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PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

    

The accompanying unaudited condensed consolidated financial statements have been prepared from the financial records of Cedar Fair, L.P. (the Partnership)"Partnership," "we," "us," or "our") without audit and reflect all adjustments (consisting of normal recurring adjustments) which are, in the opinion of management, necessary to fairly present the results of the interim periods covered in this report. Due to the seasonal nature of the Partnership'sour amusement and water park operations, the results for any interim period may not be indicative of the results expected for the full fiscal year.

(1) Significant Accounting and Reporting Policies:

Except for the changes described below, the Partnership’sour unaudited condensed consolidated financial statements included in this Form 10-Q report have been prepared in accordance with the accounting policies described in the Notes to Consolidated Financial Statements for the year ended December 31, 2018,2019, which were included in the Form 10-K filed on February 22, 2019.21, 2020. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (the Commission)"Commission"). These financial statements should be read in conjunction with the financial statements and the notes thereto included in the Form 10-K referred to above.

In December 2019, the FASB issued Accounting Standards Update No. 2019-12, Simplifying the Accounting for Income Taxes ("ASU 2016-02"2019-12"). ASU 2019-12 simplifies the accounting for income taxes by removing specific exceptions and clarifying and amending existing guidance under Topic 740, Income Taxes. ASU 2019-12 is effective January 1, 2019 usingfor fiscal years after December 15, 2020 and interim periods within those years. Early adoption is permitted, including adoption in any interim period, but all amendments must be adopted in the comparative reporting approach, which requires applicationsame period. The allowable adoption methods differ under the various amendments. We are in the process of evaluating the neweffect this standard atwill have on the adoption date. 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 theunaudited condensed consolidated financial statements regardingand related disclosures.

In March 2020, 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 significantly change the accounting applied by a lessor. The adoptionFASB issued Accounting Standards Update No. 2020-04, Facilitation of the standard resultedEffects of Reference Rate Reform on Financial Reporting ("ASU 2020-04"). ASU 2020-04 provides optional guidance to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on contracts, hedging relationships, and other transactions that reference London Interbank Offered Rate ("LIBOR") or another reference rate expected to be discontinued because of reference rate reform. ASU 2020-04 is effective as of March 12, 2020 through December 31, 2022. We are in the recognitionprocess of right-of-use assets and corresponding lease liabilities forevaluating the Partnership's Santa Clara land lease, as well as its other operating leases, of $73.5 million andeffect this standard will have on the addition of required disclosures (see Note 11). The Partnership elected not to reassess: whether any expired or existing contracts are or contain leases; the lease classification of any expired or existing leases; and the initial direct costs for any existing leases. On June 28, 2019, the Partnership purchased the land at California's Great America from the lessor, the City of Santa Clara, for $150.3 million. Following the purchase, the Partnership's remaining lease commitments were immaterial to theunaudited condensed consolidated financial statements at June 30, 2019. However, the Partnership assumed a material lease commitment when it completed its subsequent event acquisition on July 1, 2019 (see Note 15). The material lease commitment is for the land on which one of the acquired properties is located. This land lease is expected to result in the recognition of an additional right-of-use asset between $6 million and $8 million and an additional corresponding lease liability between $4 million and $6 million in the third quarter of 2019.related disclosures.

(2) Interim Reporting:

To assure that these highly seasonal operations will not result in misleading comparisons of current and subsequent interim periods, the Partnership haswe have adopted the following accounting and reporting procedures for its seasonal parks:procedures: (a) revenues from multi-use products are recognized over the estimated number of uses expected for each type of product; and the estimated number of uses is reviewed and may 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; (b) depreciation, certain advertising and certain seasonal operating costs are expensed over each park’s operating season, including some costs incurred prior to the season, which are deferred and amortized over the season; and (c) all other costs are expensed as incurred or ratably over the entire year. If the COVID-19 pandemic prevents us from opening our parks during the second quarter of 2020, we anticipate recognizing depreciation and certain other operating costs, which are typically expensed over each park's operating season and which will still be incurred, over the calendar year instead of over each park's operating season. This change in accounting procedure would more accurately reflect incurred expense during this unprecedented shutdown.

(3) Acquisitions:

(4) Revenue Recognition:

As disclosed within the unaudited condensed consolidated statements of operations and comprehensive income, revenues are generated from sales of (1) admission to the Partnership'sour 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 the Partnership'sour 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 the Partnership'snet 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 described below, for the periods presented:

In some instances, the Partnership arrangeswe arrange with outside parties ("concessionaires") to provide goods to guests, typically food and merchandise, and the Partnership actswe act as an agent, resulting in net revenuerevenues recorded within the condensed consolidated statementstatements of operations and comprehensive income. Concessionaire arrangement revenues are recognized over the operating season and are variable. Sponsorship revenues and marina revenues, which are classified as "Accommodations, extra-charge products and other" within the condensed consolidated statement of operations and comprehensive income,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. The Partnership estimatesWe estimate variable revenues and performsperform a constraint analysis using both historical information and current trends to determine the amount of revenue that is not probable of a significant reversal.

Many products, including season-long products, are sold to customers in advance, resulting in a contract liability ("deferred revenue"). Deferred revenue is at its highest immediately prior to the peak summer season, and at its lowest inat the fallbeginning of the calendar year following the close of our parks' operating seasons, as well as at the end of the third quarter after the peak summer season and at the beginning of the selling season for the next year's products. Season-long products represent the majoritymost of the deferred revenue balance in any given period.

Of the $107.1$151.4 million of deferred revenue recorded as of January 1, 2019, 88%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 sixthree months ended June 30, 2019,March 29, 2020, approximately $41.9$6.3 million of the deferred revenue balance as of January 1, 20192020 was recognized. The remaining difference

Due to the COVID-19 pandemic, we have estimated that some or all of our parks may remain closed throughout 2020. We have announced our intention to extend the validity of our season pass products through the 2021 operating season to compensate for lost days in the opening and closing balances2020. As a result, we have classified a portion of the Partnership'sour deferred revenue balance in the current period was attributableas non-current as of March 29, 2020. The following table discloses when we expect to additional season-long product sales during the first six months of 2019.recognize our outstanding deferred revenue:

Payment is due immediately on the transaction date for most products. The Partnership'sOur receivable balance includes 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 three3 monthly installments to twelve12 monthly installments. Payment terms for billings are typically net 30 days. Receivables are highest in the peak summer months and the lowest in the winter months. The Partnership isWe are not exposed to a significant concentration of customer credit risk. As of June 30, 2019,March 29, 2020, December 31, 20182019 and June 24, 2018, the PartnershipMarch 31, 2019, we recorded an $8.2a $6.0 million, $2.6$3.4 million and $7.3$3.9 million allowance for doubtful accounts, respectively, representing estimated

Most deferred revenue from contracts with customers is classified as current withinAs mentioned above, due to the balance sheet. However,COVID-19 pandemic, we have estimated that some or all of our parks may remain closed throughout 2020. We have announced a portionsuspension of deferred revenue from contracts with customers is classified as non-current during the third quarter related to season-long products sold in the current season for use in the subsequent season. Season-long products are sold beginning in August of the year preceding the operating season. Season-long products may be recognized 12 to 16 months after purchase dependingcollections on the date of sale. The Partnership estimates the number of uses expected outside of the next twelve months for each type of product and classifies the related deferred revenue as non-current.

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 condensed consolidated financial statements.

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.

During the third quarter of 2016, the Partnershipwe ceased operations of one1 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 approximately 670 acres of land. The Wildwater Kingdom acreage, reduced by acreage sold, is recorded within "Other Assets" in the unaudited condensed consolidated balance sheet ($9.0 million as of June 30, 2019,March 29, 2020, December 31, 20182019 and June 24, 2018)March 31, 2019).

(6) Goodwill and Other Intangible Assets:

Goodwill and other indefinite-lived intangible assets, including trade-names,trade names, are reviewed for impairment annually, or more frequently if indicators of impairment exist. AsDue to the negative impact of June 30, 2019, there werethe 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. 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 indicatorslonger exceeded their carrying values. Therefore, we recorded a $73.6 million, $6.8 million and $7.9 million impairment of impairment. The Partnership's annual testing date isgoodwill at the Schlitterbahn parks, goodwill at Dorney Park, and the Schlitterbahn trade name, respectively, during the first dayquarter of 2020. The impairment 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 unaudited condensed consolidated statement of operations and comprehensive income.

The 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 anticipated time frame to re-open our parks following the COVID-19 pandemic, and the related 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 fourth quarter. There were no impairmentsreporting units. The impairment charge recognized was for any period presented.the amount by which the reporting unit's carrying amount exceeded its fair value.

A summaryOur indefinite-lived intangible assets consist of changestrade names. The fair value of our trade names was calculated using a relief-from-royalty model. The impairment charge recognized was for the amount by which the trade name's carrying amount exceeded its fair value.

Management made significant estimates in calculating the Partnership’sfair value of our reporting units and trade names. Actual results could materially differ from these estimates.

Changes in the carrying value of goodwill for the sixthree months ended June 30,March 29, 2020 and March 31, 2019 and June 24, 2018 is as follows:were:

As of June 30, 2019,March 29, 2020, December 31, 2018,2019, and June 24, 2018, the Partnership’sMarch 31, 2019, other intangible assets consisted of the following:

Long-term debt as of June 30, 2019,March 29, 2020, December 31, 2018,2019, and June 24, 2018March 31, 2019 consisted of the following:

Term Debt and Revolving Credit Facilities

In April 2017, the Partnershipwe amended and restated itsour existing credit agreement. The $1,025 million amended and restated credit agreement (the "2017 Credit Agreement") includes. As of March 29, 2020, the 2017 Credit Agreement included a $750 million senior secured term loan facility and a $275 million senior secured revolving credit facility. The 2017 Credit Agreement was amended on March 14, 2018 (subsequently referred to as the "Amended 2017 Credit Agreement"). Specifically, the interest rate for the senior secured term loan facility was amended to London InterBank Offered Rate ("LIBOR") plus 175 basis points (bps). The pricing terms for the 2018 amendment reflected $0.9 million of Original Issue Discount ("OID") and resulted in the write-off of debt issuance costs of $1.1 million which was recorded as a loss on early debt extinguishment during the first quarter of 2018.. The senior secured term loan facility matures April 15, 2024 and, as of March 29, 2020, $7.5 million iswas payable annually. The facilities provided under the Amended 2017 Credit Agreement are collateralized by substantially all of the assets of the Partnership.

Notes

In June 2014, the Partnershipwe issued $450 million of 5.375% senior unsecured notes ("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 notes may be redeemed, in whole or in part, at various prices depending on the date redeemed.

In April 2017, concurrently with amending and restating its credit facilities, the Partnershipwe issued $500 million of 5.375% senior unsecured notes maturing in 2027 ("2027 senior notes"). The net proceeds from the offering of the 2027 senior notes, together with borrowings under the 2017 Credit Agreement, were used to redeem all of the Partnership's 5.25% senior unsecured notes due 2021 ("2021 senior 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 2021 senior 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 early debt extinguishment of $23.1 million during 2017.

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 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 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 notes may be redeemed, in whole or in part, at various prices depending on the date redeemed.

As market conditions warrant, the Partnershipwe may from time to time repurchase debt securities issued by the Partnership, in privately negotiated or open market transactions, by tender offer, exchange offer or otherwise.

Covenants

TheAs of March 29, 2020, the Amended 2017 Credit Agreement includesincluded a Consolidated Leverage Ratio, which if breached for any reason and not cured could result in an event of default. The ratio iswas set at a maximum of 5.50x Consolidated Total Debt-to-Consolidated EBITDA. As of June 30, 2019, the Partnership wasMarch 29, 2020, we were in compliance with this financial condition covenant and all other financial covenants under the Amended 2017 Credit Agreement.

The Partnership'sOur long-term debt 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 2024 senior notes, which includesincluded the most restrictive of these Restricted Payments provisions the Partnership canas of March 29, 2020, if our pro forma Total-Indebtedness-to-Consolidated-Cash-Flow Ratio was greater than 5.00x, we could still make Restricted Payments of $60 million annually so long as no default or event of default hashad occurred and is continuing; and the Partnership can make additional Restricted Payments if the Partnership'swas continuing. If our pro forma Total-Indebtedness-to-Consolidated-Cash-Flow Ratio iswas less than or equal to 5.00x.5.00x, we could make Restricted Payments up to our Restricted Payment pool. Our pro forma Total-Indebtedness-to-Consolidated-Cash-Flow Ratio was less than or equal to 5.00x as of March 29, 2020.

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 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.

The Partnership has fourWe have 4 interest rate swap agreements that mature on December 31, 2020 and convert $500 million of variable-rate debt to a rate of 4.39%. The PartnershipWe also has fourhave 4 additional interest rate swap agreements that convert the same notional amount to a rate of 4.63% for the period December 31, 2020 through December 31, 2023. None of the interest rate swap agreements are designated as hedging instruments. The fair market value of theour swap portfolio, was recorded inincluding the location within the unaudited condensed consolidated balance sheets, within "Derivative Liability" as of June 30, 2019 and December 31, 2018 and within "Other Assets" as of June 24, 2018for the periods presented were as follows:

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 unaudited condensed consolidated statements of operations and comprehensive income. The amounts that were previously recorded as a component of AOCI prior to the 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 2016 amendments, the previously existing interest rate swap agreements were de-designated, and the amounts previously recorded in AOCI were amortized into earnings through the original December 31, 2018 maturity. Therefore, all losses in AOCI related to the effective cash flow hedge contracts prior to de-designation have been reclassified into earnings as of December 31, 2018.

Fair values of the interest rate swap agreements are determined using significant inputs, including the LIBOR forward curves, which are considered Level 2 observable market inputs.

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 other assets measured at fair value on a non-recurring basis as of June 30, 2019,March 29, 2020, December 31, 20182019 or June 24, 2018.March 31, 2019.

(10) Earnings per Unit:

Net income (loss)loss per limited partner unit iswas calculated based on the following unit amounts:

We 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 total provision (benefit) for taxes includes amounts for the PTP gross income tax and federal, state, local and foreign income taxes. Under the applicable accounting rules, the total provision (benefit) for income taxes are recognized forincludes the amount of taxes payable by the Partnership’s corporate subsidiaries for the current year and for the impact of deferred tax assets and liabilities, which representrepresents future tax consequences of events that have beenare recognized differentlyin different periods in the financial statements than for tax purposes.

The incometotal tax provision (benefit) for interim periods is determined by applying an estimated annual effective tax rate to the applicable quarterly income (loss) of. Our consolidated estimated annual effective tax rate differs from the Partnership’s corporate subsidiaries. In additionstatutory federal income tax rate primarily due to state, local and foreign income taxes, on its corporate subsidiaries, the Partnership iscertain partnership level income not being subject to a publicly traded partnership tax (PTP tax) on partnership-level gross income (net revenues less cost of food, merchandise, and games revenues). As such, the Partnership’s total provision (benefit) for taxes includes amounts for both the PTPfederal tax and for income taxesbeneficial rate differences on its subsidiaries.loss carrybacks enacted by the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act") on March 27, 2020.

The Partnership's unrecognizedUnrecognized tax benefits, including accrued interest and penalties, were not material in any period presented. The Partnership recognizesWe recognize interest and penalties related to unrecognized tax benefits as income tax expense.

(11)(12) Lease Commitments and Contingencies: