FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10 - Q

(Mark One)

x
þQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period endedSeptember 24, 2006

March 25, 2007

OR

¨
oTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from            to            .

Commission file number1-9444

CEDAR FAIR, L.P.

(Exact name of Registrant as specified in its charter)

DELAWARE 34-1560655
DELAWARE34-1560655

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

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)

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.
Yesþx    Noo¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.
Large accelerated filerþ Accelerated filero Non-accelerated filero

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.
Act).    Yesox    Noþ¨

Title of Class

 
Title of Class
Units Representing
Limited Partner Interests

Units Outstanding As Of
October May 1, 2006

54,066,4592007

Units Representing

Limited Partner Interests

 54,206,932

 

CEDAR FAIR, L.P.

INDEX

FORM 10-Q

10—Q

Part I - Financial Information  
Item 1.  Financial Statements  3-9
Part I — Financial Information
Item 2.  
Item 1.
Financial Statements3-10
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations  11-1810-13
Item 3.  
Item 3.
Quantitative and Qualitative Disclosures About Market Risk  1814
Item 4.  
Item 4.
Controls and Procedures  1814
Part II - Other Information  
Item 1A.  Risk Factors  15
Part II — Other Information
Item 6.  Exhibits  15
Signatures  16
Item 1A.
Risk Factors19
Item 6.
Exhibits19
Signatures20
Index to Exhibits  21
EX-31.1
EX-31.2
EX-32.117

2

PART I — I—FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS
ITEM 1.FINANCIAL STATEMENTS

CEDAR FAIR, L.P.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

         
  9/24/06  12/31/05 
ASSETS
        
Current Assets:        
Cash and cash equivalents $87,848  $4,421 
Receivables  59,515   7,259 
Inventories  31,488   17,678 
Prepaids and other current assets  22,480   11,252 
       
   201,331   40,610 
         
Property and Equipment:        
Land  330,254   174,081 
Land improvements  316,617   163,952 
Buildings  582,010   308,748 
Rides and equipment  1,243,364   714,862 
Construction in progress  17,698   23,434 
       
   2,489,943   1,385,077 
Less accumulated depreciation  (487,260)  (417,821)
       
   2,002,683   967,256 
         
Goodwill  332,478   9,061 
Other intangibles, net  66,304   2,349 
Other assets  38,032   5,518 
       
 ��$2,640,828  $1,024,794 
       
         
LIABILITIES AND PARTNERS’ EQUITY
        
Current Liabilities:        
Current maturities of long-term debt $17,450  $20,000 
Accounts payable  49,360   16,590 
Distribution payable to partners  —   24,747 
Deferred revenue  23,068   10,794 
Accrued interest  10,146   6,698 
Accrued taxes  71,488   21,395 
Accrued salaries, wages and benefits  31,843   14,021 
Self-insurance reserves  20,654   14,386 
Other accrued liabilities  28,768   2,102 
       
   252,777   130,733 
         
Deferred Tax Liability  154,789   — 
         
Other Liabilities  35,636   8,977 
         
Long-Term Debt:        
Revolving credit loans  —   105,850 
Term debt  1,727,550   345,000 
       
   1,727,550   450,850 
         
Partners’ Equity:        
Special L.P. interests  5,290   5,290 
General partner  2   1 
Limited partners, 54,066 and 53,797 units outstanding at September 24, 2006 and December 31, 2005, respectively  496,006   428,943 
Accumulated Other Comprehensive Loss  (31,222)  — 
       
   470,076   434,234 
       
  $2,640,828  $1,024,794 
       

   3/25/07  12/31/06 
ASSETS   

Current Assets:

   

Cash and cash equivalents

  $22,871  $30,203 

Receivables

   16,553   21,796 

Inventories

   37,297   26,377 

Prepaids and other current assets

   29,886   26,132 
         
   106,607   104,508 

Property and Equipment:

   

Land

   326,118   325,617 

Land improvements

   315,154   315,406 

Buildings

   581,653   580,588 

Rides and equipment

   1,236,610   1,237,790 

Construction in progress

   45,876   25,288 
         
   2,505,411   2,484,689 

Less accumulated depreciation

   (499,145)  (498,980)
         
   2,006,266   1,985,709 

Goodwill

   315,169   314,057 

Other Intangibles, net

   64,567   64,837 

Other Assets

   38,138   41,810 
         
  $2,530,747  $2,510,921 
         
LIABILITIES AND PARTNERS' EQUITY   

Current Liabilities:

   

Current maturities of long-term debt

  $17,450  $17,450 

Accounts payable

   34,162   19,764 

Deferred revenue

   29,276   19,490 

Accrued interest

   9,887   1,345 

Accrued taxes

   10,209   38,632 

Accrued salaries, wages and benefits

   12,127   27,537 

Self-insurance reserves

   21,319   22,124 

Other accrued liabilities

   18,088   12,916 
         
   152,518   159,258 

Deferred Tax Liability

   146,801   146,801 

Other Liabilities

   39,305   34,534 

Long-Term Debt:

   

Revolving credit loans

   147,150   40,888 

Term debt

   1,718,825   1,718,825 
         
   1,865,975   1,759,713 

Partners' Equity:

   

Special L.P. interests

   5,290   5,290 

General partner

   —     1 

Limited partners, 54,204 and 54,092 units outstanding at March 25, 2007 and December 31, 2006, respectively

   360,886   440,516 

Accumulated other comprehensive loss

   (40,028)  (35,192)
         
   326,148   410,615 
         
  $2,530,747  $2,510,921 
         

The accompanying Notes to Unaudited Condensed Consolidated Financial Statements are an integral part of these statements.

3

CEDAR FAIR, L.P.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per unit amounts)

                         
  Three months ended  Nine months ended  Twelve months ended 
  9/24/06  9/25/05  9/24/06  9/25/05  9/24/06  9/25/05 
Net revenues:                        
Admissions $309,616  $166,912  $389,569  $249,057  $432,920  $285,745 
Food, merchandise and games  193,200   117,094   264,570   188,772   294,892   214,677 
Accommodations and other  39,333   33,019   57,384   52,849   61,740   58,415 
                   
   542,149   317,025   711,523   490,678   789,552   558,837 
                   
                         
Costs and expenses:                        
Cost of food, merchandise and games revenues  46,952   29,874   66,577   49,437   74,746   57,675 
Operating expenses  157,546   92,916   264,760   200,197   308,206   246,949 
Selling, general and administrative  52,138   29,960   80,803   60,913   94,261   73,529 
Depreciation and amortization  56,312   28,102   78,004   49,042   84,727   55,760 
                   
   312,948   180,852   490,144   359,589   561,940   433,913 
                   
                         
Operating income  229,201   136,173   221,379   131,089   227,612   124,924 
Interest expense  34,966   6,464   50,207   19,813   56,599   25,817 
Loss on early extinguishment of debt  4,697   —   4,697   —   4,697   — 
Other (income)  (54)  —   (54)  (459)  (54)  (1,290)
                   
                         
Income before taxes  189,592   129,709   166,529   111,735   166,370   100,397 
Provision (credit) for taxes  56,689   (41,122)  49,070   (46,802)  46,596   (50,398)
                   
                         
Net income  132,903   170,831   117,459   158,537   119,774   150,795 
Net income allocated to general partner  1   2   1   2   1   2 
                   
Net income allocated to limited partners $132,902  $170,829  $117,458  $158,535  $119,773  $150,793 
                   
                         
Basic earnings per limited partner unit:                        
Weighted average limited partner units outstanding  53,968   53,737   53,912   53,617   53,876   53,581 
Net income per limited partner unit $2.46  $3.18  $2.18  $2.96  $2.22  $2.81 
                   
                         
Diluted earnings per limited partner unit:                        
Weighted average limited partner units outstanding  54,964   54,994   54,915   54,943   54,930   54,915 
Net income per limited partner unit $2.42  $3.11  $2.14  $2.89  $2.18  $2.75 
                   

   Three months ended  Twelve months ended 
   3/25/07  3/26/06  3/25/07  3/26/06 

Net revenues:

     

Admissions

  $11,332  $8,519  $462,288  $292,746 

Food, merchandise and games

   13,973   11,782   309,105   219,642 

Accommodations and other

   4,694   3,644   66,050   55,463 
                 
   29,999   23,945   837,443   567,851 
                 

Costs and expenses:

     

Cost of food, merchandise and games revenues

   4,390   3,624   80,968   57,714 

Operating expenses

   58,104   36,068   362,300   244,006 

Selling, general and administrative

   14,069   8,473   106,320   73,273 

Depreciation and amortization

   4,318   3,474   91,547   55,785 
                 
   80,881   51,639   641,135   430,778 
                 

Operating income (loss)

   (50,882)  (27,694)  196,308   137,073 

Interest expense

   33,405   7,201   115,358   26,905 

Loss on early extinguishment of debt

   —     —     4,697   —   

Other (income) expense

   120   —     (799)  —   
                 

Income (loss) before taxes

   (84,407)  (34,895)  77,052   110,168 

Provision (credit) for taxes

   (29,283)  (8,391)  18,195   (48,744)
                 

Net income (loss)

   (55,124)  (26,504)  58,857   158,912 

Net income (loss) allocated to general partner

   (1)  —     —     2 
                 

Net income (loss) allocated to limited partners

  $(55,123) $(26,504) $58,857  $158,910 
                 

Basic earnings per limited partner unit:

     

Weighted average limited partner units outstanding

   54,129   53,853   54,022   53,745 

Net income (loss) per limited partner unit

  $(1.02) $(0.49) $1.09  $2.96 
                 

Diluted earnings per limited partner unit:

     

Weighted average limited partner units outstanding

   54,129   53,853   54,892   54,931 

Net income (loss) per limited partner unit

  $(1.02) $(0.49) $1.07  $2.89 
                 

The accompanying Notes to Unaudited Condensed Consolidated Financial Statements are an integral part of these statements.

4

CEDAR FAIR, L.P.

UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF PARTNERS’ EQUITY

FOR THE NINETHREE MONTHS ENDED SEPTEMBER 24, 2006
MARCH 25, 2007

(In thousands, except per unit amounts)

             
  Three  Three  Three 
  Months  Months  Months 
  Ended  Ended  Ended 
  09/24/06  06/25/06  03/26/06 
Limited Partnership Units Outstanding
            
Beginning balance  53,920   53,908   53,797 
Limited partnership unit options exercised  146   12   97 
Issuance of limited partnership units as compensation  —   —   14 
          
   54,066   53,920   53,908 
          
             
Limited Partners’ Equity
            
Beginning balance $363,317  $377,421  $428,943 
Net income (loss)  132,902   11,060   (26,504)
Partnership distribution declared ($0.47 per limited partnership unit)  —   (25,343)  (25,337)
Expense recognized for limited partnership unit options  22   22   12 
Limited partnership unit options exercised  242   211   296 
Tax effect of units involved in option exercises and treasury unit transactions  (477)  (54)  (400)
Issuance of limited partnership units as compensation  —   —   411 
          
   496,006   363,317   377,421 
          
             
General Partner’s Equity
            
Beginning balance  1   1   1 
Net income  1   —   — 
          
   2   1   1 
          
Special L.P. Interests
  5,290   5,290   5,290 
          
             
Accumulated Other Comprehensive Loss
            
Cumulative foreign currency translation adjustment:            
Beginning balance  —   —   — 
Current period activity, net of tax ($1,092)  (1,651)  —   — 
          
   (1,651)  —   — 
          
             
Unrealized loss on cash flow hedging derivatives:            
Beginning balance  —   —   — 
Current period activity  (29,571)  —   — 
          
   (29,571)  —   — 
          
   (31,222)  —   — 
          
             
Total Partners’ Equity
 $470,076  $368,608  $382,712 
          
             
Summary of Comprehensive Income
            
Net income (loss) $132,903  $11,060  $(26,504)
Other comprehensive loss  (31,222)  —   — 
          
Total Comprehensive Income
 $101,681  $11,060  $(26,504)
          

   

Three Months

Ended

03/25/07

 

Limited Partnership Units Outstanding

  

Beginning balance

   54,092 

Limited partnership unit options exercised

   60 

Issuance of limited partnership units as compensation

   52 
     
   54,204 
     

Limited Partners' Equity

  

Beginning balance

  $440,516 

Net loss

   (55,123)

Partnership distribution declared ($0.47 per limitedpartnership unit)

   (25,432)

Expense recognized for limited partnership unit options

   16 

Limited partnership unit options exercised

   12 

Tax effect of units involved in option exercises andtreasury unit transactions

   (597)

Issuance of limited partnership units as compensation

   1,494 
     
   360,886 
     

General Partner's Equity

  

Beginning balance

   1 

Net loss

   (1)
     
   —   
     

Special L.P. Interests

   5,290 
     

Accumulated Other Comprehensive Loss

  

Cumulative foreign currency translation adjustment:

  

Beginning balance

   (2,039)

Current period activity, net of tax ($185)

   325 
     
   (1,714)
     

Unrealized loss on cash flow hedging derivatives:

  

Beginning balance

   (33,153)

Current period activity, net of tax ($41)

   (5,161)
     
   (38,314)
     
   (40,028)
     

Total Partners' Equity

  $326,148 
     

Summary of Comprehensive Loss

  

Net loss

  $(55,124)

Other comprehensive loss

   (4,836)
     

Total Comprehensive Loss

  $(59,960)
     

The accompanying Notes to Unaudited Condensed Consolidated Financial Statements are an integral part of this statement.

5

CEDAR FAIR, L.P.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

                         
  Three months ended  Nine months ended  Twelve months ended 
  9/24/06  9/25/05  9/24/06  9/25/05  9/24/06  9/25/05 
CASH FLOWS FROM (FOR) OPERATING ACTIVITIES
                        
Net income $132,903  $170,831  $117,459  $158,537  $119,774  $150,795 
Adjustments to reconcile net income to net cash from operating activities:                        
Depreciation and amortization  56,312   28,102   78,004   49,042   84,727   55,760 
Non-cash unit option expense  22   60   56   1,079   90   2,169 
Loss on early extinguishment of debt  4,697   —   4,697   —   4,697   — 
Other non-cash (income) expense  2,368   —   2,664   (459)  3,642   (1,290)
Change in assets and liabilities, net of effects from acquistion:                        
(Increase) decrease in current assets  10,041   8,339   (10,406)  (2,727)  2,955   (1,227)
(Increase) decrease in other assets  4,237   8,274   4,601   (17,625)  (905)  (5,778)
Increase (decrease) in accounts payable  (13,199)  2,404   2,672   23,281   (15,064)  1,320 
Increase (decrease) in accrued taxes  54,313   (60,451)  38,340   (53,992)  41,379   (58,427)
Increase (decrease) in self-insurance reserves  (109)  469   (1,031)  92   (995)  1,346 
Increase (decrease) in deferred revenue and other current liabilities  (39,429)  (17,273)  (17,567)  1,434   (20,008)  87 
Increase (decrease) in deferred income taxes and other liabilities  (4,494)  482   (822)  (1)  26   1,298 
                   
Net cash from operating activities  207,698   141,237   218,667   158,661   220,318   146,053 
                   
                         
CASH FLOWS FROM (FOR) INVESTING ACTIVITIES
                        
Acquisition of Paramount Parks, net of cash acquired  (1,252,685)  —   (1,252,685)  —   (1,252,685)  — 
Capital expenditures  (10,988)  (14,813)  (48,800)  (60,698)  (63,507)  (81,454)
                   
Net cash (for) investing activities  (1,263,673)  (14,813)  (1,301,485)  (60,698)  (1,316,192)  (81,454)
                   
                         
CASH FLOWS FROM (FOR) FINANCING ACTIVITIES
                        
Acquisition of Paramount Parks:                        
Term debt borrowings  1,745,000   —   1,745,000   —   1,745,000   — 
Payment of debt issuance costs  (26,962)  —   (26,962)  —   (26,962)  — 
Net borrowings (payments) on revolving credit loans  (196,600)  (95,500)  (105,850)  (2,900)  (72,500)  48,100 
Term debt payments, including early termination penalties  (371,053)  (20,000)  (371,053)  (20,000)  (371,053)  (20,000)
Distributions paid to partners  (25,343)  (24,696)  (75,427)  (73,391)  (100,158)  (97,457)
Termination of interest rate swap agreements  —   2,967   —   2,967   —   2,967 
Exercise of limited partnership unit options  242   618   749   655   960   655 
                   
Net cash from (for) financing activities  1,125,284   (136,611)  1,166,457   (92,669)  1,175,287   (65,735)
                   
                         
CASH
                        
Effect of exchange rate changes on cash  (212)  —   (212)  —   (212)  — 
Net increase (decrease) for the period  69,309   (10,187)  83,639   5,294   79,413   (1,136)
Balance, beginning of period  18,751   18,834   4,421   3,353   8,647   9,783 
                   
Balance, end of period $87,848  $8,647  $87,848  $8,647  $87,848  $8,647 
                   
                         
SUPPLEMENTAL INFORMATION
                        
Cash payments for interest expense $30,643  $9,364  $45,306  $22,617  $49,053  $24,858 
Interest capitalized  226   64   826   418   1,010   870 
Cash payments for income taxes  5,091   5,224   7,069   6,310   9,511   9,368 

   Three months ended  Twelve months ended 
   3/25/07  3/26/06  3/25/07  3/26/06 

CASH FLOWS FROM (FOR) OPERATING ACTIVITIES

     
     

Net income (loss)

  $(55,124) $(26,504) $58,857  $158,912 

Adjustments to reconcile net income (loss) to net cash from (for) operating activities:

     

Depreciation and amortization

   4,318   3,474   91,547   55,785 

Non-cash unit option expense

   16   12   79   170 

Loss on early extinguishment of debt

   —     —     4,697   —   

Other non-cash (income) expense

   706   79   3,816   13 

Change in assets and liabilities, net of effects from acquisition:

     

(Increase) decrease in current assets

   (9,271)  (2,325)  32,037   (4,416)

(Increase) decrease in other assets

   204   583   2,425   4,501 

Increase (decrease) in accounts payable

   12,552   4,100   (17,985)  4,339 

Increase (decrease) in accrued taxes

   (29,334)  (10,400)  (8,301)  (62,038)

Increase (decrease) in self-insurance reserves

   (813)  (596)  306   563 

Increase (decrease) in deferred revenue and other current liabilities

   10,223   94   (37,130)  2,804 

Increase (decrease) in deferred income taxes and other liabilities

   (2,488)  (1,273)  (1,760)  536 
                 

Net cash from (for) operating activities

   (69,011)  (32,756)  128,588   161,169 
                 

CASH FLOWS FROM (FOR) INVESTING ACTIVITIES

     
     

Acquisition of Paramount Parks, net of cash acquired

   —     —     (1,253,564)  —   

Capital expenditures

   (21,400)  (16,431)  (64,563)  (74,789)
                 

Net cash (for) investing activities

   (21,400)  (16,431)  (1,318,127)  (74,789)
                 

CASH FLOWS FROM (FOR) FINANCING ACTIVITIES

     
     

Net borrowings (payments) on revolving credit loans

   106,262   73,750   (32,450)  28,250 

Term debt borrowings

   —     —     1,745,000   —   

Term debt payments, including early termination penalties

   —     —     (379,778)  (20,000)

Payment of debt issuance costs

   (2,000)  —     (28,310)  —   

Distributions paid to partners

   (25,432)  (24,747)  (101,463)  (98,803)

Termination of interest rate swap agreements

   3,867   —     3,867   2,981 

Exercise of limited partnership unit options

   12   296   465   1,125 

Excess tax benefit from unit-based compensation expense

   299   —     1,245   —   
                 

Net cash from (for) financing activities

   83,008   49,299   1,208,576   (86,447)
                 

EFFECT OF EXCHANGE RATE CHANGES ON CASH

   71   —     (699)  —   
                 

CASH AND CASH EQUIVALENTS

     

Net increase (decrease) for the period

   (7,332)  112   18,338   (67)

Balance, beginning of period

   30,203   4,421   4,533   4,600 
                 

Balance, end of period

  $22,871  $4,533  $22,871  $4,533 
                 

SUPPLEMENTAL INFORMATION

     

Cash payments for interest expense

  $23,805  $9,712  $108,126  $26,001 

Interest capitalized

   398   293   1,263   695 

Cash payments for income taxes

   825   453   10,108   9,187 

The accompanying Notes to Unaudited Condensed Consolidated Financial Statements are an integral part of these statements.

6

CEDAR FAIR, L.P.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE PERIODS ENDED SEPTEMBER 24,MARCH 25, 2007 AND MARCH 26, 2006 AND SEPTEMBER 25, 2005

The accompanying unaudited condensed consolidated financial statements have been prepared from the financial records of Cedar Fair, L.P. (the Partnership) without audit and reflect all 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 highly seasonal nature of the Partnership’s amusement and water park operations, the results for any interim period are not indicative of the results to be expected for the full fiscal year. Accordingly, the Partnership has elected to present financial information regarding operations and cash flows for the preceding twelve-month periods ended September 24,March 25, 2007 and March 26, 2006 and September 25, 2005 to accompany the quarterly results. Because amounts for the twelve months ended September 24,March 25, 2007 include actual 2006 include 2005 fourth quarterpeak season operating results, they may not be indicative of 20062007 full calendar year operations.

On June 30, 2006, Cedar Fair, L.P. completed the acquisition of all of the outstanding shares of capital stock of Paramount Parks, Inc. (“PPI”) from a subsidiary of CBS Corporation at an aggregate cash purchase price of $1,243 million, prior to direct acquisition costs and certain adjustments per the purchase agreement related to working capital, which have yet to be finalized. Upon closing of the transaction, the Partnership acquired, indirectly through Magnum Management Corporation, its wholly owned subsidiary, the following amusement parks: Canada’s Wonderland near Toronto, Canada; Kings Island near Cincinnati, Ohio; Kings Dominion near Richmond, Virginia; Carowinds near Charlotte, North Carolina; and Great America located in Santa Clara, California. The Partnership also acquired Star Trek: The Experience, an interactive adventure in Las Vegas, and a management contract for BonfanteGilroy Gardens Family Theme Park in Gilroy, California. The results of operations of PPI since June, 30, 2006 are included in the accompanying consolidated financial statements. Further discussion of this transaction can be found under Note 63 to the Unaudited Condensed Consolidated Financial Statements.

Statements for the year ended December 31, 2006, which was included in the Form 10-K filed on March 1, 2007.

(1) Significant Accounting and Reporting Policies:

The Partnership’s unaudited condensed consolidated financial statements for the periods ended September 24,March 25, 2007 and March 26, 2006 and September 25, 2005 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, 2005,2006, which were included in the Form 10-K filed on March 14, 2006.1, 2007. 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. 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.

The Partnership has been recording expense for equity-based compensation under Statement of Financial Accounting Standards (SFAS) No. 123, “Accounting for Stock-Based Compensation,” since January 1, 2003. Effective January 1, 2006, the Partnership adopted SFAS No. 123(R), “Share-Based Payment,” which is a revision of SFAS No. 123. Generally, the approach in SFAS No. 123(R) is similar to the fair value approach described in SFAS No. 123. The adoption of SFAS No. 123(R) did not have a material impact on the Partnership’s consolidated financial statements.
Certain prior period amounts have been reclassified to conform to the current period classification.
In July 2006, the Financial Account Standards Board (FASB) issued FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes.” This Interpretation of FASB Statement No. 109, “Accounting for Income Taxes,” contains guidance on the recognition and measurement of uncertain tax positions. The Partnership will be required to recognize the impact of a tax position if it is more likely than not that it will be sustained upon examination, based upon the technical merits of the position. The effective date for application of this interpretation is for periods beginning after December 15, 2006. The cumulative effect of applying the provisions of this Interpretation must be reported as an adjustment to the opening balance of retained earnings for that fiscal period. The Partnership is in the process of determining the effect, if any, this Interpretation will have on its consolidated financial statements.

7

(2) Interim Reporting:

The Partnership owns and operates 12 amusement parks, five outdoor water parks, one indoor water park and six hotels. In order to more efficiently manage its properties and communicate its results, management has created regional designations for the parks. Parks in the Partnership’s northern region include Cedar Point and the adjacent Soak City water park in Sandusky, Ohio; Kings Island near Cincinnati, Ohio; Canada’s Wonderland in Toronto, Canada; Dorney Park & Wildwater Kingdom near Allentown, Pennsylvania; Valleyfair, near Minneapolis/St. Paul, Minnesota; Geauga Lake & Wildwater Kingdom near Cleveland, Ohio; and Michigan’s Adventure near Muskegon, Michigan. In the southern region are Kings Dominion near Richmond, Virginia; Carowinds near Charlotte, North Carolina; and Worlds of Fun and Oceans of Fun in Kansas City, Missouri. The western parks include Knott’s Berry Farm, near Los Angeles in Buena Park, California; Great America located in Santa Clara, California; and three Knott’s Soak City water parks located in California. The Partnership also owns and operates the Castaway Bay Indoor Waterpark Resort in Sandusky, Ohio and Star Trek: The Experience, an interactive adventure in Las Vegas, and it operates BonfanteGilroy Gardens Family Theme Park in Gilroy, California under a management contract. Virtually all of the Partnership’s revenues from its seasonal amusement parks, as well as its outdoor water parks and other seasonal resort facilities, are realized during a 130- to 140-day operating period beginning in early May, with the major portion concentrated in the third quarter during the peak vacation months of July and August. Castaway Bay, Star Trek: The Experience and Knott’s Berry Farm are open year-round, but Knott’s operates at its highestlowest level of attendance during the third and fourth quartersfirst quarter of the year.

To assure that these highly seasonal operations will not result in misleading comparisons of current and subsequent interim periods, the Partnership has adopted the following accounting and reporting procedures for its seasonal parks: (a) revenues on multi-day admission tickets are recognized over the estimated number of visits expected for each type of ticket and are adjusted at the end of

each seasonal period, (b) depreciation, advertising and certain seasonal operating costs are expensed during each park’s operating season, including certain costs incurred prior to the season which are amortized over the season, and (c) all other costs are expensed as incurred or ratably over the entire year.

(3) Derivative Financial Instruments:

Derivative financial instruments are only used within the Partnership’s overall risk management program to manage certain interest rate and foreign currency risks from time to time. The Partnership has only limited involvement with derivative financial instruments and does not use them for trading purposes.

During the third quarter of 2006, the Partnership entered into several interest ratesrate swap agreements as a means of converting a portionwhich effectively convert $1.0 billion of its variable-rate debt intoto a fixed-rate debt.of 7.6%. Cash flows related to these interest rate swap agreements are included in interest expense over the term of the agreements, which are set to expire in 2012. TheseThe Partnership has designated these interest rate swap agreements and hedging relationships have been designated and qualify as cash flow hedges. To qualify for hedge accounting under SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities,” as amended, the effectiveness of each hedging relationship is assessed both at hedge inception and at each reporting period thereafter. Also, at the end of each reporting period, ineffectiveness in the hedging relationships is measured as the difference between the change in the fair value of the derivative instruments and the change in the fair value of the expected cash flows. Ineffectiveness, if any, is recorded in other income. The effective portion of the change in the swaps’ fair values is recorded in other comprehensive income.

At September 24, 2006, the Partnership had outstanding interest rate swap agreements with notional amounts totaling $1.0 billion, converting variable-rate debt to an average fixed-rate of 8.11%. The change in fair market value of these agreements at March 25, 2007, which was obtained from broker quotes, was recorded as a liability of $29.6$32.4 million in “Other Liabilities” on the condensed consolidated balance sheet at September 24, 2006.sheet. No ineffectiveness was recorded in the thirdfirst quarter of 2006.
2007.

In February 2007, the Partnership terminated two cross-currency interest rate swap agreements, which were effectively converting $268.7 million of term debt related to its wholly owned Canadian subsidiary from variable U.S. dollar denominated debt to fixed-rate Canadian dollar denominated debt. In return for terminating the swaps the Partnership received $3.9 million in cash, which has been deferred in “Accumulated other comprehensive loss” on the condensed consolidated balance sheet and is being amortized over the remaining term of the underlying long-term debt that the swaps were effectively hedging prior to termination.

The terminated swaps were replaced with two new cross-currency swap agreements, which effectively convert the variable U.S. dollar denominated debt, and the associated interest payments, to 6.3% fixed-rate Canadian dollar denominated debt. The Partnership designated the new cross currency swaps as foreign currency cash flow hedges. The fair market value of the cross-currency swaps was a liability of $1.4 million at March 25, 2007, which was recorded in “Other Liabilities” on the condensed consolidated balance sheet. No ineffectiveness was recorded in the first quarter of 2007.

(4) Contingencies:

The Partnership is a party to a number of lawsuits arising in the normal course of business. In the opinion of management, these matters will not have a material effect in the aggregate on the Partnership’s financial statements.

8

(5) Earnings per Unit:

Net income per limited partner unit is calculated based on the following unit amounts:

                         
  Three months ended  Nine months ended  Twelve months ended 
  09/24/06  09/25/05  09/24/06  09/25/05  09/24/06  09/25/05 
      (In thousands except per unit amounts)     
Basic weighted average units outstanding  53,968   53,737   53,912   53,617   53,876   53,581 
Effect of dilutive units:                        
Unit options  805   1,090   847   1,166   889   1,169 
Phantom units  191   167   156   160   165   165 
                   
                         
Diluted weighted average units outstanding  54,964   54,994   54,915   54,943   54,930   54,915 
                   
                         
Net income per unit – basic $2.46  $3.18  $2.18  $2.96  $2.22  $2.81 
                   
                         
Net income per unit – diluted $2.42  $3.11  $2.14  $2.89  $2.18  $2.75 
                   

   Three months ended  Twelve months ended
   03/25/07  03/26/06  03/25/07  03/26/06
   (In thousands except per unit amounts)

Basic weighted average units outstanding

   54,129   53,853   54,022   53,745

Effect of dilutive units:

      

Unit options

   —     —     695   1,022

Phantom units

   —     —     175   164
                

Diluted weighted average units outstanding

   54,129   53,853   54,892   54,931
                

Net income (loss) per unit – basic

  $(1.02) $(0.49) $1.09  $2.96
                

Net income (loss) per unit – diluted

  $(1.02) $(0.49) $1.07  $2.89
                

The effect of unit options and phantom units on the three months ended March 25, 2007 and March 26, 2006, had they not been antidilutive, would have been 800,000 and 1.0 million units, respectively.

(6) Acquisition:Goodwill and Other Intangible Assets:

On June 30,

As further described in Note 3 to the Consolidated Financial Statements for the year ended December 31, 2006, goodwill acquired during 2006 was the Partnership completedresult of the completion of the acquisition of all of the outstanding shares of capital stock of Paramount Parks, Inc. (“PPI”) from a subsidiary of CBS Corporation in a cash transaction valued at an aggregate cash purchase price of $1,243 million, prior to direct acquisition costs and certain adjustments per the purchase agreement related to working capital, which have yet to be finalized. Upon closing of the transaction, the Partnership acquired, indirectly through Magnum Management Corporation, its wholly owned subsidiary, the following amusement parks: Canada’s Wonderland near Toronto, Canada; Kings Island near Cincinnati, Ohio; Kings Dominion near Richmond, Virginia; Carowinds near Charlotte, North Carolina; and Great America located in Santa Clara, California.PPI. The Partnership also acquired Star Trek: The Experience, an interactive adventure located in Las Vegas, and a management contract for Bonfante Gardens in Gilroy, California.

The PPI results of operations since June 30, 2006 are included in the accompanying unaudited condensed consolidated financial statements. The acquisition has been accounted for as a purchase, and accordingly the purchase price has been allocated to assets and liabilities acquired based upon their estimated fair values at the date of acquisition. The Partnership is still in the process of obtaining third-party valuations of certain tangible and intangible assets, as well as developing its plan of integration; thus the allocation of the purchase price to assets and liabilities is subject to adjustment.
The following table shows the preliminary purchase price allocation and resulting goodwill:
     
(in thousands) June 30, 2006
 
Current assets $66,636 
Property and equipment  1,068,127 
Goodwill  324,270 
Intangibles and other assets  77,560 
Current liabilities  121,761 
Deferred taxes and other liabilities  160,470 
In connection with the acquisition, the Partnership terminated its existing term debt and revolving credit agreements and entered into a new $2,090 million credit agreement with certain financial institutions (the “Credit Agreement”). The credit facilities provided under the Credit Agreement include a $1,475 million U.S. term loan, $310 million in U.S. revolving loan commitments, a $270 million Canadian term loan and $35 million in Canadian revolving commitments. All facilities other than the Canadian revolving loan commitment bear interest at either a rate based on the London interbank offered rate plus 2.50% or a rate based on the prime rate plus 1.50%. Loans made under the Canadian revolving commitment bear interest at either a rate based on Bankers’ Acceptance plus 2.50% or a rate based on the Canadian Prime Rate plus 1.50%. The Credit Agreement also provides for the issuance of documentary and standby letters of credit. The U.S. term loan matures on August 30, 2012 and amortizes at a rate

9

of $14.8 million per year. The Canadian term loan matures on August 31, 2011 and amortizes at a rate of $2.7 million per year. The U.S. revolving commitment and the Canadian revolving commitment expire on August 30, 2011.
The Partnership’s unaudited condensed consolidated financial statements include the results of operations of PPI since June 30, 2006, the date of acquisition. The following unaudited summary information presents the consolidated results of operations of the Partnership on a pro forma basis, as if the PPI acquisition had occurred at the beginning of the periods presented.
             
  Three  
  Months  
  Ended Nine Months Ended
(In thousands, except per unit amounts) 09/25/05 09/24/06 09/25/05
Net revenues $549,105  $871,718  $877,293 
Operating income  229,984   213,845   201,590 
Net income  198,407   56,807   121,630 
Net income per limited partner unit-diluted $3.61  $1.05  $2.21 
The pro forma results include depreciation and amortization of fair value adjustments on property and newly created intangibles and post-acquisition related charges. The pro forma results presented do not reflect cost savings, or revenue enhancements anticipated from the acquisition, and are not necessarily indicative of what actually would have occurred if the acquisition had been completed as of the beginning of the periods presented, nor are they necessarily indicative of future consolidated results. Reflected in the three and nine month results ended September 25, 2005 is a one time reversal of $66.1 million in contingent liabilities related to publicly traded partnership (PTP) taxes.
(7) Goodwill and Other Intangible Assets:
As further described in Note 6, goodwill acquired during 2006 was the result of the completion of the acquisition of PPI. In accordance with FASB Statement No. 142, “Goodwill and Other Intangible Assets,” goodwill is not amortized, but is evaluated for impairment on an annual basis. A summary of changes in the Partnership’s carrying value of goodwill is as follows:
     
Balance at January 1, 2006 $9,061 
Acquisition  324,270 
Translation and other adjustments  (853)
    
Balance at September 24, 2006 $332,478 
    
follows (in thousands):

Balance at December 31, 2006

  $314,057

Translation adjustment

   452

Purchase accounting adjustments

   660
    

Balance at March 25, 2007

  $315,169
    

At September 24, 2006,March 25, 2007, the Partnership’s other intangible assets consisted of the following:

             
  September 24, 2006 
  Gross  Accumulated  Net 
(In thousands) Carrying Amount  Amortization  Carrying Value 
Other intangible assets:            
Trade names $52,300  $—  $52,300 
License / franchise agreements  14,142   678   13,464 
Non-compete agreements  200   10   190 
Customer relationships  400   50   350 
          
Total other intangible assets $67,042  $738  $66,304 
          

(In thousands)

  Gross
Carrying Amount		  Accumulated
Amortization		  Net
Carrying Value

Other intangible assets:

      

Trade names

  $51,597  $—    $51,597

License / franchise agreements

   14,146   1,346   12,800

Non-compete agreements

   200   30   170
            

Total other intangible assets

  $65,943  $1,376  $64,567
            

Amortization expense of other intangible assets for the three months ended March 25, 2007 was $341,000.

(7) New Accounting Pronouncements:

FASB Interpretation No. 48 (FIN 48), “Accounting for Uncertainty in Income Taxes”—On July 13, 2006, the FASB issued FIN 48, “Accounting for Uncertainty in Income Taxes—An Interpretation of FASB Statement No. 109.” FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an entity’s financial statements in accordance with FASB Statement No. 109, “Accounting for Income Taxes” and prescribes a recognition threshold and measurement attributes for financial statement disclosure of tax positions taken or expected to be taken on a tax return. Under FIN 48, the impact of an uncertain income tax position on the income tax return must be recognized at the largest amount that is more-likely-than-not to be sustained upon audit by the relevant taxing authority. An uncertain income tax position will not be recognized if it has less than a 50% likelihood of being sustained. Additionally, FIN 48 provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. FIN 48 is effective for fiscal years beginning after December 15, 2006.

The Partnership, which applied the provisions of FIN 48 on January 1, 2007, has no unrecognized income tax benefits. As such, the implementation of FIN 48 did not have a material effect on its financial position and results of operations. Interest and penalties related to uncertain tax positions, if any, are recognized in income tax expense.

The Partnership and its corporate subsidiaries are subject to taxation in the U.S., Canada and various state jurisdictions. With few exceptions, the Partnership and its corporate subsidiaries are no longer subject to examination by the major taxing authorities for tax years before 2003.

FASB Statement No. 157, “Fair Value Measurements”—In September 24, 2006, was $392,000.

10

the FASB issued Statement No. 157, which establishes a common definition for fair value to be applied to GAAP guidance requiring use of fair value, establishes a framework for measuring fair value, and expands disclosure about such fair value measurements. Statement No. 157 is effective for fiscal years beginning after November 15, 2007. The Partnership is currently assessing the impact this Statement will have on its consolidated financial position and results of operations.

FASB Statement No. 159, “The Fair Value Opinion for Financial Assets and Financial Liabilities”—In February 2007, the FASB issued Statement No. 159, which permits entities to choose to measure financial instruments and certain other financial assets and financial liabilities at fair value. Statement No. 159 is effective for fiscal years beginning after November 15, 2007. The Partnership is currently assessing the impact this Statement will have on its consolidated financial position and results of operations.

ITEM 2.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Business Overview:

ITEM 2. 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 parks, (2) food, merchandise and games inside our parks, and (3) hotel rooms, food and other attractions outside our parks. Our principal costs and expenses, which include salaries and wages, advertising, maintenance, operating supplies, utilities and insurance, are relatively fixed and do not vary significantly with attendance. The fixed nature of these costs makes attendance a key factor in the profitability of each park.

On June 30, 2006, we completed the acquisition of all of the outstanding shares of capital stock of Paramount Parks, Inc. (“PPI”) from a subsidiary of CBS Corporation. Upon closing of the transaction, we acquired, indirectly through Magnum Management Corporation, a wholly owned subsidiary of Cedar Fair, the following amusement parks: Canada’s Wonderland near Toronto, Canada; Kings Island near Cincinnati, Ohio; Kings Dominion near Richmond, Virginia; Carowinds near Charlotte, North Carolina; and Great America located in Santa Clara, California. We also acquired Star Trek: The Experience, an interactive adventure in Las Vegas, and a management contract for Bonfante Gardens in Gilroy, California. The acquisition represents a major strategic event in Cedar Fair’s history and is expected to result in cost synergies as well as future growth opportunities. The results of PPI operations have been included in the Unaudited Condensed Consolidated Financial Statements from June 30, 2006, the date of the acquisition. Further discussion ofWith this transaction can be found under Note 6acquisition we expect to generate 2007 full year revenues between $950 million and $1 billion and full-year adjusted EBITDA in the Unaudited Condensed Consolidated Financial Statements.

$320 – $340 million range.

With this acquisition, we are now 1718 distinct amusement parks,locations, covering a much larger and diversified footprint. In order to more efficiently manage our properties and communicate our results going forward, we have created regional designations for our parks. The Northern Region, which is the largest, includes Cedar Point and the adjacent Soak City water park, Kings Island, Canada’s Wonderland, Dorney Park, Valleyfair, Geauga Lake and Michigan’s Adventure. The southern region includes Kings Dominion, Carowinds, Worlds of Fun and Oceans of Fun. Finally, our Western Region includes Knott’s Berry Farm, Great America and the Soak City water parks located in Palm Springs, San Diego and adjacent to Knott’s Berry Farm. This region also includes Star Trek: The Experience, an interactive adventure in Las Vegas.

Vegas and the management contract with Gilroy Gardens Family Theme Park in Gilroy, California.

Critical Accounting Policies:

Management’s

This management’s discussion and analysis is based upon our unaudited condensed 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 reported amounts in the unaudited condensed consolidated financial statements. Actual results could differ significantly from those estimates under different assumptions and conditions. The following discussion addresses our critical accounting policies, which are those that are most important to the reportingportrayal of our financial condition and operating results and involve a higher degree of judgment and complexity (See Note 2 to our Consolidated Financial Statements for the year ended December 31, 2005,2006, as included in the Form 10-K filed on March 14, 2006,1, 2007, for a complete discussion of our significant accounting policies).

Accounting for Business Combinations – Business combinations are accounted for under the purchase 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 obtained during the due diligence process, valuations supplied by independent appraisal experts for significant business combinations 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 both by management and outside experts engaged to assist in this process.

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 capitalized. Depreciation is computed on a straight-line basis over the estimated useful lives of the assets. The composite method is used for the group of assets acquired as a whole in 1983, as well as for the groups of like assets of each subsequent business acquisition. The unit method is used for all individual assets purchased.

Self-Insurance Reserves – Reserves are recorded for the estimated amounts of guest and employee claims and expenses incurred each period that are not covered by insurance. These estimates are established based upon historical claims data and third-party estimates of settlement costs for incurred claims. These reserves are periodically reviewed for changes in these factors and adjustments are made as needed.

11

Revenue Recognition– Revenues on multi-day admission tickets are recognized over the estimated number of visits expected for each type of ticket, and are adjusted at the end of each seasonal period. All other revenues are recognized on a daily basis based on actual guest spending at our facilities, or over the park operating season in the case of certain marina dockage revenues and certain sponsorship revenues.

Derivative Financial Instruments – Derivative financial instruments are only used within our overall risk management program to manage certain interest rate and foreign currency risks from time to time. We only have limited involvement with derivative financial instruments and do not use them for trading purposes.

The use of derivative financial instruments is accounted for according to SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities” and related amendments. For derivative instruments that 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. Derivative financial instruments used in hedging transactions are assessed both at inception and quarterly thereafter to ensure they are effective in offsetting changes in the cash flows of the related underlying exposures.

Results of Operations:

Our results of operations for the three nine and twelve months ended September 24,March 25, 2007 and March 26, 2006 and September 25, 2005 are not directly comparable due to the acquisition of PPI on June 30, 2006. Since material changes to our statements of operations are primarily due to this acquisition, we will also discuss operating results on a same-park basis to previous periods.

ThirdFirst Quarter –

Operating results for the first quarter include normal off-season operating, maintenance and administrative expenses at our 11 seasonal amusement parks and five outdoor water parks, as well as daily operations at Knott’s Berry Farm, Castaway Bay and Star Trek: The Experience, which are open year-round.

The following table presents key operating and financial information for the three months ended September 24, 2006March 25, 2007 and September 25, 2005:

                     
  All Properties (a)  Same Park Comparison (b) 
  Three months  Three months  Three months    
  ended  ended  ended  Increase (Decrease) 
  9/24/06  9/24/06  9/25/05  $  % 
      (Amounts in thousands except per capita spending)         
Attendance  13,024   7,195   7,246   (51)  (0.7)
Per capita spending $38.81  $37.61  $37.68  $(0.07)  (0.2)
Out-of-park revenues $51,519  $47,510  $47,620  $(110)  (0.2)
                     
Net revenues $542,149  $315,037  $317,025  $(1,988)  (0.6)
Cash operating costs and expenses  256,614   156,067   152,690   3,377   2.2 
Depreciation and amortization  56,312   28,705   28,102   603   2.1 
Non-cash compensation expense  22   22   60   (38)  (63.3)
                
Operating income $229,201  $130,243  $136,173  $(5,930)  (4.4)
                
March 26, 2006:

   All Properties (a)  Same Park Comparison (b) 
   

Three months
ended

3/25/07

  

Three months
ended

3/25/07

  

Three months
ended

3/26/06

  Increase (Decrease) 
     $  % 
   (Amounts in thousands except per capita spending) 

Net revenues

  $29,999  $25,547  $23,945  $1,602  6.7 

Operating costs and expenses

   76,563   47,159   48,165   (1,006) (2.1)

Depreciation and amortization

   4,318   3,534   3,474   60  1.7 
               

Operating loss

  $(50,882) $(25,146) $(27,694)  (2,548) (9.2)
               
(a)Includes results for all owned and/or managed properties as of September 24, 2006.March 25, 2007.
(b)Same park comparison includes properties owned and operated for the full periods in 20062007 and 20052006 and excludes the newly acquired parks.

Same-Park Comparison:

For the quarter ended September 24, 2006,March 25, 2007, consolidated net revenues on a same-park basis decreased less than 1%increased 7%, or $1.6 million, to $315.0$25.5 million from $317.0$23.9 million in 2005, on a less than 1% decrease, or approximately 51,000 visits, in combined attendance, and2006. This increase was primarily due to improved per capita spending and out-of-park revenues which remained relatively unchanged toattendance at our Western Region parks in the same period in 2005. The slight decrease in attendance and subsequent revenues is primarily due to our northern region parks, including Cedar Point and Valleyfair. This region was impacted by higher gas prices and a soft economy during the quarter. This decrease was partially offset by increased attendance and per capita spending at other amusement parks within the region. The southern region, which benefited from a world-class roller coaster introduced at Worlds of Fun, continues to see improved attendance and revenues while the western region’s performance was comparable with the same three months in 2005.

12

Excluding depreciation and other non-cash charges,amortization, total cash operating costs and expenses for the quarter, on a same-park basis, increased 3%decreased 2% to $156.1$47.1 million from $152.7$48.2 million in 2005. A portion of this increase, approximately $1.7 million,2006. The decrease in operating costs is the result of increased corporate costs dueattributable to the acquisition of the Paramount Parks. Since this acquisition on June 30, 2006, we have introduced new staffing at the corporate level that willour continued focus on regional operations, marketing and purchasing opportunities for the new combined company.bringing costs in-line with attendance trends at our Northern Region parks, particularly at Geauga Lake. The increasesavings we generated in corporateoperating costs in the third quarter are expected to be more thanperiod were somewhat offset by reductions in overheadhigher operating costs at the combined company over the long term. The remainder of this increase was attributable to higher cost of goods sold and seasonal wages in our southern region, which recognizedWestern Region parks, resulting from higher attendance trends during the third quarter, and the timing of advertising costs in the western region.
attendance.

After depreciation and a small non-cash charge for unit options,amortization, the operating incomeloss for the quarter on a same-park basis decreased 4%9%, or $2.5 million, to $130.2$25.1 million from $136.2$27.7 million a year ago.

Combined Results:

On a combined basis including the results of the newly acquired parks, consolidated net revenues for the quarter were $542.1$30.0 million. Excluding depreciation and other non-cash charges,amortization, combined operating costs and expenses were $256.6 million versus $152.7 million for the same period in 2005.totaled $76.5 million. After depreciation and a small non-cash charge for unit options,amortization, the operating incomeloss for the quarter on a combined basis, was $229.2$50.9 million compared with $136.2$27.7 million in 2005.

2006.

As we continue to integrate the acquired parks, we remain focused on reducing costs, particularly when the parks are not in operation. During the first quarter we successfully identified additional operating efficiencies through cost synergies at the new parks.

Interest expense for the first quarter increased approximately $28.5$26.2 million to $35.0$33.4 million, due to the PPI acquisition and refinancing of existing debt. As part of the refinancing of existing debt, we recognized a loss on the early extinguishment of debt of $4.7 million. Further discussion of this transaction can be found in the “Liquidity and Capital Resources” section and in Note 6principally to the Unaudited Condensed Consolidated Financial Statements.

acquisition. A provisionnet credit for taxes of $56.7$29.3 million was recorded to account for the tax attributes of our corporate subsidiaries and PTP taxes.taxes during the first quarter of 2007. This compares withcompared to a net credit for taxes of $41.1$8.4 million forin the same period in 2005, when we reversed $66.1 million of contingent liabilities related to PTP taxes.
a year ago.

After interest expense and provisionthe credit for taxes, combinedthe net incomeloss for the period totaled $132.9$55.1 million, or $2.42$1.02 per diluted limited partner unit, compared with a net incomeloss of $170.8$26.5 million, or $3.11$0.49 per unit, a year ago.

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NineTwelve Months Ended September 24, 2006March 25, 2007 –

The following table presents key operating and financial information for the ninetwelve months ended September 24, 2006March 25, 2007 and September 25, 2005:

                     
  All    
  Properties    
  (a)  Same Park Comparison (b) 
  Nine months  Nine months  Nine months    
  ended  ended  ended  Increase (Decrease) 
  9/24/06  9/24/06  9/25/05  $  % 
      (Amounts in thousands except per capita spending)         
Attendance  16,639   10,811   10,943   (132)  (1.2)
Per capita spending $38.68  $37.80  $37.87  $(0.07)  (0.2)
Out-of-park revenues $87,175  $83,166  $83,035  $131   0.2 
                     
Net revenues $711,523  $484,411  $490,678  $(6,267)  (1.3)
Cash operating costs and expenses  412,084   311,537   309,468   2,069   0.7 
Depreciation and amortization  78,004   50,397   49,042   1,355   2.8 
Non-cash compensation expense  56   56   1,079   (1,023)  (94.8)
                
Operating income $221,379  $122,421  $131,089  $(8,668)  (6.6)
                
March 26, 2006:

   All Properties (a)  Same Park Comparison (b) 
   

Twelve months
ended

3/25/07

  

Twelve months
ended

3/25/07

  

Twelve months
ended

3/26/06

  Increase (Decrease) 
        $  % 
   (Amounts in thousands except per capita spending) 

Net revenues

  $837,443  $568,083  $567,851  $232  —   

Operating costs and expenses

   549,588   375,199   374,993   206  0.1 

Depreciation and amortization

   91,547   57,552   55,785   1,767  3.2 
               

Operating income

  $196,308  $135,332  $137,073   (1,741) (1.3)
               
(a)Includes results for all owned and/or managed properties as of September 24, 2006.March 25, 2007.
(b)Same park comparison includes properties owned and operated for the full periods in 20062007 and 20052006 and excludes the newly acquired parks.

Same-Park Comparison:

For the nine months ended September 24, 2006, net revenues, on a same-park basis, decreased 1% to $484.4 million from $490.7 million for the same period in 2005, on a 1% decrease, or 132,000 visits, in combined attendance and per capita and out-of-park revenues which remained relatively unchanged to the same period in 2005. The decrease in attendance and subsequent decrease in revenues is attributable to our northern region parks, including Cedar Point and Valleyfair. This region continues to be impacted by higher gas prices and a soft economy. These decreases were somewhat offset by favorable attendance in our southern region, where a new world-class roller coaster was introduced at Worlds of Fun.
Excluding depreciation and other non-cash charges, total cash operating costs and expenses for the nine months on a same-park basis increased less than 1% to $311.5 million from $309.5 million in 2005. The increase in cash operating costs is primarily attributable to additional corporate overhead costs relating to the PPI acquisition and higher cost of goods sold and seasonal wages in our southern region, which recognized higher attendance trends during the period. After depreciation and a small non-cash charge for unit options, operating income for the period on a same-park basis decreased 7% to $122.4 million from $131.1 million a year ago.
Combined Results:
On a combined basis, consolidated net revenues for the nine months were $711.5 million. Excluding depreciation and other non-cash charges, combined cash operating costs and expenses were $412.1 million versus $309.5 million for the same period in 2005. After depreciation and a small non-cash charge for unit options, operating income for this period, on a combined basis, was $221.4 million compared with $131.1 million for the nine months ended in 2005.
Interest expense over this same time increased approximately $30.4 million to $50.2 million, due to the acquisition of PPI. We were also required to refinance our existing debt and subsequently recognized a loss on the early extinguishment of debt of $4.7 million. Further discussion of this transaction can be found in the “Liquidity and Capital Resources” section and in Note 6 to the Unaudited Condensed Consolidated Financial Statements.

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A provision for taxes of $49.1 million was recorded to account for the tax attributes of our corporate subsidiaries and PTP taxes. This compares with a credit for taxes of $46.8 million for the same period in 2005, when we reversed $66.1 million of contingent liabilities related to PTP taxes.
After interest expense and provision for taxes, net income for the nine months totaled $117.5 million, or $2.14 per diluted limited partner unit, compared with net income of $158.5 million, or $2.89 per unit, a year ago.
Twelve Months Ended September 24, 2006 –
The following table presents key operating and financial information for the twelve months ended September 24, 2006 and September 25, 2005:
                     
  All Properties (a)  Same Park Comparison (b) 
      Twelve  Twelve    
  Twelve months  months  months    
  ended  ended  ended  Increase (Decrease) 
  9/24/06  9/24/06  9/25/05  $  % 
      (Amounts in thousands except per capita spending)     
Attendance  18,434   12,606   12,529   77   0.6 
Per capita spending $38.49  $37.65  $37.46  $0.19   0.5 
Out-of-park revenues $100,744  $96,734  $97,091  $(357)  (0.4)
                     
Net revenues $789,552  $562,440  $558,837  $3,603   0.6 
Cash operating costs and expenses  477,123   376,576   375,984   592   0.2 
Depreciation and amortization  84,727   57,120   55,760   1,360   2.4 
Non-cash compensation expense  90   90   2,169   (2,079)  (95.9)
                
Operating income $227,612  $128,654  $124,924  $3,730   3.0 
                
(a)Includes results for all owned and/or managed properties as of September 24, 2006.
(b)Same park comparison includes properties owned and operated for the full periods in 2006 and 2005 and excludes the acquired parks.
Same-Park Comparison:
For the twelve months ended September 24, 2006,March 25, 2007, which included actual 2005 fourth quarter2006 peak season operating results, net revenues on a same-park basis increased 1%slightly to $562.4$568.1 million from $558.8$567.9 million for the twelve-month period ended September 25, 2005, which included actual 2004 fourth quarter operating results. The increase in consolidated revenues was the result of a 1% increase, or 77,000 visits, in combined attendance. Out-of-park revenues and in-park per capita spending remained relatively unchanged to the same period in 2005.
For the twelve months ended September 24,March 26, 2006, which included actual 2005 peak season operating results. Over this same period, operating costs and expenses, on a same-park basis before depreciation and other non-cash charges,amortization, increased less than 1%slightly to $376.6$375.2 million from $376.0$375.0 million from the twelve months ended September 25, 2005. This increase is attributable to additional corporate overhead costs due to the recent acquisition of PPI as previously discussed.a year ago. After depreciation and a small non-cash charge for unit options,amortization, operating income for the twelve-monthtwelve month period was 1% lower at $135.3 million compared to $137.1 million a year ago, on a same-park basis, was $128.7 million, compared with operating income of $124.9 million over the same period in 2005.
basis.

Combined Results:

On a combined basis, consolidated net revenues for the twelve months ended September 24, 2006,March 25, 2007, were $789.6$837.4 million. Excluding depreciation and other non-cash charges,amortization, combined cash operating costs and expenses were $477.1 million versus $376.0 million for the same period in 2005.$549.6 million. After depreciation and a small non-cash charge for unit options,amortization, operating income for the twelve months, on a combined basis, was $227.6$196.3 million compared with $124.9$137.1 million for the same period in 2005.

152006.

Interest expense for the twelve month period increased $30.8$88.4 million to $56.6$115.3 million, due to the acquisition of PPI. We also recognized a $4.7 million loss onacquisition. During the early extinguishment of debt. During this same period, we recorded a provision for taxes of $46.6$18.2 million to account for the tax attributes of our corporate subsidiaries and PTP taxes. This compares with a credit for taxes of $50.4$48.7 million a year ago, which includeswhen we reversed $66.1 million of contingent liabilities related to PTP taxes. The twelve-month period ended March 26, 2006, also reflects the reversalrecognition of a PTP tax accrual as previously discussed.
$4.7 million loss on the early extinguishment of debt during the period.

After interest expense and provision for taxes, net income for the twelve months ended September 24, 2006March 25, 2007 was $119.8$58.9 million, or $2.18$1.07 per diluted limited partner unit, compared with net income of $150.8$158.9 million, or $2.75$2.89 per diluted limited partner unit, for the twelve months ended September 25, 2005.

March 26, 2006.

October 2006 –

Results of operations improved during the month of October, as our fall promotions continue to gain in popularity with guests. Excluding the acquisition of Paramount Parks, combined attendance in October improved year over year erasing much of the shortfall as of September 24, 2006. Over the same period, average in-park guest per capita spendingLiquidity and out-of-park revenues also remained comparable toCapital Resources:

We ended the prior year.

Including results from the Paramount Parks since their acquisition, combined revenues through the end of October totaled $797.2 million. Over this same period, combined attendance totaled 18.2 million visits, average in-park guest per capita spending was $38.68, and out-of-park revenues totaled $92.6 million.
Integration Progress –
The third quarter was our first quarter of operations with the Paramount Parks. Since the acquisition we have established an integrated management team, begun to recognize cost savings from staffing reductions, consolidated purchasing contracts for services, such as food, energy, entertainment, marketing and sales, and begun the process of streamlining our information systems. We have also launched joint marketing initiatives across all parks for the 2007 season.
Through the end of 2006, we estimate we will recognize incremental restructuring costs of approximately $2-3 million at the PPI properties, which will be more than offset by cost savings of approximately $4.5-5 million.
Adjusted EBITDA –
We believe that adjusted EBITDA (earnings before interest, taxes, depreciation, and all other non-cash items) is a meaningful measure of park-level operating profitability because 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. For the third quarter adjusted EBITDA increased $121.2 million to $285.5 million due to the acquisition of PPI. On a same park basis, adjusted EBITDA decreased $5.3 million to $159.0 million. This is primarily attributable to increased corporate costs in the near term of $1.7 million as we begin to integrate the five new properties into our existing portfolio of assets and a decrease in operating profits from our northern region parks, Cedar Point and Valleyfair. This decrease was offset slightly by improved results at the other parks within the northern region and our southern region parks, where a new world-class roller coaster was introduced at Worlds of Fun. For the nine-month period, adjusted EBITDA, increased $118.2 to $299.4 million and on a same-park basis adjusted EBITDA decreased $8.3 million to $172.9 million. The decrease in adjusted EBITDA for the nine months is, likewise, attributable to cost incurred to integrate the PPI properties into our existing portfolio and soft attendance at our northern region parks which includes Cedar Point and Valleyfair.
Adjusted EBITDA is provided here 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 (loss) for the three, nine, and twelve-month periods ended September 24, 2006 and September 25, 2005.

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  Three months ended  Nine months ended  Twelve months ended 
  9/24/2006  9/25/2005  9/24/2006  9/25/2005  9/24/2006  9/25/2005 
          (In thousands)         
Adjusted EBITDA $285,535  $164,335  $299,439  $181,210  $312,429  $182,853 
Depreciation and amortization  56,312   28,102   78,004   49,042   84,727   55,760 
Non-cash unit option expense  22   60   56   1,079   90   2,169 
                   
Operating income  229,201   136,173   221,379   131,089   227,612   124,924 
Interest expense  34,966   6,464   50,207   19,813   56,599   25,817 
Loss on early extinguishment of debt  4,697   —   4,697   —   4,697   — 
Other (income)  (54)  —   (54)  (459)  (54)  (1,290)
Provision (credit) for taxes  56,689   (41,122)  49,070   (46,802)  46,596   (50,398)
                   
Net income $132,903  $170,831  $117,459  $158,537  $119,774  $150,795 
                   
Liquidity and Capital Resources:
We ended the third quarter of 2006 in sound financial condition in terms of both liquidity and cash flow. The negative working capital ratio (current liabilities divided by current assets) of 1.31.4 at September 24, 2006March 25, 2007 is the result of our highly seasonal business and our recent refinancing of debt due to the acquisition of PPI on June 30, 2006. Further discussion of this transaction can be found in Note 6 to the Unaudited Condensed Consolidated Financial Statements.business. Receivables and inventories are at normal seasonal levels and cash and credit facilities are in place to fund current liabilities.
On

In June 30,2006, and as amended in August 2006, in connection with ourthe acquisition of the five Paramount Parks previously owned by CBS Corporation,PPI we terminated our existing term debt and revolving credit agreements and entered into a new $2,090 million credit agreement with several banks and certain financial institutions“Lenders” party thereto (the “Credit Agreement”).

The credit facilities provided under In February 2007, we took advantage of favorable market conditions and amended the Credit Agreement, include a $1,475 million U.S.reducing interest rate spreads on term loan, $310borrowings under the agreement by 50 basis points (bps). The 50 bps reduction in interest rate is expected to save us approximately $8.0 million in U.S. revolving loan commitments, a $270 million Canadian term loan and $35 million in Canadian revolving loan commitments. All facilities other than the Canadian revolving commitment bearcash interest at either a rate based on the London interbank offered rate plus 2.50% or a rate based on the prime rate plus 1.50%. Loans made under the Canadian revolving commitment bear interest at either a rate based on Bankers’ Acceptance plus 2.50% or a rate based on the Canadian Prime Rate plus 1.50%. The Credit Agreement also provides for the issuance of documentary and standby letters of credit. The U.S. term loan matures on August 30, 2012 and amortizes at a rate of $14.8 million per year. The Canadian term loan matures on August 31, 2011 and amortizes at a rate of $2.7 million per year. The U.S. revolving commitment and the Canadian revolving commitment expire on August 30, 2011.
costs annually.

At the end of the quarter, we had $1,745$1,736.3 million of variable-rate term debt and no outstanding$147.2 million in borrowings onunder our revolving credit facilities. DuringOf our total term debt, $17.5 million is scheduled to mature within the quarter,next twelve months.

In 2006, we entered into several interest rate swap agreements as a means of converting a portionwhich effectively convert $1.0 billion of our variable-rate debt intoto a fixed rate of 7.6%. In 2007, we terminated two cross-currency swaps, which were effectively converting variable-rate debt related to our wholly owned Canadian subsidiary to fixed-rate debt, and received $3.9 million in cash upon termination. We replaced these swaps with two new cross-currency swap agreements, which effectively convert $268.7 million of term debt, and the associated interest payments, from U.S. dollar denominated debt at a rate of LIBOR plus 200 bps to 6.3% fixed-rate Canadian dollar denominated debt.

Credit facilities and cash flow from operations are expected to be adequate to meet working capital needs, debt service, planned capital expenditures and regular quarterly cash distributions for the foreseeable future.

Off Balance Sheet Arrangements:

We have no significant off-balance sheet financing arrangements.

Forward Looking Statements

Some of the statements contained in this report including(including the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section, constitutesection) that are not historical in nature are forward-looking statements.statements within the meaning of Section 27A of the Securities and Exchange Act of 1933 and Section 21E of the Securities and 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 have beenbe correct. Important factors, including general economic conditions, competition for consumers’ leisure time and spending,

17

adverse weather conditions, risks concerningthose listed under Item 1A in the acquisition of the Paramount Parks, unanticipated construction delays, and other factorsPartnership’s Form 10-K, could adversely affect attendance and in-park guest per capita spending at our parksfuture financial performance and cause actual results to differ materially from our expectations. The risks and uncertainties concerning the acquisition of the Paramount Parks include, but are not limited to our ability to combine the operations and take advantage of growth, savings and synergy opportunities.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
ITEM 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to market risks from fluctuations in interest rates, and currency exchange rates. Onerates 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.

At September 24, 2006, $1,000

After considering the impact of interest rate swap agreements, at March 25, 2007, $1,269 million of our outstanding long-term debt has been converted torepresented fixed-rate debt through the use of interest rate swap agreements and $745$614 million represented variable-rate debt. A hypothetical one percentage point increase in the applicable interest rates on our variable-rate debt would increase annual interest expense by approximately $7.5$6.0 million as of September 24, 2006.

March 25, 2007.

ITEM 4. CONTROLS AND PROCEDURES
(a) Evaluation of Disclosure Controls and Procedures -
ITEM 4.CONTROLS AND PROCEDURES

(a)Evaluation of Disclosure Controls and Procedures -

The Partnership maintains a system of controls and procedures designed to provide reasonable assurance as to the reliability of the financial statements and other disclosures included in this report. As of September 24, 2006,March 25, 2007, the Partnership has evaluated the effectiveness of the design and operation of its disclosure controls and procedures under supervision of management, including the Partnership’s Chief Executive Officer and Chief Financial Officer. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Partnership’s disclosure controls and procedures are effective in timely alerting them to material information required to be included in the Partnership’s periodic Securities and Exchange Commission filings.

(b) Changes in Internal Control Over Financial Reporting -

(b)Changes in Internal Control Over Financial Reporting -

There were no significant changes in the Partnership’s internal controls over financial reporting in connection with its 2006 third2007 first quarter evaluation, or subsequent to such evaluation, that have materially affected, or are reasonably likely to materially affect, the Partnership’s internal control over financial reporting.

18

PART II — II—OTHER INFORMATION
ITEM 1A. RISK FACTORS –
With the exception of the new items listed below, there

ITEM 1A.RISK FACTORS –

There have been no material changes to the risk factors previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2005. The following list includes only new risk factors or risk factors that have been modified or have materially changed since year-end.

If the acquisition of the Paramount Parks does not generate the results we anticipate, then the debt we incurred to finance the acquisition could limit our earnings and cash available for distributions.
Our ability to service our debt and maintain our distributions depends in part upon achieving anticipated results from the acquisition of the Paramount Parks. If the acquisition of the Paramount Parks does not generate the anticipated savings from integration, or the acquired parks do not generate the anticipated cash flows from operations, then the debt we put in place to finance the acquisition could limit our earnings and cash available for distribution.
2006.

ITEM 6. EXHIBITS
ITEM 6.EXHIBITS

Exhibit (31.1) Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
Exhibit (31.2) Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
Exhibit (32.1) Certifications Pursuant to 18 U.S.C. 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

19

SIGNATURES

SIGNATURES
Pursuant to the requirements 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)

 
 By Cedar Fair Management, Inc.
  

General Partner

Date: November 3, 2006May 4, 2007 

/s/ Peter J. Crage

Peter J. Crage
 
 Corporate Vice President —- Finance
 
 (Chief Financial Officer)
 

/s/ Brian C. Witherow

Brian C. Witherow
Vice President and Corporate Controller
(Chief Accounting Officer)

INDEX TO EXHIBITS

    
/s/ Brian C. Witherow
Brian C. Witherow
Vice President and Corporate Controller
(Chief Accounting Officer)

20

INDEX TO EXHIBITS
Page

Number
Exhibit (31.1) Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 2218
Exhibit (31.2) Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 2319
Exhibit (32.1) Certifications Pursuant to 18 U.S.C. 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 2420

21

17