effects of the COVID-19 pandemic on our expected future operating results, we tested our long-lived assets, goodwill, and indefinite-lived intangible assets for impairment as of March 29, 2020 and September 27, 2020 resulting in $106.7 million of impairment charges recorded, primarily related to the recently acquired Schlitterbahn parks.
Management has made significant estimates and assumptions to determine our liquidity requirements and estimate the impact of the COVID-19 pandemic on our business, including financial results in the near and long-term. Actual results could materially differ from these estimates depending on the ultimate extent of the effects of the COVID-19 pandemic.
2021 Outlook
As we continue to actively work with state and local officials, we have established May 2021 opening dates for our seasonal parks. Knott's Berry Farm, our only year-round park, has announced a new culinary festival beginning in March 2021. The culinary festivals at Knott's Berry Farm are expected to continue until state and local officials lift restrictions to allow us to resume normal amusement park operations. Prior to reopening, pre-opening expenses will be minimized. With broad vaccination distribution efforts in process and anticipated pent-up demand for outdoor entertainment, management is focused on maximizing the seasonally weighted second half of 2021. A substantial portion of our revenues are typically generated during the peak vacation months of July and August allowing for broader vaccine distribution and a potential reduction of COVID-19 restrictions before these key months. In addition, as of December 31, 2020, we have a sizeable base of approximately 1.8 million season passes outstanding and valid for the 2021 operating season following the extension of usage privileges for 2020 season passes through the 2021 operating season. Despite these positive indicators, we do not anticipate 2021 to be a normal operating year operationally or financially, and it is uncertain how long it may take us to achieve full operational potential. Our future operations are dependent on factors beyond our knowledge or control, including the duration and severity of the COVID-19 pandemic and actions taken to contain its spread and mitigate its public health effects. See Risk Factors at Item 1A. In January 2021, Knott's Berry Farm announced a day for day extension into calendar year 2022 for 2020 and 2021 season passes for every day the park is closed in 2021. No other parks have announced similar plans.
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 complexity (see Note 2 to our Consolidated Financial Statements3 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.
Impairment of Long-Lived Assets
The carrying values of long-lived assets, including property and equipment, are reviewed whenever events or changes in circumstances indicate that the carrying values 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 amountsamount of the asset. Fair value is generally determined based onusing a discounted cash flow analysis.combination of a cost and market approach. Significant factors considered in the cost approach include the replacement cost, reproduction cost, depreciation, physical deterioration, functional obsolescence and economic obsolescence of the asset. The market approach estimates fair value by utilizing market data for similar assets. 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.
The determination of both undiscounted and discounted cash flows requires management to make significant estimates and consider an anticipated course of action as of the balance sheet date. Subsequent changes in estimated undiscounted and discounted cash flows arising from changes in anticipated actions could impact the determination of whether impairment exists the amount of the impairment charge recorded and whether the effects could materially impact the consolidated financial statements.
AtDue to the endnegative effects of the fourth quarter of 2015,COVID-19 pandemic on our expected future operating results, we decided to permanently remove from service atested our long-lived asset at Cedar Point. Accordingly, we recognized and recorded an $8.6 million chargeassets for impairment equalas of March 29, 2020 and September 27, 2020 (see Note 6). Management made significant estimates in performing these impairment tests, including the anticipated time frame to re-open our parks following the COVID-19 pandemic and the related anticipated demand upon re-opening our parks following the COVID-19 pandemic. Actual results could materially differ from these estimates depending on the ultimate extent of the effects of the COVID-19 pandemic. Due to the remaining net book valueongoing development and fluidity of this long-lived asset.the COVID-19 pandemic, the ultimate extent of the effects of the COVID-19 pandemic cannot be reasonably predicted.
Accounting for Business Combinations
Business combinations are accounted for under the acquisition method of accounting. The amount was recordedamounts assigned to the identifiable assets acquired and liabilities assumed in "Lossconnection with acquisitions are based on impairment / retirementestimated fair values as of fixed assets, net" in the consolidated statement of operations and comprehensive income.
During the third quarter of 2016, we ceased operations of one of our separately gated outdoor water parks, Wildwater Kingdom, located near Cleveland in Aurora, Ohio. At the date that Wildwater Kingdom ceased operations,of the only remaining long-lived asset wasacquisition, with the approximate 670 acres of land ownedremainder, if any, recorded as goodwill. The fair values are determined by management, taking into consideration information supplied by the Partnership. This land had an associated carrying valuemanagement of $17.1 million. We assessed the remaining assetacquired entities, valuations supplied by independent appraisal experts and concluded there was no impairment duringother relevant information. The valuations are generally based upon future cash flow projections for the third quarteracquired assets, discounted to present value. The determination of 2016. Infair values requires significant judgment by management. If future operating results do not meet expectations or anticipated synergies are not realized, the fourth quarter of 2017, we recorded a $7.6 million impairment charge based on recent information from our ongoing marketing activities. The amount was recorded in "Loss on impairment / retirement of fixed assets, net" in the consolidated statement of operations and comprehensive income. The remaining Wildwater Kingdom acreage, reduced by acreage sold, is classified as assets held-for-sale within "Other Assets" in the consolidated balance sheet with a carrying value of $9.0 million as of December 31, 2017.Schlitterbahn reporting unit may become further impaired.
Goodwill and Other Intangible Assets
Goodwill and other indefinite-lived intangible assets, including trade-names, are reviewed for impairment annually, or more frequently if indicators of impairment exist. A significant amount of judgment is involved in determining if an indicator of impairment has occurred. Such indicators may include, among others: a significant decline in expected future cash flows; a sustained, significant decline in equity price and market capitalization; a significant adverse change in legal factors or in the business climate; unanticipated competition; the testing for recoverability of a significant asset group within a reporting unit; and slower growth rates. Any adverse change in these factors could have a significant impact on the recoverability of these assets and could have a material impact on our consolidated financial statements.
We elected to adopt FASB Accounting Standards Update No. 2017-04, Simplifying the Test for Goodwill Impairment ("ASU 2017-04"), for our 2017 annual impairment test. ASU 2017-04 eliminates step two from the goodwill impairment test. Instead, an entity recognizes an impairment charge for the amount by which a reporting unit's carrying amount exceeds its fair value, not to exceed the carrying amount of goodwill. The fair value of a reporting unit is established using a combination of an income (discounted cash flow) and market approach.
We completed the review of goodwill and other indefinite-lived intangibles as of the first days of the fourth quarter of 2017 and 2016 and determined goodwill and other indefinite-lived intangibles were not impaired at these testing dates.
It is possible that our assumptions about future performance, as well as the economic outlook and related conclusions regarding valuation, could change adversely, which may result in additional impairment that would have a material effect on our financial position and results of operations in future periods.
Due to the negative effects of the COVID-19 pandemic on our expected future operating results, we tested our goodwill and other indefinite-lived intangible assets for impairment as of March 29, 2020 and September 27, 2020 (see Note 7). Management made significant estimates in performing these impairment tests, including the anticipated time frame to re-open our parks following the COVID-19 pandemic and the related anticipated demand upon re-opening our parks following the COVID-19 pandemic. Actual results could materially differ from these estimates depending on the ultimate extent of the effects of the COVID-19 pandemic. Due to the ongoing development and fluidity of the COVID-19 pandemic, the ultimate extent of the effects of the COVID-19 pandemic cannot be reasonably predicted. In conjunction with our annual measurement date, we completed the review of goodwill and other indefinite-lived intangibles as of the first days of the fourth quarter of 2020 and 2019 and determined goodwill and other indefinite-lived intangibles were not further impaired as of these testing dates.
Self-Insurance Reserves
ReservesSelf-insurance reserves are recorded for the estimated amounts of guest and employee claims and expenses incurred each period. Reserves are established for both identified claims and incurred but not reported (IBNR) claims. Such amounts("IBNR") claims and are accrued forrecorded when claim amounts become probable and estimable. Reserves for identified claims are based upon our own historical claims experience and third-party estimates of settlement costs. Reserves for IBNR claims which are not material to our consolidated financial statements, are based upon our own claims data history. All self-insuranceSelf-insurance reserves are periodically reviewed for changes in facts and circumstances and adjustments are made as necessary.
necessary. The ultimate cost for identified claims can be difficult to predict due to the unique facts and circumstances associated with each claim.
Revenue Recognition
As disclosed within the consolidated statements of operations and comprehensive (loss) income, revenues are generated from sales of (1) admission to our amusement parks and water parks, (2) food, merchandise and games both inside and outside the parks, and (3) accommodations, extra-charge products, and other revenue sources. Most revenues are recognized on a daily basis based on actual guest spend at the properties. Revenues onfrom multi-use products, including season-long products for admission, dining, beverage and other products, are recognized over the estimated number of uses expected for each type of productproduct. The estimated number of uses is reviewed and are adjustedmay be updated periodically during the operating season prior to the ticket or product expiration, which generally occurs no later than the close of the operating season. Other revenues are recognized on a daily basisThe number of uses is estimated based on actual guest spending athistorical usage adjusted for current period trends.
Due to the effects of the COVID-19 pandemic, we extended the validity of our facilities, or over2020 season-long products through the park2021 operating season in order to ensure our season pass holders receive a full season of access to our parks. The extended validity of the case2020 season-long products resulted in a significant amount of certain marina revenues and certain sponsorship revenues.
Admission revenues include amounts paidrevenue deferred into 2021. In order to gaincalculate revenue recognized in 2020 on 2020 season-long products, management made significant estimates regarding the estimated number of uses expected for these season-long products for admission, into our parks, including parking fees. Revenues related to extra-charge attractions, including our premium benefit offerings like our front-of-line products, and on-line advanced purchase transaction fees charged to customers are included in Accommodations, extra-charge productsdining, beverage and other revenue.products for the 2021 operating season. Actual results could materially differ from these estimates depending on the ultimate extent of the effects of the COVID-19 pandemic. Due to the ongoing development and fluidity of the COVID-19 pandemic, the ultimate extent of the effects of the COVID-19 pandemic cannot be reasonably predicted.
Income Taxes
Our legal entity structure includes both partnerships and corporate subsidiaries. As aWe are subject to publicly traded partnership wetax ("PTP tax") on certain partnership level gross income (net revenues less cost of food, merchandise, and games revenues), state and local income taxes on partnership income, U.S. federal state and local income taxes on income from our corporate subsidiaries and foreign income taxes on our foreign subsidiary. As such, the total (benefit) provision for taxes includes amounts for the PTP gross income tax and federal, state, local and foreign income taxes. Under applicable accounting rules, the total (benefit) provision for income taxes includes the amount of taxes payable for the current year and the impact of deferred tax assets and liabilities, which represents future tax consequences of events that are subject to an entity-level tax (the "PTP tax"). Accordingly, the Partnership itself is not subject to corporate income taxes; rather, the Partnership's tax attributes (except those of the corporate subsidiaries) are includedrecognized in different periods in the financial statements than for tax returns of our partners. Our corporate subsidiaries are subject to entity-level income taxes. Our "Provision for taxes" includes both the PTP tax and the income taxes from the corporate subsidiaries.purposes.
Our corporate subsidiaries account for income taxes under the asset and liability method. Accordingly, deferred tax assets and liabilities are recognized for the future book and tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are determined using enacted tax rates expected to apply in the year in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax law is recognized in income at the time of enactment of such change in tax law. Any interest or penalties due for payment of income taxes are included in the provision for income taxes.
We record a valuation allowance if, based on the weight of available evidence, it is more likely than not that some portion, or all, of a deferred tax asset will not be realized. Through December 31, 2016, we had recorded a $4.2 million valuation allowance related to a $7.7 million deferred tax asset for foreign tax credit carryforwards. The need for this allowance wasis based on several factors including the ten-year carryforward period allowed for excess foreign tax credits, experience to date of foreign tax credit limitations, carryforward periods of state net operating losses, and management's long termlong-term estimates of domestic and foreign source income.
During the fourth quarter of 2017, we recognized a $0.1 million tax benefit per a release of valuation allowance based on management's updated projection of future foreign tax credit utilization. As of December 31, 2017, we had recorded a $4.1 million valuation allowance related to an $8.7 million deferred tax asset for foreign tax credit carryforwards.
There is inherent uncertainty in the estimates used to project the amount of foreign tax credit and state net operating loss carryforwards that are more likely than not to be realized. It is possible that our future income projections, as well as the economic outlook and related conclusions regarding the valuation allowanceallowances could change, which may result in additional valuation allowance being recorded or may result in additional valuation allowance reductions, and which may have a material negative or positive effect on our reported financial position and results of operations in future periods.
Adjusted EBITDA
Adjusted EBITDA represents earnings before interest, taxes, depreciation, amortization, other non-cash items, and Jobs Act (the "Act") was signed into law on December 22, 2017. The Act makes significant changes to U.S. tax lawadjustments as defined in the Third Amended 2017 Credit Agreement and among other things, reduces federal corporate tax rates from 35% to 21%. The accounting treatmentprior agreements. Adjusted EBITDA is not a measurement of these tax law changes is complex, and the SEC staff issued Staff Accounting Bulletin No. 118 ("SAB 118") to address the application of U.S. GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed in reasonable detail to complete the accounting for certain tax effects of the Act. We have recognized the provisional tax impacts related to the reduction in tax rates including the revaluation of deferred tax assets and liabilities in our consolidated financial statements for the year ended December 31, 2017. The ultimate impact may differ from these provisional amounts, possibly materially, due to, among other things, additional analysis, changes in interpretations and assumptions we have made, additional regulatory or accounting guidance that may be issued, and actions the Partnership may take as a result of the Act. We expect to complete our analysis of the effects of the Act within the measurement periodoperating performance computed in accordance with SAB 118.generally accepted accounting principles ("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 as it is widely used by analysts, investors and comparable companies in our industry to evaluate our operating performance on a consistent basis, as well as more easily compare our results with those of other companies in our industry. Further, management believes Adjusted EBITDA is a meaningful measure of park-level operating profitability and 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 is provided in the discussion of results of operations that follows as a supplemental measure of our operating results and is not intended to be a substitute for operating income, net income or cash flows from operating activities as defined under GAAP. In addition, Adjusted EBITDA may not be comparable to similarly titled measures of other companies.
The table below sets forth a reconciliation of Adjusted EBITDA to net (loss) income for the periods indicated:
| | | | | | | | | | | | | | | | | | | | | | | | |
| | Years Ended December 31, |
| (In thousands) | | 2020 | | 2019 | | 2018 | | | | |
| Net (loss) income | | $ | (590,243) | | | $ | 172,365 | | | $ | 126,653 | | | | | |
| Interest expense | | 150,669 | | | 100,364 | | | 85,687 | | | | | |
| Interest income | | (460) | | | (2,033) | | | (1,515) | | | | | |
| (Benefit) provision for taxes | | (137,915) | | | 42,789 | | | 34,743 | | | | | |
| Depreciation and amortization | | 157,549 | | | 170,456 | | | 155,529 | | | | | |
| EBITDA | | (420,400) | | | 483,941 | | | 401,097 | | | | | |
| Loss on early debt extinguishment | | 2,262 | | | — | | | 1,073 | | | | | |
| Net effect of swaps | | 15,849 | | | 16,532 | | | 7,442 | | | | | |
| Non-cash foreign currency (gain) loss | | (12,011) | | | (21,061) | | | 36,294 | | | | | |
| Non-cash equity compensation expense | | (209) | | | 12,434 | | | 11,243 | | | | | |
| Loss on impairment/retirement of fixed assets, net | | 8,135 | | | 4,931 | | | 10,178 | | | | | |
| Loss on impairment of goodwill and other intangibles | | 103,999 | | | — | | | — | | | | | |
| Gain on sale of investment | | (11) | | | (617) | | | (112) | | | | | |
| Acquisition-related costs | | 16 | | | 7,162 | | | — | | | | | |
| | | | | | | | | | |
Other (1) | | 359 | | | 1,351 | | | 558 | | | | | |
| Adjusted EBITDA | | $ | (302,011) | | | $ | 504,673 | | | $ | 467,773 | | | | | |
(1) Consists of certain costs as defined in our Third Amended 2017 Credit Agreement and prior credit agreements. These items are excluded in the calculation of Adjusted EBITDA and have included certain legal expenses and severance expenses. This balance also includes unrealized gains and losses on short-term investments.
Results of Operations
We believe the following are significantkey operational measures in the structure of our management and operational reporting, and they are used as major factors in keysignificant operational decisions:decisions as they are primary drivers of our financial and operational performance:
Attendance is defined as the number of guest visits to our amusement parks and separately gated outdoor water parks.
In-park per capita spending is calculated as revenues generated within our amusement parks and separately gated outdoor water parks along with related tolls and parking revenues (in-park revenues), divided by total attendance.
Out-of-park revenues are defined as revenues from resort, marina, sponsorship, on-line advanced purchaseonline transaction fees charged to customers and all other out-of-park operations.
Both Net revenues consist of in-park revenues and out-of-park revenues less amounts remitted to outside parties under concessionaire arrangements (see Note 5).
2020 vs. 2019
The results for the year ended December 31, 2020 were not directly comparable with the results for the year ended December 31, 2019 due to park closures and operating calendar changes associated with the COVID-19 pandemic (the "COVID-19 disruption"). On March 14, 2020, we closed our properties in response to the spread of COVID-19. We ultimately resumed only partial operations at 10 of our 13 properties in 2020. Beginning in the second quarter of 2020, we resumed partial operations at eight properties on a staggered basis with opening dates starting in mid-June and continuing through mid-July. We also reopened operations at some of our out-of-park attractions at this time, such as hotel operations. Attendance upon reopening was impacted by the ongoing effects of the pandemic and was below original expectations. Due to these soft demand trends upon reopening, park operating calendars were adjusted for the remainder of 2020, including reduced operating days per week and operating hours within each operating day. In addition, some of our reopened parks closed earlier than the park's typical operating calendar. Two parks, Cedar Point and Kings Island, remained open after Labor Day. Two additional parks, Carowinds and Kings Dominion, reopened on weekends in November and December to host abbreviated versions of their traditional WinterFest events. Following March 14, 2020, Knott's Berry Farm's partial operations were limited to culinary festivals. Net revenues from these limited operations at Knott's Berry Farm were classified as out-of-park revenues. Attendance, in-park per capita spending and out-of-park revenues operating day statistics for 2020 exclude amounts remitted to others under concessionaire arrangements.these limited operations at Knott's Berry Farm.
2017 vs. 2016
As a result of the COVID-19 disruption, the current year included 487 operating days compared with 2,224 operating days for the year ended December 31, 2019. The following table presents key financial information and operating statistics for the years ended December 31, 20172020 and December 31, 2016:2019:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | Increase (Decrease) |
| | | December 31, 2020 | | December 31, 2019 | | $ | | % |
| | (Amounts in thousands, except for per capita spending) |
| Net revenues | | $ | 181,555 | | | $ | 1,474,925 | | | $ | (1,293,370) | | | (87.7) | % |
| Operating costs and expenses | | 483,891 | | | 990,716 | | | (506,825) | | | (51.2) | % |
| Depreciation and amortization | | 157,549 | | | 170,456 | | | (12,907) | | | (7.6) | % |
| Loss on impairment/retirement of fixed assets, net | | 8,135 | | | 4,931 | | | 3,204 | | | N/M |
| Loss on impairment of goodwill and other intangibles | | 103,999 | | | — | | | 103,999 | | | N/M |
| Gain on sale of investment | | (11) | | | (617) | | | 606 | | | N/M |
| Operating (loss) income | | $ | (572,008) | | | $ | 309,439 | | | $ | (881,447) | | | N/M |
| N/M - Not meaningful | | | | | | | | |
| Other Data: | | | | | | | | |
Adjusted EBITDA (1) | | $ | (302,011) | | | $ | 504,673 | | | $ | (806,684) | | | N/M |
| | | | | | | | |
| Attendance | | 2,595 | | | 27,938 | | | (25,343) | | | (90.7) | % |
| In-park per capita spending | | $ | 46.38 | | | $ | 48.32 | | | $ | (1.94) | | | (4.0) | % |
| Out-of-park revenues | | $ | 67,375 | | | $ | 168,708 | | | $ | (101,333) | | | (60.1) | % |
|
| | | | | | | | | | | | | | | |
| | | | | | | Increase (Decrease) |
| | | 12/31/2017 | | 12/31/2016 | | $ | | % |
| | | (Amounts in thousands, except for per capita spending) |
| Net revenues | | $ | 1,321,967 |
| | $ | 1,288,721 |
| | $ | 33,246 |
| | 2.6 | % |
| Operating costs and expenses | | 862,683 |
| | 827,319 |
| | 35,364 |
| | 4.3 | % |
| Depreciation and amortization | | 153,222 |
| | 131,876 |
| | 21,346 |
| | 16.2 | % |
| Loss on impairment/retirement of fixed assets, net | | 12,728 |
| | 12,587 |
| | 141 |
| | N/M |
|
| Gain on sale of investment | | (1,877 | ) | | — |
| | (1,877 | ) | | N/M |
|
| Operating income | | $ | 295,211 |
| | $ | 316,939 |
| | $ | (21,728 | ) | | (6.9 | )% |
| N/M - Not meaningful | | | | | | | | |
| Other Data: | | | | | | | | |
Adjusted EBITDA (1) | | $ | 478,977 |
| | $ | 481,248 |
| | $ | (2,271 | ) | | (0.5 | )% |
Adjusted EBITDA margin (2) | | 36.2 | % | | 37.3 | % | | — |
| | (1.1 | )% |
| Attendance | | 25,723 |
| | 25,104 |
| | 619 |
| | 2.5 | % |
| In-park per capita spending | | $ | 47.30 |
| | $ | 46.90 |
| | $ | 0.40 |
| | 0.9 | % |
| Out-of-park revenues | | $ | 143,763 |
| | $ | 146,137 |
| | $ | (2,374 | ) | | (1.6 | )% |
(1) For additional information regarding Adjusted EBITDA, including how we define and use Adjusted EBITDA, as well as a reconciliation from net (loss) income, see Itempage 20.
Consolidated net revenues totaled $181.6 million for the year ended December 31, 2020, decreasing $1.3 billion, from $1.5 billion for 2019. This reflected the impact of a 25.3 million-visit decrease in attendance, a $1.94 decrease in in-park per capita spending, and a $101.3 million decrease in out-of-park revenues, all of which were heavily impacted by the COVID-19 disruption. The decrease in attendance was due to the aforementioned park closures and operating calendar changes, as well as soft initial demand upon re-opening our parks. However, demand steadily increased from 20-25% of comparable prior-year attendance
levels upon initially reopening up to 55% of comparable prior-year attendance levels in September 2020. The decrease in in-park per capita spending was the result of less guest spending on extra-charge products, specifically front-of-line products, and admission attributable to a higher season pass mix. In-park per capita spending on food, merchandise and games increased compared with the prior year. The decrease in out-of-park revenues was primarily attributable to a decline in accommodations revenue related to a decrease in occupancy due to the COVID-19 disruption, as well as a decrease in online transaction fee revenue due to a decline in online sales volume. Net revenues were not materially impacted by foreign currency exchange rates.
Operating costs and expenses for 2020 decreased 51.2%, or $506.8 million, to $483.9 million from $990.7 million for 2019. The decrease was the result of a $98.3 million decrease in cost of food, merchandise and games revenues ("COGS"), a $294.4 million decrease in operating expenses, and a $114.1 million decrease in selling, general, and administrative expenses ("SG&A"). The decrease in COGS was due to the decline in sales volume from the COVID-19 disruption and soft initial demand at our open parks. The $294.4 million decrease in operating expenses was attributable to $167.5 million of seasonal labor savings, as well as reductions in operating supplies, maintenance supplies, utilities, entertainment-related fees and insurance attributable to closed properties, abbreviated operating calendars and fewer offerings at our parks. In addition, full-time wages decreased due to a decline in anticipated payout of bonus plans. The $114.1 million decrease in SG&A expense was attributable to $57.5 million of advertising expense savings, as well as a reduction in transaction fee expense due to a decline in online sales volume, a decline in the anticipated payout of outstanding equity-based compensation and bonus plans, and prior period acquisition-related costs. Operating costs and expenses were not materially impacted by foreign currency exchange rates.
Depreciation and amortization expense for 2020 decreased $12.9 million compared with 2019 primarily due to the prior period change in estimated useful life of a long-lived asset at Kings Dominion. The loss on impairment / retirement of fixed assets for 2020 was $8.1 million compared with $4.9 million for 2019. The current year included a $2.7 million impairment charge with respect to the Schlitterbahn parks' long-lived assets triggered by the effects of the COVID-19 pandemic during the first quarter of 2020 (see Note 6 "Selected Financial Data"), as well as the impairment of two specific assets during the first quarter of 2020. Similarly triggered by the anticipated effects of the COVID-19 pandemic, the loss on impairment of goodwill and other intangibles for 2020 included a $73.6 million, $6.8 million and $7.9 million impairment of goodwill at the Schlitterbahn parks, goodwill at Dorney Park, and the Schlitterbahn trade name, respectively, during the first quarter of 2020, and an $11.3 million, $2.3 million and $2.2 million impairment of goodwill at the Schlitterbahn parks, goodwill at Dorney Park, and the Schlitterbahn trade name, respectively, during the third quarter of 2020 (see Note 7). During the first quarter of 2019, a $0.6 million gain on sale of investment was recognized for additional proceeds from the liquidation of a preferred equity investment.
After the items above, operating loss for 2020 totaled $572.0 million compared with operating income of $309.4 million for 2019.
Interest expense for 2020 increased $50.3 million due to interest incurred on the 2025 senior notes issued in April 2020 and on the 2029 senior notes issued in late June 2019. The net effect of our swaps resulted in a $15.8 million charge to earnings for 2020 compared with a $16.5 million charge to earnings for 2019. The difference was attributable to the change in fair market value of our swap portfolio. We recognized a $2.3 million loss on early debt extinguishment related to our 2020 refinancing events (see Note 8). During 2020, we also recognized a $12.2 million net benefit to earnings for foreign currency gains and losses compared with a $21.1 million net benefit to earnings for 2019. Both amounts primarily represent remeasurement of the U.S.-dollar denominated debt recorded at our Canadian entity from the U.S.-dollar to the legal entity's functional currency.
For 2020, a benefit for taxes of $137.9 million was recorded to account for PTP taxes and federal, state, local and foreign income taxes compared with a provision for taxes recorded for 2019 of $42.8 million. The increase in benefit for taxes was attributable to an increase in pretax loss from our taxable subsidiaries, as well as expected benefits from the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act"), which was signed into law on March 27, 2020. The CARES Act resulted in various changes to the U.S. tax law, including, among other things, allowing net operating losses arising in tax years 2018 through 2020 to be carried back to the preceding five taxable years and removing the limitation that such losses only offset 80% of taxable income. As a result of these changes, we expect to recognize two benefits. First, we expect to carryback the 2020 losses incurred by our corporate subsidiaries, which will result in the refund of a portion of federal income taxes paid during the carryback period of approximately $55.4 million. Second, as of December 31, 2020, the annual effective tax rate included a net benefit of $18.1 million from carrying back the projected 2020 losses of the corporate subsidiaries. This tax benefit represents an estimated $34.2 million incremental benefit of tax loss carrybacks for periods when the federal income tax rate was greater than the current 21% rate. The estimated $34.2 million benefit was decreased by $16.1 million for a projected valuation allowance on foreign tax credits originally utilized during the carryback period which would be released as a result of the loss carryback but which are not expected to be utilized.
After the items above, net loss for 2020 totaled $590.2 million, or $10.45 per diluted limited partner unit, compared with net income of $172.4 million, or $3.03 per diluted unit, for 2019.
For 2020, Adjusted EBITDA loss totaled $302.0 million compared with a $504.7 million Adjusted EBITDA for 2019. The variance in Adjusted EBITDA was due to decreased net revenues offset somewhat by expense savings attributable to the COVID-19 disruption.
2019 vs. 2018
The results for the year ended December 31, 2019 were not directly comparable with the results for the year ended December 31, 2018. The year ended December 31, 2019 included results from the operations of the Schlitterbahn parks from the July 1, 2019 acquisition date. Since many differences in our operating results related to the acquisition, we also included a discussion of operating results excluding the results of the Schlitterbahn parks (or on a "same-park" basis).
The year ended December 31, 2019 included 2,224 operating days compared with 2,061 operating days for the year ended December 31, 2018. On a same-park basis, the year ended December 31, 2019 included 2,079 operating days. The increase in same-park operating days from the year ended December 31, 2018 was largely due to the inaugural Canada's Wonderland WinterFest event, a holiday event operating during November and December, in 2019. The following table presents key financial information and operating statistics for the years ended December 31, 2019 and December 31, 2018:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | Increase (Decrease) |
| | | December 31, 2019 | | December 31, 2018 | | $ | | % |
| | (Amounts in thousands, except for per capita spending) |
| Net revenues | | $ | 1,474,925 | | | $ | 1,348,530 | | | $ | 126,395 | | | 9.4 | % |
| Operating costs and expenses | | 990,716 | | | 892,416 | | | 98,300 | | | 11.0 | % |
| Depreciation and amortization | | 170,456 | | | 155,529 | | | 14,927 | | | 9.6 | % |
| Loss on impairment/retirement of fixed assets, net | | 4,931 | | | 10,178 | | | (5,247) | | | N/M |
| | | | | | | | |
| Gain on sale of investment | | (617) | | | (112) | | | (505) | | | N/M |
| Operating income | | $ | 309,439 | | | $ | 290,519 | | | $ | 18,920 | | | 6.5 | % |
| N/M - Not meaningful | | | | | | | | |
| Other Data: | | | | | | | | |
Adjusted EBITDA (1) | | $ | 504,673 | | | $ | 467,773 | | | $ | 36,900 | | | 7.9 | % |
Adjusted EBITDA margin (2) | | 34.2 | % | | 34.7 | % | | — | | | (0.5) | % |
| Attendance | | 27,938 | | | 25,912 | | | 2,026 | | | 7.8 | % |
| In-park per capita spending | | $ | 48.32 | | | $ | 47.69 | | | $ | 0.63 | | | 1.3 | % |
| Out-of-park revenue | | $ | 168,708 | | | $ | 152,216 | | | $ | 16,492 | | | 10.8 | % |
(1) For additional information regarding Adjusted EBITDA, including how we define and use Adjusted EBITDA, as well as a reconciliation from net (loss) income, see page 16.20.
(2) Adjusted EBITDA margin (Adjusted EBITDA divided by net revenues) is not a measurement computed in accordance with generally accepted accounting principles ("GAAP")GAAP or a substitute for measures computed in accordance with GAAP and may not be comparable to similarly titled measures of other companies. We provide Adjusted EBITDA margin because we believe the measure provides a meaningful metric of operating profitability.
Consolidated net revenues totaled $1,322.0$1,474.9 million for the year ended December 31, 2017,2019, increasing $33.2$126.4 million, from $1,288.7$1,348.5 million for 2016.2018. This reflects an increase in both attendance and in-park per capita spending. Out-of park revenues decreased $2.4reflected the impact of a 2.0 million compared with the prior year. The 619,000 visit or 2.5%, increase in attendance was driven by higher season pass visitation and increased attendance during WinterFest, a holiday event operating during November and December. The increase in WinterFest attendance related primarily to three new events held at Kings Island, Carowinds, and Worlds of Fun. The $0.40, or 0.9%,$0.63 increase in in-park per capita spending was primarily attributable to growthspending. Out-of-park revenues increased $16.5 million compared with 2018. The increase in our food and beverage programs, and the closure of Wildwater Kingdom (one of our separately gated outdoor water parks which was closed after the 2016 operating season). The $2.4 million, or 1.6%, decrease in out-of-parknet revenues was due to prior period revenues received from Super Bowl 50 special events andnet of a decrease in transaction fee revenue recognized during the period. Foreign$10.4 million unfavorable impact of foreign currency exchange rates had an immaterial impact on net revenues.related to our Canadian park.
Operating costs and expenses for the year ended December 31, 2019 increased 4.3%11.0%, or $35.4$98.3 million, to $862.7$990.7 million from $827.3$892.4 million for 2016. This2018. The increase was the result of a $4.2an $11.5 million increase in cost of goods sold,COGS, a $19.2$57.9 million increase in operating expenses, and an $11.9 million increase in selling, general, and administrative expenses ("SG&A"). The $4.2 million increase in cost of goods sold related to the growth in our food and beverage programs, as well as higher attendance levels. Cost of goods sold, as a percentage of food, merchandise, and games revenue, was comparable for both periods. The $19.2 million increase in operating expenses was primarily due to higher seasonal labor costs driven by rate increases, especially in California, as well as incremental labor hours especially related to WinterFest. In addition, full-time wages increased as a result
of incremental head count and normal merit increases, as well as increased maintenance labor associated with WinterFest. Lastly, operating supply expense increased due to incremental special and seasonal events, especially for WinterFest, and the opening of several large capital projects that began operation in 2017. The $11.9$28.9 million increase in SG&A expense was attributable to a reserve for an employment practice claim settlement of $4.9 million, increased marketing expense, higher merchant fees, and increased technology related costs. Foreign currency exchange rates had an immaterial impact onexpense. The increase in operating costs and expenses.
expenses was net of a $5.1 million favorable impact of foreign currency exchange related to our Canadian park. Depreciation and amortization expense for 20172019 increased $21.3$14.9 million compared with the prior year. The increase was attributable to a change in the estimated useful lives of specific long-lived assets, in particular at Cedar Point and Dorney Park, as well as due to growth in capital improvements. 2018.
The loss on impairment / retirement of fixed assets net for 20172019 was $12.7$4.9 million reflecting a charge of $7.6compared with $10.2 million for 2018. The decrease was attributable to the impairmentretirement of a specific asset in the remaining land at Wildwater Kingdom, onesecond quarter of our separately gated outdoor water parks which ceased operations in 2016,2018 and the impairment of two specific assets in the normal course of business at several of our properties. This is compared with the $12.6 million loss on impairment / retirement of fixed assets, net for 2016 reflecting the impairment of assets in the normal course of business. During the third quarter of 2017, a $1.92018. A $0.6 million and $0.1 million gain on sale of investment was recognized for the liquidation of a preferred equity investment.investment during the first quarter of 2019 and fourth quarter of 2018, respectively.
After the items above, operating income decreased $21.7increased $18.9 million to $295.2$309.4 million for 20172019 from operating income of $316.9$290.5 million for 2016.2018.
Interest expense for 2019 increased $14.7 million due to interest incurred on the 2029 senior notes issued in late June 2019 and incremental revolving credit facility borrowings during 2019. We recognized a $1.1 million loss on early debt extinguishment during the first quarter of 2018 in connection with amending our 2017 increased $1.7 million compared with the prior year. The increase was attributable to an increase in outstanding term debt.Credit Agreement. The net effect of our swaps resulted in an immaterial impacta $16.5 million charge to earnings for 20172019 compared with a $1.2$7.4 million non-cash benefitcharge to earnings for 2016.2018. The difference reflects the amortization of amounts in OCI in our de-designated swap portfolio offset byreflected changes in fair market value movements in our swap portfolio offset by 2018 amortization of amounts in other comprehensive income for theseour de-designated swaps. We recognized a $23.1 million loss on early debt extinguishment during 2017 as a result of the April 2017 debt refinancing. We also recognized a $29.1$21.1 million net benefit to earnings for foreign currency gains and
losses in 20172019 compared with a $14.7$36.3 million net benefitcharge to earnings for 2016.2018. Both amounts primarily representrepresented remeasurement of the U.S.-dollar denominated debt heldrecorded at our Canadian propertyentity from the applicable currencyU.S.-dollar to the legal entity's functional currency.
For 2017,2019, a provision for taxes of $1.1$42.8 million was recorded to account for PTP taxes and federal, state, local and foreign income taxes on our corporate subsidiaries.taxes. This comparescompared with a provision for taxes recorded for 20162018 of $71.4$34.7 million. The decreaseincrease in provision for taxes was attributable to a $9.9 million tax provisionbenefit in 2018 for the current year relates primarily to implementation of the Tax Cuts and Jobs Act (the "Act"), which was signed into law on December 22, 2017. The Act includes numerous changes to the tax law, including a reduction in the federal corporate income tax rate from 35% to 21%. Since our corporate subsidiaries have a March tax year end, the applicable tax rate for 2017 will be a 31.8% blended rate that is based on the applicable statutory rates before and after the change and the number of days in the period within the taxable year before and after the effective date of the change in tax rate. As a result of the reduction in the federal corporate income tax rate, we recognized a $6.1 million current income tax benefit. Also, the change in tax rates necessitates that we remeasure deferred tax balances that are expected to reverse following enactment using the applicable tax rates. As a result of this remeasurement of our net deferred tax liability, we recognized a $49.2 million deferred tax benefit. The sum of these effects was recorded as a tax benefit in the consolidated statement of operations and comprehensive income for the year ended December 31, 2017. While we believe these provisional amounts are reasonable estimates of the effects of the Act, they are subject to change in accordance with SAB 118; see "Critical Accounting Policies - Income Taxes".Act. Cash taxes paid in 20172019 were $56.0$40.8 million compared with $44.5to $42.2 million in 2016. For 2018, cash taxes to be paid or payable are estimated to range from $40 million to $55 million. The change in cash taxes relates to continuing strong business performance offset by our current estimate of the ongoing impact of the Act.2018.
After the items above, net income for 20172019 totaled $215.5$172.4 million, or $3.79$3.03 per diluted limited partner unit, compared with net income of $177.7$126.7 million, or $3.14$2.23 per diluted unit, for 2016.2018.
For 2017, Adjusted EBITDA decreased to $479.0 millionAs stated previously, the results for 2019 included the results of the Schlitterbahn parks from $481.2 million for 2016. The $2.3 million decrease in Adjusted EBITDA is a result of higher operating coststhe July 1, 2019 acquisition date. Comparing 2019 and expenses associated with labor, marketing, merchant fees, and other planned spending out-pacing revenue growth, specifically attendance growth. As a result, our Adjusted EBITDA margin decreased by 110 basis points.
On2018 on a same-park basis, (excluding Wildwater Kingdom), net revenues increased by $38.7$83.8 million, or 6%, to $1,322.0 million for$1,432.4 million. The increase reflected the year ended December 31, 2017 from $1,283.3 million for 2016. This was the resultimpact of an 856,000-visita 1.3 million-visit increase in attendance to 27.2 million visits and a $0.17$0.44 increase in in-park per capita spending to $48.13 on a same-park basis. Operating costs and expenses (including depreciation and amortization, loss on impairment of fixed assets and gain on sale of investment) on a same-park basis increased $61.2 million resulting in a $22.5 million decrease in same-park operating income.
Results of Operations
2016 vs. 2015
The following table presents key financial information and operating statistics for the years ended December 31, 2016 and December 31, 2015:
|
| | | | | | | | | | | | | | | |
| | | | | | | Increase (Decrease) |
| | | 12/31/2016 | | 12/31/2015 | | $ | | % |
| | | (Amounts in thousands, except for per capita spending) |
| Net revenues | | $ | 1,288,721 |
| | $ | 1,235,778 |
| | $ | 52,943 |
| | 4.3 | % |
| Operating costs and expenses | | 827,319 |
| | 793,943 |
| | 33,376 |
| | 4.2 | % |
| Depreciation and amortization | | 131,876 |
| | 125,631 |
| | 6,245 |
| | 5.0 | % |
| Loss on impairment/retirement of fixed assets, net | | 12,587 |
| | 20,873 |
| | (8,286 | ) | | N/M |
|
| Operating income | | $ | 316,939 |
| | $ | 295,331 |
| | $ | 21,608 |
| | 7.3 | % |
| N/M - Not meaningful | | | | | | | | |
| Other Data: | | | | | | | | |
Adjusted EBITDA (1) | | $ | 481,248 |
| | $ | 459,238 |
| | $ | 22,010 |
| | 4.8 | % |
Adjusted EBITDA margin (2) | | 37.3 | % | | 37.2 | % | | — |
| | 0.1 | % |
| Attendance | | 25,104 |
| | 24,448 |
| | 656 |
| | 2.7 | % |
| In-park per capita spending | | $ | 46.90 |
| | $ | 46.20 |
| | $ | 0.70 |
| | 1.5 | % |
| Out-of-park revenue | | $ | 146,137 |
| | $ | 137,698 |
| | $ | 8,439 |
| | 6.1 | % |
(1) For additional information regarding Adjusted EBITDA, including how we define and use Adjusted EBITDA, as well as a reconciliation from net income, see Item 6, "Selected Financial Data", on page 16.
(2) Adjusted EBITDA margin (Adjusted EBITDA divided by net revenues) is not a measurement computed in accordance with generally accepted accounting principles ("GAAP") or a substitute for measures computed in accordance with GAAP and may not be comparable to similarly titled measures of other companies. We provide Adjusted EBITDA margin because we believe the measure provides a meaningful metric of operating profitability.
Consolidated net revenues totaled $1,288.7 million in 2016, increasing $52.9 million, from $1,235.8 million in 2015. This reflected an increase in both attendance and in-park per capita spending, as well as an increase in out-of park revenues compared with 2015. The 656,000 visit, or 2.7%, increase in attendance, particularly season pass visitation, was driven by higherstrong season pass visitation assales, favorable third quarter weather conditions and the resultintroduction of new rides and attractions,immersive events, including live entertainment and multi-week special events during the traditional summer season, as well as growth in our fall and winter seasonal events.inaugural WinterFest at Canada's Wonderland. The new WinterFest event at California's Great America resulted in incremental attendance and revenue and some shifting of season pass related revenue into the fourth quarter of 2016. The $0.70, or 1.5%, increase in in-park per capita spending was attributable to increaseshigher guest spending in admissions pricingfood and growthbeverage driven by the continued investment in our food and beverage programs. The $8.4offerings and in extra-charge products, particularly front-of-line products, driven by higher attendance levels. Out-of-park revenues increased $11.5 million or 6.1%, increase in out-of-park revenues reflected favorable performance at our resort properties, increased transaction fees from on-line advanced purchases,to $163.7 million on a same-park basis largely due to an increase in special events at several parks, including Super Bowl 50 special events at California's Great America,online transaction fees charged to customers and proceeds received from a business interruption claim relating to an early season electrical outagethe acquisition of the Sawmill Creek Resort at Cedar Point in 2016. The overall increase in net revenues was net of an unfavorable impact of foreign currency exchange rates of $3.7Point. Amounts remitted to outside parties under concessionaire arrangements increased $2.8 million related to our Canadian property for 2016 compared with the impact of foreign currency for 2015.$42.2 million on a same-park basis, reflecting higher attendance and food and beverage demand.
Operating costs and expenses for 2016on a same-park basis increased 4.2%by $70.7 million, or 8%, or $33.4 million, to $827.3 million from $793.9 million for 2015.$963.1 million. The increase was the result of a $1.8an $8.6 million increase in cost of goods sold,COGS, a $21.3$37.8 million increase in operating expenses and a $10.3$24.2 million increase in SG&A. The $1.8 million increase in cost of goods sold related to higher attendance levels, as well as additional volume in our meal and beverage plan programs. Cost of goods sold,&A expense on a same-park basis. COGS as a percentage of food, merchandise, and games net revenue was comparable for both 2016 and 2015. The $21.3comparable. Operating expenses grew by $37.8 million increase in operating expenses was primarily due to higherincreased labor costs for seasonal, full-time and maintenance labor costs. These costs increased due tolargely driven by planned market-based adjustmentswage and statutory minimum-wage rate increases alongand related benefits, as well as incremental operating costs associated with related employer taxes.new and expanded immersive events, including the inaugural WinterFest at Canada's Wonderland. The $10.3$24.2 million increase in SG&A expense was primarily dueattributable to increases in media and other marketing$7.2 million of acquisition-related costs, increased transaction fees related to higher sales volume, increased full-time wages, higher technology related costs, and higher e-commerce and merchant fees. Thean increase in operating costs and expenses was net of a favorable impact of foreign currency exchange rates of $2.3 million related to our Canadian property for 2016 compared with the impact of foreign currency for 2015.
marketing expense. Depreciation and amortization expense for 2016 increased $6.2$12.2 million compared with 2015to $167.8 million on a same-park basis due to growth in capital improvements. Theimprovements and the change in estimated useful lives for a series of specific assets in anticipation of future disposal.
After the same-park basis fluctuations described above, and the fluctuations of loss on impairment / retirement of fixed assets net for 2016 was $12.6 million, reflectingand gain on sale of investment, which were not materially impacted by the impairmentacquisition of assets in the normal course of business at several of our properties, as compared with $20.9 million in 2015 which included an $8.6 million impairment for a certain long-lived asset at Cedar Point (as discussed in Note 3 to our Consolidated Financial Statements), as well as the retirement of assets at several of our properties.
After the items above,Schlitterbahn parks, operating income on a same-park basis increased $21.6 million to $316.9 million for 2016 from operating income of $295.3 million for 2015.
Interest$6.9 million. The fluctuations in interest expense, for 2016 decreased to $83.9 million from $86.8 million in 2015 related to a decline in the outstanding notional amounts of our derivative contracts and the corresponding reductions in required settlement payments. The net effect of our swaps, resulted in a benefit to earnings of $1.2 million for 2016 compared with a $6.9 million benefit to earnings for 2015. The difference reflected the change in fair market value movements in our de-designated swap portfolio offset by the amortization of amounts in OCI for these swaps. During 2016, we also recognized a $14.7 million net benefit to earnings forloss on early debt extinguishment, foreign currency gains(gain) loss, and losses compared with an $81.0 million charge to earnings during 2015. Amounts in both periods primarily represented remeasurement of the U.S.-dollar denominated debt held at our Canadian property from the applicable currency to the entity's functional currency.
For 2016, a provision for taxes on a same-park basis were not materially impacted by the acquisition of $71.4 million was recorded to account for PTP taxes and income taxes on our corporate subsidiaries. This compared with a provision for taxes recorded for 2015 of $22.2 million. The increase in tax provision in 2016 related largely to improved operating results and the full utilization of net operating loss carryforwards during 2015, and to accounting for a change in U.S. tax law that increased the provision by $7.4 million. Cash taxes paid in 2016 were $44.5 million compared with $20.0 million in 2015. The increase in cash taxes related to continuing strong business performance.
Schlitterbahn parks. After thethese items, above, net income on a same-park basis increased $33.7 million to $160.4 million for 2016 totaled $177.7 million, or $3.14 per diluted limited partner unit, compared with net income of $112.2 million, or $1.99 per diluted unit, for 2015.2019.
For 2016,2019, Adjusted EBITDA increased $36.9 million to $481.2$504.7 million from $459.2$467.8 million for 2015. The $22.0 million increase in2018. Adjusted EBITDA wason a result ofsame-park basis increased $21.2 million, or 5%, due to increased net revenues driven by higher attendance, in particular from growth in the Partnership's fall and winter seasonal events, higher in-park per capita spending and stronger out-of-park revenues compared with 2015. Partially offsetting these revenue increases were increases in operating costs andoffset by higher expenses, associated withparticularly for planned increases in labor and operating supply costs and variable costs associated with higher attendance, such as COGS and other spending on marketing, technology and e-commercetransaction fees. Over this same period,Our Adjusted EBITDA margin for 2019 decreased 50 basis points ("bps") compared with our Adjusted EBITDA margin increased by 10for 2018. Adjusted EBITDA margin on a same-park basis pointsdecreased 60 bps due to the planned expense increases in labor and operating supply costs, including costs for new facilities and immersive events. Adjusted EBITDA and Adjusted EBITDA margin were computed in the same manner on a same-park basis (3).
(3) Adjusted EBITDA for 2019 excluding the Schlitterbahn parks' results was calculated as net income of $160.4 million plus interest expense of $100.4 million, interest income of $2.0 million, provision for taxes of $42.8 million, depreciation and amortization expense of $167.8 million, net effect of swaps charge of $16.5 million, non-cash foreign currency gain of $21.1 million, non-cash equity compensation expense of $12.4 million, loss on impairment / retirement of fixed assets of $4.7 million, and acquisition-related costs of $7.2 million.
Liquidity and Capital Resources
Our principal sources of liquidity typically include cash from operating activities, funding from our long-term debt obligations and existing cash on hand. Due to the seasonality of our business, we typically fund pre-opening operations with revolving credit borrowings. Revolving credit borrowings are typically reduced with our positive cash flow during the seasonal operating period. Our primary uses of liquidity typically include operating expenses, partnership distributions, capital expenditures, interest payments and income tax obligations.
Due to the negative effects of the COVID-19 pandemic, we took steps in 2020 to secure additional liquidity and to obtain relief from certain financial covenants including the issuance of $1.3 billion of senior notes, amendment of our term debt and revolving credit agreement, reducing operating expenses, including labor costs, suspending capital expenditures, and suspending quarterly partnership distributions. Due to limited open operations during 2020, our 2020 liquidity needs were funded from cash on hand from the recently issued senior notes. As of December 31, 2020, we had cash on hand of $376.7 million and $359.1 million of available borrowings under our revolving credit facility. Based on this level of liquidity, we have concluded that we will have sufficient liquidity to satisfy our obligations and remain in compliance with our debt covenants at least through the first quarter of 2022 assuming partial operations in 2021.
In the long term, and as restrictions to mitigate the spread of COVID-19 are lifted and our properties are able to resume full operations, management is focused on pursuing business process efficiencies and cost savings opportunities identified as a result of increased attendancethe COVID-19 pandemic, optimizing the Company's organizational structure with an aim for margin expansion, and guest spending trends, offset by higher labor costs described above.reducing the Company's leverage. Also, in the long term, management anticipates returning to historic annual capital expenditure investments of 9-10% of revenues. We have no material, long-term commitments for new rides and attractions. Management is also committed to reinstituting quarterly partnership distributions when it is appropriate to do so and it is permissible under the Third Amended 2017 Credit Agreement and our other debt covenants.
Financial Condition
In the short term, and as we prepare our properties for the 2021 operating season, we expect to invest $30-35 million in capital expenditures, specifically for essential compliance and infrastructure requirements, as well as the completion of select unfinished projects from 2020. Many new rides and attractions planned for the 2020 operating season have yet to be introduced to our guests. We ended 2017may invest in sound condition with respectadditional capital expenditures over the 2021 operating season as conditions permit. Due to boththe issuance of $1.3 billion of senior notes in 2020, we anticipate an increase in cash interest payments of $45 million in 2021 to approximately $175 million in annual cash interest. We are expecting to receive $55.4 million in tax refunds attributable to the net operating loss in 2020 being carried back to prior years in the United States and an additional $11.9 million in tax refunds attributable to net operating losses being carried back to prior years in Canada. We anticipate receiving these tax refunds in the fourth quarter of 2021. Also, in 2021, we anticipate cash payments for income taxes to range from $5 million to $10 million, exclusive of these tax refunds. We anticipate funding our 2021 liquidity needs from cash on hand and cash flow. The working capital ratio (current assets divided by current liabilities) was 1.1from operating activities.
As of the date of this Form 10-K, we anticipate that we will spend $40-50 million per month during the first quarter of 2021 as we prepare our parks for opening in the second quarter of December 31, 2017 and was 0.8 as of December 31, 2016. Receivables and inventories are at normally low seasonal levels and cash and credit facilities are in place to fund current liabilities,2021. Our estimate includes projected operating expenses, capital expenditures, partnership distributions,income tax obligations, and pre-opening expenses as required.interest payments. We have made significant estimates and assumptions to estimate the impact of the COVID-19 pandemic on our business, including financial results in the near and long term. Actual results could materially differ from these estimates. We have not provided a longer period estimate due to the volatility of the current operating environment.
Operating Activities
Net cash for operating activities in 2020 totaled $416.5 million compared with net cash from operating activities of $403.0 million in 2019. The variance was attributable to lower earnings as a result of the COVID-19 disruption. Net cash from operating activities in 2017 decreased $27.22019 increased $52.3 million compared with 2018. The increase was driven primarily by higher season-long product sales for the subsequent operating season, an increase in accrued income taxes due to $331.2 million from $358.3an increase in income before taxes and the timing of payments, and an increase in accrued interest due to the 2029 senior notes issued in 2019.
Cash interest payments totaled $130.4 million in 2016. Net cash from operating activities in 2016 increased $12.4 million to $358.3 million from $346.02020 compared with $85.6 million in 2015.2019. The fluctuationsincrease in operating cash flows between yearsinterest payments from 2019 was primarily attributable to changesthe 2025 senior notes and 2028 senior notes issuances during 2020 offset by less outstanding term debt in working capital.2020 following a $463.3 million prepayment in the second quarter of 2020. Cash payments for income taxes totaled $1.8 million in 2020 compared with $40.8 million in 2019. The decrease in cash payments for income taxes from 2019 was attributable to an increase in pretax loss from our taxable subsidiaries, as well as expected benefits from the CARES Act.
Investing Activities
InvestingNet cash for investing activities consist principallyin 2020 totaled $120.8 million, a decrease of $479.4 million compared with 2019. The decrease from 2019 was attributable to multiple causes. First, in 2020 and due to the effects of the COVID-19 pandemic, we reduced our capital investments we makespending by approximately $60 million from our initial capital expenditures budget to maintain flexibility and retain liquidity. Second, in our2019, net cash for investing activities included the acquisitions of the Schlitterbahn parks and resort properties. During 2017, cash spent on capital expendituresSawmill Creek Resort which totaled $188.1$270.2 million attributable to capital for marketable new rides and attractions, and to a lesser extent, infrastructure and incremental opportunities specific to resort properties. During 2017, we also received $3.3 millionthe purchase of proceeds from the sale of a preferred equity investment in a non-public entity. During 2016, cash spent on capital expenditures totaled $160.7 million. During 2016, we also purchased identifiable intangible assets for $0.6 million. During 2015, cash spent on capital expenditures totaled $175.9 million. During 2015, we also purchased for $2.0 million the preferred equity investment that we sold in 2017.
Historically, we have been able to improve our revenues and profitability by continuing to make substantial capital investments in our park and resort facilities. This has enabled us to maintain or increase attendance levels, as well as to generate increases in in-park per capita spending and revenues from guest accommodations. For the 2018 operating season, we will be investing approximately $155 million on infrastructure and marketable new rides and attractions, and anticipate investing an additional $20 million to $30 million as we invest in incremental opportunities such as resort properties. Infrastructure and marketable capital investments will include four ground-breaking roller coastersland at Cedar Point, Knott's Berry Farm, California's Great America and Kings Dominion. In additionfrom the City of Santa Clara for $150.3 million. Net cash for investing activities in 2019 increased $410.5 million compared with 2018. The increase from 2018 was
attributable to the coasters, we will renovateacquisitions of the Schlitterbahn parks and expandSawmill Creek Resort and the children's and family attractionspurchase of the land at Carowinds along with the addition of many other new attractions at all of our parks. We will also extend the operating season at Kings Dominion for a new WinterFest holiday event, bringing the total to six of our amusement parks with winter holiday events. Lastly, as we continue to expand Cedar Point's resort accommodations, a new five-story addition to Hotel Breakers will openCalifornia's Great America in May 2018 featuring an additional outdoor pool and sun deck adjacent to the mile-long beach.2019.
Financing Activities
Net cash utilizedfrom financing activities in 2020 totaled $730.9 million, an increase of $460.4 million compared with 2019. The increase from 2019 was primarily attributable to the net cash proceeds from the April 2020 financing events and the issuance of the 2028 senior notes in the fourth quarter of 2020 compared with the 2029 senior notes issuance in 2019. The increase from 2019 was somewhat offset by the suspension of quarterly partnership distributions following the first quarter 2020 partnership distribution. Net cash from financing activities in 2019 increased $487.0 million compared with net cash for financing activities in 2017 totaled $106.4 million, compared with $194.5 million in 2016. This decrease reflects incremental debt borrowings2018. The increase from 2018 was primarily due to the increase in our senior secured term loan facility under the 2017 Credit Agreement, offset by other impacts of the April 2017 refinancing including payment of debt issuance costs and early termination penalties.
Net cash utilized for financing activities in 2016 totaled $194.5 million, compared with $177.9 million in 2015. This increase in net cash utilized for financing activities is due to an increaseproceeds from the 2029 senior notes issuance in distributions paid to partners in 2016, as well as a $6.0 million pre-payment of term debt in 2016.2019.
Liquidity and Capital Resources
Contractual Obligations
As of December 31, 2017,2020, our primary contractual obligations consisted of outstanding long-term debt beforeagreements and related derivative agreements. Before reduction for debt issuance costs and original issue discount, our long-term debt agreements consisted of the following:
•$500264 million of 5.375% senior unsecuredsecured term debt, maturing in April 2024 under our Third Amended 2017 Credit Agreement. The term debt bears interest at London InterBank Offering Rate ("LIBOR") plus 175 bps, under amendments we entered into on March 14, 2018. The pricing terms for the amendment reflected $0.9 million of Original Issue Discount ("OID"). Following a $463.3 million prepayment during the second quarter of 2020, we do not have any required remaining quarterly payments. Therefore, we had no current maturities as of December 31, 2020.
•$1.0 billion of 5.500% senior secured notes, maturing in April 2027,May 2025, issued at par. The 2025 senior notes and the related guarantees are secured by first-priority liens on the issuers' and the guarantors' assets that secure all the obligations under our credit facilities. Prior to April 15, 2020,May 1, 2022, up to 35% of the 2025 senior notes may be redeemed with net cash proceeds of certain equity offerings at a price equal to 105.375%105.500% of the principal amount thereof, together with accrued and unpaid interest and additional interest, if any. The 2025 senior notes may be redeemed, in whole or in part, at any time prior to May 1, 2022 at a price equal to 100% of the principal amount of the notes redeemed plus a "make-whole" premium, together with accrued and unpaid interest and additional interest, if any, to the redemption date. Thereafter, the 2025 senior notes may be redeemed, in whole or in part, at various prices depending on the date redeemed. The 2025 senior notes pay interest semi-annually in May and November.
•$450 million of 5.375% senior unsecured notes, maturing in June 2024, issued at par. The 2024 senior notes may be redeemed, in whole or in part, at various prices depending on the date redeemed. The 2024 senior notes pay interest semi-annually in June and December.
•$500 million of 5.375% senior unsecured notes, maturing in April 2027, issued at par. The 2027 senior notes may be redeemed, in whole or in part, at any time prior to April 15, 2022 at a price equal to 100% of the principal amount of the notes redeemed plus a "make-whole" premium, together with accrued and unpaid interest and additional interest, if any, to the redemption date. Thereafter, the 2027 senior notes may be redeemed, in whole or in part, at various prices depending on the date redeemed. The 2027 senior notes pay interest semi-annually in April and October.
•$450300 million of 5.375%6.500% senior unsecured notes, maturing in June 2024,October 2028, issued at par. Prior to October 1, 2023, up to 35% of the 2028 senior notes may be redeemed with the net cash proceeds of certain equity offerings at a price equal to 106.500% of the principal amount thereof, together with accrued and unpaid interest and additional interest, if any. The 2028 senior notes may be redeemed, in whole or in part, at any time prior to JuneOctober 1, 20192023 at a price equal to 100% of the principal amount of the notes redeemed plus a "make-whole" premium together with accrued and unpaid interest and additional interest, if any, to the redemption date. Thereafter, the 2028 senior notes may be redeemed, in whole or in part, at various prices depending on the date redeemed. The 2028 senior notes pay interest semi-annually in JuneApril and December.
October, beginning April 1, 2021.
•$735500 million of 5.250% senior secured term debt,unsecured notes, maturing in AprilJuly 2029, issued at par. Prior to July 15, 2022, up to 35% of the 2029 senior notes may be redeemed with the net cash proceeds of certain equity offerings at a price equal to 105.250% of the principal amount thereof, together with accrued and unpaid interest and additional interest, if any. The 2029 senior notes may be redeemed, in whole or in part, at any time prior to July 15, 2024 under our 2017 Credit Agreement. at a price equal to 100% of the principal amount of the notes redeemed plus a "make-whole" premium together with accrued and unpaid interest and additional interest, if any, to the redemption date. Thereafter, the 2029 senior notes may be redeemed, in whole or in part, at various prices depending on the date redeemed. The term debt bears2029 senior notes pay interest at London InterBank Offering Rate ("LIBOR") plus 225 basis points (bps). The term loan amortizes $7.5 million annually. We paid $15.0 million of amortization during the third quarter of 2017. Therefore, we have no current maturities as of December 31, 2017.
semi-annually in January and July.
•No borrowings under the $275$375 million senior secured revolving credit facility under our Third Amended 2017 Credit Agreement with a Canadian sub-limit of $15.0$15 million. $300 million. Borrowing under of the senior secured revolving credit facility bearbears interest at LIBOR plus 350 bps or Canadian Dollar Offered Rate ("CDOR") plus 200 bps. The revolving credit facility is scheduled to mature in April 2022250 bps and also provides for the issuance of documentary and standby letters of credit. The 2017 Credit Agreement requires the payment of a 37.562.5 bps commitment fee per annum on the unused portion of the credit facilities.
As of December 31, 2017, before reduction for debt issuance costs, we had $735.0 The remaining $75 million of variable-rate term debt, $950.0the revolving
credit facility bears interest at LIBOR plus 300 bps or CDOR plus 200 bps and requires the payment of a 37.5 bps commitment fee per annum on the unused portion of the credit facilities. The $300 million of outstanding fixed-rate notes, and no borrowings outstanding under our revolving credit facility. As offacility is scheduled to mature in December 31, 2016, before reduction of debt issuance costs, we had $602.92023 and the $75 million of variable-rate term debt, $950.0 million of outstanding fixed-rate notes, and no borrowings outstanding under
our revolving credit facility.facility is scheduled to mature in April 2022. The Third Amended 2017 Credit Agreement provides for the issuance of documentary and standby letters of credit. After letters of credit, which totaled $15.9 million as of December 31, 20172020 and $15.4 million as of December 31, 2016,2019, we had available borrowings under our revolving credit facility of $259.1$359.1 million as of December 31, 2020 and $239.1$259.6 million respectively.as of December 31, 2019. Our letters of credit are primarily in place to backstop insurance arrangements. The maximum outstanding balance under our revolving credit facility was $110.0$140.0 million during the year ended December 31, 20172020 and $101.0$150.0 million during the year ended December 31, 2016.2019.
As of December 31, 20172020 and as of December 31, 2016,2019, we had four interest rate swap agreements that effectively convertmatured on December 31, 2020 and converted $500 million of variable-rate debt to a fixed rate. These swaps, which mature onrate of 4.39%. We have four additional interest rate swap agreements that convert the same notional amount of variable-rate debt to a fixed rate of 4.63% for the period December 31, 2020 and fix LIBOR at a weighted averagethrough December 31, 2023. None of our interest rate of 2.64%,swap agreements were de-designated duringdesignated as cash flow hedges in the first quarter of 2016.periods presented. As of December 31, 2017,2020, the fair market value of our swap portfolio was a liability of $8.7$39.1 million compared with a liability of $17.7$23.2 million as of December 31, 2016. In both periods presented,2019. As of December 31, 2020, the total fair value of our swap portfolio was classified as long-term and recorded in "Derivative Liability". Additional detail regarding within the consolidated balance sheet. As of December 31, 2019, $5.1 million of the fair value of our swap arrangements is providedportfolio was classified as current and recorded in Note 6 to our Consolidated Financial Statements."Other accrued liabilities", and $18.1 million was classified as long-term and recorded in "Derivative Liability" within the consolidated balance sheet.
The Third Amended 2017 Credit Agreement includes (i) a ConsolidatedSenior Secured Leverage Ratio of 4.50x Total First Lien Senior Secured Debt-to-Consolidated EBITDA starting with the first quarter of 2022, which if breachedwill step down to 4.00x in the second quarter of 2023 and which will step down further to 3.75x in the third quarter of 2023, with the covenant calculations for the first, second, and third quarters in 2022 to include Consolidated EBITDA from the second, third and fourth quarters of the fiscal year ended December 31, 2019 in lieu of the Consolidated EBITDA for the corresponding quarters in 2021 ("Deemed EBITDA Quarters"), (ii) a requirement that we maintain a minimum liquidity level of at least $125 million, tested at all times, until the earlier of December 31, 2022 or the termination of the Additional Restrictions Period (which generally includes the period from the effective date of the Second Amendment until the delivery of the compliance certificate for the fourth quarter of 2022), (iii) a suspension of certain restricted payments, including partnership distributions, under the Third Amended 2017 Credit Agreement until the termination of the Additional Restrictions Period. We may terminate the Additional Restrictions Period prior to December 31, 2022 by achieving compliance with the Senior Secured Leverage Ratio covenant as of the end of a fiscal quarter without giving effect to Deemed EBITDA Quarters for any reason and not cured could result in an event of default. The ratio is set at a maximum of 5.50x Consolidated Total Debt-to-Consolidated EBITDA.fiscal quarter. As of December 31, 2017,2020, we were in compliance with thisthe applicable financial condition covenant and all other covenants under the Third Amended 2017 Credit Agreement.
Our long-term debtfixed rate note agreements include Restricted Payment provisions.provisions, which could limit our ability to pay partnership distributions. Pursuant to the terms of the indenture governing the June 20142024 senior notes, which includes the most restrictive of these Restricted Payments provisions under our fixed rate note agreements, if our pro forma Total-Indebtedness-to-Consolidated-Cash-Flow Ratio is greater than 5.00x, we can still make Restricted Payments of $60 million annually so long as no default or event of default has occurred and is continuing; and we can make additional Restricted Payments ifcontinuing. If our pro forma Total-Indebtedness-to-Consolidated-Cash-Flow Ratio is less than or equal to 5.00x.5.00x, we can make Restricted Payments up to our Restricted Payment pool. Our pro forma Total-Indebtedness-to-Consolidated-Cash-Flow Ratio was greater than 5.00x as of December 31, 2020.
As market conditions warrant, we may from time to time repurchase our outstanding debt securities, issued by the Partnership, in privately negotiated or open market transactions, by tender offer, exchange offer or otherwise.
Financial and Non-Financial Disclosure About Issuers and Guarantors of our Registered Senior Notes
As discussed within the Long-Term Debt footnote at Note 8, we have issued five tranches of fixed rate senior notes: the 2024, 2025, 2027, 2028 and 2029 senior notes (“senior notes”). The 2024, 2027 and 2029 senior notes (the “registered senior notes”) have been registered under the Securities Act of 1933. The 2025 and 2028 senior notes were sold in a private placement in reliance on exemptions from registration under the Securities Act of 1933. Cedar Fair, L.P., Canada's Wonderland Company ("Cedar Canada"), and Magnum Management Corporation ("Magnum") are the co-issuers of the 2024 senior notes. Cedar Fair, L.P., Cedar Canada, Magnum, and Millennium Operations LLC (“Millennium”) are the co-issuers of the 2027 and 2029 senior notes. Our senior notes have been irrevocably and unconditionally guaranteed, on a joint and several basis, by each 100% owned subsidiary of Cedar Fair (other than the co-issuers). There are no non-guarantor subsidiaries. A full listing of the issuers and guarantors of our registered senior notes can be found within Exhibit 22, and additional information with respect to our registered senior notes and the related guarantees follows.
The 2024, 2027 and 2029 senior notes each rank equally in right of payment with all of each issuer’s existing and future senior unsecured debt, including the other registered senior notes and the 2028 senior notes. However, the 2024, 2027 and 2029 senior notes are ranked effectively junior to our secured debt under the Third Amended 2017 Credit Agreement and the 2025 senior notes to the extent of the value of the assets securing such debt.
In accordance withthe event that the co-issuers (except for Cedar Fair, L.P.) or any subsidiary guarantor is released from its obligations under our debt provisions, on November 2, 2017, we announced the declaration of a distribution of $0.89 per limited partner unit, which was paid on December 15, 2017.
Existingsenior secured credit facilities (or the Third Amended 2017 Credit Agreement), such entity will also be released from its obligations under the registered senior notes. In addition, the co-issuers (except for Cedar Fair, L.P.) or any subsidiary guarantor can be released from its obligations under the 2024, 2027 and cash flows from operations2029 senior notes under the following circumstances, assuming the associated transactions are expectedin compliance with the applicable provisions of the indentures governing the 2024, 2027 and 2029 senior notes: i) any direct or indirect sale, conveyance or other disposition of the capital stock of such entity following which the entity ceases to be sufficienta direct or indirect subsidiary of Cedar Fair or a sale or disposition of all or substantially all of the assets of such entity; ii) if such entity is dissolved or liquidated; iii) if we designate such entity as an Unrestricted Subsidiary; iv) upon transfer of such entity in a qualifying transaction if following such transfer the entity ceases to meet working capital needs, debt service, partnership distributionsbe a direct or indirect Restricted Subsidiary of Cedar Fair or is a Restricted Subsidiary that is not a guarantor under any credit facility; or v) in the case of the subsidiary guarantors, upon a discharge of the indenture or upon any legal defeasance or covenant defeasance of the indenture.
The obligations of each guarantor are limited to the extent necessary to prevent such guarantee from constituting a fraudulent conveyance or fraudulent transfer under applicable law. This provision may not, however, protect a guarantee from being voided under fraudulent transfer law, or may reduce the applicable guarantor’s obligation to an amount that effectively makes its guarantee worthless. If a guarantee were rendered voidable, it could be subordinated by a court to all other indebtedness of the guarantor, and planned capital expenditures fordepending on the foreseeable future.amount of such indebtedness, could reduce the guarantee to zero. Each guarantor that makes a payment or distribution under a guarantee is entitled to a pro rata contribution from each other guarantor based on the respective net assets of the guarantors.
Contractual Obligations
The following table summarizes certain obligations (on an undiscounted basis)tables provide summarized financial information for each of our co-issuers and guarantors of the 2024, 2027 and 2029 senior notes. We have presented each entity that is a co-issuer of any series of the registered senior notes separately. The subsidiaries that guarantee the 2027 and 2029 senior notes are presented on a combined basis with intercompany balances and transactions between entities in such guarantor subsidiary group eliminated. Intercompany balances and transactions between the co-issuers and guarantor subsidiaries have not been eliminated. The subsidiaries that guarantee the 2024 senior notes include the guarantor subsidiary group, as well as Millennium. Millennium is a co-issuer under the 2027 and 2029 senior notes and a guarantor under the 2024 senior notes. There are no non-guarantor subsidiaries.
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Summarized Financial Information
(In thousands) | | Cedar Fair L.P. (Parent) | | Magnum
(Co-Issuer Subsidiary) | | Cedar Canada
(Co-Issuer Subsidiary) | | Millennium
(Co-Issuer 2027 & 2029
Guarantor 2024) | | Guarantor Subsidiaries (1) | | | | |
| Balance as of December 31, 2020 | | | | | | | | | | | | |
| Current Assets | | $ | 421 | | | $ | 33,985 | | | $ | 44,465 | | | $ | 464,779 | | | $ | 1,033,489 | | | | | |
| Non-Current Assets | | (31,953) | | | 994,682 | | | 528,281 | | | 2,311,502 | | | 1,833,932 | | | | | |
| Current Liabilities | | 488,799 | | | 573,244 | | | 18,235 | | | 200,107 | | | 42,224 | | | | | |
| Non-Current Liabilities | | 146,106 | | | 44,778 | | | 461,903 | | | 2,370,939 | | | 93,430 | | | | | |
| Balance as of December 31, 2019 | | | | | | | | | | | | |
| Current Assets | | $ | 182 | | | $ | 2,568 | | | $ | 104,993 | | | $ | 198,816 | | | $ | 1,039,345 | | | | | |
| Non-Current Assets | | 641,742 | | | 1,381,226 | | | 551,471 | | | 2,344,117 | | | 2,071,112 | | | | | |
| Current Liabilities | | 651,890 | | | 454,376 | | | 22,974 | | | 183,101 | | | 63,520 | | | | | |
| Non-Current Liabilities | | — | | | 144,468 | | | 463,527 | | | 1,583,782 | | | 99,504 | | | | | |
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Summarized Statement of Operations
(In thousands) | | Cedar Fair L.P. (Parent) | | Magnum
(Co-Issuer Subsidiary) | | Cedar Canada
(Co-Issuer Subsidiary) | | Millennium
(Co-Issuer 2027 & 2029
Guarantor 2024) | | Guarantor Subsidiaries
(1) | | | | |
| Year Ended December 31, 2020 | | | | | | | | | | | | |
| Net revenues | | $ | — | | | $ | 102 | | | $ | 440 | | | $ | 510,077 | | | $ | 152,257 | | | | | |
| Operating (loss) income | | (199,250) | | | (323,293) | | | (37,655) | | | 109,688 | | | (121,498) | | | | | |
| Net loss | | (590,243) | | | (361,061) | | | (54,046) | | | — | | | (149,903) | | | | | |
| | | | | | | | | | | | | | |
| Year Ended December 31, 2019 | | | | | | | | | | | | |
| Net revenues | | $ | 96,986 | | | $ | 369,633 | | | $ | 149,792 | | | $ | 1,092,584 | | | $ | 398,922 | | | | | |
| Operating income (loss) | | 93,795 | | | (67,845) | | | 54,294 | | | 68,923 | | | 160,272 | | | | | |
| Net income | | 172,365 | | | 119,541 | | | 72,209 | | | — | | | 169,281 | | | | | |
(1)With respect to the 2024 senior notes, if the financial information presented for Millennium was combined with that of the other guarantor subsidiaries that have been presented on a combined basis, the following additional intercompany balances and transactions between Millennium and such other guarantor entities would be eliminated: Non-Current Assets - $2,201.8 million as of December 31, 2017:
|
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| | Payments Due by Period |
| (In thousands) | Total | | 2018 | | 2019-2020 | | 2021-2022 | | 2023 - Thereafter |
| |
| |
| | | | | | |
Long-term debt (1) | $ | 2,313,385 |
| | $ | 92,722 |
| | $ | 197,843 |
| | $ | 172,156 |
| | $ | 1,850,664 |
|
Capital expenditures (2) | 63,296 |
| | 40,716 |
| | 22,580 |
| | — |
| | — |
|
Lease & other obligations (3) | 161,296 |
| | 24,349 |
| | 19,672 |
| | 17,279 |
| | 99,996 |
|
| Total | $ | 2,537,977 |
| | $ | 157,787 |
| | $ | 240,095 |
| | $ | 189,435 |
| | $ | 1,950,660 |
|
| |
(1) | Represents maturities and mandatory prepayments on long-term debt obligations, fixed interest on senior notes, variable interest on term debt assuming LIBOR interest rates as of December 31, 2017, and the impact of our various derivative contracts. See Note 5 to our Consolidated Financial Statements for further information. |
| |
(2) | Represents contractual obligations in place at year-end for the purchase of new rides, facilities, and attractions. Obligations not denominated in U.S. dollars have been converted based on the currency exchange rates as of December 31, 2017. |
| |
(3) | Represents contractual lease and purchase obligations in place at year-end. |
Off-Balance Sheet Arrangements
We had $15.92020 and $2,141.8 million of letters of credit, which are primarily in place to backstop insurance arrangements, outstanding on our revolving credit facility as of December 31, 2017. We have no2019; and Net revenues - $130.3 million as of December 31, 2020 and $121.1 million as of December 31, 2019. Combined amounts for all guarantors of the 2024 senior notes for all other significant off-balance sheet financing arrangements.line items within the table would be computed by adding the amounts in the Millennium and Guarantor Subsidiaries columns.
Quantitative and Qualitative Disclosures about Market Risk
We are exposed to market risks from fluctuations in interest rates, and to a lesser extent on currency exchange rates on our operations in Canada, and from time to time, on imported rides and equipment. 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.
We manage interest rate risk through the use ofusing a combination of fixed-rate long-term debt, interest rate swaps that fix a portion of our variable-rate long-term debt, and variable-rate borrowings under our revolving credit facility. Translation exposures with regard to our Canadian operations are not hedged.
For derivative instruments thatNone of our interest rate swap agreements 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.hedging instruments. Changes in fair value of derivative instruments that do not qualify as effective hedging activitiesfor hedge accounting or were de-designated are reported as "Net effect of swaps" in the consolidated statementstatements of operations. Additionally, the "Otheroperations and comprehensive income (loss)" related to interest rate swaps that become ineffective is amortized over the remaining life of the interest rate swap and reported as a component of "Net effect of swaps" in the consolidated statement of operations. income.
As of December 31, 2017,2020, on an adjusted basis after giving effect to the impact of interest rate swap agreements, and before reduction for debt issuance costs, $1,450.0 millionall of our outstanding long-term debt represented fixed-rate debt and $235.0 million represented variable-rate debt.except for revolving credit borrowings. Assuming an average balance on our revolving credit borrowings of approximately $7.3$14.6 million, a hypothetical 100 bps increase in 30-day LIBOR on our variable-rate debt (not(including term debt and not considering the impact of our interest rate swaps) would lead to an increase of approximately $7.4$2.8 million in annual cash interest costs.costs over the next twelve months.
Assuming a hypothetical 100 bps increase in 30-day LIBOR, the amount of net cash interest paid on our derivative portfolio would decrease by $5.0$2.6 million over the next year.twelve months.
A uniform 10% strengthening of the U.S. dollar relative to the Canadian dollar would result in a $3.5$2.9 million decrease in annual operating income.loss for the year ended December 31, 2020.
Impact of Inflation
Substantial increases in costs and expenses could impact our operating results to the extent such increases could 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 are consistent with federal and state minimum wage laws. 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 Act of 1933 and Section 21E of the Securities 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. We do not undertake any obligation to publicly update or revise any forward-looking statements to reflect future events, information or circumstances that arise after the filing date of this document.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
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" of this Report is incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
Quarterly operating results for 2017 and 2016 are presented in the table below:CEDAR FAIR, L.P.
FINANCIAL STATEMENTS INDEX |
| | | | | | | | | | | | | | | | | | | | |
Unaudited (In thousands, except per unit amounts) | | Net revenues | | Operating income (loss) | | Net income (loss) | | Net income (loss) per limited partner unit-basic | | Net income (loss) per limited partner unit-diluted |
| 2017 | | | | | | | | | | |
| 1st Quarter | | $ | 48,318 |
| | $ | (75,961 | ) | | $ | (64,754 | ) | | $ | (1.16 | ) | | $ | (1.16 | ) |
| 2nd Quarter | | 392,798 |
| | 95,313 |
| | 31,368 |
| | 0.56 |
| | 0.55 |
|
| 3rd Quarter | | 652,689 |
| | 256,139 |
| | 191,315 |
| | 3.41 |
| | 3.38 |
|
4th Quarter (1) | | 228,162 |
| | 19,720 |
| | 57,547 |
| | 1.03 |
| | 1.01 |
|
| 2017 Total | | $ | 1,321,967 |
| | $ | 295,211 |
| | $ | 215,476 |
| | 3.84 |
| | 3.79 |
|
| | | | | | | | | | | |
| 2016 | | | | | | | | | | |
| 1st Quarter | | $ | 58,438 |
| | $ | (65,818 | ) | | $ | (48,486 | ) | | $ | (0.87 | ) | | $ | (0.87 | ) |
| 2nd Quarter | | 388,034 |
| | 94,858 |
| | 57,983 |
| | 1.04 |
| | 1.03 |
|
| 3rd Quarter | | 650,283 |
| | 267,795 |
| | 174,987 |
| | 3.13 |
| | 3.10 |
|
| 4th Quarter | | 191,966 |
| | 20,104 |
| | (6,796 | ) | | (0.12 | ) | | (0.12 | ) |
| 2016 Total | | $ | 1,288,721 |
| | $ | 316,939 |
| | $ | 177,688 |
| | 3.18 |
| | 3.14 |
|
| | | | | |
(1) | The fourth quarter of 2017 includes a $62.7 million benefit for taxes compared with a $6.1 million provision for taxes for the fourth quarter of 2016 primarily due to a $55.3 million tax benefit recorded in 2017 related to the Tax Cuts and Jobs Act (refer to Note 9). |
| |
Note: | To assure that our highly seasonal operations will not result in misleading comparisons |
| |
| |
| |
| |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Unitholders and the Board of Directors and the Unitholders of
Cedar Fair, L.P.
Sandusky, Ohio
OpinionOpinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated balance sheets of Cedar Fair, L.P. and subsidiaries (the "Partnership") as of December 31, 20172020 and 2016,2019, the related consolidated statements of operations and comprehensive (loss) income, partners' equity (deficit), and cash flows for each of the three years in the period ended December 31, 2017,2020, and the related notes (collectively referred to as the “financial statements”). We also have audited the Partnership's internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Partnership as of December 31, 20172020 and 2016,2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2017,2020, in conformity with accounting principles generally accepted in the United StatedStates of America.
We have also audited, Also, in accordance withour opinion, the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Partnership'sPartnership maintained, in all material respects, effective internal control over financial reporting as of December 31, 2017,2020, based on the criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 23, 2018 expressed an unqualified opinion on theCOSO.
Basis for Opinions
The Partnership's management is responsible for these financial statements, for maintaining effective internal control over financial reporting.
Basisreporting, and for Opinion
These financial statements are the responsibilityits assessment of the Partnership's management.effectiveness of internal control over financial reporting, included in the accompanying Management's Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on these financial statements and an opinion on the Partnership's internal control over financial reporting based on our audits. We are a public accounting firm registered with the PCAOBPublic Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Partnership in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the auditaudits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. fraud, and whether effective internal control over financial reporting was maintained in all material respects.
Our audits of the financial statements included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures thatto respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinion.opinions.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed 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 its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Schlitterbahn Goodwill Valuation - Refer to Notes 3, 4 and 7 to the consolidated financial statements
Critical Audit Matter Description
The Partnership’s evaluation of goodwill for impairment involves the comparison of the fair value of each reporting unit to its carrying value. The Partnership determines the fair value of its reporting units using the discounted cash flow model and the market approach. The determination of the fair value using the discounted cash flow model requires management to make significant assumptions related to long-term growth rates and discount rates. The determination of the fair value using the market approach requires management to make significant assumptions related to the selection of comparable guideline public companies and the valuation multiples to determine the fair value. The goodwill balance was $267 million as of December 31, 2020, of which $93 million was allocated to the Schlitterbahn Waterparks & Resort Reporting Unit (“Schlitterbahn”). During the current year two triggering events were identified and the fair value of the Schlitterbahn reporting unit did not exceed its carrying value resulting in impairment charges of $74 million and $11 million for the quarters ended March 29, 2020 and September 27, 2020, respectively. The fair value of the Schlitterbahn reporting unit equaled its carrying value as of the measurement date of September 28, 2020 and at December 31, 2020 there was no triggering event, therefore, no additional impairment was recognized.
Given the significant estimates and assumptions management makes to estimate the fair value of Schlitterbahn and the sensitivity of Schlitterbahn’s operations to changes in demand, performing audit procedures to evaluate the reasonableness of management’s estimates and assumptions required a high degree of auditor judgment and an increased extent of effort, including the need to involve our fair value specialists.
How the Critical Audit Matter was Addressed in the Audit
Our audit procedures related to the selection of the long-term growth rate and discount rate for the Schlitterbahn reporting unit and the selection of comparable guideline public companies and the valuation multiples. Those procedures included the following, among others:
•We tested the effectiveness of controls over management’s goodwill impairment evaluation, including those over the determination of the fair value of Schlitterbahn, such as controls related to management’s selection of the discount rate, long-term growth rate, comparable guideline public companies and valuation multiples.
•We evaluated the reasonableness of management’s revenue and operating margin forecasts by comparing the forecasts to (1) internal communications to management and the Board of Directors and (2) information included in the Partnership’s press releases as well as in analyst and industry reports for the Partnership and companies in its peer group.
•We considered the impact of changes in the regulatory and operating environment on management’s assumptions.
•With the assistance of our fair value specialists, we evaluated the long-term growth rate and discount rate, including testing the underlying source information and the mathematical accuracy of the calculations, and developing ranges of independent estimates and comparing those to the long-term growth and discount rates selected by management.
•With the assistance of our fair value specialists, we evaluated the selected guideline public companies and valuation multiples, including testing the underlying source information and mathematical accuracy of the calculations, and comparing the multiples selected by management to its comparable guideline public companies.
/s/ DELOITTE & TOUCHE LLP
Cleveland, Ohio
February 23, 201819, 2021
We have served as the Partnership’s auditor since 2004.
CEDAR FAIR, L.P.
CONSOLIDATED BALANCE SHEETS
(In thousands)
| | | | | | | | | | | | | | |
| | | December 31, 2020 | | December 31, 2019 |
| ASSETS | | | | |
| Current Assets: | | | | |
| Cash and cash equivalents | | $ | 376,736 | | | $ | 182,252 | |
| Receivables | | 34,445 | | | 63,106 | |
| Inventories | | 47,479 | | | 32,902 | |
| Current income tax receivable | | 69,104 | | | 0 | |
| Other current assets | | 26,747 | | | 15,921 | |
| | 554,511 | | | 294,181 | |
| Property and Equipment: | | | | |
| Land | | 442,708 | | | 441,038 | |
| Land improvements | | 467,176 | | | 460,534 | |
| Buildings | | 849,404 | | | 816,780 | |
| Rides and equipment | | 1,962,324 | | | 1,907,544 | |
| Construction in progress | | 75,507 | | | 70,731 | |
| | 3,797,119 | | | 3,696,627 | |
| Less accumulated depreciation | | (1,995,138) | | | (1,855,019) | |
| | 1,801,981 | | | 1,841,608 | |
| Goodwill | | 266,961 | | | 359,654 | |
| Other Intangibles, net | | 50,288 | | | 59,899 | |
| Right-of-Use Asset | | 13,527 | | | 14,324 | |
| Other Assets | | 6,144 | | | 11,479 | |
| | $ | 2,693,412 | | | $ | 2,581,145 | |
| LIABILITIES AND PARTNERS’ EQUITY | | | | |
| Current Liabilities: | | | | |
| Current maturities of long-term debt | | $ | 0 | | | $ | 7,500 | |
| Accounts payable | | 14,272 | | | 29,344 | |
| Deferred revenue | | 183,354 | | | 151,377 | |
| Accrued interest | | 33,718 | | | 21,442 | |
| Accrued taxes | | 10,775 | | | 39,237 | |
| Accrued salaries, wages and benefits | | 24,975 | | | 29,549 | |
| Self-insurance reserves | | 22,322 | | | 24,665 | |
| Other accrued liabilities | | 10,565 | | | 21,024 | |
| | 299,981 | | | 324,138 | |
| Deferred Tax Liability | | 39,595 | | | 82,046 | |
| Derivative Liability | | 39,086 | | | 18,108 | |
| Lease Liability | | 10,483 | | | 10,600 | |
| Other Liabilities | | 16,460 | | | 10,336 | |
| Long-Term Debt: | | | | |
| | | | |
| Term debt | | 255,025 | | | 714,150 | |
| Notes | | 2,699,219 | | | 1,431,733 | |
| | 2,954,244 | | | 2,145,883 | |
| Partners’ Deficit: | | | | |
| Special L.P. interests | | 5,290 | | | 5,290 | |
| General partner | | (7) | | | (1) | |
| Limited partners, 56,706 and 56,666 units outstanding as of December 31, 2020 and December 31, 2019, respectively | | (674,319) | | | (25,001) | |
| Accumulated other comprehensive income | | 2,599 | | | 9,746 | |
| | (666,437) | | | (9,966) | |
| | $ | 2,693,412 | | | $ | 2,581,145 | |
|
| | | | | | | | |
| | | 12/31/2017 | | 12/31/2016 |
| ASSETS | | | | |
| Current Assets: | | | | |
| Cash and cash equivalents | | $ | 166,245 |
| | $ | 122,716 |
|
| Receivables | | 37,722 |
| | 35,414 |
|
| Inventories | | 29,719 |
| | 26,276 |
|
| Other current assets | | 13,297 |
| | 11,270 |
|
| | | 246,983 |
| | 195,676 |
|
| Property and Equipment: | | | | |
| Land | | 271,021 |
| | 265,961 |
|
| Land improvements | | 421,593 |
| | 402,013 |
|
| Buildings | | 693,899 |
| | 663,982 |
|
| Rides and equipment | | 1,740,653 |
| | 1,643,770 |
|
| Construction in progress | | 72,847 |
| | 58,299 |
|
| | | 3,200,013 |
| | 3,034,025 |
|
| Less accumulated depreciation | | (1,614,241 | ) | | (1,494,805 | ) |
| | | 1,585,772 |
| | 1,539,220 |
|
| Goodwill | | 183,830 |
| | 179,660 |
|
| Other Intangibles, net | | 38,064 |
| | 37,837 |
|
| Other Assets | | 9,510 |
| | 20,788 |
|
| | | $ | 2,064,159 |
| | $ | 1,973,181 |
|
| LIABILITIES AND PARTNERS’ EQUITY | | | | |
| Current Liabilities: | | | | |
| Current maturities of long-term debt | | $ | — |
| | $ | 2,775 |
|
| Accounts payable | | 24,621 |
| | 20,851 |
|
| Deferred revenue | | 86,131 |
| | 82,765 |
|
| Accrued interest | | 8,124 |
| | 9,986 |
|
| Accrued taxes | | 43,975 |
| | 58,958 |
|
| Accrued salaries, wages and benefits | | 18,740 |
| | 30,358 |
|
| Self-insurance reserves | | 25,107 |
| | 27,063 |
|
| Other accrued liabilities | | 18,796 |
| | 9,927 |
|
| | | 225,494 |
| | 242,683 |
|
| Deferred Tax Liability | | 74,798 |
| | 104,885 |
|
| Derivative Liability | | 8,722 |
| | 17,721 |
|
| Other Liabilities | | 11,684 |
| | 13,162 |
|
| Long-Term Debt: | | | | |
| Term debt | | 723,788 |
| | 594,228 |
|
| Notes | | 936,727 |
| | 939,983 |
|
| | | 1,660,515 |
| | 1,534,211 |
|
| Commitments and Contingencies (Note 10) | |
| |
|
| Partners’ Equity: | | | | |
| Special L.P. interests | | 5,290 |
| | 5,290 |
|
| General partner | | — |
| | — |
|
| Limited partners, 56,359 and 56,201 units outstanding at December 31, 2017 and December 31, 2016, respectively | | 81,589 |
| | 52,288 |
|
| Accumulated other comprehensive income (loss) | | (3,933 | ) | | 2,941 |
|
| | | 82,946 |
| | 60,519 |
|
| | | $ | 2,064,159 |
| | $ | 1,973,181 |
|
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
CEDAR FAIR, L.P.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME
(In thousands, except per unit amounts)
| | | | | | | | | | | | | | | | | | | | |
| | Years Ended December 31, |
| | 2020 | | 2019 | | 2018 |
| Net revenues: | | | | | | |
| Admissions | | $ | 67,852 | | | $ | 795,271 | | | $ | 737,676 | |
| Food, merchandise and games | | 76,921 | | | 473,499 | | | 433,315 | |
| Accommodations, extra-charge products and other | | 36,782 | | | 206,155 | | | 177,539 | |
| | 181,555 | | | 1,474,925 | | | 1,348,530 | |
| Costs and expenses: | | | | | | |
| Cost of food, merchandise and games revenues | | 27,991 | | | 126,264 | | | 114,733 | |
| Operating expenses | | 347,782 | | | 642,200 | | | 584,350 | |
| Selling, general and administrative | | 108,118 | | | 222,252 | | | 193,333 | |
| Depreciation and amortization | | 157,549 | | | 170,456 | | | 155,529 | |
| Loss on impairment / retirement of fixed assets, net | | 8,135 | | | 4,931 | | | 10,178 | |
| Loss on impairment of goodwill and other intangibles | | 103,999 | | | 0 | | | 0 | |
| Gain on sale of investment | | (11) | | | (617) | | | (112) | |
| | 753,563 | | | 1,165,486 | | | 1,058,011 | |
| Operating (loss) income | | (572,008) | | | 309,439 | | | 290,519 | |
| Interest expense | | 150,669 | | | 100,364 | | | 85,687 | |
| Net effect of swaps | | 15,849 | | | 16,532 | | | 7,442 | |
| Loss on early debt extinguishment | | 2,262 | | | 0 | | | 1,073 | |
| (Gain) loss on foreign currency | | (12,183) | | | (21,107) | | | 36,254 | |
| Other income | | (447) | | | (1,504) | | | (1,333) | |
| (Loss) income before taxes | | (728,158) | | | 215,154 | | | 161,396 | |
| (Benefit) provision for taxes | | (137,915) | | | 42,789 | | | 34,743 | |
| Net (loss) income | | (590,243) | | | 172,365 | | | 126,653 | |
| Net (loss) income allocated to general partner | | (6) | | | 2 | | | 1 | |
| Net (loss) income allocated to limited partners | | $ | (590,237) | | | $ | 172,363 | | | $ | 126,652 | |
| | | | | | |
| Net (loss) income | | $ | (590,243) | | | $ | 172,365 | | | $ | 126,653 | |
| Other comprehensive (loss) income, (net of tax): | | | | | | |
| Foreign currency translation | | (7,147) | | | (11,536) | | | 17,240 | |
| Cash flow hedging derivative activity | | 0 | | | 0 | | | 8,366 | |
| Other comprehensive (loss) income, (net of tax) | | (7,147) | | | (11,536) | | | 25,606 | |
| Total comprehensive (loss) income | | $ | (597,390) | | | $ | 160,829 | | | $ | 152,259 | |
| Basic (loss) income per limited partner unit: | | | | | | |
| Weighted average limited partner units outstanding | | 56,476 | | | 56,349 | | | 56,212 | |
| Net (loss) income per limited partner unit | | $ | (10.45) | | | $ | 3.06 | | | $ | 2.25 | |
| Diluted (loss) income per limited partner unit: | | | | | | |
| Weighted average limited partner units outstanding | | 56,476 | | | 56,921 | | | 56,860 | |
| Net (loss) income per limited partner unit | | $ | (10.45) | | | $ | 3.03 | | | $ | 2.23 | |
|
| | | | | | | | | | | | |
| | | Years Ended December 31, |
| | | 2017 | | 2016 | | 2015 |
| Net revenues: | | | | | | |
| Admissions | | $ | 734,060 |
| | $ | 716,189 |
| | $ | 687,442 |
|
| Food, merchandise and games | | 422,469 |
| | 407,673 |
| | 398,019 |
|
| Accommodations, extra-charge products and other | | 165,438 |
| | 164,859 |
| | 150,317 |
|
| | | 1,321,967 |
| | 1,288,721 |
| | 1,235,778 |
|
| Costs and expenses: | |
| | | | |
| Cost of food, merchandise and games revenues | | 110,811 |
| | 106,608 |
| | 104,827 |
|
| Operating expenses | | 558,102 |
| | 538,881 |
| | 517,626 |
|
| Selling, general and administrative | | 193,770 |
| | 181,830 |
| | 171,490 |
|
| Depreciation and amortization | | 153,222 |
| | 131,876 |
| | 125,631 |
|
| Loss on impairment / retirement of fixed assets, net | | 12,728 |
| | 12,587 |
| | 20,873 |
|
| Gain on sale of investment | | (1,877 | ) | | — |
| | — |
|
| | | 1,026,756 |
| | 971,782 |
| | 940,447 |
|
| Operating income | | 295,211 |
| | 316,939 |
| | 295,331 |
|
| Interest expense | | 85,603 |
| | 83,863 |
| | 86,849 |
|
| Net effect of swaps | | (45 | ) | | (1,197 | ) | | (6,884 | ) |
| Loss on early debt extinguishment | | 23,121 |
| | — |
| | — |
|
| (Gain) loss on foreign currency | | (29,086 | ) | | (14,656 | ) | | 81,016 |
|
| Other income | | (970 | ) | | (177 | ) | | (64 | ) |
| Income before taxes | | 216,588 |
| | 249,106 |
| | 134,414 |
|
| Provision for taxes | | 1,112 |
| | 71,418 |
| | 22,192 |
|
| Net income | | 215,476 |
| | 177,688 |
| | 112,222 |
|
| Net income allocated to general partner | | 2 |
| | 2 |
| | 1 |
|
| Net income allocated to limited partners | | $ | 215,474 |
| | $ | 177,686 |
| | $ | 112,221 |
|
| | | | | | | |
| Net income | | $ | 215,476 |
| | $ | 177,688 |
| | $ | 112,222 |
|
| Other comprehensive income (loss), (net of tax): | | | | | | |
| Foreign currency translation adjustment | | (14,849 | ) | | (3,700 | ) | | 16,655 |
|
| Unrealized gain (loss) on cash flow hedging derivatives | | 7,975 |
| | 3,350 |
| | (2,734 | ) |
| Other comprehensive income (loss), (net of tax) | | (6,874 | ) | | (350 | ) | | 13,921 |
|
| Total comprehensive income | | $ | 208,602 |
| | $ | 177,338 |
| | $ | 126,143 |
|
| Basic earnings per limited partner unit: | | | | | | |
| Weighted average limited partner units outstanding | | 56,061 |
| | 55,933 |
| | 55,745 |
|
| Net income per limited partner unit | | $ | 3.84 |
| | $ | 3.18 |
| | $ | 2.01 |
|
| Diluted earnings per limited partner unit: | | | | | | |
| Weighted average limited partner units outstanding | | 56,800 |
| | 56,562 |
| | 56,362 |
|
| Net income per limited partner unit | | $ | 3.79 |
| | $ | 3.14 |
| | $ | 1.99 |
|
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
CEDAR FAIR, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWSPARTNERS’ EQUITY (DEFICIT)
(In thousands)thousands, except per unit amounts) |
| | | | | | | | | | | | |
| | | Years Ended December 31, |
| | | 2017 | | 2016 | | 2015 |
| CASH FLOWS FROM OPERATING ACTIVITIES | | | | | | |
| Net income | | $ | 215,476 |
| | $ | 177,688 |
| | $ | 112,222 |
|
| Adjustments to reconcile net income to net cash from operating activities: | | | | | | |
| Depreciation and amortization | | 153,222 |
| | 131,876 |
| | 125,631 |
|
| Loss on early debt extinguishment | | 23,121 |
| | — |
| | — |
|
| Non-cash foreign currency (gain) loss on debt | | (30,912 | ) | | (14,771 | ) | | 81,608 |
|
| Non-cash equity based compensation expense | | 13,434 |
| | 11,878 |
| | 10,998 |
|
| Non-cash deferred income tax expense (benefit) | | (35,770 | ) | | 10,662 |
| | (16,056 | ) |
| Other non-cash expenses | | 13,516 |
| | 13,300 |
| | 15,321 |
|
| Change in operating assets and liabilities: | | | | | | |
| (Increase) decrease in receivables | | (2,195 | ) | | (5,887 | ) | | (2,276 | ) |
| (Increase) decrease in inventories | | (3,332 | ) | | (1,208 | ) | | 607 |
|
| (Increase) decrease in other assets | | (40 | ) | | (53 | ) | | (875 | ) |
| Increase (decrease) in accounts payable | | 1,906 |
| | (407 | ) | | 3,243 |
|
| Increase (decrease) in deferred revenue | | 2,964 |
| | 13,099 |
| | 9,149 |
|
| Increase (decrease) in accrued interest | | (2,002 | ) | | 13 |
| | 359 |
|
| Increase (decrease) in accrued taxes | | (15,398 | ) | | 16,888 |
| | 20,965 |
|
| Increase (decrease) in accrued salaries and wages | | (8,004 | ) | | 5,804 |
| | (6,997 | ) |
| Increase (decrease) in self-insurance reserves | | (2,055 | ) | | 3,026 |
| | 881 |
|
| Increase (decrease) in other liabilities | | 7,248 |
| | (3,561 | ) | | (8,830 | ) |
| Net cash from operating activities | | 331,179 |
| | 358,347 |
| | 345,950 |
|
| CASH FLOWS FOR INVESTING ACTIVITIES | | | | | | |
| Capital expenditures | | $ | (188,084 | ) | | $ | (160,656 | ) | | $ | (175,865 | ) |
| Sale (purchase) of preferred equity investment | | 3,281 |
| | — |
| | (2,000 | ) |
| Purchase of identifiable intangible assets | | (66 | ) | | (577 | ) | | — |
|
| Net cash for investing activities | | (184,869 | ) | | (161,233 | ) | | (177,865 | ) |
| CASH FLOWS FOR FINANCING ACTIVITIES | | | | | | |
| Term debt borrowings | | 750,000 |
| | — |
| | — |
|
| Note borrowings | | 500,000 |
| | — |
| | — |
|
| Term debt payments | | (617,850 | ) | | (6,000 | ) | | — |
|
| Note payments, including amounts paid for early termination | | (515,458 | ) | | — |
| | — |
|
| Distributions paid to partners | | (194,756 | ) | | (187,182 | ) | | (172,614 | ) |
| Payment of debt issuance costs | | (19,809 | ) | | — |
| | — |
|
| Exercise of limited partnership unit options | | 65 |
| | — |
| | — |
|
| Tax effect of units involved in treasury unit transactions | | (4,440 | ) | | (422 | ) | | (1,589 | ) |
| Payments related to tax withholding for equity compensation | | (4,173 | ) | | (920 | ) | | (3,733 | ) |
| Net cash for financing activities | | (106,421 | ) | | (194,524 | ) | | (177,936 | ) |
| EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS | | 3,640 |
| | 569 |
| | (2,432 | ) |
| Net increase (decrease) for the year | | 43,529 |
| | 3,159 |
| | (12,283 | ) |
| Balance, beginning of year | | 122,716 |
| | 119,557 |
| | 131,840 |
|
| Balance, end of year | | $ | 166,245 |
| | $ | 122,716 |
| | $ | 119,557 |
|
| | | | | | | |
| SUPPLEMENTAL INFORMATION | | | | | | |
| Net cash payments for interest expense | | $ | 85,975 |
| | $ | 82,015 |
| | $ | 84,963 |
|
| Interest capitalized | | 2,524 |
| | 2,331 |
| | 3,094 |
|
| Cash payments for income taxes, net of refunds | | 55,989 |
| | 44,502 |
| | 19,976 |
|
| Capital expenditures in accounts payable | | 5,365 |
| | 5,425 |
| | 2,357 |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Limited Partnership Units Outstanding | | Limited Partners’ Equity | | General Partner’s Equity | | Special L.P. Interests | | Accumulated Other Comprehensive Income (Loss) | | Total Partners’ Equity (Deficit) |
| Balance as of December 31, 2017 | 56,359 | | | $ | 81,589 | | | $ | 0 | | | $ | 5,290 | | | $ | (3,933) | | | $ | 82,946 | |
| Net income | — | | | 126,652 | | | 1 | | | — | | | — | | | 126,653 | |
| Partnership distribution declared ($3.595 per unit) | — | | | (203,197) | | | (2) | | | — | | | — | | | (203,199) | |
| Issuance of limited partnership units related to compensation | 205 | | | 2,940 | | | — | | | — | | | — | | | 2,940 | |
| Tax effect of units involved in treasury unit transactions | — | | | (2,530) | | | — | | | — | | | — | | | (2,530) | |
| Foreign currency translation adjustment, net of tax $3,862 | — | | | — | | | — | | | — | | | 17,240 | | | 17,240 | |
| Cash flow hedging derivative activity, net of tax $(1,094) | — | | | — | | | — | | | — | | | 8,366 | | | 8,366 | |
| Reclassification of stranded tax effect | — | | | 391 | | | — | | | — | | | (391) | | | 0 | |
| Balance as of December 31, 2018 | 56,564 | | | $ | 5,845 | | | $ | (1) | | | $ | 5,290 | | | $ | 21,282 | | | $ | 32,416 | |
| Net income | — | | | 172,363 | | | 2 | | | — | | | — | | | 172,365 | |
| Partnership distribution declared ($3.710 per unit) | — | | | (210,009) | | | (2) | | | — | | | — | | | (210,011) | |
| Issuance of limited partnership units related to compensation | 102 | | | 8,183 | | | — | | | — | | | — | | | 8,183 | |
| Tax effect of units involved in treasury unit transactions | — | | | (1,383) | | | — | | | — | | | — | | | (1,383) | |
| Foreign currency translation adjustment, net of tax $(2,161) | — | | | — | | | — | | | — | | | (11,536) | | | (11,536) | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| Balance as of December 31, 2019 | 56,666 | | | $ | (25,001) | | | $ | (1) | | | $ | 5,290 | | | $ | 9,746 | | | $ | (9,966) | |
| Net loss | — | | | (590,237) | | | (6) | | | — | | | — | | | (590,243) | |
| Partnership distribution declared ($0.935 per unit) | — | | | (53,020) | | | 0 | | | — | | | — | | | (53,020) | |
| Issuance of limited partnership units related to compensation | 40 | | | (4,721) | | | — | | | — | | | — | | | (4,721) | |
| Tax effect of units involved in treasury unit transactions | — | | | (1,490) | | | — | | | — | | | — | | | (1,490) | |
| Foreign currency translation adjustment, net of tax $(546) | — | | | — | | | — | | | — | | | (7,147) | | | (7,147) | |
| | | | | | | | | | | |
| Other | — | | | 150 | | | — | | | — | | | — | | | 150 | |
| Balance as of December 31, 2020 | 56,706 | | | $ | (674,319) | | | $ | (7) | | | $ | 5,290 | | | $ | 2,599 | | | $ | (666,437) | |
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
CEDAR FAIR, L.P.
CONSOLIDATED STATEMENTS OF PARTNERS’ EQUITYCASH FLOWS
(In thousands, except per unit amounts)thousands)
| | | | | | | | | | | | | | | | | | | | |
| | Years Ended December 31, |
| | 2020 | | 2019 | | 2018 |
| CASH FLOWS (FOR) FROM OPERATING ACTIVITIES | | | | | | |
| Net (loss) income | | $ | (590,243) | | | $ | 172,365 | | | $ | 126,653 | |
| Adjustments to reconcile net (loss) income to net cash (for) from operating activities: | | | | | | |
| Depreciation and amortization | | 157,549 | | | 170,456 | | | 155,529 | |
| Loss on early debt extinguishment | | 2,262 | | | 0 | | | 1,073 | |
| Loss on impairment of goodwill and other intangibles | | 103,999 | | | 0 | | | 0 | |
| Non-cash foreign currency (gain) loss on debt | | (9,344) | | | (22,307) | | | 37,724 | |
| Non-cash equity-based compensation expense | | (209) | | | 11,910 | | | 11,243 | |
| Non-cash deferred income tax (benefit) expense | | (41,933) | | | (4,106) | | | 11,259 | |
| Other non-cash expenses | | 30,396 | | | 24,460 | | | 16,146 | |
| Change in operating assets and liabilities: | | | | | | |
| (Increase) decrease in receivables | | 28,729 | | | (8,166) | | | (13,975) | |
| (Increase) decrease in inventories | | (14,499) | | | (211) | | | (1,203) | |
| (Increase) decrease in tax receivable | | (97,488) | | | 8,547 | | | (13,842) | |
| (Increase) decrease in other assets | | (12,180) | | | (5,221) | | | 148 | |
| Increase (decrease) in accounts payable | | (9,917) | | | (1,107) | | | 549 | |
| Increase (decrease) in deferred revenue | | 31,160 | | | 36,920 | | | 21,564 | |
| Increase (decrease) in accrued interest | | 12,235 | | | 13,414 | | | (25) | |
| Increase (decrease) in accrued salaries, wages and benefits | | (4,609) | | | 10,674 | | | 149 | |
| Increase (decrease) in other liabilities | | (2,445) | | | (4,587) | | | (2,252) | |
| Net cash (for) from operating activities | | (416,537) | | | 403,041 | | | 350,740 | |
| CASH FLOWS FOR INVESTING ACTIVITIES | | | | | | |
| Capital expenditures | | (129,087) | | | (330,662) | | | (189,816) | |
| Acquisitions, net of cash acquired | | 0 | | | (270,171) | | | 0 | |
| Proceeds from sale of other assets | | 8,266 | | | 617 | | | 112 | |
| Net cash for investing activities | | (120,821) | | | (600,216) | | | (189,704) | |
| CASH FLOWS FROM (FOR) FINANCING ACTIVITIES | | | | | | |
| | | | | | |
| Note borrowings | | 1,300,000 | | | 500,000 | | | 0 | |
| Term debt payments | | (465,125) | | | (5,625) | | | 0 | |
| | | | | | |
| Distributions paid to partners | | (53,020) | | | (210,011) | | | (203,199) | |
| Payment of debt issuance costs and original issue discount | | (46,849) | | | (8,262) | | | (2,543) | |
| Payments related to tax withholding for equity compensation | | (4,624) | | | (4,250) | | | (8,428) | |
| Other | | 468 | | | (1,383) | | | (2,405) | |
| Net cash from (for) financing activities | | 730,850 | | | 270,469 | | | (216,575) | |
| EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS | | 992 | | | 3,609 | | | (5,357) | |
| Net increase (decrease) for the year | | 194,484 | | | 76,903 | | | (60,896) | |
| Balance, beginning of year | | 182,252 | | | 105,349 | | | 166,245 | |
| Balance, end of year | | $ | 376,736 | | | $ | 182,252 | | | $ | 105,349 | |
| | | | | | |
| SUPPLEMENTAL INFORMATION | | | | | | |
| Cash payments for interest | | $ | 130,444 | | | $ | 85,596 | | | $ | 84,947 | |
| Interest capitalized | | 2,653 | | | 3,001 | | | 2,864 | |
| Cash payments for income taxes, net of refunds | | 1,792 | | | 40,793 | | | 42,159 | |
| Capital expenditures in accounts payable | | 3,286 | | | 9,073 | | | 5,083 | |
|
| | | | | | | | | | | |
| | Years Ended December 31, |
| | 2017 | | 2016 | | 2015 |
| | | | | | |
| Limited Partnership Units Outstanding | | | | | |
| Beginning balance | 56,201 |
| | 56,018 |
| | 55,828 |
|
| Limited partnership unit options exercised | 11 |
| | 46 |
| | 50 |
|
| Limited partnership unit forfeitures | (3 | ) | | (1 | ) | | (1 | ) |
| Issuance of limited partnership units related to compensation | 150 |
| | 138 |
| | 141 |
|
| | 56,359 |
| | 56,201 |
| | 56,018 |
|
| Limited Partners’ Equity | | | | | |
| Beginning balance | $ | 52,288 |
| | $ | 48,428 |
| | $ | 101,556 |
|
| Net income | 215,474 |
| | 177,686 |
| | 112,221 |
|
| Partnership distribution declared (2017 - $3.455; 2016 - $3.330; 2015 - $3.075) | (194,754 | ) | | (187,180 | ) | | (172,614 | ) |
| Expense recognized for limited partnership unit options | — |
| | 5 |
| | 580 |
|
| Limited partnership unit options exercised | 65 |
| | — |
| | — |
|
| Tax effect of units involved in treasury unit transactions | (4,440 | ) | | (422 | ) | | (1,589 | ) |
| Issuance of limited partnership units related to compensation | 12,956 |
| | 13,771 |
| | 8,274 |
|
| | 81,589 |
| | 52,288 |
| | 48,428 |
|
| General Partner’s Equity | | | | | |
| Beginning balance | — |
| | — |
| | 1 |
|
| Net income | 2 |
| | 2 |
| | 1 |
|
| Partnership distribution declared | (2 | ) | | (2 | ) | | (2 | ) |
| | — |
| | — |
| | — |
|
| Special L.P. Interests | 5,290 |
| | 5,290 |
| | 5,290 |
|
| | | | | | |
| Accumulated Other Comprehensive Income (Loss) | | | | | |
| Foreign currency translation adjustment | | | | | |
| Beginning balance | 18,891 |
| | 22,591 |
| | 5,936 |
|
| Period activity, net of tax (($4,330) in 2017; $2,127 in 2016; ($9,050) in 2015) | (14,849 | ) | | (3,700 | ) | | 16,655 |
|
| | 4,042 |
| | 18,891 |
| | 22,591 |
|
| Unrealized loss on cash flow hedging derivatives: | | | | | |
| Beginning balance | (15,950 | ) | | (19,300 | ) | | (16,566 | ) |
| Period activity, net of tax (($1,484) in 2017; ($650) in 2016; $625 in 2015) | 7,975 |
| | 3,350 |
| | (2,734 | ) |
| | (7,975 | ) | | (15,950 | ) | | (19,300 | ) |
| | (3,933 | ) | | 2,941 |
| | 3,291 |
|
| Total Partners’ Equity | $ | 82,946 |
| | $ | 60,519 |
| | $ | 57,009 |
|
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
CEDAR FAIR, L.P.
Notes To Consolidated Financial StatementsINDEX FOR NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
CEDAR FAIR, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) Impact of COVID-19 Pandemic:
The novel coronavirus (COVID-19) pandemic had a material impact on our business in 2020. Most significantly, we closed our properties for several months beginning on March 14, 2020. We ultimately resumed partial operations at 10 of our 13 properties in 2020, operating in accordance with local and state guidelines. Due to soft demand trends upon reopening, park operating calendars were adjusted, including reduced operating days per week and operating hours within each operating day.
Following the March 14, 2020 closure of our properties, we took steps in 2020 to secure additional liquidity and to obtain relief from certain financial covenants, including the issuance of $1.3 billion of senior notes and amendment of our term debt and revolving credit agreement. See the Long-Term Debt footnote at Note 8.
In order to ensure our season pass holders receive a full season of access to our parks, in April 2020, we extended the usage privileges of 2020 season passes through the 2021 season and paused collections of guest payments on installment purchase products. See the Revenue Recognition footnote at Note 5.
Due to the negative effects of the COVID-19 pandemic on our expected future operating results, we tested our long-lived assets, goodwill, and indefinite-lived intangible assets for impairment as of March 29, 2020 and September 27, 2020 resulting in $106.7 million of impairment charges recorded, primarily related to the recently acquired Schlitterbahn parks. See the Long-Lived Assets footnote at Note 6 and the Goodwill and Other Intangible Assets footnote at Note 7 for further detail.
Lastly, during 2020, we benefited from the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act"). See the Income and Partnership Taxes footnote at Note 12 for further detail.
Management has made significant estimates and assumptions to determine our liquidity requirements and estimate the impact of the COVID-19 pandemic on our business, including financial results in the near and long-term. Actual results could materially differ from these estimates depending on the ultimate extent of the effects of the COVID-19 pandemic. Our future operations are dependent on factors beyond our knowledge or control, including the duration and severity of the COVID-19 pandemic and actions taken to contain its spread and mitigate its public health effects.
(2) Partnership Organization:
Cedar Fair, L.P. (together with its affiliated companies, 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 (the “General Partner”), whose shares are held by an Ohio trust. The General Partner owns a 0.001% interest in the Partnership's income, losses and cash distributions, except in defined circumstances, and has full responsibility for management of the Partnership. As of December 31, 2017,2020, there were 56,358,79256,706,338 outstanding limited partnership units listed on The New York Stock Exchange, net of 703,191355,645 units held in treasury. As of December 31, 2016,2019, there were 56,200,55556,666,418 outstanding limited partnership units listed, net of 861,428395,565 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 in the Partnership Agreement. InFollowing the closure of our parks in March 2020 in response to COVID-19 health recommendations, the Board of Directors suspended quarterly partnership distributions to maintain flexibility and additional liquidity. The Board of Directors is committed to reinstitute quarterly partnership distributions in accordance with the Partnership agreementAgreement when it is appropriate to do so, and restrictions withinit is permissible under the Partnership's 2013Third Amended 2017 Credit Agreement and 2017 Credit Agreement,our other debt covenants. Prior to the suspension of quarterly partnership distributions, the General Partner paid $3.46$0.935 per limited partner unit in partnership distributions, or approximately $194.8$53.0 million in aggregate, in 2017.the first quarter of 2020.
(2)
(3) Summary of Significant Accounting Policies:
TheWe use the following policies are used by the Partnership in its preparationpreparing 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.owned or the Partnership is the primary beneficiary. Intercompany transactions and balances are eliminated in consolidation.
Foreign Currency
The U.S. dollar is theour reporting currency for the Partnership and the functional currency for the majoritymost of the Partnership'sour operations. The financial statements of the Partnership'sour Canadian subsidiary are measured using the Canadian dollar as its functional currency. Assets and liabilities are translated into U.S. dollars at the appropriate spot rates as of the balance sheet date, while income and expenses are translated at average monthly exchange rates. Translation gains and losses are included as components of accumulated other comprehensive (loss) income in partners' (deficit) equity. Gains or losses from remeasuring foreign currency transactions from the transaction currency to functional currency are included in (loss) income. Foreign currency (gains) losses for the periods presented were as follows:
| | | | | | | | | | | | | | | | | | | | |
| | Years Ended December 31, |
| (In thousands) | | 2020 | | 2019 | | 2018 |
| (Gain) loss on foreign currency related to re-measurement of U.S. dollar denominated debt held in Canada | | $ | (9,344) | | | $ | (22,307) | | | $ | 37,724 | |
| (Gain) loss on other transactions | | (2,839) | | | 1,200 | | | (1,470) | |
| (Gain) loss on foreign currency | | $ | (12,183) | | | $ | (21,107) | | | $ | 36,254 | |
|
| | | | | | | | | | | | |
| | | Years Ended December 31, |
| (In thousands) | | 2017 | | 2016 | | 2015 |
| (Gain) loss on foreign currency related to re-measurement of U.S. dollar denominated debt held in Canada | | $ | (30,912 | ) | | $ | (14,771 | ) | | $ | 81,608 |
|
| (Gain) loss on other transactions | | $ | 1,826 |
| | $ | 115 |
| | $ | (592 | ) |
| (Gain) loss on foreign currency | | $ | (29,086 | ) | | $ | (14,656 | ) | | $ | 81,016 |
|
Segment Reporting
Each of the Partnership's parks operatesOur properties operate autonomously, and management reviews operating results, evaluates performance and makes operating decisions, including the allocation of resources, on a property-by-property basis. In addition to reviewing and evaluating performance of the business at the individual parkproperty level, the structure of the Partnership'sour management incentive compensation systems areis centered aroundon the operating results of each parkproperty as an integrated operating unit. Therefore, each parkproperty represents a separate operating segment of our business with the Partnership's business.exception of the Schlitterbahn parks, which are aggregated into 1 segment. Although the Partnership manages its parkswe manage our properties with a high degree of autonomy, each parkproperty offers and markets a similar collection of products and services to similar customers. In addition, the parks allproperties have similar economic characteristics, in that they all show similar long-term growth trends in key industry metrics such as attendance, in-park per capita spending, net revenue, operating costs and operating profit. Therefore, the Partnership operateswe operate within a single reportable segment of amusement/water parks with accompanying resort facilities.
Estimates
The preparation of financial statements in conformity with generally accepted accounting principlesGAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the 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.
Fair Value
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants, or an exit price. Inputs to valuation techniques used to measure fair value may be observable or unobservable, and valuation techniques used to measure fair value should maximize the use of relevant observable inputs and minimize the use of unobservable inputs. Accordingly, a hierarchical disclosure framework ranks the quality and reliability of information used to determine fair values. The three broad levels of inputs defined by the fair value hierarchy are as follows:
•Level 1 – inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.
•Level 2 – inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.
•Level 3 – inputs to the valuation methodology are unobservable and significant to the fair value measurement.
A financial instrument's categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Assets and liabilities recognized or disclosed at fair value on a recurring basis include our derivatives, debt and short-term investments.
Cash and Cash Equivalents
The Partnership considersWe consider all highly liquid instruments purchased with an original maturity of three months or less to be cash equivalents.
Inventories
The Partnership'sOur inventories primarily consist of purchased products, such as merchandise and food, for sale to itsour customers. Inventories are stated at the lower of cost or market using the first-in, first-out (FIFO) or average cost methods of accounting at the park level.
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 generally capitalized. Depreciation is computed on a straight-line basis over the estimated useful lives of the assets. Depreciation expense totaled $152.5$157.0 million for the year ended December 31, 2017, $131.2in 2020, $169.8 million for 2016,in 2019, and $125.5$154.9 million for 2015.in 2018.
The estimated useful lives of the assets are as follows:
|
| | | | | | | | | | |
| Land improvements | Approximately | | 25 years |
| Buildings | 25 years | - | 40 years |
| Rides | Approximately | | 20 years |
| Equipment | 3 years | - | 10 years |
Impairment of Long-Lived Assets
Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 360 - Property, Plant, and Equipment requires that long-livedLong-lived assets beare 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 onusing a discounted cash flow analysis.combination of a cost and market approach. Significant factors considered in the cost approach include replacement cost, reproduction cost, depreciation, physical deterioration, functional obsolescence and economic obsolescence of the assets. The market approach estimates fair value by utilizing market data for similar assets. 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.
Accounting for Business Combinations
Business combinations are accounted for under the acquisition 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 supplied by the management of the acquired entities, 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 by management.
Goodwill
FASB ASC 350 - Intangibles - Goodwill and Other requires that goodwill be tested for impairment. Goodwill is reviewed annually for impairment, or whenever events or changes in circumstances indicate that the carrying value may not be recoverable. All of the Partnership's goodwillGoodwill is allocated to its reporting units and goodwill impairment tests are performed at the reporting unit level. The Partnership performed itsWe perform our annual goodwill impairment test as of the first daysday of the fourth quarter for 2017 and 2016, respectively, and concluded there was no impairmentquarter.
We may elect to first perform a qualitative assessment to determine whether it is more likely than not that a reporting unit is impaired. If we do not perform a qualitative assessment, or if we determine that it is not more likely than not that the fair value of the reporting unit exceeds its carrying amount, we calculate the fair value of goodwill in either period.
A significant amount of judgment is involved in determining if an indicator of impairment has occurred. Such indicators may include, among others: a significant decline in expected future cash flows; a sustained, significant decline in equity price and market capitalization; a significant adverse change in legal factors or in the business climate; unanticipated competition; the testing for recoverability of a significant asset group within a reporting unit; and slower growth rates. Any adverse change in these factors could have a significant impact on the recoverability of these assets and could have a material impact on our consolidated financial statements.
The Partnership elected to adopt FASB Accounting Standards Update No. 2017-04, Simplifying the Test for Goodwill Impairment ("ASU 2017-04"), for its 2017 annual impairment test. ASU 2017-04 eliminates step two from the goodwill impairment test. Instead, an entity recognizes an impairment charge for the amount by which a reporting unit's carrying amount exceeds its fair value, not to exceed the carrying amount of goodwill.
unit. The fair value of a reporting unit is established using a combination of an income (discounted cash flow) approach and market approach. The income approach uses a reporting unit's projection of estimated operating results and discounted cash flows that is discounted using a weighted-average cost of capital that reflects current market conditions. The projection usesEstimated operating results are established using management's best estimates of economic and market conditions over the projected period including growth rates in revenues and costs, estimates of future expected changes in operating margins and cash expenditures. Other significant estimates and assumptions include terminal value growth rates, future estimates of capital expenditures and changes in future working capital requirements. A market approach estimates fair value by applying cash flow multiples to the reporting unit's operating performance. The multiples are derived from comparable publicly traded companies with similar operating and investment characteristics of the reporting units. If an impairment is identified, an impairment charge is recognized for the amount by which a reporting unit's carrying amount exceeds its fair value, not to exceed the carrying amount of goodwill.
Other Intangible Assets
The Partnership's otherOur finite-lived intangible assets consist primarily of trade-names and license and franchise agreements. 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 FASB ASC 350, the Partnership determined that the trade-names had indefinite lives. Pursuant to FASB ASC 350, indefinite-livedThese intangible assets are amortized on a straight-line basis over the life of the agreement, ranging from two to twenty years.
Our infinite-lived intangible assets consist of trade names. Our trade names are reviewed along with goodwill, annually for impairment, or more frequently if impairment indicators arise. A relief-from-royalty model is usedWe may elect to first perform a qualitative assessment to determine whether it is more
likely than not that a trade name is impaired. If we do not perform a qualitative assessment, or if we determine that it is not more likely than not that the fair value of trade-names exceed theirthe trade name exceeds its carrying amounts. Theamount, we calculate the fair value of the trade-names is determined astrade name using a relief-from-royalty model. Principal assumptions under the presentrelief-from-royalty model include royalty rates, growth rates in revenues, estimates of future expected changes in operating margins, terminal value growth rates, and a discount rate based on a weighted-average cost of fees avoided by owningcapital that reflects current market conditions. We assess the respective trade-name. The Partnership performed its annualindefinite-lived trade names for impairment test as of the first days of the fourth quarter for 2017 and 2016, respectively, and concluded there was no impairment of the carryingseparately from goodwill.
value of these assets in either period. The Partnership's license and franchise agreements are amortized over the life of the agreement, generally ranging from four to twenty years.
Self-Insurance Reserves
ReservesSelf-insurance reserves are recorded for the estimated amounts of guest and employee claims and related expenses incurred each period. Reserves are established for both identified claims and incurred but not reported (IBNR) claims. Such amounts("IBNR") claims and are accrued forrecorded when claim amounts become probable and estimable. Reserves for identified claims are based upon the Partnership's ownour historical claimsclaim experience and third-party estimates of settlement costs. Reserves for IBNR claims which are not material to our consolidated financial statements, are based upon the Partnership's ownour claims data history. AllSelf-insurance reserves are periodically reviewed for changes in facts and circumstances, and adjustments are made as necessary. As of December 31, 20172020 and December 31, 2016,2019, the accrued self-insurance reserves totaled $25.1$22.3 million and $27.1$24.7 million, respectively.
Derivative Financial Instruments
The Partnership isWe are exposed to market risks, primarily resulting from changes in interest rates and currency exchange rates. To manage these risks, itwe may enter into derivative transactions pursuant to itsour overall financial risk management program. The Partnership doesWe do not use derivative financial instruments for trading purposes.
The Partnership accounts for the use As of derivative financial instruments according to FASB ASC 815 - Derivatives and Hedging. For derivative instruments that hedge the exposure of variability in short-term rates,December 31, 2020, we had 0 derivatives 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. Any ineffectiveness is recognized immediately in income. 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.hedges. Instruments that do not qualify for hedge accounting or were de-designated are prospectively adjusted to fair value each reporting period through "Net effect of swaps".
Leases
We have commitments under various operating leases. Right-of-use assets and lease liabilities are recognized at the present value of the future lease payments at the lease commencement date. The discount rate used to determine the present value of the future lease payments is our incremental borrowing rate as the rate implicit in most of our leases is not readily determinable. As a practical expedient, a relief provided in the accounting standard to simplify compliance, we do not recognize right-of-use assets and lease liabilities for leases with an original term of December 31, 2017,one year or less and have elected to not separate lease components from non-lease components. The current portion of our lease liability is recorded within "Other accrued liabilities" in the Partnership had no derivatives designated as cash flow hedges.consolidated balance sheets.
Revenue Recognition and related receivables and contract liabilities
As disclosed within the consolidated statements of operations and comprehensive (loss) income, revenues are generated from sales of (1) admission to our amusement parks and water parks, (2) food, merchandise and games both inside and outside the parks, and (3) accommodations, extra-charge products, and other revenue sources. Admission revenues include amounts paid to gain admission into our parks, including parking fees. Revenues related to extra-charge products, including premium benefit offerings such as front-of-line products, and online transaction fees charged to customers are included in "Accommodations, extra-charge products and other". Due to our highly seasonal operations, a substantial portion of our revenues typically are generated during an approximate 130- to 140-day operating season. Most revenues are recognized on a daily basis based on actual guest spend at our properties. Revenues from multi-use products, including season-long products for admission, dining, beverage and other products, are recognized over the estimated number of uses expected for each type of productproduct. The estimated number of uses is reviewed and are adjustedmay be updated periodically during the operating season prior to the ticket or product expiration, which generally occurs no later than the close of the operating season. OtherThe number of uses is estimated based on historical usage adjusted for current period trends. For any bundled products that include multiple performance obligations, revenue is allocated using the retail price of each distinct performance obligation and any inherent discounts are allocated based on the gross margin and expected redemption of each performance obligation. We do not typically provide for refunds or returns.
In some instances, we arrange with outside parties ("concessionaires") to provide goods to guests, typically food and merchandise, and we act as an agent, resulting in net revenues recorded within the consolidated statements of operations and comprehensive (loss) income. Concessionaire arrangement revenues are recognized on a daily basis based on actual guest spending at our facilities, orover the operating season and are variable. Sponsorship revenues and marina revenues, which are classified as "Accommodations, extra-charge products and other," are recognized over the park operating season which represents the period in which the performance obligations are satisfied. Sponsorship revenues are typically fixed. However, some sponsorship revenues are variable based on achievement of specified operating metrics. We estimate variable revenues and perform a constraint analysis using both historical information and current trends to determine the amount of revenue that is not probable of a significant reversal.
Most deferred revenue from contracts with customers is classified as current within the balance sheet. However, a portion of deferred revenue from contracts with customers is typically classified as non-current during the third quarter related to season-long products sold in the casecurrent season for use in the subsequent season. Season-long products are typically sold beginning in August of certain marina revenuesthe year preceding the operating season. Season-long products may subsequently be recognized 12 to 16 months after purchase depending on the date of sale. We estimate the number of uses expected outside of the next twelve months for each type of product and certain sponsorship revenues.classify the related deferred revenue as non-current in the consolidated balance sheets.
Admission revenues include amounts paid
Except for the non-current deferred revenue described above, our contracts with customers have an original duration of one year or less. For these short-term contracts, we use the practical expedient applicable to gain admission intosuch contracts and have not disclosed the Partnership's parks, including parking fees. Revenues relatedtransaction price for the remaining performance obligations as of the end of each reporting period or when we expect to extra-charge attractions, including premium benefit offerings like front-of-line products, and on-line advancedrecognize this revenue. Further, we have elected to recognize incremental costs of obtaining a contract as an expense when incurred as the amortization period of the asset would be less than one year. Lastly, we have elected not to adjust consideration for the effects of significant financing components of our installment purchase transaction fees charged to customers are included in Accommodations, extra-charge products and other revenue.plans because the terms of these plans do not exceed one year.
Advertising Costs
The Partnership expenses allProduction costs of commercials and programming are expensed in the year first aired. All other costs associated with its advertising, promotion and marketing programs are expensed as incurred, or for certain costs, over each park's operating season. Advertising expense totaled $63.9 million for the year ended December 31, 2017, $60.8 million for 2016 and $58.7 million for 2015. Certain prepaid costs incurred through year-end for the following year's advertising programs are included within "Other current assets" in Other current assets.the consolidated balance sheets. Advertising expense totaled $10.5 million in 2020, $67.9 million in 2019 and $65.5 million in 2018. Due to the effects of the COVID-19 pandemic, we suspended all advertising costs effective April 2020. For those parks which ultimately opened in 2020, we incurred limited incremental advertising expense for the remainder of 2020 to correspond with lower than typical attendance levels and abbreviated park operating calendars.
Equity-Based Compensation
The Partnership accounts for equity-based compensation in accordance with FASB ASC 718 - Compensation - Stock Compensation which requires measurement ofWe measure compensation cost for all equity-based awards at fair value on the date of grant and recognition ofgrant. We recognize the compensation cost over the service period for awards expected to vest. The Partnership uses a binomial option-pricing model for all grant date estimations of fair value. The Partnership recognizesperiod. We recognize forfeitures as they occur.
Income Taxes
The Partnership'sOur legal entity structure includes both partnerships and corporate subsidiaries. As aWe are subject to publicly traded partnership tax ("PTP tax") on certain partnership level gross income (net revenues less cost of food, merchandise, and games revenues), state and local income taxes on partnership income, U.S. federal state and local income taxes on income from our corporate subsidiaries and foreign income taxes on our foreign subsidiary. As such, the Partnership is subject to an entity-leveltotal (benefit) provision for taxes includes amounts for the PTP gross income tax (the "PTP tax"). Accordingly,and federal, state, local and foreign income taxes. Under applicable accounting rules, the Partnership itself is not subject to corporatetotal (benefit) provision for income taxes; rather,taxes includes the Partnership'samount of taxes payable for the current year and the impact of deferred tax attributes (except thoseassets and liabilities, which represents future tax consequences of the corporate subsidiaries)events that are includedrecognized in different periods in the financial statements than for tax returns of its partners. The Partnership's corporate subsidiaries are subject to entity-level income taxes.purposes.
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 Partnershipwe must perform annually for itsour 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.
The Partnership'sOur corporate subsidiaries account for income taxes under the asset and liability method. Accordingly, deferred tax assets and liabilities are recognized for the future book and tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are determined using enacted tax rates expected to apply in the year in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax law is recognized in income at the time of enactment of such change in tax law. Any interest or penalties due for
payment of income taxes are included in the (benefit) provision for income taxes. The Partnership's total Provision for taxes includes PTP taxes owed (see Note 9 to the Consolidated Financial Statements).
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 (loss) income. The unit amounts used in calculating the basic and diluted earnings per limited partner unit for the years ended December 31, 2017, 20162020, 2019 and 20152018 are as follows:
| | | | | | | | | | | | | | | | | | | | |
| | Years Ended December 31, |
| (In thousands, except per unit amounts) | | 2020 | | 2019 | | 2018 |
| Basic weighted average units outstanding | | 56,476 | | | 56,349 | | | 56,212 | |
| Effect of dilutive units: | | | | | | |
| | 0 | | | 50 | | | 48 | |
| | 0 | | | 118 | | | 135 | |
| | 0 | | | 275 | | | 312 | |
| | 0 | | | 129 | | | 153 | |
| | | | | | |
| Diluted weighted average units outstanding | | 56,476 | | | 56,921 | | | 56,860 | |
| Net (loss) income per unit - basic | | $ | (10.45) | | | $ | 3.06 | | | $ | 2.25 | |
| Net (loss) income per unit - diluted | | $ | (10.45) | | | $ | 3.03 | | | $ | 2.23 | |
|
| | | | | | | | | | | | |
| | | Years Ended December 31, |
| | | 2017 | | 2016 | | 2015 |
| | | (In thousands, except per unit amounts) |
| Basic weighted average units outstanding | | 56,061 |
| | 55,933 |
| | 55,745 |
|
| Effect of dilutive units: | | | | | | |
| Deferred units (Note 7) | | 42 |
| | 31 |
| | 23 |
|
| Performance units (Note 7) | | 188 |
| | 181 |
| | 72 |
|
| Restricted units (Note 7) | | 324 |
| | 288 |
| | 358 |
|
| Unit options (Note 7) | | 185 |
| | 129 |
| | 141 |
|
| Phantom units (Note 7) | | — |
| | — |
| | 23 |
|
| Diluted weighted average units outstanding | | 56,800 |
| | 56,562 |
| | 56,362 |
|
| Net income per unit - basic | | $ | 3.84 |
| | $ | 3.18 |
| | $ | 2.01 |
|
| Net income per unit - diluted | | $ | 3.79 |
| | $ | 3.14 |
| | $ | 1.99 |
|
Adopted Accounting Pronouncements
In MarchJune 2016, the FASB issued Accounting Standards Update No. 2016-09, Improvements2016-13, Measurement of Credit Losses on Financial Instruments ("ASC 2016-13"). ASU 2016-13 replaces the incurred loss impairment methodology with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to Employee Share-Based Payment Accounting ("inform credit loss estimates. ASU 2016-09"). The amendments in ASU 2016-09 were meant to simplify the accounting for share-based payment transactions, specifically the accounting for income taxes, award classification, cash flow presentation, and accounting for forfeitures. ASU 2016-092016-13 is effective for annual and interim periods beginningfiscal years after December 15, 2016.2019, including interim periods within those fiscal years. Early adoption is permitted, including adoption in any interim period. We adopted ASU 2016-13 as of January 1, 2020. The Partnership adopted this guidance in the first quarter of 2017. The impact of the guidance included: (1) prospective recognition of excess tax benefits and tax deficiencies as income tax expense (as opposed to the previous recognition in additional paid-in-capital), approximately $1.4 million of excess tax benefits were recognized in provision for taxes for the year ended December 31, 2017; (2) prospective exclusion of future excess tax benefits and deficiencies in the calculation of diluted shares, which had an immaterial impact on net income per limited partner unit for the year ended December 31, 2017; (3) prospective classification of excess tax benefits as an operating activity within the statement of cash flows (as opposed to the previous classification as a financing activity), approximately $1.4 million of excess tax benefits were classified as an operating activity for the year ended December 31, 2017; (4) the formal accounting policy election to recognize forfeitures as they occur (as opposed to estimating a forfeiture accrual), whichstandard did not have a material impactan effect on the Partnership'sconsolidated financial statements; and (5) retrospective classification of employee taxes paid when an employer withholds shares for tax withholding purposes as a financing activity within the statement of cash flows (as opposed to the previous classification as an operating activity), approximately $0.9 million was reclassified for the year ended December 31, 2016 and $3.7 million for the year ended December 31, 2015.statements.
New Accounting Pronouncements
In January 2017,December 2019, the FASB issued Accounting Standards Update No. 2017-04,2019-12, Simplifying the TestAccounting for Goodwill ImpairmentIncome Taxes ("ASU 2017-04"2019-12"). ASU 2017-04 eliminates step two from2019-12 simplifies the goodwill impairment test. Instead, an entity recognizes an impairment chargeaccounting for the amountincome taxes by which a reporting unit's carrying amount exceeds its fair value, not to exceed the carrying amount of goodwill.removing specific exceptions and clarifying and amending existing guidance under Topic 740, Income Taxes. ASU 2017-042019-12 is effective for annual and any interim impairment tests for periods beginningfiscal years after December 15, 2019 on a prospective basis.2020 and interim periods within those years. Early adoption is permitted, for annual andincluding adoption in any interim impairment tests occurring afterperiod, but all amendments must be adopted in the same period. The allowable adoption methods differ under the various amendments. We adopted ASU 2019-12 as of January 1, 2017.2021. The Partnership adopted the standard for its 2017 annual impairment test. The adoption of the standard did not have a materialan effect on the consolidated financial statements (see discussion above and Note 4).related disclosures.
New Accounting Pronouncements
In May 2014,March 2020, the FASB issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers2020-04, Facilitation of the Effects of Reference Rate Reform on Financial Reporting ("ASU 2014-09"2020-04"). The ASU 2020-04 provides optional guidance to ease the potential burden in accounting for a single, principles-based model for revenue recognition(or recognizing the effects of) reference rate reform on contracts, hedging relationships, and other transactions that replaces the existing revenue recognition guidance.reference London Interbank Offered Rate ("LIBOR") or another reference rate expected to be discontinued because of reference rate reform. ASU 2014-092020-04 is effective for annual and interim periods beginning after December 15, 2017 and will replace most existing revenue recognition guidance under U.S. GAAP when it becomes effective. It permits the use of either a retrospective or modified retrospective transition method, and early adoption is permitted only as of an annual reporting period beginning afterMarch 12, 2020 through December 15, 2016, including interim reporting periods within that reporting period. The Partnership has adopted this standard in the first quarter of 2018 using the modified retrospective method. The primary impact of the adoption on the consolidated financial statements will be the additional required disclosures around revenue recognition in the notes to the consolidated financial statements. The standard did not have a material effect on the consolidated financial statements.
In February 2016, the FASB issued Accounting Standards Update No. 2016-02, Leases ("ASU 2016-02"). The ASU requires the recognition of lease assets and lease liabilities within the balance sheet by lessees for operating leases, as well as requires additional disclosures in the consolidated financial statements regarding the amount, timing, and uncertainty of cash flows arising from leases. The ASU does not significantly change the recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee, nor does the ASU change the accounting applied by a lessor. ASU 2016-02 is effective for annual and interim periods beginning after December 15, 2018. This ASU requires a modified retrospective method and applies to the earliest period presented in the financial statements. The Partnership expects to adopt this standard in the first quarter of 2019. While the Partnership is still31, 2022. We are in the process of evaluating the effect this standard will have on the consolidated financial statements and related disclosures,disclosures.
(4) Acquisitions:
On July 1, 2019, we completed the Partnership anticipates recognizingacquisition of 2 water parks and 1 resort in Texas, the Schlitterbahn Waterpark & Resort New Braunfels and the Schlitterbahn Waterpark Galveston ("Schlitterbahn parks"), for a cash purchase price of $257.7 million. The acquisition increased our presence in growing and attractive markets and further diversified our portfolio of properties. The Schlitterbahn parks are included within our single reportable segment of amusement/water parks with accompanying resort facilities.
The purchase price was allocated to the underlying assets acquired and liabilities assumed based upon management's estimated fair values at the date of acquisition. To the extent the purchase price exceeded the estimated fair value of the net identifiable tangible and intangible assets acquired, such excess was allocated to goodwill. Based on the fair value of the assets acquired and the liabilities assumed, goodwill of $178.0 million, property and equipment of $58.1 million, an indefinite-lived trade name of $23.2 million, covenants not to complete of $0.2 million and a net working capital deficit of $3.3 million were recorded. We also assumed a lease commitment for the land on which Schlitterbahn Waterpark Galveston is located. This land lease resulted in the recognition of an additional right-of-use asset totaling $6.8 million and an additional corresponding lease liability totaling $5.3 million (see Note 13). All goodwill is expected to be deductible for income tax purposes.
Due to the negative effects of the COVID-19 pandemic on our expected future operating results, we tested the long-lived assets, goodwill and indefinite-lived intangible assets of the Schlitterbahn parks for impairment as of March 29, 2020 and as of September 27, 2020. This resulted in impairment charges at the Schlitterbahn parks of $2.7 million for long-lived assets, $73.6 million for goodwill and $7.9 million for the Schlitterbahn trade name as of March 29, 2020, and $11.3 million for goodwill and $2.2 million for the Schlitterbahn trade name as of September 27, 2020 (see Note 6 and Note 7).
The results of the Schlitterbahn parks' operations from the date of acquisition, including $10.9 million and $42.5 million of net revenues and $121.7 million of net loss and $12.0 million of net income, are included within the consolidated statements of operations and comprehensive (loss) income for the years ended December 31, 2020 and December 31, 2019, respectively. If we had acquired the Schlitterbahn parks on January 1, 2018, our results for the year ended December 31, 2019 would have included net revenues and net income of approximately $69 million and $11 million, respectively. Comparable results for the year ended December 31, 2018 would have included net revenues and net income of approximately $66 million and $14 million, respectively. Related acquisition transaction costs totaled $7.0 million for the year ended December 31, 2019 and were included within "Selling, general and administrative expenses".
(5) Revenue Recognition:
As disclosed within the consolidated statements of operations and comprehensive (loss) income, revenues are generated from sales of (1) admission to our amusement parks and water parks, (2) food, merchandise and games both inside and outside the parks, and (3) accommodations, extra-charge products, and other revenue sources. Admission revenues include amounts paid to gain admission into our parks, including parking fees. Revenues related to extra-charge products, including premium benefit offerings such as front-of-line products, and online transaction fees charged to customers are included in "Accommodations, extra-charge products and other".
The following table presents net revenues disaggregated by revenues generated within the parks and revenues generated from out-of-park operations less amounts remitted to outside parties under concessionaire arrangements for the periods presented:
| | | | | | | | | | | | | | | | | | | | |
| | Years Ended December 31, |
| (In thousands) | | 2020 | | 2019 | | 2018 |
| In-park revenues | | $ | 120,370 | | | $ | 1,349,903 | | | $ | 1,235,742 | |
| Out-of-park revenues | | 67,375 | | | 168,708 | | | 152,216 | |
| Concessionaire remittance | | (6,190) | | | (43,686) | | | (39,428) | |
| Net revenues | | $ | 181,555 | | | $ | 1,474,925 | | | $ | 1,348,530 | |
Many products, including season-long products, are sold to customers in advance, resulting in a contract liability ("deferred revenue"). Deferred revenue is typically at its highest immediately prior to the peak summer season, and at its lowest at the beginning of the calendar year following the close of our parks' operating seasons. Season-long products represent most of the deferred revenue balance in any given period.
Of the $151.4 million of deferred revenue recorded as of January 1, 2020, 91% was related to season-long products. The remainder was related to deferred online transaction fees charged to customers, advanced ticket sales, marina deposits, advanced resort reservations, and other deferred revenue. During the year ended December 31, 2020, approximately $28 million of the deferred revenue balance as of January 1, 2020 was recognized. Typically, all deferred revenue as of January 1, 2020 would have been recognized by December 31, 2020 except for an immaterial amount of deferred revenue for prepaid products such as gift cards and prepaid games cards. Due to the effects of the COVID-19 pandemic, we extended the validity of our 2020 season-long products through the 2021 operating season in order to ensure our season pass holders receive a full season of access to our parks. The extended validity of the 2020 season-long products resulted in a significant amount of revenue deferred into 2021. In order to calculate revenue recognized in 2020 on 2020 season-long products, management made significant estimates regarding the estimated number of uses expected for these season-long products for admission, dining, beverage and other products for the 2021 operating season. Actual results could materially differ from these estimates depending on the consolidatedultimate extent of the effects of the COVID-19 pandemic.
Payment is due immediately on the transaction date for most products. Our receivable balance sheetincludes outstanding amounts on installment purchase plans which are offered for season-long products (and other select products for specific time periods), and includes sales to retailers, group sales and catering activities which are billed. Installment purchase plans vary in length from 3 monthly installments to 12 monthly installments. Payment terms for billings are typically net 30 days. Receivables are typically highest in the peak summer months and lowest in the winter months. We are not exposed to a significant concentration of customer credit risk. As of December 31, 2020 and December 31, 2019, we recorded an $8.7 million and $3.4 million allowance for doubtful accounts, respectively, representing estimated defaults on installment purchase plans. The default estimate is calculated using historical default rates adjusted for current period trends, including an adjustment for the Santa Clara land lease,impact of the COVID-19 pandemic on our customers' ability to pay based on collection rates since March 2020. The allowance for doubtful accounts is recorded as wella reduction of deferred revenue to the extent revenue has not been recognized on the corresponding season-long products. Due to the effects of the COVID-19 pandemic and given the uncertainty around the timing of the reopening of our parks, we paused collections on our installment purchase plans in April 2020. For those parks which opened during the summer of 2020, we resumed collections of guest payments on installment purchase products as othereach of these parks opened for the 2020 operating leases, upon adoption.season. For those parks which did not open during the summer of 2020, we will resume collections of guest payments as each of these parks opens for the 2021 operating season.
(3)(6) Long-Lived Assets:
Long-lived assets are 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. 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. A significant amount of judgment is involved in determining if an indicator of impairment has occurred. Such indicators may include, among others: a significant decline in expected future cash flows; a sustained, significant decline in equity price and market capitalization; a significant adverse change in legal factors or in the business climate; unanticipated competition; and slower growth rates. Any adverse change in these factors could have a significant impact on the recoverability of these assets and could have a material impact on the Partnership's consolidated financial statements.
The long-lived asset impairment test involves a two-step process. The first step is a comparison of each asset group's carrying value to its estimated undiscounted future cash flows expected to result from the use of the assets, including disposition. Projected future cash flows reflect management's best estimates of economic and market conditions over the projected period, including growth rates in revenues and costs, estimates of future expected changes in operating margins and cash expenditures. Other significant estimates and assumptions include terminal value growth rates. If the carrying value of the asset group is higher than its undiscounted future cash flows, there is an indication that impairment exists and the second step must be performed to measure the amount of impairment loss. The amount of impairment is determined by comparing the fair value of the asset group to its carrying value in a manner consistent with the highest and best use of those assets. The Partnership estimates fair value of operating assets using an income (discounted cash flows) approach, which uses an asset group's projection of estimated operating results and cash flows that is discounted using a weighted-average cost of capital reflective of current market conditions. If the fair value of the assets is less than their carrying value, an impairment charge is recorded for the difference.
Non-operating assets are evaluated for impairment based on changes in market conditions. When changes in market conditions are observed, impairment is estimated using a market-based approach. If the estimated fair value of the non-operating assets is less than their carrying value, an impairment charge is recorded for the difference.
AtDue to the endnegative effects of the fourth quarterCOVID-19 pandemic on our expected future operating results, we tested our long-lived assets for impairment as of 2015,March 29, 2020 and September 27, 2020. As of March 29, 2020, we concluded the Partnership decidedestimated undiscounted future cash flows expected to permanently removeresult from servicethe use of the long-lived assets at the Schlitterbahn parks no longer exceeded the related carrying values. Therefore, we recorded a long-lived asset at Cedar Point. Accordingly, the Partnership recognized and recorded an $8.6$2.7 million impairment charge for impairment equal to the remaining net bookdifference between the fair value and the carrying amounts of this long-lived asset. The amount was recordedthe assets in "Loss on impairment / retirement of fixed assets, net" inassets" within the consolidated statement of
operations and comprehensive income.(loss) income during the first quarter of 2020. The fair value of the long-lived assets was determined using a real and personal property appraisal which was performed in accordance with ASC 820 - Fair Value Measurement. We performed additional impairment testing as of September 27, 2020 due to a further decline in our financial performance projections. Our impairment testing as of September 27, 2020 resulted in no further impairment of our long-lived assets. Management made significant estimates in performing these impairment tests, including the anticipated time frame to re-open our parks following the COVID-19 pandemic and the related anticipated demand upon re-opening our parks following the COVID-19 pandemic. Actual results could materially differ from these estimates depending on the ultimate extent of the effects of the COVID-19 pandemic.
During the third quarter of 2016, the Partnershipwe ceased operations of one of itsour separately gated outdoor water parks, Wildwater Kingdom, located near Cleveland in Aurora, Ohio. At the date that Wildwater Kingdom ceased operations, the only remaining long-lived asset was the approximateapproximately 670 acres of land owned by the Partnership. This land had an associated carrying value of $17.1 million.land. The Partnership assessed the remaining asset and concluded there was no impairment during the third quarter of 2016. In the fourth quarter of 2017, the Partnership recorded a $7.6 million impairment charge based on recent information from ongoing marketing activities. The amount was recorded in "Loss on impairment / retirement of fixed assets, net" in the consolidated statement of operations and comprehensive income. The remaining Wildwater Kingdom acreage, reduced by acreage sold, is classified as assets held-for-salerecorded within "Other Assets" in the consolidated balance sheetsheets ($9.02.1 million as of December 31, 20172020 and $17.0$9.0 million as of December 31, 2016)2019).
(4)(7) Goodwill and Other Intangible Assets:
Goodwill and other indefinite-lived intangible assets, including trade-namestrade names are reviewed for impairment annually, or more frequently if indicators of impairment exist. Due to the negative effects of the COVID-19 pandemic on our expected future operating results, we tested our goodwill and indefinite-lived intangible assets for impairment as of March 29, 2020 and September 27, 2020. As of March 29, 2020 and September 27, 2020, we concluded the estimated fair value of goodwill at the Schlitterbahn parks and Dorney Park reporting units, and the estimated fair value of the Schlitterbahn trade name no longer exceeded their carrying values. Therefore, we recorded a $73.6 million, $6.8 million and $7.9 million impairment of goodwill at the Schlitterbahn parks, goodwill at Dorney Park, and the Schlitterbahn trade name, respectively, during the first quarter of 2020. We also recorded an $11.3 million, $2.3 million and $2.2 million impairment of goodwill at the Schlitterbahn parks, goodwill at Dorney Park, and the Schlitterbahn trade name, respectively, during the third quarter of 2020. The Partnershipimpairment charges were equal to the amount by which the carrying amounts exceeded the assets' fair value and were recorded in "Loss on impairment of goodwill and other intangibles" within the consolidated statement of operations and comprehensive (loss) income. We performed itsour annual impairment test as of the first days of the fourth quarter in 20172020 and 2016,2019, respectively, and concluded there was no further impairment of the carrying value of goodwill or other indefinite-lived intangible assets in either period.
A summaryThe fair value of our reporting units was established using a combination of an income (discounted cash flow) approach and market approach. The income approach used each reporting unit's projection of estimated operating results and discounted cash flows using a weighted-average cost of capital that reflected current market conditions. Estimated operating results were established using our best estimates of economic and market conditions over the projected period including growth rates in revenues and costs, estimates of future expected changes in operating margins and cash expenditures, the Partnership'santicipated time frame to re-open our parks following the COVID-19 pandemic, and the related anticipated demand upon re-opening our parks following the COVID-19 pandemic. Other significant estimates and assumptions included terminal value growth rates, future estimates of capital expenditures and changes in future working capital requirements. The market approach estimated fair value by applying cash flow multiples to each reporting unit's operating performance. The multiples were derived from comparable publicly traded companies with similar operating and investment characteristics of the reporting units. The impairment charges recognized were for the amount by which the reporting unit's carrying amount exceeded its fair value.
Our indefinite-lived intangible assets consist of trade names. The fair value of our trade names was calculated using a relief-from-royalty model. The impairment charges recognized were for the amount by which the trade name's carrying amount exceeded its fair value.
Management made significant estimates calculating the fair value of our reporting units and trade names. Actual results could materially differ from these estimates depending on the ultimate extent of the effects of the COVID-19 pandemic.
Changes in the carrying value of goodwill for the years ended December 31, 20172020 and December 31, 2016 is as follows:2019 were:
|
| | | | | | | | | | | | |
| (In thousands) | | Goodwill (gross) | | Accumulated Impairment Losses | | Goodwill (net) |
| Balance at December 31, 2015 | | $ | 290,679 |
| | $ | (79,868 | ) | | $ | 210,811 |
|
Deferred income tax adjustment related to Canadian disregarded entity (1) | | (33,945 | ) | | — |
| | (33,945 | ) |
| Foreign currency exchange translation | | 2,794 |
| | — |
| | 2,794 |
|
| Balance at December 31, 2016 | | 259,528 |
| | (79,868 | ) | | 179,660 |
|
| Foreign currency exchange translation | | 4,170 |
| | — |
| | 4,170 |
|
| Balance at December 31, 2017 | | $ | 263,698 |
| | $ | (79,868 | ) | | $ | 183,830 |
|
| | | | | | | | |
(1)(In thousands) | See | Goodwill |
| Balance as of December 31, 2018 | | $ | 178,719 | |
| | 177,993 | |
| Foreign currency exchange translation | | 2,942 | |
| Balance as of December 31, 2019 | | $ | 359,654 | |
| Impairment | | (93,929) | |
| Foreign currency exchange translation | | 1,236 | |
| Balance as of December 31, 2020 | | $ | 266,961 | |
Goodwill included $93.1 million and $178.0 million as of December 31, 2020 and December 31, 2019, respectively, of goodwill related to the Schlitterbahn parks which were acquired on July 1, 2019 (see Note 4).
As of December 31, 20172020 and December 31, 2016, the Partnership's2019, other intangible assets consisted of the following:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| (In thousands) | | Weighted Average Amortization Period | | Gross Carrying Amount | | Accumulated Amortization | | Net Carrying Value |
| December 31, 2020 | | | | | | | | |
| Other intangible assets: | | | | | | | | |
| Trade names | | — | | | $ | 49,454 | | | $ | — | | | $ | 49,454 | |
| License / franchise agreements | | 7.1 years | | 4,259 | | | (3,425) | | | 834 | |
| Total other intangible assets | | | | $ | 53,713 | | | $ | (3,425) | | | $ | 50,288 | |
| | | | | | | | |
| December 31, 2019 | | | | | | | | |
| Other intangible assets: | | | | | | | | |
| Trade names | | — | | | $ | 59,249 | | | $ | — | | | $ | 59,249 | |
| License / franchise agreements | | 10.9 years | | 3,583 | | | (2,933) | | | 650 | |
| Total other intangible assets | | | | $ | 62,832 | | | $ | (2,933) | | | $ | 59,899 | |
|
| | | | | | | | | | | | | | | |
| (In thousands) | | Weighted Average Amortization Period | | Gross Carrying Amount | | Accumulated Amortization | | Net Carrying Value |
| December 31, 2017 | | | | | | | | |
| Other intangible assets: | | | | | | | | |
| Trade names | | — |
| | $ | 36,531 |
| | $ | — |
| | $ | 36,531 |
|
| License / franchise agreements | | 5.9 years |
| | 3,360 |
| | (1,827 | ) | | 1,533 |
|
| Total other intangible assets | | | | $ | 39,891 |
| | $ | (1,827 | ) | | $ | 38,064 |
|
| | | | | | | | | |
| December 31, 2016 | | | | | | | | |
| Other intangible assets: | | | | | | | | |
| Trade names | | — |
| | $ | 35,603 |
| | $ | — |
| | $ | 35,603 |
|
| License / franchise agreements | | 5.4 years |
| | 3,326 |
| | (1,092 | ) | | 2,234 |
|
| Total other intangible assets | | | | $ | 38,929 |
| | $ | (1,092 | ) | | $ | 37,837 |
|
Other intangible assets included $13.1 million and $23.2 million as of December 31, 2020 and December 31, 2019, respectively, for the Schlitterbahn trade name acquired on July 1, 2019 (see Note 4). The Schlitterbahn trade name is an indefinite-lived intangible asset. Amortization expense of finite-lived other intangible assets for 2017, 20162020, 2019 and 20152018 was immaterial and is expected to be immaterial going forward.
(5)(8) Long-Term Debt:
Long-term debt as of December 31, 20172020 and December 31, 20162019 consisted of the following:
| | | | | | | | | | | | | | |
| (In thousands) | | December 31, 2020 | | December 31, 2019 |
| | | | |
| U.S. term loan averaging 2.70% in 2020; 4.01% in 2019 (due 2017-2024) (1) | | $ | 264,250 | | | $ | 729,375 | |
| Notes | | | | |
| 2024 U.S. fixed rate senior unsecured notes at 5.375% | | 450,000 | | | 450,000 | |
| 2025 U.S. fixed rate senior secured notes at 5.500% | | 1,000,000 | | | 0 | |
| 2027 U.S. fixed rate senior unsecured notes at 5.375% | | 500,000 | | | 500,000 | |
| 2028 U.S. fixed rate senior unsecured notes at 6.500% | | 300,000 | | | 0 | |
| 2029 U.S. fixed rate senior unsecured notes at 5.250% | | 500,000 | | | 500,000 | |
| | 3,014,250 | | | 2,179,375 | |
| Less current portion | | 0 | | | (7,500) | |
| | 3,014,250 | | | 2,171,875 | |
| Less debt issuance costs and original issue discount | | (60,006) | | | (25,992) | |
| | $ | 2,954,244 | | | $ | 2,145,883 | |
|
| | | | | | | | |
| | | December 31, 2017 | | December 31, 2016 |
| (In thousands) | | | | |
Term debt (1) | | | | |
| April 2017 U.S. term loan averaging 3.43% (due 2017-2024) | | $ | 735,000 |
| | $ | — |
|
| March 2013 U.S. term loan averaging 3.25% (due 2013-2020) | | — |
| | 602,850 |
|
| Notes | | | | |
| April 2017 U.S. fixed rate notes at 5.375% (due 2027) | | 500,000 |
| | — |
|
| June 2014 U.S. fixed rate notes at 5.375% (due 2024) | | 450,000 |
| | 450,000 |
|
| March 2013 U.S. fixed rate notes at 5.25% (due 2021) | | — |
| | 500,000 |
|
| | | 1,685,000 |
| | 1,552,850 |
|
| Less current portion | | — |
| | (2,775 | ) |
| | | 1,685,000 |
| | 1,550,075 |
|
| Less debt issuance costs | | (24,485 | ) | | (15,864 | ) |
| | | $ | 1,660,515 |
| | $ | 1,534,211 |
|
(1)The weighted average interest rates do not reflect the effect of interest rate swap agreements (see Note 9). | |
(1) | The average interest rates are calculated over the life of the instrument and do not reflect the effect of interest rate swap agreements (see Note 6 to the Consolidated Financial Statements). |
Term Debt and Revolving Credit Facilities
In April 2017, the Partnership issued $500 million of 5.375% senior unsecured notes ("April 2017 notes"), maturing in 2027. The net proceeds from the offering of the April 2017 notes, together with borrowings under the 2017 Credit Agreement (defined below), were used to redeem all of the Partnership's 5.25% senior unsecured notes due 2021 ("March 2013 notes"), and pay accrued interest and transaction fees and expenses, to repay in full all amounts outstanding under its existing credit facilities and for general corporate purposes. The redemption of the March 2013 notes and repayments of the amounts outstanding under the existing credit facilities resulted in the write-off of debt issuance costs of $7.7 million and debt premium payments of $15.5 million. Accordingly, the Partnership recorded a loss on debt extinguishment of $23.1 million during the year ended December 31, 2017.
Concurrently with the April 2017 notes issuance, the Partnershipwe amended and restated itsour existing $885 million credit agreement (the "2013"2017 Credit Agreement"), which included a $630 millionincludes our senior secured term loan facility and a $255 million senior secured revolving credit facility. The $1,025 million amended and restated credit agreement (the "2017 Credit Agreement") includes a $750 million senior secured term loan facility and a $275 million senior secured revolving credit facility. The terms ofunder the senior secured term loan facility include a maturity date of2017 Credit Agreement matures on April 15, 2024 and, following an amendment in March 2018, bears interest rate ofat London InterBank Offered Rate ("LIBOR") plus 225175 basis points (bps). The pricing terms for the amendment reflected $0.9 million of Original Issue Discount ("OID"). In April 2020, as a result of the anticipated effects of the COVID-19 pandemic, we further amended the 2017 Credit Agreement (the "Second Amendment") to suspend and revise certain financial covenants, and to adjust the interest rate on and reflect additional commitments and capacity for our revolving credit facility. In conjunction with the April 2020 amendment, we prepaid $463.3 million of our outstanding senior secured term loan facility. Following the prepayment, we do not have any required remaining scheduled quarterly payments on our senior secured term loan facility. We may prepay some or all of our term debt without premium or penalty at any time. A schedule of minimum annual maturities for our senior secured term loan facility follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (In thousands) | 2021 | | 2022 | | 2023 | | 2024 | | 2025 | | 2026 and beyond | | Total |
| U.S. term loan | $ | 0 | | | $ | 0 | | | $ | 0 | | | $ | 264,250 | | | $ | 0 | | | $ | 0 | | | $ | 264,250 | |
In September 2020, in response to the continuing effects of the COVID-19 pandemic, we further amended the 2017 Credit Agreement (subsequently referred to as the "Third Amended 2017 Credit Agreement" or "Third Amendment") to further suspend
and revise certain of the financial covenants and extend the maturity of and adjust the terms that apply to a portion of our senior secured revolving credit facility. The facilities provided under the Third Amended 2017 Credit Agreement are collateralized by substantially all of the assets of the Partnership.
Revolving Credit Loans
TheIn connection with the Second Amendment, we received additional commitments under the U.S. senior secured revolving credit facility of $100.0 million bringing our total senior secured revolving credit facility capacity under the 2017 Credit Agreement has a combined limit of $275to $375.0 million andwith a Canadian sub-limit of $15$15.0 million. Borrowings under theSenior secured revolving credit facility bearborrowings following the Second Amendment bore interest at LIBOR plus 300 bps or Canadian Dollar Offered Rate ("CDOR") plus 200 bps. The revolving credit facility is scheduled to mature in April 2022bps and also provides for the issuance of documentary and standby letters of credit. As of December 31, 2017, no borrowings under the revolving credit facility were outstanding and standby letters of credit totaled $15.9 million. After letters of credit, the Partnership had $259.1 million of available borrowings under its revolving credit facility as of December 31, 2017. The maximum outstanding revolving credit facility balance during 2017 was $110 million. The 2017 Credit Agreement requiresrequired the payment of a 37.5 bps commitment fee per annum on the unused portion of the revolving credit facility. The revolving credit facility was scheduled to mature in April 2022 under the Second Amendment. In September 2020, the Third Amendment extended the maturity date of $300.0 million of the $375.0 million senior secured revolving credit facility to December 2023 (which the portion of the facility is subsequently referred to as the "2023 Revolving Credit Facility Capacity"). Under the Third Amendment, the 2023 Revolving Credit Facility Capacity bears interest at LIBOR plus 350 bps or CDOR plus 250 bps and requires the payment of a 62.5 bps commitment fee per annum on the unused portion of the 2023 Revolving Credit Facility Capacity, in each case without any step-downs. The terms of the remaining $75.0 million available under the senior secured revolving credit facility remain unchanged from the Second Amendment. Prior to the Second Amendment and Third Amendment, our senior secured revolving credit facility had a combined limit of $275 million with a Canadian sub-limit of $15 million and bore interest at LIBOR or CDOR plus 200 bps. The Third Amended 2017 Credit Agreement also provides for the issuance of documentary and standby letters of credit.
As of December 31, 2020 and December 31, 2019, 0 amounts were outstanding under the revolving credit facility. After letters of credit of $15.9 million and $15.4 million, we had $359.1 million and $259.6 million of available borrowings under our revolving credit facility as of December 31, 2020 and December 31, 2019, respectively. The maximum outstanding revolving credit facility balance during 2020 was $140 million.
Notes
In April 2020, as a result of the anticipated effects of the COVID-19 pandemic and in connection with the Second Amendment, we issued $1.0 billion of 5.500% senior secured notes due 2025 ("2025 senior notes") in a private placement. The 2025 senior notes and the related guarantees are secured by first-priority liens on the issuers' and the guarantors' assets that secure all the obligations under our credit facilities.
Term Debt
The $750net proceeds from the offering of the 2025 senior notes were used to repay $463.3 million of our then-outstanding senior secured term loan facility underfacility. The remaining amount is to be used for general corporate and working capital purposes, including fees and expenses related to the 2017 Credit Agreement hastransaction.
The 2025 senior notes pay interest semi-annually in May and November, with the principal due in full on May 1, 2025. Prior to May 1, 2022, up to 35% of the 2025 senior notes may be redeemed with the net cash proceeds of certain equity offerings at a maturityprice equal to 105.500% of the principal amount thereof, together with accrued and unpaid interest and additional interest, if any. The 2025 senior notes may be redeemed, in whole or in part, at any time prior to May 1, 2022 at a price equal to 100% of the principal amount of the notes redeemed plus a "make-whole" premium together with accrued and unpaid interest and additional interest, if any, to the redemption date. Thereafter, the 2025 senior notes may be redeemed, in whole or in part, at various prices depending on the date redeemed.
In October 2020, in response to the continuing effects of April 15, 2024 and an interest rate of LIBOR plus 225 bps. The term loan amortizes at $7.5 million annually. The minimum maturities of term debt under the 2017 Credit Agreement are as follows:
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (In thousands) | 2018 | | 2019 | | 2020 | | 2021 | | 2022 | | 2023 & Beyond | | Total |
| April 2017 U.S. term loan averaging 3.43% (due 2017-2024) | $ | — |
| | $ | 5,625 |
| | $ | 7,500 |
| | $ | 7,500 |
| | $ | 7,500 |
| | $ | 706,875 |
| | $ | 735,000 |
|
During the third quarter of 2017, $15.0COVID-19 pandemic, we issued $300 million of amortization was paid. Therefore, there were no current maturities outstanding as6.500% senior unsecured notes due 2028 ("2028 senior notes") in a private placement. The net proceeds from the offering of December 31, 2017. the 2028 senior notes is to be used for general corporate and working capital purposes, including fees and expenses related to the transaction.
The Partnership2028 senior notes pay interest semi-annually in April and October, beginning April 1, 2021, with the principal due in full on October 1, 2028. Prior to October 1, 2023, up to 35% of the 2028 senior notes may prepay somebe redeemed with the net cash proceeds of certain equity offerings at a price equal to 106.500% of the principal amount thereof, together with accrued and unpaid interest, if any. The 2028 senior notes may be redeemed, in whole or all of its term debt without premium or penaltyin part, at any time.time prior to October 1, 2023 at a price equal to 100% of the principal amount of the notes redeemed plus a "make-whole" premium together with accrued and unpaid interest and additional interest, if any, to the redemption date. Thereafter, the 2028 senior notes may be redeemed, in whole or in part, at various prices depending on the date redeemed.
NotesIn June 2014, we issued $450 million of 5.375% senior unsecured notes due 2024 ("2024 senior notes"). The 2024 senior notes pay interest semi-annually in June and December, with the principal due in full on June 1, 2024. The 2024 senior notes may be redeemed, in whole or in part, at various prices depending on the date redeemed.
The Partnership's
In April 2017, we issued $500 million of 5.375% senior unsecured notes due 2027 ("2027 senior notes"). The 2027 senior notes pay interest semi-annually in April and October, with the principal due in full on April 15, 2027. Prior to April 15, 2020, up to 35% of the notes may be redeemed with the net cash proceeds of certain equity offerings at a price equal to 105.375% of the principal amount thereof, together with accrued and unpaid interest and additional interest, if any. The 2027 senior notes may be redeemed, in whole or in part, at any time prior to April 15, 2022 at a price equal to 100% of the principal amount of the notes redeemed plus a "make-whole" premium together with accrued and unpaid interest and additional interest, if any, to the redemption date. Thereafter, the 2027 senior notes may be redeemed, in whole or in part, at various prices depending on the date redeemed.
In June 2019, in conjunction with the acquisition of the Schlitterbahn parks, we issued $500 million of 5.250% senior unsecured notes due 2029 ("2029 senior notes"). The 2029 senior notes pay interest semi-annually in January and July, with the principal due in full on July 15, 2029. Prior to July 15, 2022, up to 35% of the 2029 senior notes may be redeemed with the net cash proceeds of certain equity offerings at a price equal to 105.250% of the principal amount thereof, together with accrued and unpaid interest and additional interest, if any. The 2029 senior notes may be redeemed, in whole or in part, at any time prior to July 15, 2024 at a price equal to 100% of the principal amount of the notes redeemed plus a "make-whole" premium together with accrued and unpaid interest and additional interest, if any, to the redemption date. Thereafter, the 2029 senior notes may be redeemed, in whole or in part, at various prices depending on the date redeemed.
Cedar Fair, L.P., Canada’s Wonderland Company ("Cedar Canada"), and Magnum Management Corporation ("Magnum") are the co-issuers of the 2024 senior notes. The 2024 senior notes have been fully and unconditionally guaranteed, on a joint and several basis, by each 100% owned subsidiary of Cedar Fair (other than Cedar Canada and Magnum). There are no non-guarantor subsidiaries.
Cedar Fair, L.P., Canada's Wonderland Company ("Cedar Canada"), Magnum Management Corporation ("Magnum"), and Millennium Operations LLC ("Millennium") are the co-issuers of the Partnership's April 20172025, 2027, 2028 and 2029 senior notes and co-borrowers of the senior secured credit facilities. Both the notes and senior secured credit facilities have been fully and unconditionally guaranteed, on a joint and several basis, by each 100% owned subsidiary of Cedar Fair (other than Cedar Canada, Magnum and Millennium). There are no non-guarantor subsidiaries.
In June 2014, the Partnership issued $450 million of 5.375% senior unsecured notes ("June 2014 notes"). The Partnership's June 2014 notes pay interest semi-annually in June and December, with the principal due in full on June 1, 2024. The notes may be redeemed, in whole or in part, at any time prior to June 1, 2019 at a price equal to 100% of the principal amount of the notes redeemed plus a “make-whole” premium together with accrued and unpaid interest, if any, to the redemption date. Thereafter, the notes may be redeemed, in whole or in part, at various prices depending on the date redeemed.
Cedar Fair, L.P., Canada’s Wonderland Company ("Cedar Canada"), and Magnum Management Corporation ("Magnum") are the co-issuers of the June 2014 notes. The June 2014 notes have been fully and unconditionally guaranteed, on a joint and several basis, by each 100% owned subsidiary of Cedar Fair (other than Cedar Canada and Magnum). There are no non-guarantor subsidiaries.
As market conditions warrant, the Partnershipwe may from time to time repurchase our outstanding debt securities issued by the Partnership, in privately negotiated or open market transactions, by tender offer, exchange offer or otherwise.
Covenants
The Third Amended 2017 Credit Agreement includes (i) a ConsolidatedSenior Secured Leverage Ratio of 4.50x Total First Lien Senior Secured Debt-to-Consolidated EBITDA starting with the first quarter of 2022, which if breachedwill step down to 4.00x in the second quarter of 2023 and which will step down further to 3.75x in the third quarter of 2023, with the covenant calculations for the first, second, and third quarters in 2022 to include Consolidated EBITDA from the second, third and fourth quarters of the fiscal year ended December 31, 2019 in lieu of the Consolidated EBITDA for the corresponding quarters in 2021 ("Deemed EBITDA Quarters"), (ii) a requirement that we maintain a minimum liquidity level of at least $125 million, tested at all times, until the earlier of December 31, 2022 or the termination of the Additional Restrictions Period (which generally includes the period from the effective date of the Second Amendment until the delivery of the compliance certificate for the fourth quarter of 2022), (iii) a suspension of certain restricted payments, including partnership distributions, under the Third Amended 2017 Credit Agreement until the termination of the Additional Restrictions Period. We may terminate the Additional Restrictions Period prior to December 31, 2022 by achieving compliance with the Senior Secured Leverage Ratio covenant as of the end of a fiscal quarter without giving effect to Deemed EBITDA Quarters for any reason and not cured could result in an event of default. The ratio is set at a maximum of 5.50x Consolidated Total Debt-to-Consolidated EBITDA.fiscal quarter. As of December 31, 2017, the Partnership was2020, we were in compliance with this financial condition covenant and all otherthe applicable financial covenants under the Third Amended 2017 Credit Agreement.
The Partnership's long-term debtOur fixed rate note agreements include Restricted Payment provisions.provisions, which could limit our ability to pay partnership distributions. Pursuant to the terms of the indenture governing the Partnership's June 20142024 senior notes, which includes the most restrictive of these Restricted Payments provisions the Partnershipunder our fixed rate note agreements, if our pro forma Total-Indebtedness-to-Consolidated-Cash-Flow Ratio is greater than 5.00x, we can still make Restricted Payments of $60 million annually so long as no default or event of default has occurred and is continuing; and the Partnership can make additional Restricted Payments if the Partnership'scontinuing. If our pro forma Total-Indebtedness-to-Consolidated-Cash-Flow Ratio is less than or equal to 5.00x.5.00x, we can make Restricted Payments up to our Restricted Payment pool. Our pro forma Total-Indebtedness-to-Consolidated-Cash-Flow Ratio was greater than 5.00x as of December 31, 2020.
(6)
(9) Derivative Financial Instruments:
Derivative financial instruments are used within the Partnership’sour overall risk management program to manage certain interest rate and foreign currency risks. By utilizing a derivative instrument to hedge our exposure to LIBOR rate changes, the Partnership iswe are exposed to counterparty credit risk, in particular the failure of the counterparty to perform under the terms of the derivative contract. To mitigate this risk, hedging instruments are placed with a counterparty that the Partnership believeswe believe poses minimal credit risk. The Partnership doesWe do not use derivative financial instruments for trading purposes.
In the first quarter of 2016, the Partnership amended each of its fourWe had 4 interest rate swap agreements to extend each of the maturities by two years tothat matured on December 31, 2020 and effectively convertconverted $500 million of variable-rate debt to a fixed rate of 2.64%4.39%. AsWe have 4 additional interest rate swap agreements that convert the same notional amount to a resultfixed rate of 4.63% for the period December 31, 2020 through December 31, 2023. NaN of the amendments, the previously existing interest rate swaps were de-designated, and the amounts recorded in AOCI are being amortized into earnings through the original December 31, 2018 maturity. The amended interest rate swap agreements are not designated as hedging instruments.
The fair market value of the Partnership's swap portfolio was recorded within "Derivative Liability" on the consolidated balance sheets as of December 31, 2017 and December 31, 2016 as follows:
|
| | | | | | | |
| (In thousands) | December 31, 2017 | | December 31, 2016 |
| Derivatives not designated as hedging instruments: | | | |
| Interest rate swaps | $ | (8,722 | ) | | $ | (17,721 | ) |
Derivatives Designated as Hedging Instruments
Changes in fair value of highly effective hedges are recorded as a component of AOCI in the balance sheet. Any ineffectiveness is recognized immediately in income. Amounts recorded as a component of accumulated other comprehensive income are reclassified into earnings in the same period the forecasted transactions affect earnings. As a result of the first quarter of 2016 amendments, the previously existing interest rate swap agreements were de-designated and the amended interest rate swap agreements were not designated as hedging instruments. AsThe fair value of December 31, 2017,our swap portfolio for the Partnership had no designated derivatives; therefore, no amountperiods presented were as follows:
| | | | | | | | | | | | | | |
| (In thousands) | Balance Sheet Location | December 31, 2020 | | December 31, 2019 |
| Derivatives not designated as hedging instruments: | | | | |
| Interest rate swaps | Other accrued liabilities | $ | 0 | | | $ | (5,129) | |
| Derivative Liability | (39,086) | | | (18,108) | |
| | $ | (39,086) | | | $ | (23,237) | |
Derivatives Not Designated as Hedging Instruments
Instruments that do not qualify for hedge accounting or were de-designated are prospectively adjusted to fair value each reporting period through "Net effect of swaps" within the consolidated statements of operations and comprehensive (loss) income. The amounts that were previously recorded as a component of AOCI prior to de-designation are reclassified to earnings, and a corresponding realized gain or loss is recognized when the forecasted cash flow occurs. As a result of the first quarter of 2016 amendments, the previouslyPreviously existing interest rate swap agreements were de-designated, and the amounts previously recorded in AOCI are beingwere amortized into earnings through thean original December 31, 2018 maturity. As of December 31, 2017, approximately $9.5 million ofmaturity date. Therefore, all losses remained in AOCI related to the effective cash flow hedge contracts prior to de-designation all of which will bewere reclassified to earnings within the next twelve months.as of December 31, 2018.
The following table summarizes the effect of derivative instruments(gains) losses recognized in net (loss) income on income and other comprehensive income for the years ended December 31, 2017 and December 31, 2016:
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (In thousands) | | Amount of Gain (Loss)
recognized in OCI on
Derivatives
(Effective Portion) | | Amount and Location of Gain (Loss)
Reclassified from Accumulated OCI into Income
(Effective Portion) | | Amount and Location of Gain (Loss) Recognized in Income on Derivatives |
| Designated Derivatives | | Year ended 12/31/17 | | Year ended 12/31/16 | | Designated Derivatives | | Year ended 12/31/17 | | Year ended 12/31/16 | | Derivatives Not Designated | | Year ended 12/31/17 | | Year ended 12/31/16 |
| Interest rate swaps | | $ | — |
| | $ | (4,671 | ) | | Interest Expense | | $ | — |
| | $ | (851 | ) | | Net effect of swaps | | $ | 9,504 |
| | $ | 9,868 |
|
During the year ended December 31, 2017, the Partnership recognized $9.5 million of gains on the derivatives not designated as cash flow hedges and $9.5 million of expense representing the regular amortization of amounts in AOCI. The net effect of these amounts resulted in an immaterial impact to earnings for the yearwere recorded in "Net effect of swaps".
During the year ended December 31, 2016, the Partnership recognized $9.9 million of gains on the derivatives not designated as cash flow hedges and $8.7 million of expense representing the regular amortization of amounts in AOCI. The net effect of these amounts resulted in a benefit to earnings for the year of $1.2 million recorded in "Net effect of swaps".periods presented as follows:
| | | | | | | | | | | | | | | | | | | | |
| | Years Ended December 31, |
| (In thousands) | | 2020 | | 2019 | | 2018 |
| Change in fair market value | | $ | 15,849 | | | $ | 16,532 | | | $ | (2,017) | |
| Amortization of amounts in AOCI | | 0 | | | 0 | | | 9,459 | |
| Net effect of swaps | | $ | 15,849 | | | $ | 16,532 | | | $ | 7,442 | |
(7)
(10) Partners' Equity:
Equity and Equity-Based Compensation:
Special L.P. Interests
In accordance with the Partnership Agreement, certain partners were allocated $5.3$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$5.3 million upon liquidation of the Partnership.
Equity-Based Incentive Plan
The 2016 Omnibus Incentive Plan was approved by the Partnership'sour unitholders in June 2016 and allows the awarding of up to 2.8 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. The 2016 Omnibus Incentive Plan superseded the 2008 Omnibus Incentive Plan which was approved by the Partnership'sour unitholders in May 2008 and allowed the awarding of up to 2.5 million unit options and other forms of equity. Outstanding awards under the 2008 Omnibus Incentive Plan continue to be in effect and are governed by the terms of that plan. The 2016 Omnibus Incentive Plan provides an opportunity for officers, directors, and eligible persons to acquire an interest in the growth and performance of the Partnership'sour units and provides employees annual and long-term incentive awards as determined by the Board of Directors. Under the 2016 Omnibus Incentive Plan, the Compensation Committee of the Board of Directors may grant unit options, unit appreciation rights, restricted units, performance awards, other unit awards, cash incentive awards and unrestricted unit awards. The awards granted by the Compensation Committee fall into two categories, Awards Payable in Cash or Equity, and Awards Payable in Equity. The impact of these awards is more fully described below.
Equity-based compensation expense recognized in the consolidated statements of operations and comprehensive (loss) income within "Selling, General and Administrative Expense" for the applicable periods was as follows:
| | | | | | | | | | | | | | | | | | | | |
| | Years Ended December 31, |
| (In thousands) | | 2020 (1) | | 2019 | | 2018 |
| Awards Payable in Cash or Equity | | | | | | |
| | | | | | |
| | | | | | |
| Deferred units | | $ | (588) | | | $ | 611 | | | $ | (266) | |
| Awards Payable in Equity | | | | | | |
| Performance units | | (5,270) | | | 5,535 | | | 5,413 | |
| Restricted units | | 5,061 | | | 6,375 | | | 5,830 | |
| | | | | | |
| Total equity-based compensation expense | | $ | (797) | | | $ | 12,521 | | | $ | 10,977 | |
(1) The market value of our deferred unit awards and the anticipated payout of our annual performance unit awards decreased due to the effects of the COVID-19 pandemic resulting in expense reversed during the year ended December 31, 2020.
|
| | | | | | | | | | | | |
| | | Years Ended December 31, |
| (In thousands) | | 2017 | | 2016 | | 2015 |
| Awards Payable in Cash or Equity | | | | | |
|
|
| Phantom units | | $ | — |
| | $ | — |
| | $ | 788 |
|
| Performance units | | 507 |
| | 4,586 |
| | 8,041 |
|
| Deferred units | | 627 |
| | 993 |
| | 794 |
|
| Awards Payable in Equity | | | | | | |
| Performance units | | 8,822 |
| | 7,519 |
| | 3,677 |
|
| Restricted units | | 4,612 |
| | 3,856 |
| | 4,075 |
|
| Unit Options | | — |
| | 5 |
| | 580 |
|
| Total equity-based compensation expense | | $ | 14,568 |
| | $ | 16,959 |
| | $ | 17,955 |
|
Awards Payable in Cash or Equity
Phantom Units
During the year ended December 31, 2017, no phantom units were awarded. Phantom unit awards generally vest over an approximate four-year period and can be settled with cash, limited partnership units, or a combination of both, as determined by the Compensation Committee. The effect of phantom unit awards has been included in the diluted earnings per unit calculation for the year ended December 31, 2015, as a portion of the awards were paid in limited partnership units during that year. As of December 31, 2015, the Partnership had settled all outstanding phantom unit awards.
Performance Units
During the year ended December 31, 2017, no performance units payable in cash or equity were awarded. The number of performance units issuable under these awards are contingently based upon certain performance targets over a three-year period and these awards can be settled with cash, limited partnership units, or a combination of both as determined by the Compensation Committee, after the end of the performance period. Certain of these types of performance units were awarded in prior years. The effect of these outstanding performance unit awards for which the performance condition had been met has been included in the diluted earnings per unit calculation, as a portion of the awards were paid in limited partnership units. The effect of these outstanding performance unit awards for which the performance condition had not been met has been excluded from the diluted earnings per unit calculation. As of December 31, 2017, the Partnership had settled all outstanding performance unit awards payable in cash or equity.
Deferred Units
| | | | | | | | | | | | | | |
| (In thousands, except per unit amounts) | | Number of Units | | Weighted Average Grant Date Fair Value Per Unit |
| Outstanding deferred units at December 31, 2019 | | 49 | | | $ | 54.16 | |
Granted (1) | | 8 | | | $ | 43.98 | |
| Forfeited | | 0 | | | 0 | |
| Settled | | (11) | | | $ | 55.10 | |
| Outstanding deferred units at December 31, 2020 | | 46 | | | $ | 52.07 | |
|
| | | | | | | |
| (In thousands, except per unit amounts) | | Number of Units | | Weighted Average Grant Date Fair Value Per Unit |
| Outstanding deferred units at December 31, 2016 | | 35 |
| | $ | 53.51 |
|
Granted (1) | | 9 |
| | $ | 62.71 |
|
| Forfeited | | — |
| | — |
|
| Vested | | — |
| | — |
|
| Outstanding deferred units at December 31, 2017 | | 44 |
| | $ | 55.41 |
|
(1) Includes 23 distribution-equivalent units
Deferred unit awards vest over a one-year period and the settlement of these units is deferred until the individual's service to the Partnership ends. The deferred units begin to accumulate distribution-equivalents upon vesting and are paid when the restriction ends. The effect of outstanding deferred unit awards has been included in the diluted earnings per unit calculation for the years ended December 31, 2019 and 2018, as a portion of the awards are expected to be settled in limited partnership units. As of December 31, 2017,2020, the market value of the deferred units was $2.9$1.8 million, was classified as current and was recorded within "Other accrued liabilities" within the consolidated balance sheet. As of December 31, 2017,2020, there was no0 unamortized expense related to unvested deferred unit awards as all units were fully vested.
Awards Payable in Equity
Performance Units
| | | | | | | | | | | | | | |
| (In thousands, except per unit amounts) | | Number of Units | | Weighted Average Grant Date Fair Value Per Unit |
| Unvested performance units at December 31, 2019 | | 395 | | | $ | 56.36 | |
Granted (1) | | 98 | | | $ | 32.98 | |
| Forfeited | | (315) | | | $ | 55.96 | |
| Vested | | (97) | | | $ | 57.61 | |
| Unvested performance units at December 31, 2020 | | 81 | | | $ | 27.92 | |
|
| | | | | | | |
| (In thousands, except per unit amounts) | | Number of Units | | Weighted Average Grant Date Fair Value Per Unit |
| Unvested performance units at December 31, 2016 | | 488 |
| | $ | 55.32 |
|
Granted (1) | | 112 |
| | $ | 61.79 |
|
| Forfeited | | (6 | ) | | $ | 56.78 |
|
| Vested | | (62 | ) | | $ | 50.95 |
|
| Unvested performance units at December 31, 2017 | | 532 |
| | $ | 57.18 |
|
(1) Includes 2016 forfeitable distribution-equivalent units
As of December 31, 2020, our annual performance unit awards are not anticipated to payout due to the effects of the COVID-19 pandemic. The number of performance units issuable under thesethe annual performance unit awards are contingently based upon certain performance targets over a three-year vesting period. The annual performance awards and the related forfeitable distribution-equivalent units generally are paid out in the first quarter following the performance period in limited partnership units. The effect of these types of outstanding performance unit awards, for which the performance conditions havehad been met, have been included in the diluted earnings per unit calculation. Ofcalculation for the unvested performance units atyears ended December 31, 2017, 62,1172019 and 2018.
In 2020, 80,542 performance-based other units were retention grant units. Vestingawarded to incentivize optimal executive performance in light of the retention grant unit award followseffects of the COVID-19 pandemic (the "COVID-19 performance-based other units"). The number of COVID-19 performance-based other units issuable are contingently based upon the level of attainment of various performance objectives over a three-yearsix-month period with the awards payable in limited partnership units following the one-year anniversary of the six-month performance period. Half of the retention grantThe COVID-19 performance-based other unit award vested in December 2017 and the remaining half of the award will vest in December 2018. The forfeitable distribution equivalents for the retention grant units are payable in cash at the same time. As of December 31, 2017, $0.7 million of these forfeitable distribution equivalents were accrued, classified as current and recorded within "Other accrued liabilities" within the consolidated balance sheet.awards do not earn distribution-equivalent units.
As of December 31, 2017,2020, unamortized compensation expense related to these unvested performance unit awards was $12.1$1.5 million, which is expected to be amortized over a weighted average period of 2.2 years.1.0 year and represent the COVID-19 performance-based other units. The fair value of the performance units is based on the unit price the day before the date of grant along with reinvested forfeitable distribution-equivalent units. The Partnership assessesgrant. We assess the probability of the performance targets being met and recognizes relatedmay reverse prior period expense or recognize additional expense accordingly.
Restricted Units
| | | | | | | | | | | | | | |
| (In thousands, except per unit amounts) | | Number of Units | | Weighted Average Grant Date Fair Value Per Unit |
| Unvested restricted units at December 31, 2019 | | 310 | | | $ | 57.07 | |
| Granted | | 33 | | | $ | 46.56 | |
| Forfeited | | (1) | | | $ | 58.35 | |
| Vested | | (123) | | | $ | 58.36 | |
| Unvested restricted units at December 31, 2020 | | 219 | | | $ | 54.77 | |
|
| | | | | | | |
| (In thousands, except per unit amounts) | | Number of Units | | Weighted Average Grant Date Fair Value Per Unit |
| Unvested restricted units at December 31, 2016 | | 225 |
| | $ | 57.09 |
|
| Granted | | 98 |
| | $ | 63.12 |
|
| Forfeited | | (3 | ) | | $ | 57.53 |
|
| Vested | | (68 | ) | | $ | 55.93 |
|
| Unvested restricted units at December 31, 2017 | | 252 |
| | $ | 59.75 |
|
The majority of theour annual restricted unitsunit awards vest evenly over a three-year period, and the restrictions on these units lapse upon vesting. Of the unvested restricted units atperiod. However, as of December 31, 2017, 32,1542020, 88,072 units vest following a two-year cliff vesting period and 29,253 unitsoutstanding vest following a three-year cliff vesting period. Restrictions on our restricted unit awards lapse upon vesting. During the vesting period for restricted unit awards, the units accumulate forfeitable distribution-equivalents, which, when the units are fully vested, are payable in cash. As of December 31, 2017,2020, the amount of forfeitable distribution equivalents accrued totaled $1.0$0.9 million; $0.6 million of which was classified as current and recorded within "Other accrued liabilities" within the consolidated balance sheet and $0.4 million of which was classified as non-current and recorded within "Other Liabilities".
As of December 31, 2017,2020, unamortized compensation expense, determined as the market value of the units on the day before the date of grant, related to unvested restricted unit awards was $10.0$4.8 million, which is expected to be amortized over a weighted average period of 2.31.7 years.
Unit Options
The Partnership's unit | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (In thousands, except per unit amounts) | | Unit Options | | Weighted Average Exercise Price | | Weighted Average Remaining Contractual Life | | Aggregate Intrinsic Value |
| Options outstanding at December 31, 2019 | | 362 | | | $ | 34.49 | | | | | |
| | | | | | | | |
| Exercised | | (4) | | | $ | 29.53 | | | | | |
| Forfeited | | (6) | | | $ | 36.95 | | | | | |
| Options outstanding at December 31, 2020 | | 352 | | | $ | 34.50 | | | | | |
| Options exercisable, end of year | | 352 | | | $ | 34.50 | | | 1.8 years | | $ | 1,703 | |
Unit options are issued with an exercise price no less than the market closing price of the Partnership's units on the day before the date of grant. Outstanding unit options vest over a three-year periodthree years and have a maximum term of ten years. As of December 31, 2017, the Partnership2020, we had 373,612352,136 fixed-price unit options outstanding under the 2008 Omnibus Incentive Plan. NoNaN options have been granted under the 2016 Omnibus Incentive Plan.
A summary of unit option activity and vested unit options outstanding for the years ended December 31, 2017 and December 31, 2016 is as follows:
|
| | | | | | | | | | | | | | | |
| | | 2017 | | 2016 |
| (In thousands, except per unit amounts) | | Unit Options | | Weighted Average Exercise Price | | Unit Options | | Weighted Average Exercise Price |
| Outstanding, beginning of year | | 400 |
| | $ | 34.42 |
| | 507 |
| | $ | 34.50 |
|
| Exercised | | (20 | ) | | 31.85 |
| | (107 | ) | | 34.80 |
|
| Forfeited | | (6 | ) | | 35.05 |
| | — |
| | — |
|
| Outstanding, end of year | | 374 |
| | $ | 34.55 |
| | 400 |
| | $ | 34.42 |
|
| Options exercisable, end of year | | 374 |
| | $ | 34.55 |
| | 400 |
| | $ | 34.42 |
|
| | | | | | | | | |
| Weighted Average Remaining Contractual Life | | 4.9 years |
| | | | | | |
| Aggregate intrinsic value | | $ | 11,373 |
| | | | | | |
The range of exercise prices of unit options outstanding was $29.53 to $36.95 as of December 31, 2017.2020. The total intrinsic value of unit options exercised during the years ended December 31, 2017, 20162020, 2019 and 2015 were $0.72018 was $0.0 million, $2.8$0.1 million, and $3.0$0.2 million, respectively.
The Partnership hasWe have a policy of issuing limited partnership units from treasury to satisfy unit option exercises and expects itswe expect our treasury unit balance to be sufficient for 20182021 based on estimates of unit option exercises for that period.
(8)(11) Retirement Plans:
The Partnership hasWe have trusteed, noncontributory retirement plans for the majoritymost of itsour full-time employees. Contributions are discretionary and amounts accrued were approximately $4.0 million, $4.2$4.7 million and $4.3$4.2 million for the years ended December 31, 2017, 20162019 and 2015,2018, respectively. For the year ended December 31, 2020, we did not make any discretionary contributions due to the effects of the COVID-19 pandemic on our financial performance. Additionally, the Partnership haswe have a trusteed, contributory retirement plan for the majoritymost of itsour full-time employees. This plan permits employees to contribute specified percentages of their salary, matched up to a limit by the Partnership.limit. Matching contributions, net of forfeitures, approximated $2.6$3.8 million, $2.4$3.1 million and $2.3$2.6 million for the years ended December 31, 2017, 20162020, 2019 and 2015,2018, respectively.
In addition, approximately 265250 employees are covered by union-sponsored, multi-employer pension plans for which approximately $1.8$2.0 million, $1.7$2.0 million and $1.5$1.8 million were contributed for the years ended December 31, 2017, 20162020, 2019 and 2015,2018, respectively. The Partnership hasWe have no plans to withdraw from any of the multi-employer plans. The Partnership believes that the liability resulting from any such withdrawal, as defined by the Multi-employer Pension Plan Amendments Act
(9)(12) 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 PTP tax levied on partnership gross income (net revenues less cost of food, merchandise and games) beginning in 1998. In addition, income taxes are recognized for the amount of income taxes payable by the Partnership'sCedar Fair, L.P. and its corporate subsidiaries for the current year and for the impact of deferred tax assets and liabilities that represent future tax consequences of events that have been recognized differently in the financial statements than for tax purposes. As such, the Partnership's "Provision"(Benefit) provision for taxes" includes amounts for both the PTP tax and for federal, state, local and foreign income taxes on the Partnership's corporate subsidiaries.taxes.
The Partnership's 20172020 tax provisionbenefit totaled $1.1$137.9 million, which consistsconsisted of an $11.1a $2.5 million provision for the PTP tax and a $10.0$140.4 million benefit for income taxes. This comparescompared with the Partnership's 20162019 tax provision of $71.4$42.8 million, which consisted of an $11.4a $12.1 million provision for the PTP tax and a $60.0$30.7 million provision for income taxes, and the 20152018 tax provision of $22.2$34.7 million, which consisted of an $11.7$11.6 million provision for the PTP tax and a $10.5$23.1 million provision for income taxes. The calculation of the tax (benefit) provision involves significant estimates and assumptions and actualassumptions. Actual results could differ from those estimates.
Significant components of (loss) income before taxes for the years ended December 31, 2017, 20162020, 2019 and 20152018 were as follows:
| | | (In thousands) | | 2017 | | 2016 | | 2015 | |
| | | | | | | (In thousands) | | 2020 | | 2019 | | 2018 |
| Domestic | | $ | 171,382 |
| | $ | 223,626 |
| | $ | 209,268 |
| Domestic | | $ | (675,746) | | | $ | 167,510 | | | $ | 185,749 | |
| Foreign | | 45,206 |
| | 25,480 |
| | (74,854 | ) | Foreign | | (52,412) | | | 47,644 | | | (24,353) | |
| Total income before taxes | | $ | 216,588 |
| | $ | 249,106 |
| | $ | 134,414 |
| |
| Total (loss) income before taxes | | Total (loss) income before taxes | | $ | (728,158) | | | $ | 215,154 | | | $ | 161,396 | |
|
The (benefit) provision (benefit) for income taxes was comprised of the following for the years ended December 31, 2017, 20162020, 2019 and 2015:2018:
| | | | | | | | | | | | | | | | | | | | |
| (In thousands) | | 2020 | | 2019 | | 2018 |
| Current federal | | $ | (61,726) | | | $ | 22,745 | | | $ | 2,682 | |
| Current state and local | | (3,747) | | | 6,261 | | | 4,901 | |
| Current foreign | | (32,987) | | | 5,759 | | | 4,301 | |
| Total current | | (98,460) | | | 34,765 | | | 11,884 | |
| Deferred federal, state and local | | (43,220) | | | (5,953) | | | 15,525 | |
| Deferred foreign | | 1,287 | | | 1,847 | | | (4,266) | |
| Total deferred | | (41,933) | | | (4,106) | | | 11,259 | |
| Total (benefit) provision for income taxes | | $ | (140,393) | | | $ | 30,659 | | | $ | 23,143 | |
|
| | | | | | | | | | | | |
| (In thousands) | | 2017 | | 2016 | | 2015 |
| | | | | | |
| Income taxes: | | | | | | |
| Current federal | | $ | 18,640 |
| | $ | 40,440 |
| | $ | 22,232 |
|
| Current state and local | | 4,631 |
| | 5,729 |
| | 3,767 |
|
| Current foreign | | 2,501 |
| | 3,188 |
| | 530 |
|
| Total current | | 25,772 |
| | 49,357 |
| | 26,529 |
|
| Deferred federal, state and local | | (41,133 | ) | | 5,766 |
| | 4,842 |
|
| Deferred foreign | | 5,363 |
| | 4,896 |
| | (20,898 | ) |
| Total deferred | | (35,770 | ) | | 10,662 |
| | (16,056 | ) |
| Total provision (benefit) for income taxes | | $ | (9,998 | ) | | $ | 60,019 |
| | $ | 10,473 |
|
The (benefit) provision (benefit) for income taxes for the Partnership's corporate subsidiaries differsdiffered from the amount computed by applying the U.S. federal statutory income tax rate of 35%21% to the Partnership's(loss) income before taxes.
The sources and tax effects of the differences were as follows: | | | (In thousands) | | 2017 | | 2016 | | 2015 | (In thousands) | | 2020 | | 2019 | | 2018 |
| | | | | | | |
| Income tax provision based on the U.S. federal statutory tax rate | | $ | 75,806 |
| | $ | 87,187 |
| | $ | 47,045 |
| Income tax provision based on the U.S. federal statutory tax rate | | $ | (152,913) | | | $ | 45,182 | | | $ | 33,893 | |
| Partnership income not includible in corporate income | | (23,644 | ) | | (38,702 | ) | | (39,279 | ) | |
| State and local taxes, net of federal income tax benefit | | 4,878 |
| | 6,323 |
| | 3,504 |
| |
| Partnership (income) loss not subject to corporate income tax | | Partnership (income) loss not subject to corporate income tax | | 47,631 | | | (14,031) | | | (16,403) | |
| State and local taxes, net | | State and local taxes, net | | (20,594) | | | 4,906 | | | 5,278 | |
| Valuation allowance | | (119 | ) | | (1,473 | ) | | — |
| Valuation allowance | | 3,150 | | | 196 | | | 2,321 | |
| Expired foreign tax credits | | Expired foreign tax credits | | 2,253 | | | 0 | | | 0 | |
| Tax credits | | (1,063 | ) | | (1,066 | ) | | (1,253 | ) | Tax credits | | (426) | | | (1,026) | | | (1,300) | |
| Change in U.S. tax law | | (54,171 | ) | | 7,366 |
| | — |
| Change in U.S. tax law | | (17,983) | | | 111 | | | (8,730) | |
| Foreign currency translation (gains) losses | | (10,756 | ) | | — |
| | — |
| Foreign currency translation (gains) losses | | (1,455) | | | (4,707) | | | 7,949 | |
| Nondeductible expenses and other | | (929 | ) | | 384 |
| | 456 |
| Nondeductible expenses and other | | (56) | | | 28 | | | 135 | |
| Total provision (benefit) for income taxes | | $ | (9,998 | ) | | $ | 60,019 |
| | $ | 10,473 |
| |
| Total (benefit) provision for income taxes | | Total (benefit) provision for income taxes | | $ | (140,393) | | | $ | 30,659 | | | $ | 23,143 | |
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, 20172020 and December 31, 20162019 were as follows: | | | (In thousands) | | 2017 | | 2016 | |
| | | | | (In thousands) | | 2020 | | 2019 |
| Deferred tax assets: | | | | | Deferred tax assets: | | | | |
| Compensation | | $ | 9,022 |
| | $ | 15,716 |
| Compensation | | $ | 5,800 | | | $ | 9,817 | |
| Accrued expenses | | 4,647 |
| | 6,875 |
| Accrued expenses | | 5,408 | | | 3,864 | |
| Foreign tax credits | | 8,654 |
| | 7,679 |
| Foreign tax credits | | 8,765 | | | 7,439 | |
| Tax attribute carryforwards | | 2,016 |
| | 1,987 |
| Tax attribute carryforwards | | 13,224 | | | 2,101 | |
| Derivatives | | 938 |
| | 2,698 |
| Derivatives | | 9,771 | | | 5,141 | |
| Foreign currency | | 5,443 |
| | 10,414 |
| Foreign currency | | 5,318 | | | 6,230 | |
| Deferred revenue | | 2,653 |
| | 4,455 |
| Deferred revenue | | 10,012 | | | 2,402 | |
| | Deferred tax assets | | 33,373 |
| | 49,824 |
| Deferred tax assets | | 58,298 | | | 36,994 | |
| Valuation allowance | | (4,088 | ) | | (4,207 | ) | Valuation allowance | | (9,755) | | | (6,606) | |
| Net deferred tax assets | | 29,285 |
| | 45,617 |
| Net deferred tax assets | | 48,543 | | | 30,388 | |
| Deferred tax liabilities: | | | | | Deferred tax liabilities: | | | | |
| Property | | (91,730 | ) | | (136,831 | ) | Property | | (68,256) | | | (95,087) | |
| Intangibles | | (12,353 | ) | | (13,671 | ) | Intangibles | | (19,882) | | | (17,347) | |
| Deferred tax liabilities | | (104,083 | ) | | (150,502 | ) | Deferred tax liabilities | | (88,138) | | | (112,434) | |
| Net deferred tax liability | | $ | (74,798 | ) | | $ | (104,885 | ) | Net deferred tax liability | | $ | (39,595) | | | $ | (82,046) | |
The Partnership recordsWe record a valuation allowance if, based on the weight of available evidence, it is more likely than not that some portion, or all, of a deferred tax asset will not be realized. Through December 31, 2016, the Partnership had recorded a $4.2 million valuation allowance related to a $7.7 million deferred tax asset for foreign tax credit carryforwards. The need for this allowance wasis based on several factors including the ten-year carryforward period allowedperiods for excess foreignnet operating losses and tax credits, prior experience to date of foreign tax credit limitations, and management's long termlong-term estimates of domestic and foreign source income.
During the fourth quarter of 2017, the Partnership recognized a $0.1 million tax benefit from a release of valuation allowance based on management's updated projection of future foreign tax credit utilization. The valuation allowance had previously been reduced by $1.5 million for the year ended December 31, 2016. There was no change for the year ended December 31, 2015. Further, the Partnership believes based on its update of long term estimates of domestic and foreign source income that no additional adjustments to the valuation allowance are warranted. As of December 31, 2017,2020, we had $13.2 million of tax attribute carryforwards consisting of $13.0 million for the Partnership hadtax effect of state net operating loss carryforwards and $0.2 million of federal employment tax credits. The unused state net operating loss carryforwards will expire from 2025 to 2040. We do not expect to fully realize all of these tax attribute carryforwards. As such, we recorded an $8.7$8.2 million valuation allowance relating to the tax effect of state net operating loss carryforwards as of December 31, 2020. We also recorded a $1.6 million valuation allowance related to an $8.8 million deferred tax asset for foreign tax credit carryforwards representing a decrease in the valuation allowance of $5.1 million from 2019, of which $2.3 million of the decrease related to the expiration of foreign tax credits. In total, the valuation allowance increased $3.1 million from 2019 inclusive of both the tax effect of state net operating loss and foreign tax credit carryforwards.
On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act") was signed into law. The CARES Act resulted in various changes to the U.S. tax law, including, among other things, allowing net operating losses arising in tax years 2018 through 2020 to be carried back to the preceding five taxable years and removing the limitation that such losses only offset 80% of taxable income. As a related $4.1result of these changes, we expect to recognize two benefits. First, we expect to carryback the 2020 losses incurred by our corporate subsidiaries, which will result in the refund of a portion of federal income taxes paid during the carryback period of approximately $55.4 million. Second, as of December 31, 2020, the annual effective tax rate included a net benefit of $18.1 million from carrying back the projected 2020 losses of the corporate subsidiaries. This tax benefit represents an estimated $34.2 million incremental benefit of tax loss carrybacks for periods when the federal income tax rate was greater than the current 21% rate. The estimated $34.2 million benefit was decreased by $16.1 million for a projected valuation allowance.allowance on foreign tax credits originally utilized during the carryback period which would be released as a result of the loss carryback but which are not expected to be utilized.
DuringAs of December 31, 2020, $55.4 million in tax refunds attributable to the net operating loss in 2020 being carried back to prior years in the United States, and an additional $11.9 million in tax refunds attributable to the net operating loss of our Canadian corporate subsidiary being carried back to prior years in Canada, were recorded within "Current income tax receivable" in the consolidated balance sheet. We anticipate receiving these tax refunds in the fourth quarter of 2017,2021.
On December 27, 2020, the Partnership recognized a tax benefit of $54.2 million dueConsolidated Appropriations Act, 2021 (the "Appropriations Act") was signed into law. The Appropriations Act resulted in various changes to U.S. tax law changes. First, during October 2017,and made technical corrections to the CARES Act. The U.S. Department of Treasury extendedtax law changes and technical corrections did not impact the implementation date of the final regulations impacting the recognition of foreign currency gains and losses for the purpose of calculating U.S. taxable income. The regulations change the taxability of future recognized foreign currency gains and losses upon repatriation from a foreign subsidiary. Accordingly, during 2017 and 2016, the Partnership, using the Fresh Start Transition Method provided in the regulations, recomputed and recorded the future reported tax consequences of the change in tax law. The Partnership recognized an increase in(benefit) provision for income taxes and a reduction of deferred tax assets of $1.1 million related to these changes for the year ended December 31, 2017 and $7.4 million for the year ended December 31, 2016. Second, on2020.
On December 22, 2017, the Tax Cuts and Jobs Act (the "Act"), was signed into law. The Act includesincluded numerous tax law changes, including a reduction in the federal corporate income tax rate from 35% to 21%. Since the Partnership's corporate subsidiaries have a March tax year end, the applicable tax rate for 2017 will be a 31.8% blended rate that is based on the applicable statutory rates before and after the change, and the number of days in the period within the taxable year before and after the effective date of the change in tax rate. As a result of the reduction in the federal corporate income tax rate, the Partnershipwe recognized a $6.1an $8.6 million current income tax benefit.benefit for the year ended December 31, 2018. The $8.6 million current income tax benefit for 2018 was attributable to the higher blended rate applied to net losses in the first quarter of 2018. The change in tax rates also necessitatesrequired the remeasurement of deferred tax balances that are expected to reversebe realized following enactment using the applicable tax rates. As a result of finalization of the remeasurement of the net deferred
tax liability, the Partnership realized a $49.2an additional $1.3 million deferred tax benefit. The amounts recorded to reflect the effects of the Act are provisional and are subject to change in accordance with SAB 118. The sum of these effectsbenefit was recorded as a tax benefit in the Partnership's consolidated statement of operations and comprehensive incomerealized for the year ended December 31, 2017.
As2018. In addition, we are applying the final regulations that were enacted during October 2017 which impacts the recognition of December 31, 2017, the Partnership had $2.0 million of tax attribute carryforwards consisting entirely of the tax effect of state net operating loss carryforwards. Unused state net operating loss carryforwards will expire from 2018 to 2028. The Partnership expects to fully realize these tax attribute carryforwards. As such, no valuation allowance has been recorded relating to these tax attribute carryforwards.
During the fourth quarter of 2016, management reassessed its accountingforeign currency gains and losses for the deferred incomepurpose of calculating U.S. taxable income. The impact of these regulations, the CARES Act and the Act resulted in a tax effects related to its Canadian disregarded entity temporary differences that were recordedbenefit of $18.0 million in purchase accounting at the time2020, a tax charge of the acquisition. As$0.1 million in 2019, and a result, to appropriately reflect these tax effects, the Partnership recorded an adjustment that reduced deferred tax liabilities and goodwill by $33.9benefit of $8.7 million as of December 31, 2016. The adjustment did not impact the statements of operations and comprehensive income or cash flows for any period presented.in 2018, respectively.
The Partnership hasWe have recorded a deferred tax liability of $3.2 million as of December 31, 2017 and a deferred tax asset of $3.0$2.6 million as of December 31, 20162020 and December 31, 2019, respectively, to account for the tax effect of derivatives and foreign currency translation adjustments included in other comprehensive income.
The Partnership has unrecognized income tax benefits as of December 31, 2017. The following is a reconciliation of beginning and ending unrecognized tax benefits: |
| | | | |
| (In thousands) | | Unrecognized Tax Benefits |
| Balance at December 31, 2015 | | $ | 1,100 |
|
| Increase from 2016 tax positions | | — |
|
| Increase from 2015 tax positions | | 100 |
|
| Decrease from settlements with taxing authority | | — |
|
| Decrease from expiration of statute of limitations | | (300 | ) |
| Balance at December 31, 2016 | | 900 |
|
| Increase from 2017 tax positions | | — |
|
| Increase from 2016 tax positions | | 100 |
|
| Decrease from settlements with taxing authority | | — |
|
| Decrease from expiration of statute of limitations | | (300 | ) |
| Balance at December 31, 2017 | | $ | 700 |
|
As of December 31, 2017, a total of $0.7 million ofOur unrecognized tax benefits, was recorded for stateincluding accrued interest and local income tax positions. Therepenalties, were $0.9 million of unrecognized tax positions during thenot material in any year ended December 31, 2016 and $1.1 million unrecognized tax positions for the year ended December 31, 2015. If recognized, the tax benefits would decrease the Partnership taxes by $0.7 million.
The Partnership recognizespresented. We recognize accrued interest and penalties related to unrecognized tax benefits as income tax expense. Related to the unrecognized tax benefits noted, the Partnership accrued interest of $0.3 million and penalties of $0.1 million during the year ended December 31, 2017. The Partnership does not anticipate a significant change to the amount of unrecognized tax benefits over the next 12 months.
The Partnership and its corporate subsidiariesWe are subject to taxation in the U.S., Canada and various state and local jurisdictions. TheOur tax returns of the Partnership are subject to examination by state and federal tax authorities. With few exceptions, the Partnership and its corporate subsidiarieswe are no longer subject to examination by the major taxing authorities for tax years before 2013.2016.
(10) Operating(13) Lease Commitments and Contingencies:
Operating Lease Commitments
Our most significant lease commitment is for the land on which Schlitterbahn Waterpark Galveston is located which we acquired upon acquisition of the Schlitterbahn parks on July 1, 2019 (see Note 4). This land lease resulted in the recognition of an additional right-of-use asset totaling $6.8 million and an additional corresponding lease liability totaling $5.3 million during the third quarter of 2019. The PartnershipSchlitterbahn Waterpark Galveston land lease has commitments underan initial term through 2024 with renewal options through 2049. In calculating the right-of-use asset and lease liability, we are reasonably certain to exercise renewal options through 2049 and the discount rate used represents the incremental borrowing rate if we were to acquire the land on the acquisition date, or July 1, 2019.
As a lessee, we have also entered into various operating leases at its parks. Future minimumfor office space, office equipment, vehicles, and revenue-generating assets. As a lessor, we lease a portion of the California's Great America parking lot to the Santa Clara Stadium Authority during Levi's Stadium events. The parking lot lease is effective through the life of the stadium, or approximately 25 years, from the opening of the stadium through 2039. The lease payments under non-cancelable operating leases aswere prepaid, and the corresponding income is being recognized over the life of December 31, 2017 are as follows:the stadium. The annual lease income recognized is immaterial.
|
| | | |
| (In thousands) | Future Minimum Lease Payments |
| Year: | |
| 2018 | $ | 8,720 |
|
| 2019 | 7,592 |
|
| 2020 | 6,527 |
|
| 2021 | 5,937 |
|
| 2022 | 5,684 |
|
| Thereafter | 91,321 |
|
| Total | $ | 125,781 |
|
The amount due after 2022 includesPrior to the second quarter of 2019, our most significant lease commitment was for the land leaseon which California's Great America is located in the City of Santa Clara, which had an initial term through 2039 with renewal options through 2074. On June 28, 2019, we purchased the land at California's Great America which is renewable in 2039. from the lessor, the City of Santa Clara, for $150.3 million.
Total lease cost and related supplemental information for the years ended December 31, 2020 and December 31, 2019 were as follows:
| | | | | | | | | | | | | | | | | | |
| | Years Ended December 31, | | | | |
| (In thousands, except for lease term and discount rate) | | 2020 | | 2019 | | | | |
| Operating lease expense | | $ | 2,797 | | | $ | 5,623 | | | | | |
| Variable lease expense | | 173 | | | 1,579 | | | | | |
| Short-term lease expense | | 2,205 | | | 6,635 | | | | | |
| Sublease income | | 0 | | | (244) | | | | | |
| Total lease cost | | $ | 5,175 | | | $ | 13,593 | | | | | |
| | | | | | | | |
| Weighted-average remaining lease term | | 16.8 years | | 16.7 years | | | | |
| Weighted-average discount rate | | 4.1 | % | | 4.2 | % | | | | |
| Operating cash flows for operating leases | | $ | 2,679 | | | $ | 5,494 | | | | | |
| Leased assets obtained in exchange for new operating lease liabilities (non-cash activity) | | $ | 1,769 | | | $ | 5,512 | | | | | |
Lease expense, which includes short-term rentals for equipment and machinery, totaled $16.5 million for the yearsyear ended December 31, 2017, 20162018.
Future undiscounted cash flows under our operating leases and 2015 totaled $14.8 million, $12.8 million and $14.5 million, respectively.a reconciliation to the operating lease liabilities recognized as of December 31, 2020 are included below:
| | | | | | | | |
| (In thousands) | | December 31, 2020 |
| Undiscounted cash flows | | |
| 2021 | | $ | 2,113 | |
| 2022 | | 1,531 | |
| 2023 | | 1,249 | |
| 2024 | | 998 | |
| 2025 | | 897 | |
| Thereafter | | 10,313 | |
| Total | | $ | 17,101 | |
| | |
| Present value of cash flows | | |
| Current lease liability | | $ | 1,692 | |
| Lease Liability | | 10,483 | |
| Total | | $ | 12,175 | |
| | |
| Difference between undiscounted cash flows and discounted cash flows | | $ | 4,926 | |
Contingencies
The Partnership is alsoWe are a party to a number of lawsuits arising in the normal course of business. In the opinion of management, none of these matters beyond what has been disclosed within this document, are expected to have a material effect in the aggregate on the Partnership'sconsolidated financial statements.
(11)
(14) Fair Value Measurements:
The FASB's Accounting Standards Codification (ASC) 820 - Fair Value Measurements and Disclosures emphasizes that fair value is a market-based measurement that should be determined based on assumptions (inputs) that market participants would use in pricing an asset or liability. Inputs may be observable or unobservable, and valuation techniques used to measure fair value should maximize the use of relevant observable inputs and minimize the use of unobservable inputs. Accordingly, FASB ASC 820 establishes a hierarchal disclosure framework that ranks the quality and reliability of information used to determine fair values. The hierarchy is associated with the level of pricing observability utilized in measuring fair value and defines three levels of inputs to the fair value measurement process. Quoted prices are the most reliable valuation inputs, whereas model values that include inputs based on unobservable data are the least reliable. Each fair value measurement must be assigned to a level corresponding to the lowest level input that is significant to the fair value measurement in its entirety.
The three broad levels of inputs defined by the fair value hierarchy are as follows:
Level 1 – inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.
Level 2 – inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.
Level 3 – inputs to the valuation methodology are unobservable and significant to the fair value measurement.
A financial instrument's categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The table below presents the balances of assets and liabilities measured at fair value as of December 31, 20172020 and December 31, 20162019 on a recurring basis, as well as the fair values of other financial instruments:instruments, including their locations within the consolidated balance sheets:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (In thousands) | | | | | December 31, 2020 | | December 31, 2019 |
| Consolidated Balance Sheet Location | Fair Value Hierarchy Level | | Carrying Value | Fair Value | | Carrying Value | Fair Value |
| Financial assets (liabilities) measured on a recurring basis: | | | | | | |
| Short-term investments | | Other current assets | Level 1 | | $ | 280 | | $ | 280 | | | $ | 275 | | $ | 275 | |
| Interest rate swaps | | Derivative Liability (1) | Level 2 | | $ | (39,086) | | $ | (39,086) | | | $ | (23,237) | | $ | (23,237) | |
| Other financial assets (liabilities): | | | | | | |
| Term debt | | Long-Term Debt (2) | Level 2 | | $ | (264,250) | | $ | (253,680) | | | $ | (721,875) | | $ | (725,484) | |
| 2024 senior notes | | Long-Term Debt (2) | Level 1 | | $ | (450,000) | | $ | (451,125) | | | $ | (450,000) | | $ | (462,375) | |
| 2025 senior notes | | Long-Term Debt (2) | Level 2 | | $ | (1,000,000) | | $ | (1,043,750) | | | 0 | | 0 | |
| 2027 senior notes | | Long-Term Debt (2) | Level 1 | | $ | (500,000) | | $ | (507,500) | | | $ | (500,000) | | $ | (535,000) | |
| 2028 senior notes | | Long-Term Debt (2) | Level 2 | | $ | (300,000) | | $ | (318,000) | | | 0 | | 0 | |
| 2029 senior notes | | Long-Term Debt (2) | Level 1 (3) | | $ | (500,000) | | $ | (505,625) | | | $ | (500,000) | | $ | (539,375) | |
|
| | | | | | | | | | | | | | | | | |
| (In thousands) | | | | | December 31, 2017 | | December 31, 2016 |
| | Consolidated Balance Sheet Level | Fair Value Hierarchy Level | | Carrying Value | Fair
Value | | Carrying Value | Fair
Value |
| Financial assets (liabilities) measured on a recurring basis: | | | | | | | | | |
| Short-term investments | | Other current assets | Level 1 | | $ | 736 |
| $ | 736 |
| | — |
| — |
|
| Interest rate swap agreements not designated as cash flow hedges | | Derivative Liability | Level 2 | | $ | (8,722 | ) | $ | (8,722 | ) | | $ | (17,721 | ) | $ | (17,721 | ) |
| Other financial assets (liabilities): | | | | |
|
|
|
| |
|
|
|
|
| March 2013 term debt | | Long-Term Debt (1) | Level 2 | | — |
| — |
| | $ | (600,075 | ) | $ | (603,075 | ) |
| April 2017 term debt | | Long-Term Debt (1) | Level 2 | | $ | (735,000 | ) | $ | (742,350 | ) | | — |
| — |
|
| March 2013 notes | | Long-Term Debt (1) | Level 1 | | — |
| — |
| | $ | (500,000 | ) | $ | (510,000 | ) |
| June 2014 notes | | Long-Term Debt (1) | Level 1 | | $ | (450,000 | ) | $ | (469,125 | ) | | $ | (450,000 | ) | $ | (462,375 | ) |
| April 2017 notes | | Long-Term Debt (1) | Level 2 | | $ | (500,000 | ) | $ | (525,000 | ) | | — |
| — |
|
(2)Carrying values of long-term debt balances are before reductions of debt issuance costs and original issue discount of $60.0 million and $26.0 million as of December 31, 2020 and December 31, 2019, respectively.
| |
(1) | Carrying values of long-term debt balances are before reductions of debt issuance costs of $24.5 million and $15.9 million as of December 31, 2017 and December 31, 2016, respectively. |
(3)The 2029 senior notes were based on Level 1 inputs as of December 31, 2020 and Level 2 inputs as of December 31, 2019.
Fair values of the interest rate swap agreements are determined using significant inputs, including LIBOR forward curves, which are considered Level 2 observable market inputs.
Due to the negative effects of the COVID-19 pandemic on our expected future operating results, we tested our long-lived assets, goodwill, and indefinite-lived intangible assets for impairment as of March 29, 2020 and September 27, 2020. As of December 31, 2017,both periods, we concluded the Partnership has measuredestimated fair value of goodwill at the remaining landSchlitterbahn parks reporting unit and the Schlitterbahn trade name, and the estimated fair value of goodwill at Wildwater Kingdom, onethe Dorney Park reporting unit no longer exceeded their carrying values. As of March 29, 2020, we also concluded the estimated fair value of the Partnership's separately gated outdoor waterlong-lived assets of the Schlitterbahn parks which ceased operations in 2016,no longer exceeded their carrying values. Therefore, as of March 29, 2020 and September 27, 2020, these assets were measured at fair value less cost to sell based on Level 3 unobservable market input. In the fourth quarter of 2017, the Partnershipvalue. We recorded a $7.6$2.7 million, $73.6 million and $7.9 million impairment charge based on recent information from ongoing marketing activities. This amountto long-lived assets, goodwill and the trade name at the Schlitterbahn parks, respectively, and a $6.8 million impairment charge to goodwill at Dorney Park during the first quarter of
2020. We also recorded an $11.3 million and $2.2 million impairment charge to goodwill and the trade name at the Schlitterbahn parks, respectively, and a $2.3 million impairment charge to goodwill at Dorney Park during the third quarter of 2020. The long-lived asset impairment charge was recorded in "Loss on impairment / retirement of fixed assets, net"assets", and the goodwill and intangible asset impairment charges were recorded in "Loss on impairment of goodwill and other intangibles" within the consolidated statementstatements of operations and comprehensive (loss) income.
The fair value determination for our long-lived assets, reporting units and indefinite-lived intangible assets included numerous assumptions based on Level 3 inputs. The fair value of our long-lived assets was determined using a real and personal property appraisal of which the principal assumptions included the principal market and market participants upon sale. The primary assumptions used to determine the fair value of our reporting units included growth rates in revenues and costs, estimates of future expected changes in operating margins and cash expenditures, the anticipated time frame to re-open our parks following the COVID-19 pandemic, the related anticipated demand upon re-opening our parks following the COVID-19 pandemic, terminal value growth rates, future estimates of capital expenditures, changes in future capital requirements, and a weighted-average cost of capital that reflected current market conditions. The fair value of our indefinite-lived intangible assets was determined using a relief-from-royalty method of which the principal assumptions included royalty rates, growth rates in revenues, estimates of future expected changes in operating margins, the anticipated time frame to re-open our parks following the COVID-19 pandemic, the related anticipated demand upon re-opening our parks following the COVID-19 pandemic, terminal value growth rates, and a discount rate based on a weighted-average cost of capital that reflected current market conditions.
The carrying value of cash and cash equivalents, revolving credit loans, accounts receivable, current portion of term debt, accounts payable, and accrued liabilities approximates fair value because of the short maturity of these instruments. There were no assets measured at fair value on a non-recurring basis as of December 31, 2016.
(12) Changes in Accumulated Other Comprehensive Income ("AOCI"):
The following tables reflect the changes in AOCI related to limited partners' equity for the years ended2020 or December 31, 2017 and December 31, 2016:2019.
|
| | | | | | | | | | | | | |
Changes in Accumulated Other Comprehensive Income by Component (1) |
| (In thousands) | | Gains and Losses on Cash Flow Hedges | | Foreign Currency Translation | | Total |
| Balance at December 31, 2016 | | $ | (15,950 | ) | | $ | 18,891 |
| | $ | 2,941 |
|
| | | | | | | | |
| Other comprehensive income (loss) before reclassifications, net of tax ($4,330) | | — |
| | (14,849 | ) | | (14,849 | ) |
| | | | | | | | |
Amounts reclassified from accumulated other comprehensive income, net of tax ($1,484) (2) | | 7,975 |
| | — |
| | 7,975 |
|
| | | | | | | | |
| Net other comprehensive income (loss) | | 7,975 |
| | (14,849 | ) | | (6,874 | ) |
| | | | | | | | |
| Balance at December 31, 2017 | | $ | (7,975 | ) | | $ | 4,042 |
| | $ | (3,933 | ) |
| |
(1) | All amounts are net of tax. Amounts in parentheses indicate debits. |
| |
(2) | See Reclassifications Out of Accumulated Other Comprehensive Income table below for reclassification details. |
|
| | | | | | | | | | | | | |
Changes in Accumulated Other Comprehensive Income by Component (1) |
| (In thousands) | | Gains and Losses on Cash Flow Hedges | | Foreign Currency Translation | | Total |
| Balance at December 31, 2015 | | $ | (19,300 | ) | | $ | 22,591 |
| | $ | 3,291 |
|
| | | | | | | | |
| Other comprehensive income (loss) before reclassifications, net of tax $711 and $2,127 | | (3,960 | ) | | (3,700 | ) | | (7,660 | ) |
| | | | | | | | |
Amounts reclassified from accumulated other comprehensive income, net of tax ($1,361) (2) | | 7,310 |
| | — |
| | 7,310 |
|
| | | | | | | | |
| Net other comprehensive income (loss) | | 3,350 |
| | (3,700 | ) | | (350 | ) |
| | | | | | | | |
| Balance at December 31, 2016 | | $ | (15,950 | ) | | $ | 18,891 |
| | $ | 2,941 |
|
| |
(1) | All amounts are net of tax. Amounts in parentheses indicate debits. |
| |
(2) | See Reclassifications Out of Accumulated Other Comprehensive Income table below for reclassification details. |
|
| | | | | | | | | | | |
| Reclassifications Out of Accumulated Other Comprehensive Income |
| Details about Accumulated Other Comprehensive Income Components | | Amount Reclassified from Accumulated Other Comprehensive Income | | Affected Line Item in the Statement Where Net Income is Presented |
| (In thousands) | | Year ended 12/31/2017 | | Year ended 12/31/2016 | | |
| Interest rate contracts | | $ | 9,459 |
| | $ | 8,671 |
| | Net effect of swaps |
| Provision for taxes | | (1,484 | ) | | (1,361 | ) | | Provision for taxes |
| Losses on cash flow hedges | | $ | 7,975 |
| | $ | 7,310 |
| | Net of tax |
(13) Consolidating Financial Information of Guarantors and Issuers of June 2014 Notes:
Cedar Fair, L.P., Canada's Wonderland Company ("Cedar Canada"), and Magnum Management Corporation ("Magnum") are the co-issuers of the Partnership's June 2014 Notes (see Note 5 to the Consolidated Financial Statements). The notes have been fully and unconditionally guaranteed, on a joint and several basis, by each 100% owned subsidiary of Cedar Fair (other than Cedar Canada and Magnum) that guarantees the Partnership's senior secured credit facilities. There are no non-guarantor subsidiaries.
The following consolidating schedules present condensed financial information for Cedar Fair, L.P., Cedar Canada, and Magnum, the co-issuers, and each 100% owned subsidiary of Cedar Fair (other than Cedar Canada and Magnum), the guarantors (on a combined basis), as of December 31, 2017 and December 31, 2016 and for the years ended December 31, 2017, December 31, 2016, and December 31, 2015. In lieu of providing separate audited financial statements for the guarantor subsidiaries, the accompanying condensed consolidating financial statements have been included.
CEDAR FAIR, L.P.
CONDENSED CONSOLIDATING BALANCE SHEET
DECEMBER 31, 2017
(In thousands)
|
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | Cedar Fair L.P. (Parent) | | Co-Issuer Subsidiary (Magnum) | | Co-Issuer Subsidiary (Cedar Canada) | | Guarantor Subsidiaries | | Eliminations | | Total |
| ASSETS | | | | | | | | | | | | |
| Current Assets: | | | | | | | | | | | | |
| Cash and cash equivalents | | $ | — |
| | $ | — |
| | $ | 85,758 |
| | $ | 81,582 |
| | $ | (1,095 | ) | | $ | 166,245 |
|
| Receivables | | — |
| | 1,184 |
| | 15,574 |
| | 857,205 |
| | (836,241 | ) | | 37,722 |
|
| Inventories | | — |
| | — |
| | 1,891 |
| | 27,828 |
| | — |
| | 29,719 |
|
| Other current assets | | 164 |
| | 28,297 |
| | 3,454 |
| | 10,983 |
| | (29,601 | ) | | 13,297 |
|
| | | 164 |
| | 29,481 |
| | 106,677 |
| | 977,598 |
| | (866,937 | ) | | 246,983 |
|
| Property and Equipment, net | | — |
| | 835 |
| | 181,673 |
| | 1,403,264 |
| | — |
| | 1,585,772 |
|
| Investment in Park | | 588,684 |
| | 1,045,640 |
| | 238,132 |
| | 234,238 |
| | (2,106,694 | ) | | — |
|
| Goodwill | | 674 |
| | — |
| | 63,551 |
| | 119,605 |
| | — |
| | 183,830 |
|
| Other Intangibles, net | | — |
| | — |
| | 14,177 |
| | 23,887 |
| | — |
| | 38,064 |
|
| Deferred Tax Asset | | — |
| | 20,956 |
| | — |
| | — |
| | (20,956 | ) | | — |
|
| Other Assets | | — |
| | — |
| | 40 |
| | 9,470 |
| | — |
| | 9,510 |
|
| | | $ | 589,522 |
| | $ | 1,096,912 |
| | $ | 604,250 |
| | $ | 2,768,062 |
| | $ | (2,994,587 | ) | | $ | 2,064,159 |
|
| LIABILITIES AND PARTNERS’ EQUITY | | | | | | | | | | | | |
| Current Liabilities: | | | | | | | | | | | | |
| Accounts payable | | $ | 497,558 |
| | $ | 344,410 |
| | $ | 1,379 |
| | $ | 18,610 |
| | $ | (837,336 | ) | | $ | 24,621 |
|
| Deferred revenue | | — |
| | — |
| | 6,237 |
| | 79,894 |
| | — |
| | 86,131 |
|
| Accrued interest | | 27 |
| | 18 |
| | 2,055 |
| | 6,024 |
| | — |
| | 8,124 |
|
| Accrued taxes | | 352 |
| | — |
| | — |
| | 73,224 |
| | (29,601 | ) | | 43,975 |
|
| Accrued salaries, wages and benefits | | — |
| | 17,498 |
| | 1,242 |
| | — |
| | — |
| | 18,740 |
|
| Self-insurance reserves | | — |
| | 10,947 |
| | 1,618 |
| | 12,542 |
| | — |
| | 25,107 |
|
| Other accrued liabilities | | 3,406 |
| | 5,094 |
| | 157 |
| | 10,139 |
| | — |
| | 18,796 |
|
| | | 501,343 |
| | 377,967 |
| | 12,688 |
| | 200,433 |
| | (866,937 | ) | | 225,494 |
|
| Deferred Tax Liability | | — |
| | — |
| | 13,809 |
| | 81,945 |
| | (20,956 | ) | | 74,798 |
|
| Derivative Liability | | 5,233 |
| | 3,489 |
| | — |
| | — |
| | — |
| | 8,722 |
|
| Other Liabilities | | — |
| | 873 |
| | — |
| | 10,811 |
| | — |
| | 11,684 |
|
| Long-Term Debt: | | | | | | | | | | | | |
| Term debt | | — |
| | 127,437 |
| | — |
| | 596,351 |
| | — |
| | 723,788 |
|
| Notes | | — |
| | — |
| | 445,156 |
| | 491,571 |
| | — |
| | 936,727 |
|
| | | — |
| | 127,437 |
| | 445,156 |
| | 1,087,922 |
| | — |
| | 1,660,515 |
|
| | | | | | | | | | | | | |
| Equity | | 82,946 |
| | 587,146 |
| | 132,597 |
| | 1,386,951 |
| | (2,106,694 | ) | | 82,946 |
|
| | | $ | 589,522 |
| | $ | 1,096,912 |
| | $ | 604,250 |
| | $ | 2,768,062 |
| | $ | (2,994,587 | ) | | $ | 2,064,159 |
|
CEDAR FAIR, L.P.
CONDENSED CONSOLIDATING BALANCE SHEET
DECEMBER 31, 2016
(In thousands)
|
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | Cedar Fair L.P. (Parent) | | Co-Issuer Subsidiary (Magnum) | | Co-Issuer Subsidiary (Cedar Canada) | | Guarantor Subsidiaries | | Eliminations | | Total |
| ASSETS | | | | | | | | | | | | |
| Current Assets: | | | | | | | | | | | | |
| Cash and cash equivalents | | $ | — |
| | $ | — |
| | $ | 65,563 |
| | $ | 58,178 |
| | $ | (1,025 | ) | | $ | 122,716 |
|
| Receivables | | — |
| | 1,409 |
| | 28,019 |
| | 576,975 |
| | (570,989 | ) | | 35,414 |
|
| Inventories | | — |
| | — |
| | 1,371 |
| | 24,905 |
| | — |
| | 26,276 |
|
| Other current assets | | 173 |
| | 796 |
| | 2,229 |
| | 9,833 |
| | (1,761 | ) | | 11,270 |
|
| | | 173 |
| | 2,205 |
| | 97,182 |
| | 669,891 |
| | (573,775 | ) | | 195,676 |
|
| Property and Equipment, net | | — |
| | 844 |
| | 175,358 |
| | 1,363,018 |
| | — |
| | 1,539,220 |
|
| Investment in Park | | 798,076 |
| | 937,626 |
| | 200,075 |
| | 324,282 |
| | (2,260,059 | ) | | — |
|
| Goodwill | | 674 |
| | — |
| | 59,381 |
| | 119,605 |
| | — |
| | 179,660 |
|
| Other Intangibles, net | | — |
| | — |
| | 13,255 |
| | 24,582 |
| | — |
| | 37,837 |
|
| Deferred Tax Asset | | — |
| | 33,303 |
| | — |
| | — |
| | (33,303 | ) | | — |
|
| Other Assets | | — |
| | 2,000 |
| | 108 |
| | 18,680 |
| | — |
| | 20,788 |
|
| | | $ | 798,923 |
| | $ | 975,978 |
| | $ | 545,359 |
| | $ | 2,520,058 |
| | $ | (2,867,137 | ) | | $ | 1,973,181 |
|
| LIABILITIES AND PARTNERS’ EQUITY | | | | | | | | | | | | |
| Current Liabilities: | | | | | | | | | | | | |
| Current maturities of long-term debt | | $ | — |
| | $ | 572 |
| | $ | 64 |
| | $ | 2,139 |
| | $ | — |
| | $ | 2,775 |
|
| Accounts payable | | 428,396 |
| | 145,258 |
| | 740 |
| | 18,471 |
| | (572,014 | ) | | 20,851 |
|
| Deferred revenue | | — |
| | — |
| | 5,601 |
| | 77,164 |
| | — |
| | 82,765 |
|
| Accrued interest | | 4,613 |
| | 3,207 |
| | 2,057 |
| | 109 |
| | — |
| | 9,986 |
|
| Accrued taxes | | 405 |
| | 18,653 |
| | — |
| | 41,661 |
| | (1,761 | ) | | 58,958 |
|
| Accrued salaries, wages and benefits | | — |
| | 29,227 |
| | 1,131 |
| | — |
| | — |
| | 30,358 |
|
| Self-insurance reserves | | — |
| | 12,490 |
| | 1,321 |
| | 13,252 |
| | — |
| | 27,063 |
|
| Other accrued liabilities | | 2,282 |
| | 3,018 |
| | 193 |
| | 4,434 |
| | — |
| | 9,927 |
|
| | | 435,696 |
| | 212,425 |
| | 11,107 |
| | 157,230 |
| | (573,775 | ) | | 242,683 |
|
| Deferred Tax Liability | | — |
| | — |
| | 12,838 |
| | 125,350 |
| | (33,303 | ) | | 104,885 |
|
| Derivative Liability | | 10,633 |
| | 7,088 |
| | — |
| | — |
| | — |
| | 17,721 |
|
| Other Liabilities | | — |
| | 1,236 |
| | — |
| | 11,926 |
| | — |
| | 13,162 |
|
| Long-Term Debt: | | | | | | | | | | | | |
| Term debt | | — |
| | 123,672 |
| | 13,598 |
| | 456,958 |
| | — |
| | 594,228 |
|
| Notes | | 292,075 |
| | 203,140 |
| | 444,768 |
| | — |
| | — |
| | 939,983 |
|
| | | 292,075 |
| | 326,812 |
| | 458,366 |
| | 456,958 |
| | — |
| | 1,534,211 |
|
| | | | | | | | | | | | | |
| Equity | | 60,519 |
| | 428,417 |
| | 63,048 |
| | 1,768,594 |
| | (2,260,059 | ) | | 60,519 |
|
| | | $ | 798,923 |
| | $ | 975,978 |
| | $ | 545,359 |
| | $ | 2,520,058 |
| | $ | (2,867,137 | ) | | $ | 1,973,181 |
|
CEDAR FAIR, L.P.
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME
For the Year Ended December 31, 2017
(In thousands)
|
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | Cedar Fair L.P. (Parent) | | Co-Issuer Subsidiary (Magnum) | | Co-Issuer Subsidiary (Cedar Canada) | | Guarantor Subsidiaries | | Eliminations | | Total |
| | | | | | | | | | | | | |
| Net revenues | | $ | 104,080 |
| | $ | 317,496 |
| | $ | 127,929 |
| | $ | 1,239,067 |
| | $ | (466,605 | ) | | $ | 1,321,967 |
|
| Costs and expenses: | | | | | | | | | | | | |
| Cost of food, merchandise and games revenues | | — |
| | — |
| | 11,483 |
| | 99,328 |
| | — |
| | 110,811 |
|
| Operating expenses | | — |
| | 313,654 |
| | 44,990 |
| | 666,063 |
| | (466,605 | ) | | 558,102 |
|
| Selling, general and administrative | | 3,007 |
| | 67,872 |
| | 10,497 |
| | 112,394 |
| | — |
| | 193,770 |
|
| Depreciation and amortization | | — |
| | 33 |
| | 15,654 |
| | 137,535 |
| | — |
| | 153,222 |
|
| Loss on impairment / retirement of fixed assets, net | | — |
| | — |
| | 656 |
| | 12,072 |
| | — |
| | 12,728 |
|
| Gain on sale of investment | | — |
| | (1,877 | ) | | — |
| | — |
| | — |
| | (1,877 | ) |
| | | 3,007 |
| | 379,682 |
| | 83,280 |
| | 1,027,392 |
| | (466,605 | ) | | 1,026,756 |
|
| Operating income (loss) | | 101,073 |
| | (62,186 | ) | | 44,649 |
| | 211,675 |
| | — |
| | 295,211 |
|
| Interest expense, net | | 23,739 |
| | 18,837 |
| | 24,839 |
| | 17,333 |
| | — |
| | 84,748 |
|
| Net effect of swaps | | (150 | ) | | 105 |
| | — |
| | — |
| | — |
| | (45 | ) |
| Loss on early debt extinguishment | | 11,773 |
| | 8,188 |
| | 205 |
| | 2,955 |
| | — |
| | 23,121 |
|
| Gain on foreign currency | | — |
| | (25 | ) | | (29,061 | ) | | — |
| | — |
| | (29,086 | ) |
| Other (income) expense | | 250 |
| | (73,581 | ) | | 3,460 |
| | 69,756 |
| | — |
| | (115 | ) |
| Income from investment in affiliates | | (160,925 | ) | | (176,698 | ) | | (38,057 | ) | | (84,398 | ) | | 460,078 |
| | — |
|
| Income before taxes | | 226,386 |
| | 160,988 |
| | 83,263 |
| | 206,029 |
| | (460,078 | ) | | 216,588 |
|
| Provision (benefit) for taxes | | 10,910 |
| | 60 |
| | (1,134 | ) | | (8,724 | ) | | — |
| | 1,112 |
|
| Net income | | $ | 215,476 |
| | $ | 160,928 |
| | $ | 84,397 |
| | $ | 214,753 |
| | $ | (460,078 | ) | | $ | 215,476 |
|
| Other comprehensive income (loss), (net of tax): | | | | | | | | | | | | |
| Cumulative foreign currency translation adjustment | | (14,849 | ) | | — |
| | (14,849 | ) | | — |
| | 14,849 |
| | (14,849 | ) |
| Unrealized gain on cash flow hedging derivatives | | 7,975 |
| | 2,422 |
| | — |
| | — |
| | (2,422 | ) | | 7,975 |
|
| Other comprehensive income (loss), (net of tax) | | (6,874 | ) | | 2,422 |
| | (14,849 | ) | | — |
| | 12,427 |
| | (6,874 | ) |
| Total comprehensive income | | $ | 208,602 |
| | $ | 163,350 |
| | $ | 69,548 |
| | $ | 214,753 |
| | $ | (447,651 | ) | | $ | 208,602 |
|
CEDAR FAIR, L.P.
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME
For the Year Ended December 31, 2016
(In thousands)
|
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | Cedar Fair L.P. (Parent) | | Co-Issuer Subsidiary (Magnum) | | Co-Issuer Subsidiary (Cedar Canada) | | Guarantor Subsidiaries | | Eliminations | | Total |
| | | | | | | | | | | | | |
| Net revenues | | $ | 144,042 |
| | $ | 320,945 |
| | $ | 117,962 |
| | $ | 1,234,075 |
| | $ | (528,303 | ) | | $ | 1,288,721 |
|
| Costs and expenses: | | | | | | | | | | | | |
| Cost of food, merchandise and games revenues | | — |
| | — |
| | 9,868 |
| | 96,740 |
| | — |
| | 106,608 |
|
| Operating expenses | | — |
| | 303,974 |
| | 42,820 |
| | 720,390 |
| | (528,303 | ) | | 538,881 |
|
| Selling, general and administrative | | 3,029 |
| | 68,422 |
| | 10,151 |
| | 100,228 |
| | — |
| | 181,830 |
|
| Depreciation and amortization | | — |
| | 35 |
| | 14,816 |
| | 117,025 |
| | — |
| | 131,876 |
|
| Loss on impairment / retirement of fixed assets, net | | — |
| | — |
| | 159 |
| | 12,428 |
| | — |
| | 12,587 |
|
| | | 3,029 |
| | 372,431 |
| | 77,814 |
| | 1,046,811 |
| | (528,303 | ) | | 971,782 |
|
| Operating income (loss) | | 141,013 |
| | (51,486 | ) | | 40,148 |
| | 187,264 |
| | — |
| | 316,939 |
|
| Interest expense, net | | 32,643 |
| | 24,114 |
| | 25,403 |
| | 1,526 |
| | — |
| | 83,686 |
|
| Net effect of swaps | | (473 | ) | | (724 | ) | | — |
| | — |
| | — |
| | (1,197 | ) |
| (Gain) loss on foreign currency | | — |
| | — |
| | (14,660 | ) | | 4 |
| | — |
| | (14,656 | ) |
| Other (income) expense | | 250 |
| | (83,657 | ) | | 3,925 |
| | 79,482 |
| | — |
| | — |
|
| Income from investment in affiliates | | (80,295 | ) | | (73,132 | ) | | (20,545 | ) | | (27,628 | ) | | 201,600 |
| | — |
|
| Income before taxes | | 188,888 |
| | 81,913 |
| | 46,025 |
| | 133,880 |
| | (201,600 | ) | | 249,106 |
|
| Provision for taxes | | 11,200 |
| | 1,621 |
| | 18,396 |
| | 40,201 |
| | — |
| | 71,418 |
|
| Net income | | $ | 177,688 |
| | $ | 80,292 |
| | $ | 27,629 |
| | $ | 93,679 |
| | $ | (201,600 | ) | | $ | 177,688 |
|
| Other comprehensive income (loss), (net of tax): | | | | | | | | | | | | |
| Cumulative foreign currency translation adjustment | | (3,700 | ) | | — |
| | (3,700 | ) | | — |
| | 3,700 |
| | (3,700 | ) |
| Unrealized gain on cash flow hedging derivatives | | 3,350 |
| | 1,060 |
| | — |
| | — |
| | (1,060 | ) | | 3,350 |
|
| Other comprehensive income (loss), (net of tax) | | (350 | ) | | 1,060 |
| | (3,700 | ) | | — |
| | 2,640 |
| | (350 | ) |
| Total comprehensive income | | $ | 177,338 |
| | $ | 81,352 |
| | $ | 23,929 |
| | $ | 93,679 |
| | $ | (198,960 | ) | | $ | 177,338 |
|
CEDAR FAIR, L.P.
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME
For the Year Ended December 31, 2015
(In thousands)
|
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | Cedar Fair L.P. (Parent) | | Co-Issuer Subsidiary (Magnum) | | Co-Issuer Subsidiary (Cedar Canada) | | Guarantor Subsidiaries | | Eliminations | | Total |
| | | | | | | | | | | | | |
| Net revenues | | $ | 145,571 |
| | $ | 240,817 |
| | $ | 112,217 |
| | $ | 1,118,384 |
| | $ | (381,211 | ) | | $ | 1,235,778 |
|
| Costs and expenses: | | | | | | | | | | | | |
| Cost of food, merchandise and games revenues | | — |
| | 372 |
| | 8,878 |
| | 95,577 |
| | — |
| | 104,827 |
|
| Operating expenses | | 1,063 |
| | 179,139 |
| | 42,814 |
| | 675,821 |
| | (381,211 | ) | | 517,626 |
|
| Selling, general and administrative | | 3,081 |
| | 55,551 |
| | 10,358 |
| | 102,500 |
| | — |
| | 171,490 |
|
| Depreciation and amortization | | — |
| | 37 |
| | 14,326 |
| | 111,268 |
| | — |
| | 125,631 |
|
| Loss on impairment / retirement of fixed assets, net | | — |
| | — |
| | 417 |
| | 20,456 |
| | — |
| | 20,873 |
|
| | | 4,144 |
| | 235,099 |
| | 76,793 |
| | 1,005,622 |
| | (381,211 | ) | | 940,447 |
|
| Operating income | | 141,427 |
| | 5,718 |
| | 35,424 |
| | 112,762 |
| | — |
| | 295,331 |
|
| Interest expense, net | | 34,204 |
| | 28,210 |
| | 25,381 |
| | (1,010 | ) | | — |
| | 86,785 |
|
| Net effect of swaps | | (3,820 | ) | | (3,064 | ) | | — |
| | — |
| | — |
| | (6,884 | ) |
| Loss on foreign currency | | — |
| | — |
| | 81,016 |
| | — |
| | — |
| | 81,016 |
|
| Other (income) expense | | 750 |
| | (18,649 | ) | | 3,883 |
| | 14,016 |
| | — |
| | — |
|
| (Income) loss from investment in affiliates | | (13,523 | ) | | (15,141 | ) | | (20,100 | ) | | 27,480 |
| | 21,284 |
| | — |
|
| Income (loss) before taxes | | 123,816 |
| | 14,362 |
| | (54,756 | ) | | 72,276 |
| | (21,284 | ) | | 134,414 |
|
| Provision (benefit) for taxes | | 11,594 |
| | 840 |
| | (27,274 | ) | | 37,032 |
| | — |
| | 22,192 |
|
| Net income (loss) | | $ | 112,222 |
| | $ | 13,522 |
| | $ | (27,482 | ) | | $ | 35,244 |
| | $ | (21,284 | ) | | $ | 112,222 |
|
| Other comprehensive income (loss), (net of tax): | | | | | | | | | | | | |
| Cumulative foreign currency translation adjustment | | 16,655 |
| | — |
| | 16,655 |
| | — |
| | (16,655 | ) | | 16,655 |
|
| Unrealized loss on cash flow hedging derivatives | | (2,734 | ) | | (1,021 | ) | | — |
| | — |
| | 1,021 |
| | (2,734 | ) |
| Other comprehensive income (loss), (net of tax) | | 13,921 |
| | (1,021 | ) | | 16,655 |
| | — |
| | (15,634 | ) | | 13,921 |
|
| Total comprehensive income (loss) | | $ | 126,143 |
| | $ | 12,501 |
| | $ | (10,827 | ) | | $ | 35,244 |
| | $ | (36,918 | ) | | $ | 126,143 |
|
CEDAR FAIR, L.P.
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
For the Year Ended December 31, 2017
(In thousands)
|
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | Cedar Fair L.P. (Parent) | | Co-Issuer Subsidiary (Magnum) | | Co-Issuer Subsidiary (Cedar Canada) | | Guarantor Subsidiaries | | Eliminations | | Total |
| | | | | | | | | | | | | |
| NET CASH FROM (FOR) OPERATING ACTIVITIES | | $ | 93,378 |
| | $ | (10,710 | ) | | $ | 40,569 |
| | $ | 209,780 |
| | $ | (1,838 | ) | | $ | 331,179 |
|
| CASH FLOWS FROM (FOR) INVESTING ACTIVITIES | | | | | | | | | | | | |
| Intercompany receivables (payments) receipts | | — |
| | — |
| | — |
| | (278,051 | ) | | 278,051 |
| | — |
|
| Proceeds from returns on investments | | 338,000 |
| | 15,500 |
| | — |
| | 146,500 |
| | (500,000 | ) | | — |
|
| Purchase of identifiable intangible assets | | — |
| | — |
| | — |
| | (66 | ) | | — |
| | (66 | ) |
| Proceeds from sale of preferred equity investment | | — |
| | 3,281 |
| | — |
| | — |
| | — |
| | 3,281 |
|
| Capital expenditures | | — |
| | (25 | ) | | (10,160 | ) | | (177,899 | ) | | — |
| | (188,084 | ) |
| Net cash from (for) investing activities | | 338,000 |
| | 18,756 |
| | (10,160 | ) | | (309,516 | ) | | (221,949 | ) | | (184,869 | ) |
| CASH FLOWS FROM (FOR) FINANCING ACTIVITIES | | | | | | | | | | | | |
| Intercompany payables (payments) receipts | | 69,160 |
| | 208,891 |
| | — |
| | — |
| | (278,051 | ) | | — |
|
| Payments for returns of capital | | — |
| | — |
| | — |
| | (500,000 | ) | | 500,000 |
| | — |
|
| Term debt borrowings | | — |
| | 131,000 |
| | — |
| | 619,000 |
| | — |
| | 750,000 |
|
| Note borrowings | | — |
| | — |
| | — |
| | 500,000 |
| | — |
| | 500,000 |
|
| Term debt payments | | — |
| | (126,619 | ) | | (13,854 | ) | | (477,377 | ) | | — |
| | (617,850 | ) |
| Note payments, including amounts paid for early termination | | (304,014 | ) | | (211,444 | ) | | — |
| | — |
| | — |
| | (515,458 | ) |
| Distributions paid to partners | | (196,524 | ) | | — |
| | — |
| | — |
| | 1,768 |
| | (194,756 | ) |
| Payment of debt issuance costs | | — |
| | (1,326 | ) | | — |
| | (18,483 | ) | | — |
| | (19,809 | ) |
| Exercise of limited partnership unit options | | — |
| | 65 |
| | — |
| | — |
| | — |
| | 65 |
|
| Tax effect of units involved in treasury unit transactions | | — |
| | (4,440 | ) | | — |
| | — |
| | — |
| | (4,440 | ) |
| Payments related to tax withholding for equity compensation | | — |
| | (4,173 | ) | | — |
| | — |
| | — |
| | (4,173 | ) |
| Net cash from (for) financing activities | | (431,378 | ) | | (8,046 | ) | | (13,854 | ) | | 123,140 |
| | 223,717 |
| | (106,421 | ) |
| EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS | | — |
| | — |
| | 3,640 |
| | — |
| | — |
| | 3,640 |
|
| CASH AND CASH EQUIVALENTS | | | | | | | | | | | | |
| Net increase for the year | | — |
| | — |
| | 20,195 |
| | 23,404 |
| | (70 | ) | | 43,529 |
|
| Balance, beginning of year | | — |
| | — |
| | 65,563 |
| | 58,178 |
| | (1,025 | ) | | 122,716 |
|
| Balance, end of year | | $ | — |
| | $ | — |
| | $ | 85,758 |
| | $ | 81,582 |
| | $ | (1,095 | ) | | $ | 166,245 |
|
CEDAR FAIR, L.P.
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
For the Year Ended December 31, 2016
(In thousands)
|
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | Cedar Fair L.P. (Parent) | | Co-Issuer Subsidiary (Magnum) | | Co-Issuer Subsidiary (Cedar Canada) | | Guarantor Subsidiaries | | Eliminations | | Total |
| | | | | | | | | | | | | |
| NET CASH FROM (FOR) OPERATING ACTIVITIES | | $ | 118,833 |
| | $ | (28,315 | ) | | $ | 33,918 |
| | $ | 237,262 |
| | $ | (3,351 | ) | | $ | 358,347 |
|
| CASH FLOWS FOR INVESTING ACTIVITIES | | | | | | | | | | | | |
| Intercompany receivables (payments) receipts | | — |
| | — |
| | — |
| | (24,562 | ) | | 24,562 |
| | — |
|
| Purchase of identifiable intangible assets | | — |
| | — |
| | (29 | ) | | (548 | ) | | — |
| | (577 | ) |
| Capital expenditures | | — |
| | — |
| | (7,863 | ) | | (152,793 | ) | | — |
| | (160,656 | ) |
| Net cash for investing activities | | — |
| | — |
| | (7,892 | ) | | (177,903 | ) | | 24,562 |
| | (161,233 | ) |
| CASH FLOWS FROM (FOR) FINANCING ACTIVITIES | | | | | | | | | | | | |
| Term debt payments | | — |
| | (1,237 | ) | | (138 | ) | | (4,625 | ) | | — |
| | (6,000 | ) |
| Intercompany payables (payments) receipts | | (6,332 | ) | | 30,894 |
| | — |
| | — |
| | (24,562 | ) | | — |
|
| Distributions paid to partners | | (189,508 | ) | | — |
| | — |
| | — |
| | 2,326 |
| | (187,182 | ) |
| Tax effect of units involved in treasury unit transactions | | — |
| | (422 | ) | | — |
| | — |
| | — |
| | (422 | ) |
| Payments related to tax withholding for equity compensation | | — |
| | (920 | ) | | — |
| | — |
| | — |
| | (920 | ) |
| Net cash from (for) financing activities | | (195,840 | ) | | 28,315 |
| | (138 | ) | | (4,625 | ) | | (22,236 | ) | | (194,524 | ) |
| EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS | | — |
| | — |
| | 569 |
| | — |
| | — |
| | 569 |
|
| CASH AND CASH EQUIVALENTS | | | | | | | | | | | | |
| Net increase (decrease) for the year | | (77,007 | ) | | — |
| | 26,457 |
| | 54,734 |
| | (1,025 | ) | | 3,159 |
|
| Balance, beginning of year | | 77,007 |
| | — |
| | 39,106 |
| | 3,444 |
| | — |
| | 119,557 |
|
| Balance, end of year | | $ | — |
| | $ | — |
| | $ | 65,563 |
| | $ | 58,178 |
| | $ | (1,025 | ) | | $ | 122,716 |
|
CEDAR FAIR, L.P.
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
For the Year Ended December 31, 2015
(In thousands)
|
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | Cedar Fair L.P. (Parent) | | Co-Issuer Subsidiary (Magnum) | | Co-Issuer Subsidiary (Cedar Canada) | | Guarantor Subsidiaries | | Eliminations | | Total |
| | | | | | | | | | | | | |
| NET CASH FROM (FOR) OPERATING ACTIVITIES | | $ | 89,637 |
| | $ | (1,120 | ) | | $ | 38,579 |
| | $ | 221,001 |
| | $ | (2,147 | ) | | $ | 345,950 |
|
| CASH FLOWS FOR INVESTING ACTIVITIES | | | | | | | | | | | | |
| Intercompany receivables (payments) receipts | | — |
| | — |
| | (3,252 | ) | | (55,294 | ) | | 58,546 |
| | — |
|
| Purchase of preferred equity instrument | | — |
| | (2,000 | ) | | — |
| | — |
| | — |
| | (2,000 | ) |
| Capital expenditures | | — |
| | — |
| | (7,663 | ) | | (168,202 | ) | | — |
| | (175,865 | ) |
| Net cash for investing activities | | — |
| | (2,000 | ) | | (10,915 | ) | | (223,496 | ) | | 58,546 |
| | (177,865 | ) |
| CASH FLOWS FROM (FOR) FINANCING ACTIVITIES | | | | | | | | | | | | |
| Intercompany payables (payments) receipts | | 82,131 |
| | 8,060 |
| | (31,645 | ) | | — |
| | (58,546 | ) | | — |
|
| Distributions paid to partners | | (174,761 | ) | | — |
| | — |
| | — |
| | 2,147 |
| | (172,614 | ) |
| Tax effect of units involved in treasury unit transactions | | — |
| | (1,589 | ) | | — |
| | — |
| | — |
| | (1,589 | ) |
| Payments related to tax withholding for equity compensation | | — |
| | (3,733 | ) | | — |
| | — |
| | — |
| | (3,733 | ) |
| Net cash from (for) financing activities | | (92,630 | ) | | 2,738 |
| | (31,645 | ) | | — |
| | (56,399 | ) | | (177,936 | ) |
| EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS | | — |
| | — |
| | (2,432 | ) | | — |
| | — |
| | (2,432 | ) |
| CASH AND CASH EQUIVALENTS | | | | | | | | | | | | |
| Net decrease for the year | | (2,993 | ) | | (382 | ) | | (6,413 | ) | | (2,495 | ) | | — |
| | (12,283 | ) |
| Balance, beginning of year | | 80,000 |
| | 382 |
| | 45,519 |
| | 5,939 |
| | — |
| | 131,840 |
|
| Balance, end of year | | $ | 77,007 |
| | $ | — |
| | $ | 39,106 |
| | $ | 3,444 |
| | $ | — |
| | $ | 119,557 |
|
(14) Consolidating Financial Information of Guarantors and Issuers of April 2017 Notes:
Cedar Fair, L.P., Canada's Wonderland Company ("Cedar Canada"), Magnum Management Corporation ("Magnum"), and Millennium Operations LLC ("Millennium") are the co-issuers of the Partnership's April 2017 Notes (see Note 5 to the Consolidated Financial Statements). The notes have been fully and unconditionally guaranteed, on a joint and several basis, by each 100% owned subsidiary of Cedar Fair (other than Cedar Canada, Magnum and Millennium) that guarantees the Partnership's senior secured credit facilities. There are no non-guarantor subsidiaries.
The following consolidating schedules present condensed financial information for Cedar Fair, L.P., Cedar Canada, Magnum, and Millennium, the co-issuers, and each 100% owned subsidiary of Cedar Fair (other than Cedar Canada, Magnum and Millennium), the guarantors (on a combined basis), as of December 31, 2017 and December 31, 2016 and for the years ended December 31, 2017, December 31, 2016, and December 31, 2015. In lieu of providing separate audited financial statements for the guarantor subsidiaries, the accompanying condensed consolidating financial statements have been included.
CEDAR FAIR, L.P.
CONDENSED CONSOLIDATING BALANCE SHEET
DECEMBER 31, 2017
(In thousands)
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Cedar Fair L.P. (Parent) | | Co-Issuer Subsidiary (Magnum) | | Co-Issuer Subsidiary (Cedar Canada) | | Co-Issuer Subsidiary (Millennium) | | Guarantor Subsidiaries | | Eliminations | | Total |
| ASSETS | | | | | | | | | | | | | | |
| Current Assets: | | | | | | | | | | | | | | |
| Cash and cash equivalents | | $ | — |
| | $ | — |
| | $ | 85,758 |
| | $ | 80,430 |
| | $ | 1,152 |
| | $ | (1,095 | ) | | $ | 166,245 |
|
| Receivables | | — |
| | 1,184 |
| | 15,574 |
| | 26,130 |
| | 831,075 |
| | (836,241 | ) | | 37,722 |
|
| Inventories | | — |
| | — |
| | 1,891 |
| | 22,528 |
| | 5,300 |
| | — |
| | 29,719 |
|
| Other current assets | | 164 |
| | 28,297 |
| | 3,454 |
| | 9,341 |
| | 1,642 |
| | (29,601 | ) | | 13,297 |
|
| | | 164 |
| | 29,481 |
| | 106,677 |
| | 138,429 |
| | 839,169 |
| | (866,937 | ) | | 246,983 |
|
| Property and Equipment, net | | — |
| | 835 |
| | 181,673 |
| | — |
| | 1,403,264 |
| | — |
| | 1,585,772 |
|
| Investment in Park | | 588,684 |
| | 1,045,640 |
| | 238,132 |
| | 1,392,761 |
| | 234,237 |
| | (3,499,454 | ) | | — |
|
| Goodwill | | 674 |
| | — |
| | 63,551 |
| | 8,387 |
| | 111,218 |
| | — |
| | 183,830 |
|
| Other Intangibles, net | | — |
| | — |
| | 14,177 |
| | — |
| | 23,887 |
| | — |
| | 38,064 |
|
| Deferred Tax Asset | | — |
| | 20,956 |
| | — |
| | — |
| | — |
| | (20,956 | ) | | — |
|
| Other Assets | | — |
| | — |
| | 40 |
| | 402 |
| | 9,068 |
| | — |
| | 9,510 |
|
| | | $ | 589,522 |
| | $ | 1,096,912 |
| | $ | 604,250 |
| | $ | 1,539,979 |
| | $ | 2,620,843 |
| | $ | (4,387,347 | ) | | $ | 2,064,159 |
|
| LIABILITIES AND PARTNERS’ EQUITY | | | | | | | | | | | | | | |
| Current Liabilities: | | | | | | | | | | | | | | |
| Accounts payable | | $ | 497,558 |
| | $ | 344,410 |
| | $ | 1,379 |
| | $ | 13,572 |
| | $ | 5,038 |
| | $ | (837,336 | ) | | $ | 24,621 |
|
| Deferred revenue | | — |
| | — |
| | 6,237 |
| | 59,307 |
| | 20,587 |
| | — |
| | 86,131 |
|
| Accrued interest | | 27 |
| | 18 |
| | 2,055 |
| | 6,024 |
| | — |
| | — |
| | 8,124 |
|
| Accrued taxes | | 352 |
| | — |
| | — |
| | 6,176 |
| | 67,048 |
| | (29,601 | ) | | 43,975 |
|
| Accrued salaries, wages and benefits | | — |
| | 17,498 |
| | 1,242 |
| | — |
| | — |
| | — |
| | 18,740 |
|
| Self-insurance reserves | | — |
| | 10,947 |
| | 1,618 |
| | 10,156 |
| | 2,386 |
| | — |
| | 25,107 |
|
| Other accrued liabilities | | 3,406 |
| | 5,094 |
| | 157 |
| | 5,649 |
| | 4,490 |
| | — |
| | 18,796 |
|
| | | 501,343 |
| | 377,967 |
| | 12,688 |
| | 100,884 |
| | 99,549 |
| | (866,937 | ) | | 225,494 |
|
| Deferred Tax Liability | | — |
| | — |
| | 13,809 |
| | — |
| | 81,945 |
| | (20,956 | ) | | 74,798 |
|
| Derivative Liability | | 5,233 |
| | 3,489 |
| | — |
| | — |
| | — |
| | — |
| | 8,722 |
|
| Other Liabilities | | — |
| | 873 |
| | — |
| | 120 |
| | 10,691 |
| | — |
| | 11,684 |
|
| Long-Term Debt: | | | | | | | | | | | | | | |
| Term debt | | — |
| | 127,437 |
| | — |
| | 596,351 |
| | — |
| | — |
| | 723,788 |
|
| Notes | | — |
| | — |
| | 445,156 |
| | 491,571 |
| | — |
| | — |
| | 936,727 |
|
| | | — |
| | 127,437 |
| | 445,156 |
| | 1,087,922 |
| | — |
| | — |
| | 1,660,515 |
|
| | | | | | | | | | | | | | | |
| Equity | | 82,946 |
| | 587,146 |
| | 132,597 |
| | 351,053 |
| | 2,428,658 |
| | (3,499,454 | ) | | 82,946 |
|
| | | $ | 589,522 |
| | $ | 1,096,912 |
| | $ | 604,250 |
| | $ | 1,539,979 |
| | $ | 2,620,843 |
| | $ | (4,387,347 | ) | | $ | 2,064,159 |
|
CEDAR FAIR, L.P.
CONDENSED CONSOLIDATING BALANCE SHEET
DECEMBER 31, 2016
(In thousands)
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Cedar Fair L.P. (Parent) | | Co-Issuer Subsidiary (Magnum) | | Co-Issuer Subsidiary (Cedar Canada) | | Co-Issuer Subsidiary (Millennium) | | Guarantor Subsidiaries | | Eliminations | | Total |
| ASSETS | | | | | | | | | | | | | | |
| Current Assets: | | | | | | | | | | | | | | |
| Cash and cash equivalents | | $ | — |
| | $ | — |
| | $ | 65,563 |
| | $ | 57,825 |
| | $ | 353 |
| | $ | (1,025 | ) | | $ | 122,716 |
|
| Receivables | | — |
| | 1,409 |
| | 28,019 |
| | 25,218 |
| | 551,757 |
| | (570,989 | ) | | 35,414 |
|
| Inventories | | — |
| | — |
| | 1,371 |
| | 20,891 |
| | 4,014 |
| | — |
| | 26,276 |
|
| Other current assets | | 173 |
| | 796 |
| | 2,229 |
| | 8,369 |
| | 1,464 |
| | (1,761 | ) | | 11,270 |
|
| | | 173 |
| | 2,205 |
| | 97,182 |
| | 112,303 |
| | 557,588 |
| | (573,775 | ) | | 195,676 |
|
| Property and Equipment, net | | — |
| | 844 |
| | 175,358 |
| | — |
| | 1,363,018 |
| | — |
| | 1,539,220 |
|
| Investment in Park | | 798,076 |
| | 937,626 |
| | 200,075 |
| | 1,145,326 |
| | 324,282 |
| | (3,405,385 | ) | | — |
|
| Goodwill | | 674 |
| | — |
| | 59,381 |
| | 8,387 |
| | 111,218 |
| | — |
| | 179,660 |
|
| Other Intangibles, net | | — |
| | — |
| | 13,255 |
| | — |
| | 24,582 |
| | — |
| | 37,837 |
|
| Deferred Tax Asset | | — |
| | 33,303 |
| | — |
| | — |
| | — |
| | (33,303 | ) | | — |
|
| Other Assets | | — |
| | 2,000 |
| | 108 |
| | 1,240 |
| | 17,440 |
| | — |
| | 20,788 |
|
| | | $ | 798,923 |
| | $ | 975,978 |
| | $ | 545,359 |
| | $ | 1,267,256 |
| | $ | 2,398,128 |
| | $ | (4,012,463 | ) | | $ | 1,973,181 |
|
| LIABILITIES AND PARTNERS’ EQUITY | | | | | | | | | | | | | | |
| Current Liabilities: | | | | | | | | | | | | | | |
| Current maturities of long-term debt | | $ | — |
| | $ | 572 |
| | $ | 64 |
| | $ | 2,139 |
| | $ | — |
| | $ | — |
| | $ | 2,775 |
|
| Accounts payable | | 428,396 |
| | 145,258 |
| | 740 |
| | 15,845 |
| | 2,626 |
| | (572,014 | ) | | 20,851 |
|
| Deferred revenue | | — |
| | — |
| | 5,601 |
| | 55,497 |
| | 21,667 |
| | — |
| | 82,765 |
|
| Accrued interest | | 4,613 |
| | 3,207 |
| | 2,057 |
| | 109 |
| | — |
| | — |
| | 9,986 |
|
| Accrued taxes | | 405 |
| | 18,653 |
| | — |
| | 5,950 |
| | 35,711 |
| | (1,761 | ) | | 58,958 |
|
| Accrued salaries, wages and benefits | | — |
| | 29,227 |
| | 1,131 |
| | — |
| | — |
| | — |
| | 30,358 |
|
| Self-insurance reserves | | — |
| | 12,490 |
| | 1,321 |
| | 11,162 |
| | 2,090 |
| | — |
| | 27,063 |
|
| Other accrued liabilities | | 2,282 |
| | 3,018 |
| | 193 |
| | 2,464 |
| | 1,970 |
| | — |
| | 9,927 |
|
| | | 435,696 |
| | 212,425 |
| | 11,107 |
| | 93,166 |
| | 64,064 |
| | (573,775 | ) | | 242,683 |
|
| Deferred Tax Liability | | — |
| | — |
| | 12,838 |
| | — |
| | 125,350 |
| | (33,303 | ) | | 104,885 |
|
| Derivative Liability | | 10,633 |
| | 7,088 |
| | — |
| | — |
| | — |
| | — |
| | 17,721 |
|
| Other Liabilities | | — |
| | 1,236 |
| | — |
| | 337 |
| | 11,589 |
| | — |
| | 13,162 |
|
| Long-Term Debt: | | | | | | | | | | | | | | |
| Term debt | | — |
| | 123,672 |
| | 13,598 |
| | 456,958 |
| | — |
| | — |
| | 594,228 |
|
| Notes | | 292,075 |
| | 203,140 |
| | 444,768 |
| | — |
| | — |
| | — |
| | 939,983 |
|
| | | 292,075 |
| | 326,812 |
| | 458,366 |
| | 456,958 |
| | — |
| | — |
| | 1,534,211 |
|
| | | | | | | | | | | | | | | |
| Equity | | 60,519 |
| | 428,417 |
| | 63,048 |
| | 716,795 |
| | 2,197,125 |
| | (3,405,385 | ) | | 60,519 |
|
| | | $ | 798,923 |
| | $ | 975,978 |
| | $ | 545,359 |
| | $ | 1,267,256 |
| | $ | 2,398,128 |
| | $ | (4,012,463 | ) | | $ | 1,973,181 |
|
CEDAR FAIR, L.P.
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME
For the Year Ended December 31, 2017
(In thousands)
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Cedar Fair L.P. (Parent) | | Co-Issuer Subsidiary (Magnum) | | Co-Issuer Subsidiary (Cedar Canada) | | Co-Issuer Subsidiary (Millennium) | | Guarantor Subsidiaries | | Eliminations | | Total |
| | | | | | | | | | | | | | | |
| Net revenues | | $ | 104,080 |
| | $ | 317,496 |
| | $ | 127,929 |
| | $ | 960,108 |
| | $ | 395,745 |
| | $ | (583,391 | ) | | $ | 1,321,967 |
|
| Costs and expenses: | | | | | | | | | | | | | | |
| Cost of food, merchandise and games revenues | | — |
| | — |
| | 11,483 |
| | 80,942 |
| | 18,386 |
| | — |
| | 110,811 |
|
| Operating expenses | | — |
| | 313,654 |
| | 44,990 |
| | 738,719 |
| | 44,130 |
| | (583,391 | ) | | 558,102 |
|
| Selling, general and administrative | | 3,007 |
| | 67,872 |
| | 10,497 |
| | 92,527 |
| | 19,867 |
| | — |
| | 193,770 |
|
| Depreciation and amortization | | — |
| | 33 |
| | 15,654 |
| | — |
| | 137,535 |
| | — |
| | 153,222 |
|
| Loss on impairment / retirement of fixed assets, net | | — |
| | — |
| | 656 |
| | 3,102 |
| | 8,970 |
| | — |
| | 12,728 |
|
| Gain on sale of investment | | — |
| | (1,877 | ) | | — |
| | — |
| | — |
| | — |
| | (1,877 | ) |
| | | 3,007 |
| | 379,682 |
| | 83,280 |
| | 915,290 |
| | 228,888 |
| | (583,391 | ) | | 1,026,756 |
|
| Operating income (loss) | | 101,073 |
| | (62,186 | ) | | 44,649 |
| | 44,818 |
| | 166,857 |
| | — |
| | 295,211 |
|
| Interest expense, net | | 23,739 |
| | 18,837 |
| | 24,839 |
| | 39,768 |
| | (22,435 | ) | | — |
| | 84,748 |
|
| Net effect of swaps | | (150 | ) | | 105 |
| | — |
| | — |
| | — |
| | — |
| | (45 | ) |
| Loss on early debt extinguishment | | 11,773 |
| | 8,188 |
| | 205 |
| | 2,955 |
| | — |
| | — |
| | 23,121 |
|
| Gain on foreign currency | | — |
| | (25 | ) | | (29,061 | ) | | — |
| | — |
| | — |
| | (29,086 | ) |
| Other (income) expense | | 250 |
| | (73,581 | ) | | 3,460 |
| | — |
| | 69,756 |
| | — |
| | (115 | ) |
| Income from investment in affiliates | | (160,925 | ) | | (176,698 | ) | | (38,057 | ) | | — |
| | (84,398 | ) | | 460,078 |
| | — |
|
| Income before taxes | | 226,386 |
| | 160,988 |
| | 83,263 |
| | 2,095 |
| | 203,934 |
| | (460,078 | ) | | 216,588 |
|
| Provision (benefit) for taxes | | 10,910 |
| | 60 |
| | (1,134 | ) | | 2,095 |
| | (10,819 | ) | | — |
| | 1,112 |
|
| Net income | | $ | 215,476 |
| | $ | 160,928 |
| | $ | 84,397 |
| | $ | — |
| | $ | 214,753 |
| | $ | (460,078 | ) | | $ | 215,476 |
|
| Other comprehensive income (loss), (net of tax): | | | | | | | | | | | | | | |
| Cumulative foreign currency translation adjustment | | (14,849 | ) | | — |
| | (14,849 | ) | | — |
| | — |
| | 14,849 |
| | (14,849 | ) |
| Unrealized gain on cash flow hedging derivatives | | 7,975 |
| | 2,422 |
| | — |
| | — |
| | — |
| | (2,422 | ) | | 7,975 |
|
| Other comprehensive income (loss), (net of tax) | | (6,874 | ) | | 2,422 |
| | (14,849 | ) | | — |
| | — |
| | 12,427 |
| | (6,874 | ) |
| Total comprehensive income | | $ | 208,602 |
| | $ | 163,350 |
| | $ | 69,548 |
| | $ | — |
| | $ | 214,753 |
| | $ | (447,651 | ) | | $ | 208,602 |
|
CEDAR FAIR, L.P.
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME
For the Year Ended December 31, 2016
(In thousands)
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Cedar Fair L.P. (Parent) | | Co-Issuer Subsidiary (Magnum) | | Co-Issuer Subsidiary (Cedar Canada) | | Co-Issuer Subsidiary (Millennium) | | Guarantor Subsidiaries | | Eliminations | | Total |
| | | | | | | | | | | | | | | |
| Net revenues | | $ | 144,042 |
| | $ | 320,945 |
| | $ | 117,962 |
| | $ | 962,363 |
| | $ | 378,556 |
| | $ | (635,147 | ) | | $ | 1,288,721 |
|
| Costs and expenses: | | | | | | | | | | | | | | |
| Cost of food, merchandise and games revenues | | — |
| | — |
| | 9,868 |
| | 78,984 |
| | 17,756 |
| | — |
| | 106,608 |
|
| Operating expenses | | — |
| | 303,974 |
| | 42,820 |
| | 777,841 |
| | 49,393 |
| | (635,147 | ) | | 538,881 |
|
| Selling, general and administrative | | 3,029 |
| | 68,422 |
| | 10,151 |
| | 85,170 |
| | 15,058 |
| | — |
| | 181,830 |
|
| Depreciation and amortization | | — |
| | 35 |
| | 14,816 |
| | — |
| | 117,025 |
| | — |
| | 131,876 |
|
| Loss on impairment / retirement of fixed assets, net | | — |
| | — |
| | 159 |
| | 2,686 |
| | 9,742 |
| | — |
| | 12,587 |
|
| | | 3,029 |
| | 372,431 |
| | 77,814 |
| | 944,681 |
| | 208,974 |
| | (635,147 | ) | | 971,782 |
|
| Operating income (loss) | | 141,013 |
| | (51,486 | ) | | 40,148 |
| | 17,682 |
| | 169,582 |
| | — |
| | 316,939 |
|
| Interest expense, net | | 32,643 |
| | 24,114 |
| | 25,403 |
| | 15,695 |
| | (14,169 | ) | | — |
| | 83,686 |
|
| Net effect of swaps | | (473 | ) | | (724 | ) | | — |
| | — |
| | — |
| | — |
| | (1,197 | ) |
| (Gain) loss on foreign currency | | — |
| | — |
| | (14,660 | ) | | 4 |
| | — |
| | — |
| | (14,656 | ) |
| Other (income) expense | | 250 |
| | (83,657 | ) | | 3,925 |
| | — |
| | 79,482 |
| | — |
| | — |
|
| Income from investment in affiliates | | (80,295 | ) | | (73,132 | ) | | (20,545 | ) | | — |
| | (27,628 | ) | | 201,600 |
| | — |
|
| Income before taxes | | 188,888 |
| | 81,913 |
| | 46,025 |
| | 1,983 |
| | 131,897 |
| | (201,600 | ) | | 249,106 |
|
| Provision for taxes | | 11,200 |
| | 1,621 |
| | 18,396 |
| | 1,983 |
| | 38,218 |
| | — |
| | 71,418 |
|
| Net income | | $ | 177,688 |
| | $ | 80,292 |
| | $ | 27,629 |
| | $ | — |
| | $ | 93,679 |
| | $ | (201,600 | ) | | $ | 177,688 |
|
| Other comprehensive income (loss), (net of tax): | | | | | | | | | | | | | | |
| Cumulative foreign currency translation adjustment | | (3,700 | ) | | — |
| | (3,700 | ) | | — |
| | — |
| | 3,700 |
| | (3,700 | ) |
| Unrealized gain on cash flow hedging derivatives | | 3,350 |
| | 1,060 |
| | — |
| | — |
| | — |
| | (1,060 | ) | | 3,350 |
|
| Other comprehensive income (loss), (net of tax) | | (350 | ) | | 1,060 |
| | (3,700 | ) | | — |
| | — |
| | 2,640 |
| | (350 | ) |
| Total comprehensive income | | $ | 177,338 |
| | $ | 81,352 |
| | $ | 23,929 |
| | $ | — |
| | $ | 93,679 |
| | $ | (198,960 | ) | | $ | 177,338 |
|
CEDAR FAIR, L.P.
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME
For the Year Ended December 31, 2015
(In thousands)
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Cedar Fair L.P. (Parent) | | Co-Issuer Subsidiary (Magnum) | | Co-Issuer Subsidiary (Cedar Canada) | | Co-Issuer Subsidiary (Millennium) | | Guarantor Subsidiaries | | Eliminations | | Total |
| | | | | | | | | | | | | | | |
| Net revenues | | $ | 145,571 |
| | $ | 240,817 |
| | $ | 112,217 |
| | $ | 904,376 |
| | $ | 418,394 |
| | $ | (585,597 | ) | | $ | 1,235,778 |
|
| Costs and expenses: | | | | | | | | | | | | | | |
| Cost of food, merchandise and games revenues | | — |
| | 372 |
| | 8,878 |
| | 77,093 |
| | 18,484 |
| | — |
| | 104,827 |
|
| Operating expenses | | 1,063 |
| | 179,139 |
| | 42,814 |
| | 733,446 |
| | 146,761 |
| | (585,597 | ) | | 517,626 |
|
| Selling, general and administrative | | 3,081 |
| | 55,551 |
| | 10,358 |
| | 77,795 |
| | 24,705 |
| | — |
| | 171,490 |
|
| Depreciation and amortization | | — |
| | 37 |
| | 14,326 |
| | — |
| | 111,268 |
| | — |
| | 125,631 |
|
| Loss on impairment / retirement of fixed assets, net | | — |
| | — |
| | 417 |
| | 3,389 |
| | 17,067 |
| | — |
| | 20,873 |
|
| | | 4,144 |
| | 235,099 |
| | 76,793 |
| | 891,723 |
| | 318,285 |
| | (585,597 | ) | | 940,447 |
|
| Operating income | | 141,427 |
| | 5,718 |
| | 35,424 |
| | 12,653 |
| | 100,109 |
| | — |
| | 295,331 |
|
| Interest expense, net | | 34,204 |
| | 28,210 |
| | 25,381 |
| | 10,721 |
| | (11,731 | ) | | — |
| | 86,785 |
|
| Net effect of swaps | | (3,820 | ) | | (3,064 | ) | | — |
| | — |
| | — |
| | — |
| | (6,884 | ) |
| Loss on foreign currency | | — |
| | — |
| | 81,016 |
| | — |
| | — |
| | — |
| | 81,016 |
|
| Other (income) expense | | 750 |
| | (18,649 | ) | | 3,883 |
| | — |
| | 14,016 |
| | — |
| | — |
|
| (Income) loss from investment in affiliates | | (13,523 | ) | | (15,141 | ) | | (20,100 | ) | | — |
| | 27,480 |
| | 21,284 |
| | — |
|
| Income (loss) before taxes | | 123,816 |
| | 14,362 |
| | (54,756 | ) | | 1,932 |
| | 70,344 |
| | (21,284 | ) | | 134,414 |
|
| Provision (benefit) for taxes | | 11,594 |
| | 840 |
| | (27,274 | ) | | 1,932 |
| | 35,100 |
| | — |
| | 22,192 |
|
| Net income (loss) | | $ | 112,222 |
| | $ | 13,522 |
| | $ | (27,482 | ) | | $ | — |
| | $ | 35,244 |
| | $ | (21,284 | ) | | $ | 112,222 |
|
| Other comprehensive income (loss), (net of tax): | | | | | | | | | | | | | | |
| Cumulative foreign currency translation adjustment | | 16,655 |
| | — |
| | 16,655 |
| | — |
| | — |
| | (16,655 | ) | | 16,655 |
|
| Unrealized loss on cash flow hedging derivatives | | (2,734 | ) | | (1,021 | ) | | — |
| | — |
| | — |
| | 1,021 |
| | (2,734 | ) |
| Other comprehensive income (loss), (net of tax) | | 13,921 |
| | (1,021 | ) | | 16,655 |
| | — |
| | — |
| | (15,634 | ) | | 13,921 |
|
| Total comprehensive income (loss) | | $ | 126,143 |
| | $ | 12,501 |
| | $ | (10,827 | ) | | $ | — |
| | $ | 35,244 |
| | $ | (36,918 | ) | | $ | 126,143 |
|
CEDAR FAIR, L.P.
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
For the Year Ended December 31, 2017
(In thousands)
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Cedar Fair L.P. (Parent) | | Co-Issuer Subsidiary (Magnum) | | Co-Issuer Subsidiary (Cedar Canada) | | Co-Issuer Subsidiary (Millennium) | | Guarantor Subsidiaries | | Eliminations | | Total |
| | | | | | | | | | | | | | | |
| NET CASH FROM (FOR) OPERATING ACTIVITIES | | $ | 93,378 |
| | $ | (10,710 | ) | | $ | 40,569 |
| | $ | 48,979 |
| | $ | 160,801 |
| | $ | (1,838 | ) | | $ | 331,179 |
|
| CASH FLOWS FROM (FOR) INVESTING ACTIVITIES | | | | | | | | | | | | | | |
| Intercompany receivables (payments) receipts | | — |
| | — |
| | — |
| | — |
| | (278,051 | ) | | 278,051 |
| | — |
|
| Proceeds from returns on investments | | 338,000 |
| | 15,500 |
| | — |
| | — |
| | 146,500 |
| | (500,000 | ) | | — |
|
| Purchase of identifiable intangible assets | | — |
| | — |
| | — |
| | (66 | ) | | — |
| | — |
| | (66 | ) |
| Proceeds from sale of preferred equity investment | | — |
| | 3,281 |
| | — |
| | — |
| | — |
| | — |
| | 3,281 |
|
| Capital expenditures | | — |
| | (25 | ) | | (10,160 | ) | | (149,448 | ) | | (28,451 | ) | | — |
| | (188,084 | ) |
| Net cash from (for) investing activities | | 338,000 |
| | 18,756 |
| | (10,160 | ) | | (149,514 | ) | | (160,002 | ) | | (221,949 | ) | | (184,869 | ) |
| CASH FLOWS FROM (FOR) FINANCING ACTIVITIES | | | | | | | | | | | | | | |
| Intercompany payables (payments) receipts | | 69,160 |
| | 208,891 |
| | — |
| | — |
| | — |
| | (278,051 | ) | | — |
|
| Payments for returns of capital | | — |
| | — |
| | — |
| | (500,000 | ) | | — |
| | 500,000 |
| | — |
|
| Term debt borrowings | | — |
| | 131,000 |
| | — |
| | 619,000 |
| | — |
| | — |
| | 750,000 |
|
| Note borrowings | | — |
| | — |
| | — |
| | 500,000 |
| | — |
| | — |
| | 500,000 |
|
| Term debt payments | | — |
| | (126,619 | ) | | (13,854 | ) | | (477,377 | ) | | — |
| | — |
| | (617,850 | ) |
| Note payments, including amounts paid for early termination | | (304,014 | ) | | (211,444 | ) | | — |
| | — |
| | — |
| | — |
| | (515,458 | ) |
| Distributions paid to partners | | (196,524 | ) | | — |
| | — |
| | — |
| | — |
| | 1,768 |
| | (194,756 | ) |
| Payment of debt issuance costs | | — |
| | (1,326 | ) | | — |
| | (18,483 | ) | | — |
| | — |
| | (19,809 | ) |
| Exercise of limited partnership unit options | | — |
| | 65 |
| | — |
| | — |
| | — |
| | — |
| | 65 |
|
| Tax effect of units involved in treasury unit transactions | | — |
| | (4,440 | ) | | — |
| | — |
| | — |
| | — |
| | (4,440 | ) |
| Payments related to tax withholding for equity compensation | | — |
| | (4,173 | ) | | — |
| | — |
| | — |
| | — |
| | (4,173 | ) |
| Net cash from (for) financing activities | | (431,378 | ) | | (8,046 | ) | | (13,854 | ) | | 123,140 |
| | — |
| | 223,717 |
| | (106,421 | ) |
| EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS | | — |
| | — |
| | 3,640 |
| | — |
| | — |
| | — |
| | 3,640 |
|
| CASH AND CASH EQUIVALENTS | | | | | | | | | | | | | | |
| Net increase for the year | | — |
| | — |
| | 20,195 |
| | 22,605 |
| | 799 |
| | (70 | ) | | 43,529 |
|
| Balance, beginning of year | | — |
| | — |
| | 65,563 |
| | 57,825 |
| | 353 |
| | (1,025 | ) | | 122,716 |
|
| Balance, end of year | | $ | — |
| | $ | — |
| | $ | 85,758 |
| | $ | 80,430 |
| | $ | 1,152 |
| | $ | (1,095 | ) | | $ | 166,245 |
|
CEDAR FAIR, L.P.
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
For the Year Ended December 31, 2016
(In thousands)
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Cedar Fair L.P. (Parent) | | Co-Issuer Subsidiary (Magnum) | | Co-Issuer Subsidiary (Cedar Canada) | | Co-Issuer Subsidiary (Millennium) | | Guarantor Subsidiaries | | Eliminations | | Total |
| | | | | | | | | | | | | | | |
| NET CASH FROM (FOR) OPERATING ACTIVITIES | | $ | 118,833 |
| | $ | (28,315 | ) | | $ | 33,918 |
| | $ | 189,534 |
| | $ | 47,728 |
| | $ | (3,351 | ) | | $ | 358,347 |
|
| CASH FLOWS FOR INVESTING ACTIVITIES | | | | | | | | | | | | | | |
| Intercompany receivables (payments) receipts | | — |
| | — |
| | — |
| | — |
| | (24,562 | ) | | 24,562 |
| | — |
|
| Purchase of identifiable intangible assets | | — |
| | — |
| | (29 | ) | | (74 | ) | | (474 | ) | | — |
| | (577 | ) |
| Capital expenditures | | — |
| | — |
| | (7,863 | ) | | (129,815 | ) | | (22,978 | ) | | — |
| | (160,656 | ) |
| Net cash for investing activities | | — |
| | — |
| | (7,892 | ) | | (129,889 | ) | | (48,014 | ) | | 24,562 |
| | (161,233 | ) |
| CASH FLOWS FROM (FOR) FINANCING ACTIVITIES | | | | | | | | | | | | | | |
| Term debt payments | | — |
| | (1,237 | ) | | (138 | ) | | (4,625 | ) | | — |
| | — |
| | (6,000 | ) |
| Intercompany payables (payments) receipts | | (6,332 | ) | | 30,894 |
| | — |
| | — |
| | — |
| | (24,562 | ) | | — |
|
| Distributions paid to partners | | (189,508 | ) | | — |
| | — |
| | — |
| | — |
| | 2,326 |
| | (187,182 | ) |
| Tax effect of units involved in treasury unit transactions | | — |
| | (422 | ) | | — |
| | — |
| | — |
| | — |
| | (422 | ) |
| Payments related to tax withholding for equity compensation | | — |
| | (920 | ) | | — |
| | — |
| | — |
| | — |
| | (920 | ) |
| Net cash from (for) financing activities | | (195,840 | ) | | 28,315 |
| | (138 | ) | | (4,625 | ) | | — |
| | (22,236 | ) | | (194,524 | ) |
| EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS | | — |
| | — |
| | 569 |
| | — |
| | — |
| | — |
| | 569 |
|
| CASH AND CASH EQUIVALENTS | | | | | | | | | | | | | | |
| Net increase (decrease) for the year | | (77,007 | ) | | — |
| | 26,457 |
| | 55,020 |
| | (286 | ) | | (1,025 | ) | | 3,159 |
|
| Balance, beginning of year | | 77,007 |
| | — |
| | 39,106 |
| | 2,805 |
| | 639 |
| | — |
| | 119,557 |
|
| Balance, end of year | | $ | — |
| | $ | — |
| | $ | 65,563 |
| | $ | 57,825 |
| | $ | 353 |
| | $ | (1,025 | ) | | $ | 122,716 |
|
CEDAR FAIR, L.P.
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
For the Year Ended December 31, 2015
(In thousands)
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Cedar Fair L.P. (Parent) | | Co-Issuer Subsidiary (Magnum) | | Co-Issuer Subsidiary (Cedar Canada) | | Co-Issuer Subsidiary (Millennium) | | Guarantor Subsidiaries | | Eliminations | | Total |
| | | | | | | | | | | | | | | |
| NET CASH FROM (FOR) OPERATING ACTIVITIES | | $ | 89,637 |
| | $ | (1,120 | ) | | $ | 38,579 |
| | $ | 91,714 |
| | $ | 129,287 |
| | $ | (2,147 | ) | | $ | 345,950 |
|
| CASH FLOWS FOR INVESTING ACTIVITIES | | | | | | | | | | | | | | |
| Intercompany receivables (payments) receipts | | — |
| | — |
| | (3,252 | ) | | — |
| | (55,294 | ) | | 58,546 |
| | — |
|
| Purchase of preferred equity investment | | — |
| | (2,000 | ) | | — |
| | — |
| | — |
| | — |
| | (2,000 | ) |
| Capital expenditures | | — |
| | — |
| | (7,663 | ) | | (94,443 | ) | | (73,759 | ) | | — |
| | (175,865 | ) |
| Net cash for investing activities | | — |
| | (2,000 | ) | | (10,915 | ) | | (94,443 | ) | | (129,053 | ) | | 58,546 |
| | (177,865 | ) |
| CASH FLOWS FROM (FOR) FINANCING ACTIVITIES | | | | | | | | | | | | | | |
| Intercompany payables (payments) receipts | | 82,131 |
| | 8,060 |
| | (31,645 | ) | | — |
| | — |
| | (58,546 | ) | | — |
|
| Distributions paid to partners | | (174,761 | ) | | — |
| | — |
| | — |
| | — |
| | 2,147 |
| | (172,614 | ) |
| Tax effect of units involved in treasury unit transactions | | — |
| | (1,589 | ) | | — |
| | — |
| | — |
| | — |
| | (1,589 | ) |
| Payments related to tax withholding for equity compensation | | — |
| | (3,733 | ) | | — |
| | — |
| | — |
| | — |
| | (3,733 | ) |
| Net cash from (for) financing activities | | (92,630 | ) | | 2,738 |
| | (31,645 | ) | | — |
| | — |
| | (56,399 | ) | | (177,936 | ) |
| EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS | | — |
| | — |
| | (2,432 | ) | | — |
| | — |
| | — |
| | (2,432 | ) |
| CASH AND CASH EQUIVALENTS | | | | | | | | | | | | | | |
| Net increase (decrease) for the year | | (2,993 | ) | | (382 | ) | | (6,413 | ) | | (2,729 | ) | | 234 |
| | — |
| | (12,283 | ) |
| Balance, beginning of year | | 80,000 |
| | 382 |
| | 45,519 |
| | 5,534 |
| | 405 |
| | — |
| | 131,840 |
|
| Balance, end of year | | $ | 77,007 |
| | $ | — |
| | $ | 39,106 |
| | $ | 2,805 |
| | $ | 639 |
| | $ | — |
| | $ | 119,557 |
|
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 maintainsWe maintain a system of controls and procedures designed to ensure that information required to be disclosed by the Partnershipus in itsour reports under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified by the Commission and that such information is accumulated and communicated to the Partnership's management, including the Chief Executive Officer and the Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. As of December 31, 2017, the Partnership's2020, management, with the participation of the Partnership'sour Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Partnership'sour disclosure controls and procedures. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Partnership'sour disclosure controls and procedures were effective as of December 31, 2017.2020.
Management's Report on Internal Control over Financial Reporting
The Partnership's managementManagement is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. The Partnership'sOur internal control over financial reporting is a process designed 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. Management, with the participation of the Partnership'sour Chief Executive Officer and Chief Financial Officer, assessed the effectiveness of the Partnership'sour internal control over financial reporting as of December 31, 2017.2020. In making this assessment, it used the criteria described in "Internal Control - Integrated Framework" (2013) issued by the Committee of Sponsoring Organizations (COSO) of the Treadway Commission. As a result of its assessment, management concluded that, as of December 31, 2017, the Partnership's2020, our internal control over financial reporting was effective. Deloitte & Touche LLP, the independent registered public accounting firm that audited the financial statements included in this Form 10-K, has issued an attestation report on the Partnership'sour internal control over financial reporting.
Changes in Internal Control over Financial Reporting
There were no changes in the Partnership'sour internal control over financial reporting that occurred during the fourth quarter of 20172020 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. In response to the Partnership'sCOVID-19 pandemic, many of our employees continued working from home during the fourth quarter of 2020. We are monitoring and assessing the changing business environment resulting from the COVID-19 pandemic and the related effect on our internal control over financial reporting.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Unitholders of Cedar Fair, L.P.
Sandusky, Ohio
Opinion on Internal Control over Financial Reporting
We have audited the internal control over financial reporting of Cedar Fair, L.P. and subsidiaries (the "Partnership") as of December 31, 2017, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Partnership maintained, in all material respects, effective internal control over financial reporting as of December 31, 2017, based on criteria established in Internal Control - Integrated Framework (2013) issued by COSO.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2017, of the Partnership and our report dated February 23, 2018, expressed an unqualified opinion on those financial statements.
Basis for Opinion
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, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Partnership's internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Partnership in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. 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, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed 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 its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ DELOITTE & TOUCHE LLP
Cleveland, Ohio
February 23, 2018
ITEM 9B. OTHER INFORMATION.
None.
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.
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 Partnership (see Note 1 of the Consolidated Financial Statements.2).
A. Identification of Directors:
The information required by this item is incorporated by reference to the material in our Proxy Statement to be used in connection with the annual meeting of limited partner unitholders to be held in June 2018May 2021 (the "Proxy Statement") under the captions "Proposal One. Election of Directors", "Board Committees", and, "Sectionif required, Delinquent Section 16(a) Beneficial Ownership Reporting Compliance".Reports.
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. Information about our Executive Officers of Cedar Fair"Officers" in Item 1 of Part I and is incorporated herein by reference.
C. Code of Ethics and Certifications:
In accordance with Section 406 of the Sarbanes-Oxley Act of 2002 and Item 406 of Regulation S-K, the Partnership haswe have 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, Chief Financial Officer and Chief Accounting Officer. A copy of the Code is available on the Internet at the Investor Relations section of our web sitewebsite (www.cedarfair.com).
The PartnershipWe submitted an unqualified Section 303A.12(a) Chief Executive Officer certification to the New York Stock Exchange on June 23, 2017,2, 2020, stating that the Partnership waswe were 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".
EQUITY COMPENSATION PLAN INFORMATION
The following table sets forth information concerning units authorized or available for issuance under our equity compensation plan (see Note 10) as of December 31, 2017:2020: | | | | | | | | | | | | | | | | | | | | |
| Plan Category | |
Number of units to be issued upon exercise of outstanding options, warrants and rights (a) (1) | |
Weighted-average exercise price of outstanding options, warrants and rights (b) (2) | | Number of units remaining available for future issuance under equity compensation plans
(excluding units
reflected in column (a))
(c) |
| Equity compensation plans approved by unitholders | | 1,099,472 | | | $ | 34.50 | | | 2,268,552 | |
| Equity compensation plans not approved by unitholders | | — | | | — | | | — | |
| Total | | 1,099,472 | | | $ | 34.50 | | | 2,268,552 | |
(1)The units in column (a) include performance awards and deferred unit awards at the maximum number of units issuable, as well as unit options outstanding.
(2)The weighted average price in column (b) represents the weighted average price of 352,136 unit options outstanding. Performance awards and deferred unit awards are excluded from column (b).
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| Plan Category | |
Number of units to be issued upon exercise of outstanding options, warrants and rights (a) (1) | |
Weighted-average exercise price of outstanding options, warrants and rights (b) (2) | | Number of units remaining available for future issuance under equity compensation plans (excluding units reflected in column (a)) (c) |
| Equity compensation plans approved by unitholders | | 1,110,243 |
| | $ | 34.55 |
| | 2,721,134 |
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| Equity compensation plans not approved by unitholders | | — |
| | — |
| | — |
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| Total | | 1,110,243 |
| | $ | 34.55 |
| | 2,721,134 |
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(1) | The units in column (a) include performance awards and deferred unit awards at the maximum number of units issuable, the remaining balance of retention grant units, as well as unit options outstanding. |
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(2) | The weighted average price in column (b) represents the weighted average price of 373,612 unit options outstanding. Performance awards, deferred unit awards and the remaining balance of retention grant units are excluded from column (b). |
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", "Board Independence", and "Board Committees".
ITEM 14. PRINCIPAL ACCOUNTINGACCOUNTANT 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 Services and Fees".
PART IV
ITEM 15. EXHIBITS, 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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| (i) | | Page |
(i) | Report of Independent Registered Public Accounting Firm.Firm | |
| (ii) | Consolidated Balance Sheets - December 31, 20172020 and 2016.2019 | |
| (iii) | Consolidated Statements of Operations and Comprehensive (Loss) Income - Years ended December 31, 2017, 2016,2020, 2019, and 2015.2018 | |
| (iv) | Consolidated Statements of Cash Flows - Years ended December 31, 2017, 2016,2020, 2019, and 2015.2018 | |
| (v) | Consolidated Statements of Partners' Equity (Deficit) - Years ended December 31, 2017, 2016,2020, 2019, and 2015.2018 | |
| (vi) | Notes to Consolidated Financial Statements - December 31, 2017, 2016,2020, 2019, and 2015.2018 | |
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 the Registrant or are included as exhibits in this Form 10-K.
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| Cedar Fair, L.P. CertificateAsset Purchase Agreement by and among Millennium Operations LLC, Waterpark Management, Inc., Golden Seal Investments, Inc., Bad-Schloss, Inc., Liberty Partnership, Ltd., Henry Condo 1, Ltd., Henry-Walnut, Ltd., SVV I, LLC, KC Waterpark Management, LLC, Galveston Island Water Park, LP, Galveston Waterpark Management, Inc., Schlitterbahn Seller Rep, LLC, and Gary Henry and Jana Faber, dated as of Limited Partnership.June 12, 2019. Incorporated herein by reference to Exhibit 3.62.1 to the Registration Statement onRegistrant's Form S-410-Q (File No. 333-172773)001-09444) filed on March 11, 2011.August 7, 2019. |
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| Sixth Amended and Restated Agreement of Limited Partnership of Cedar Fair, L.P., as amended by that First Amendment, dated June 1, 2017, that Second Amendment, dated August 2, 2019, and that Third Amendment, dated April 1, 2020. Incorporated herein by reference to Exhibit 3.1 to the Registrant's Form 10-Q (File No. 001-09444) filed November 4, 2011.May 6, 2020. |
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| Indenture, dated as of April 13, 2017, by and among Cedar Fair, L.P., Canada’s Wonderland Company, Magnum Management Corporation and Millennium Operations LLC, as issuers, the guarantors named therein and The Bank of New York Mellon Corporation, as trustee (including Form of 5.375% Senior Note due 2027). Incorporated herein by reference to Exhibit 4.1 to the Registrant’s Form 8-K (File No. 001-09444) filed on April 13, 2017. |
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| Registration Rights Agreement, dated April 13, 2017, by and among Cedar Fair, L.P., Canada’s Wonderland Company, Magnum Management Corporation and Millennium Operations LLC, as issuers, the guarantors named therein and J.P. Morgan Securities LLC, on behalf of itself and as representative of the initial purchasers named therein. Incorporated herein by reference to Exhibit 4.3 to the Registrant’s Form 8-K (File No. 001-09444) filed on April 13, 2017. |
| Indenture, dated as of June 27, 2019, by and among Cedar Fair, L.P., Canada’s Wonderland Company, Magnum Management Corporation and Millennium Operations LLC, as issuers, the guarantors named therein and The Bank of New York Mellon, as trustee (including Form of 5.250% Senior Note due 2029). Incorporated herein by reference to Exhibit 4.1 to the Registrant's Form 8-K (File No. 001-09444) filed on June 27, 2019. |
| Registration Rights Agreement, dated June 27, 2019, by and among Cedar Fair, L.P., Canada’s Wonderland Company, Magnum Management Corporation and Millennium Operations LLC, as issuers, the guarantors named therein and J.P. Morgan Securities LLC, on behalf of itself and as representative of the initial purchasers named therein. Incorporated herein by reference to Exhibit 4.3 to the Registrant's Form 8-K (File No. 001-09444) filed on June 27, 2019. |
| Indenture, dated as of April 27, 2020, by and among Cedar Fair, L.P., Canada’s Wonderland Company, Magnum Management Corporation and Millennium Operations LLC, as issuers, the guarantors named therein, The Bank of New York Mellon, as trustee and notes US collateral agent and BNY Trust Company of Canada, as notes Canadian collateral agent (including Form of 5.500% Senior Note due 2025). Incorporated herein by reference to Exhibit 4.1 to the Registrant's Form 8-K (Form No. 001-09444) filed on April 29, 2020. |
| Indenture, dated as of October 7, 2020, by and among Cedar Fair, L.P., Canada’s Wonderland Company, Magnum Management Corporation and Millennium Operations LLC, as issuers, the guarantors named therein and The Bank of New York Mellon, as trustee (including Form 6.500% Senior Note due 2028). Incorporated herein by reference to Exhibit 4.1 to the Registrant's Form 8-K (File No. 001-09444) filed on October 7, 2020. |
| Registration Rights Agreement, dated October 7, 2020, by and among Cedar Fair, L.P., Canada’s Wonderland Company, Magnum Management Corporation and Millennium Operations LLC, as issuers, the guarantors named therein and J.P. Morgan Securities LLC, on behalf of itself and as representative of the initial purchasers named therein. Incorporated herein by reference to Exhibit 4.3 to the Registrant's Form 8-K (File No. 001-09444) filed on October 7, 2020. |
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Exhibit Number | Description |
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| Restatement Agreement, dated April 13, 2017, among Cedar Fair, L.P., Magnum Management Corporation, Canada’s Wonderland Company and Millennium Operations LLC, as borrowers, the several lenders from time to time party thereto, JPMorgan Chase Bank, N.A. as administrative agent and collateral agent and the other parties thereto. Incorporated herein by reference to Exhibit 10.1 to the Registrant's Form 8-K (File No. 001-09444) filed on April 13, 2017. |
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| Computation of Ratio of EarningsAmendment No. 1, dated March 14, 2018, to Fixed ChargesRestatement Agreement, dated April 13, 2017, among Cedar Fair, L.P., Magnum Management Corporation, Canada’s Wonderland Company and Millennium Operations LLC, as borrowers, the several lenders from time to time party thereto, JPMorgan Chase Bank, N.A., as administrative agent and collateral agent and the other parties thereto. Incorporated herein by reference to Exhibit 10.1 to the Registrant's Form 8-K (File No. 001-09444) filed on March 14, 2018. |
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| Amendment No. 2, dated April 27, 2020, to the Amended and Restated Credit Agreement, dated April 13, 2017, among Cedar Fair, L.P., Magnum, Cedar Canada and Millennium, as borrowers, the lenders party thereto from time to time, JPMorgan Chase Bank, N.A., as administrative agent and collateral agent and the other parties thereto. Incorporated herein by reference to Exhibit 10.1 to the Registrant's Form 8-K (File No. 001-09444) filed on April 29, 2020. |
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| Exhibit Number | Description |
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| Amendment No. 3, dated as of September 28, 2020, to the Amended and Restated Credit Agreement, dated as of April 13, 2017, among Cedar Fair, Magnum, Cedar Canada and Millennium, as borrowers, the lenders party thereto from time to time, JPMorgan Chase Bank, N.A., as administrative agent and collateral agent and the other parties thereto. Incorporated herein by reference to Exhibit 10.1 to the Registrant's Form 8-K (File No. 001-09444) filed on September 30, 2020. |
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| 101 |
| The following materials from the Partnership's Annual Report on Form 10-K for the year ended December 31, 20172020 formatted in Extensible Business Reporting Language (XBRL):Inline XBRL: (i) the Consolidated Statements of Operations and Comprehensive (Loss) Income, (ii) the Consolidated Balance Sheets, (iii) the Consolidated Statements of Cash Flows, (iv) the Consolidated Statements of Partners' Equity (Deficit), and (v) related notes.notes, tagged as blocks of text and including detailed tags. |
| 104 | | The cover page from the Partnership's Annual Report on Form 10-K for the year ended December 31, 2020, formatted in Inline XBRL (included as Exhibit 101). |
(+) Management contract or compensatory plan or arrangement.
ITEM 16.FORM 10-K SUMMARY.
None.
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.
CEDAR FAIR, L.P.
(Registrant)
DATED: February 23, 201819, 2021 By: Cedar Fair Management, Inc.
General Partner
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| /S/ Richard A. Zimmerman |
| Richard A. Zimmerman |
| President and Chief Executive Officer |
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
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| Signature | | Title | Date |
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| /S/ | Richard A. Zimmerman | | President and Chief Executive Officer | February 19, 2021 |
| Richard A. Zimmerman | | Director | |
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| /S/ | Signature | | Title | Date |
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/S/ | Richard A. Zimmerman | | President and Chief Executive Officer | February 23, 2018 |
| Richard A. Zimmerman | | | |
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/S/ | Brian C. Witherow | | Executive Vice President and Chief Financial Officer | February 23, 201819, 2021 |
| Brian C. Witherow | | (Principal Financial Officer) | |
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| /S/ | David R. Hoffman | | Senior Vice President and Chief Accounting Officer | February 23, 201819, 2021 |
| David R. Hoffman | | (Principal Accounting Officer) | |
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| /S/ | Daniel J. Hanrahan | | Chairman of the Board of Directors | February 19, 2021 |
| Daniel J. Hanrahan | | | |
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| /S/ | Louis Carr | | Director | February 19, 2021 |
| Louis Carr | | | |
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| /S/ | Gina D. France | | Director | February 19, 2021 |
| Gina D. France | | | |
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| /S/ | D. Scott Olivet | | Director | February 19, 2021 |
| D. Scott Olivet | | | |
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| /S/ | Matthew A. Ouimet | | Executive ChairmanDirector | February 23, 201819, 2021 |
| Matthew A. Ouimet | | Director | |
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| /S/ | Debra Smithart-OglesbyCarlos A. Ruisanchez | | Lead Independent Director | February 23, 201819, 2021 |
| Debra Smithart-OglesbyCarlos A. Ruisanchez | | | |
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| /S/ | Eric L. Affeldt | | Director | February 23, 2018 |
| Eric L. Affeldt | | | |
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/S/ | Gina D. France | | Director | February 23, 2018 |
| Gina D. France | | | |
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/S/ | Daniel J. Hanrahan | | Director | February 23, 2018 |
| Daniel J. Hanrahan | | | |
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/S/ | Tom Klein | | Director | February 23, 2018 |
| Tom Klein | | | |
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/S/ | D. Scott Olivet | | Director | February 23, 2018 |
| D. Scott Olivet | | | |
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/S/ | John M. Scott III | | Director | February 23, 2018 |
| John M. Scott III | | | |
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/S/ | Lauri M. Shanahan | | Director | February 23, 201819, 2021 |
| Lauri M. Shanahan | | | |
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| /S/ | Debra Smithart-Oglesby | | Director | February 19, 2021 |
| Debra Smithart-Oglesby | | | |
