XNYS:FUN Cedar Fair LP Quarterly Report 10-Q Filing - 3/25/2012

Effective Date 3/25/2012

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 25, 2012
OR
o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from              to             .
Commission file number 1-9444
CEDAR FAIR, L.P.
(Exact name of registrant as specified in its charter)
 
DELAWARE
 
34-1560655
(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.    Yes   x    No  o 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer
 
x
  
Accelerated filer
 
o
 
 
 
 
Non-accelerated filer
 
o (Do not check if a smaller reporting company)
  
Smaller reporting company
 
o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  o    No  x
 
 
 
Title of Class
 
Units Outstanding As Of May 1, 2012
Units Representing
Limited Partner Interests
 
55,423,770



CEDAR FAIR, L.P.
INDEX
FORM 10 - Q
 
 
 
 
 
 
Part I - Financial Information
  
 
 
 
 
Item 1.
 
  
3-27

 
 
 
Item 2.
 
  
28-35

 
 
 
Item 3.
 
  
36

 
 
 
Item 4.
 
  
36

 
 
Part II - Other Information
  
 
 
 
 
Item 1
 
  
37

 
 
 
Item 1A.
 
 
37

 
 
 
 
 
Item 6.
 
  
37

 
 
  
38

 
 
  
39





PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

CEDAR FAIR, L.P.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
 
 
3/25/2012
 
12/31/2011
 
3/27/2011
ASSETS
 
 
 
 
 
 
Current Assets:
 
 
 
 
 
 
Cash and cash equivalents
 
$
7,319

 
$
35,524

 
$
7,255

Receivables
 
6,693

 
7,611

 
10,377

Inventories
 
44,486

 
33,069

 
42,903

Current deferred tax asset
 
15,120

 
10,345

 
14,410

Prepaid advertising
 
11,139

 
812

 
3,382

Income tax refundable
 
9,013

 

 

Other current assets
 
10,258

 
11,154

 
8,147

 
 
104,028

 
98,515

 
86,474

Property and Equipment:
 
 
 
 
 
 
Land
 
314,133

 
312,859

 
311,565

Land improvements
 
334,087

 
333,423

 
325,040

Buildings
 
580,121

 
579,136

 
576,069

Rides and equipment
 
1,423,360

 
1,423,370

 
1,400,983

Construction in progress
 
62,951

 
33,892

 
38,310

 
 
2,714,652

 
2,682,680

 
2,651,967

Less accumulated depreciation
 
(1,046,162
)
 
(1,044,589
)
 
(951,982
)
 
 
1,668,490

 
1,638,091

 
1,699,985

Goodwill
 
245,808

 
243,490

 
248,426

Other Intangibles, net
 
40,607

 
40,273

 
40,921

Other Assets
 
54,193

 
54,188

 
64,837

 
 
$
2,113,126

 
$
2,074,557

 
$
2,140,643

LIABILITIES AND PARTNERS’ EQUITY
 
 
 
 
 
 
Current Liabilities:
 
 
 
 
 
 
Current maturities of long-term debt
 
$
15,921

 
15,921

 
11,800

Accounts payable
 
28,212

 
12,856

 
25,090

Deferred revenue
 
50,754

 
29,594

 
45,349

Accrued interest
 
10,314

 
15,762

 
15,337

Accrued taxes
 
8,820

 
16,008

 
5,042

Accrued salaries, wages and benefits
 
33,562

 
33,388

 
26,234

Self-insurance reserves
 
21,754

 
21,243

 
20,648

Current derivative liability
 

 
50,772

 
90,758

Other accrued liabilities
 
6,104

 
7,899

 
9,858

 
 
175,441

 
203,443

 
250,116

Deferred Tax Liability
 
135,746

 
135,446

 
132,563

Derivative Liability
 
32,280

 
32,400

 

Other Liabilities
 
2,235

 
4,090

 
4,368

Long-Term Debt:
 
 
 
 
 
 
Revolving credit loans
 
155,004

 

 
127,114

Term debt
 
1,140,179

 
1,140,179

 
1,168,200

Notes
 
400,373

 
400,279

 
399,531

 
 
1,695,556

 
1,540,458

 
1,694,845

Commitments and Contingencies (Note 10)
 

 

 

Partners’ Equity:
 
 
 
 
 
 
Special L.P. interests
 
5,290

 
5,290

 
5,290

General partner
 
(1
)
 

 
(2
)
Limited partners, 55,424, 55,346 and 55,346 units outstanding at March 25, 2012, December 31, 2011 and March 27, 2011, respectively
 
96,417

 
182,438

 
76,393

Accumulated other comprehensive loss
 
(29,838
)
 
(29,008
)
 
(22,930
)
 
 
71,868

 
158,720

 
58,751

 
 
$
2,113,126

 
$
2,074,557

 
$
2,140,643

    
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 AND COMPREHENSIVE INCOME (LOSS)
(In thousands, except per unit amounts)
 
 
Three months ended
 
Twelve months ended
 
 
3/25/2012
 
3/27/2011
 
3/25/2012
 
3/27/2011
Net revenues:
 
 
 
 
 
 
 
 
Admissions
 
$
11,670

 
$
10,612

 
$
597,100

 
$
568,410

Food, merchandise and games
 
12,532

 
11,782

 
350,186

 
337,228

Accommodations and other
 
3,996

 
4,475

 
82,515

 
71,507


 
28,198

 
26,869

 
1,029,801

 
977,145

Costs and expenses:
 
 
 
 
 
 
 
 
Cost of food, merchandise and games revenues
 
4,087

 
4,112

 
92,032

 
86,850

Operating expenses
 
71,285

 
65,128

 
437,008

 
413,778

Selling, general and administrative
 
17,984

 
20,915

 
137,495

 
137,565

Depreciation and amortization
 
3,846

 
3,790

 
123,861

 
126,697

Loss on impairment of goodwill and other intangibles
 

 

 

 
2,293

Loss on impairment / retirement of fixed assets, net
 
92

 
196

 
2,461

 
62,948


 
97,294

 
94,141

 
792,857

 
830,131

Operating income (loss)
 
(69,096
)
 
(67,272
)
 
236,944

 
147,014

Interest expense
 
26,803

 
41,112

 
142,876

 
161,783

Net effect of swaps
 
(970
)
 
1,887

 
(15,976
)
 
12,506

Loss on early debt extinguishment
 

 

 

 
35,289

Unrealized/realized foreign currency (gain) loss
 
(8,192
)
 
(6,888
)
 
8,605

 
(27,428
)
Other (income) expense
 
(16
)
 
908

 
(126
)
 
(211
)
Income (loss) before taxes
 
(86,721
)
 
(104,291
)
 
101,565

 
(34,925
)
Provision (benefit) for taxes
 
(21,539
)
 
(19,599
)
 
9,897

 
41,401

Net income (loss)
 
(65,182
)
 
(84,692
)
 
91,668

 
(76,326
)
Net income (loss) allocated to general partner
 
(1
)
 
(1
)
 
1

 
(1
)
Net income (loss) allocated to limited partners
 
$
(65,181
)
 
$
(84,691
)
 
$
91,667

 
$
(76,325
)
 
 
 
 
 
 
 
 
 
Net income (loss)
 
$
(65,182
)
 
$
(84,692
)
 
$
91,668

 
$
(76,326
)
Other comprehensive income (loss), (net of tax):
 
 
 
 
 
 
 
 
Cumulative foreign currency translation adjustment
 
(1,169
)
 
(1,286
)
 
1,050

 
(8,818
)
Unrealized income (loss) on cash flow hedging derivatives
 
339

 
12,064

 
(7,958
)
 
59,730

Other comprehensive income (loss), (net of tax)
 
(830
)
 
10,778

 
(6,908
)
 
50,912

Total Comprehensive Income (Loss)
 
$
(66,012
)
 
$
(73,914
)
 
$
84,760

 
$
(25,414
)
Basic earnings per limited partner unit:
 
 
 
 
 
 
 
 
Weighted average limited partner units outstanding
 
55,378

 
55,343

 
55,353

 
55,332

Net income (loss) per limited partner unit
 
$
(1.18
)
 
$
(1.53
)
 
$
1.66

 
$
(1.38
)
Diluted earnings per limited partner unit:
 
 
 
 
 
 
 
 
Weighted average limited partner units outstanding
 
55,378

 
55,343

 
55,847

 
55,332

Net income (loss) per limited partner unit
 
$
(1.18
)
 
$
(1.53
)
 
$
1.64

 
$
(1.38
)
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 THREE MONTHS ENDED MARCH 25, 2012
(In thousands)

 
Three months ended
 
3/25/12
Limited Partnership Units Outstanding
 
Beginning balance
55,346

Limited partnership unit options exercised
13

Issuance of limited partnership units as compensation
65

 
55,424

Limited Partners’ Equity
 
Beginning balance
$
182,438

Net loss
(65,181
)
Partnership distribution declared ($0.40 per limited partnership unit)
(22,151
)
Expense recognized for limited partnership unit options
48

Tax effect of units involved in option exercises and treasury unit transactions
(437
)
Issuance of limited partnership units as compensation
1,700

 
96,417

General Partner’s Equity
 
Beginning balance

Net loss
(1
)
 
(1
)
Special L.P. Interests
5,290

Accumulated Other Comprehensive Income (Loss)
 
Cumulative foreign currency translation adjustment:
 
Beginning balance
(3,120
)
Current period activity, net of tax $671
(1,169
)
 
(4,289
)
Unrealized loss on cash flow hedging derivatives:
 
Beginning balance
(25,888
)
Current period activity, net of tax ($318)
339

 
(25,549
)
 
(29,838
)
Total Partners’ Equity
$
71,868





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
 
Twelve months ended
 
 
3/25/2012
 
3/27/2011
 
3/25/2012
 
3/27/2011
CASH FLOWS FROM (FOR) OPERATING ACTIVITIES
 
 
 
 
 
 
 
 
Net income (loss)
 
$
(65,182
)
 
(84,692
)
 
$
91,668

 
$
(76,326
)
Adjustments to reconcile net income (loss) to net cash from (for) operating activities:
 
 
 
 
 
 
 
 
Non-cash expense
 
737

 
(1,227
)
 
149,101

 
107,512

Loss on early extinguishment of debt
 

 

 

 
35,289

Loss on impairment of goodwill and other intangibles
 

 

 

 
2,293

Loss on impairment / retirement of fixed assets, net
 
92

 
196

 
2,461

 
62,948

Net effect of swaps
 
(970
)
 
1,887

 
(15,976
)
 
12,506

Net change in working capital
 
(12,228
)
 
14,072

 
(9,337
)
 
(3,758
)
Net change in other assets/liabilities
 
(4,381
)
 
(14,519
)
 
2,612

 
28,851

Net cash from (for) operating activities
 
(81,932
)
 
(84,283
)
 
220,529

 
169,315

CASH FLOWS FROM (FOR) INVESTING ACTIVITIES
 
 
 
 
 
 
 
 
Capital expenditures
 
(27,468
)
 
(20,303
)
 
(97,355
)
 
(67,064
)
Net cash (for) investing activities
 
(27,468
)
 
(20,303
)
 
(97,355
)
 
(67,064
)
CASH FLOWS FROM (FOR) FINANCING ACTIVITIES
 
 
 
 
 
 
 
 
Net borrowings (payments) on revolving credit loans
 
155,004

 
103,914

 
27,890

 
(88,887
)
Term debt borrowings
 

 
22,938

 

 
1,197,938

Note borrowings
 

 

 

 
399,383

Derivative settlement
 
(50,450
)
 

 
(50,450
)
 

Term debt payments, including early termination penalties
 

 

 
(23,900
)
 
(1,526,890
)
Distributions paid to partners
 
(22,151
)
 
(4,428
)
 
(73,070
)
 
(18,261
)
Exercise of limited partnership unit options
 
48

 

 
53

 
7

Payment of debt issuance costs
 

 
(20,490
)
 
(723
)
 
(63,754
)
Excess tax benefit from unit-based compensation expense
 
(437
)
 

 
(437
)
 

Net cash from (for) financing activities
 
82,014

 
101,934

 
(120,637
)
 
(100,464
)
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS
 
(819
)
 
142

 
(2,473
)
 
94

CASH AND CASH EQUIVALENTS
 
 
 
 
 
 
 
 
Net increase (decrease) for the period
 
(28,205
)
 
(2,510
)
 
64

 
1,881

Balance, beginning of period
 
35,524

 
9,765

 
7,255

 
5,374

Balance, end of period
 
$
7,319

 
$
7,255

 
$
7,319

 
$
7,255

SUPPLEMENTAL INFORMATION
 
 
 
 
 
 
 
 
Cash payments for interest expense
 
$
30,471

 
$
44,672

 
$
139,126

 
$
149,978

Interest capitalized
 
752

 
399

 
2,188

 
945

Cash payments for income taxes
 
138

 
66

 
6,207

 
16,572

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 MARCH 25, 2012 AND MARCH 27, 2011
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 fiscal twelve-month periods ended March 25, 2012 and March 27, 2011 to accompany the quarterly results. Because amounts for the fiscal twelve months ended March 25, 2012 include actual 2011 season operating results, they may not be indicative of 2012 full calendar year operations.

(1) Significant Accounting and Reporting Policies:
The Partnership’s unaudited condensed consolidated financial statements for the periods ended March 25, 2012 and March 27, 2011 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, 2011, which were included in the Form 10-K filed on February 29, 2012. 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). 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.

(2) Interim Reporting:
The Partnership owns and operates eleven amusement parks, six separately gated outdoor water parks, one indoor water park and five hotels. 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.
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 periodically during the season, (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) Long-Lived Assets:
Long-lived assets are reviewed for impairment upon the occurrence of events or changes in circumstances that would indicate that the carrying value of the assets may not be recoverable. In order to determine if an asset has been impaired, assets are grouped and tested at the lowest level for which identifiable, independent cash flows are available. A significant amount of judgment is involved in determining if an indicator of impairment has occurred. Such indicators may include, among others: a significant decline in expected future cash flows; a sustained, significant decline in equity price and market capitalization; a significant adverse change in legal factors or in the business climate; unanticipated competition; and slower growth rates. Any adverse change in these factors could have a significant impact on the recoverability of these assets and could have a material impact on our consolidated financial statements.

The long-lived asset impairment test involves a two-step process. The first step is a comparison of each asset group's carrying value to its estimated undiscounted future cash flows expected to result from the use of the assets, including disposition. Projected future cash flows reflect management's best estimates of economic and market conditions over the projected period, including growth rates in revenues and costs, estimates of future expected changes in operating margins and cash expenditures. Other significant estimates and assumptions include terminal value growth rates and future estimates of capital expenditures. If the carrying value of the asset group is higher than its undiscounted future cash flows, there is an indication that impairment exists and the second step must be performed to measure the amount of impairment loss. The amount of impairment is determined by comparing the implied fair value of the asset group to its carrying value in a manner consistent with the highest and best use of those assets. The Partnership estimates fair value using an income (discounted cash flows) approach, which uses an asset group's projection of estimated operating results and cash flows that is discounted using a weighted-average cost of capital reflective of


7


current market conditions. If the implied fair value of the assets is less than their carrying value, an impairment charge is recorded for the difference.

At the end of the fourth quarter of 2010, the Partnership concluded based on 2010 operating results, as well as updated forecasts, that a review of the carrying value of long-lived assets at California's Great America was warranted. After performing its review, the Partnership determined that a portion of the park's fixed assets, the majority of which were originally recorded with the PPI acquisition, were impaired. As a result, the Partnership recognized $62.0 million of fixed-asset impairment during the fourth quarter of 2010 which was recorded in "Loss on impairment / retirement of fixed assets, net" on the condensed consolidated statement of operations. There has been no subsequent impairment on these assets.

(4) Goodwill and Other Intangible Assets:
In accordance with the applicable accounting rules, goodwill is not amortized, but, along with indefinite-lived trade-names, is evaluated for impairment on an annual basis or more frequently if indicators of impairment exist. Until December 2011, goodwill related to parks acquired prior to 2006 was tested annually tested for impairment as of October 1, while goodwill and other indefinite-lived intangibles, including trade-name intangibles, related to the Paramount Parks (PPI) acquisition in 2006 were tested annually for impairment as of April 1. Effective in December 2010, the Partnership changed the date of its annual goodwill impairment tests from April 1 and October 1 to December 31 to more closely align the impairment testing procedures with its long-range planning and forecasting process, which occurs in the fourth quarter each year. The Partnership believes the change was preferable since the long-term cash flow projections are a key component in performing its annual impairment tests of goodwill. In addition, the Partnership changed the date of its annual impairment test for other indefinite-lived intangibles from April 1 to December 31.

During 2010, the Partnership tested goodwill for impairment as of April 1, 2010 or October 1, 2010, as applicable, and again as of December 31, 2010. The tests indicated no impairment of goodwill as of any of those dates. During 2010, the Partnership tested other indefinite-lived intangibles for impairment as of April 1, 2010 and December 31, 2010. After performing the April 1, 2010 impairment test, it was determined that a portion of trade-names at certain PPI parks were impaired as the carrying values of those trade-names exceeded their fair values. As a result the Partnership recognized $1.4 million of trade-name impairment during the second quarter of 2010. This impairment was driven mainly by an increase in the Partnership’s cost of capital in 2010 and lower projected growth rates for certain parks as of the test date. After performing the December 31, 2010 test of indefinite-lived intangibles, it was determined that a portion of the trade-names at California's Great America, originally recorded with the PPI acquisition, were impaired. As a result, the Partnership recognized $0.9 million of additional trade-name impairment during the fourth quarter of 2010 which was recorded in "Loss on impairment of goodwill and other intangibles" on the consolidated statement of operations.

The change in accounting principle related to changing the annual goodwill impairment testing date did not delay, accelerate, avoid or cause an impairment charge. As it was impracticable to objectively determine operating and valuation estimates for periods prior to December 31, 2010, the Partnership has prospectively applied the change in the annual goodwill impairment testing date from December 31, 2010.

The Partnership tested goodwill and other indefinite-lived intangibles for impairment on December 31, 2011 and no impairment was indicated. In September 2011, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update 2011-08, “Intangibles — Goodwill and Other,” which gives an entity the option to first assess qualitative factors to determine whether it is necessary to perform the current two-step goodwill impairment test. If an entity believes, as a result of its qualitative assessment, that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, the two-step goodwill impairment test is required. We adopted this guidance during the first quarter of 2012 and it did not impact the Partnership's consolidated financial statements.
A summary of changes in the Partnership’s carrying value of goodwill for the three months ended March 25, 2012 is as follows:

(In thousands)
 
Goodwill
(gross)
 
Accumulated
Impairment
Losses
 
Goodwill
(net)
Balance at December 31, 2011
 
$
323,358

 
$
(79,868
)
 
$
243,490

Foreign currency translation
 
2,318

 

 
2,318

March 25, 2012
 
$
325,676

 
$
(79,868
)
 
$
245,808

 
 
 
 
 
 
 
 

8


At March 25, 2012, December 31, 2011, and March 27, 2011 the Partnership’s other intangible assets consisted of the following:

March 25, 2012
 
Gross
Carrying
Amount
 
Accumulated
Amortization
 
Net
Carrying
Value
(In thousands)
 
 
 
 
 
 
Other intangible assets:
 
 
 
 
 
 
Trade names
 
$
40,163

 
$

 
$
40,163

License / franchise agreements
 
775

 
331

 
444

Total other intangible assets
 
$
40,938

 
$
331

 
$
40,607

 
 
 
 
 
 
 
December 31, 2011
 
 
 
 
 
 
(In thousands)
 
 
 
 
 
 
Other intangible assets:
 
 
 
 
 
 
Trade names
 
$
39,835

 
$

 
$
39,835

License / franchise agreements
 
760

 
322

 
438

Total other intangible assets
 
$
40,595

 
$
322

 
$
40,273

 
 
 
 
 
 
 
March 27, 2011
 
 
 
 
 
 
(In thousands)
 
 
 
 
 
 
Other intangible assets:
 
 
 
 
 
 
Trade names
 
$
40,534

 
$

 
$
40,534

License / franchise agreements
 
668

 
291

 
377

Non-compete agreements
 
200

 
190

 
10

Total other intangible assets
 
$
41,402

 
$
481

 
$
40,921

Amortization expense of other intangible assets for the three months ended March 25, 2012 and March 27, 2011 was $9,000 and $18,000, respectively. The estimated amortization expense for the remainder of 2012 is $26,000. Estimated amortization expense is expected to total less than $100,000 in each year from 2012 through 2015.

(5) Long-Term Debt:

In July 2010, the Partnership issued $405 million of 9.125% senior unsecured notes, maturing in 2018, in a private placement, including $5.6 million of Original Issue Discount to yield 9.375%. Concurrently with this offering, the Partnership entered into a new $1,435 million credit agreement (the "2010 Credit Agreement”), which included a $1,175 million senior secured term loan facility and a $260 million senior secured revolving credit facility. The net proceeds from the offering of the notes, along with borrowings under the 2010 Credit Agreement, were used to repay in full all amounts outstanding under the previous credit facilities.

Terms of the 2010 Credit Agreement included a reduction in the Partnership's previous $310 million revolving credit facilities to a combined $260 million facility. Under the 2010 Credit Agreement, the Canadian portion of the revolving credit facility has a limit of $15 million. U.S. denominated loans made under the revolving credit facility bear interest at a rate of LIBOR plus 400 basis points (bps) (with no LIBOR floor). Canadian denominated loans made under the Canadian portion of the facility also bear interest at a rate of LIBOR plus 400 bps (with no LIBOR floor). The revolving credit facility, which matures in July 2015, also provides for the issuance of documentary and standby letters of credit.

In February 2011, the Partnership amended the 2010 Credit Agreement (as so amended, the “Amended 2010 Credit Agreement”) and extended the maturity date of the U.S. term loan portion of the credit facilities by one year. The extended U.S. term loan, which amortizes at $11.8 million per year beginning in 2011, matures in December 2017 and bears interest at a rate of LIBOR plus 300 bps, with a LIBOR floor of 100 bps. As the result of an optional $18.0 million debt prepayment made in August 2011, the Partnership has no remaining scheduled term-debt principal payments due within the next twelve months, but we are required to make a prepayment due to the Excess Cash Flow ("ECF") provision in the Amended 2010 Credit Agreement based on our Senior Secured Leverage Ratio as of December 31, 2011. As a result of the ECF provision and as described in the mandatory debt repayment section of the debt agreement, the mandatory prepayment of $15.9 million must be made by June 30, 2012, and is recorded on the Consolidated Balance Sheet in "Current maturities of long-term debt."


9


The Partnership's $405 million of senior unsecured notes pay interest semi-annually in February and August, with the principal due in full on August 1, 2018. The notes may be redeemed, in whole or in part, at any time prior to August 1, 2014 at a price equal to 100% of the principal amount of the notes redeemed plus a “make-whole” premium together with accrued and unpaid interest, if any, to the redemption date. Thereafter, the notes may be redeemed, in whole or in part, at various prices depending on the date redeemed. Prior to August 1, 2013, up to 35% of the notes may be redeemed with the net cash proceeds of certain equity offerings at 109.125%.

The Amended 2010 Credit Agreement requires the Partnership to maintain specified financial ratios, which if breached for any reason, including a decline in operating results, could result in an event of default under the agreement. The most critical of these ratios is the Consolidated Leverage Ratio which is measured on a trailing-twelve month quarterly basis. The Consolidated Leverage ratio is set at 6.0x consolidated total debt- (excluding the revolving debt) to-Consolidated EBITDA and will remain at that level through the end of the third quarter in 2013, and the ratio will decrease further each fourth quarter beginning with the fourth quarter of 2013. As of March 25, 2012, the Partnership’s Consolidated Leverage Ratio was 4.19x, providing $112.5 million of consolidated EBITDA cushion on the ratio as of the end of the first quarter. The Partnership was in compliance with all other covenants under the Amended 2010 Credit Agreement as of March 25, 2012.

The Amended 2010 Credit Agreement also includes provisions that allowed the Partnership to make restricted payments of up to $20 million. These restricted payments are not subject to any specific covenants. Beginning in 2012, additional restricted payments are allowed to be made based on an Excess-Cash-Flow formula, should the Partnership’s pro-forma Consolidated Leverage Ratio be less than or equal to 4.50x. Per the terms of the indenture governing the Partnership's notes, the ability to make restricted payments in 2012 and beyond is permitted should the Partnership's trailing-twelve-month Total-Indebtedness-to-Consolidated-Cash-Flow Ratio be less than or equal to 4.75x, measured on a quarterly basis.

In addition to the above, among other covenants and provisions, the Amended 2010 Credit Agreement contains an initial three-year requirement (from July 2010) that at least 50% of our aggregate term debt and senior notes be subject to either a fixed interest rate or interest rate protection.
 
(6) 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 does not use derivative financial instruments for trading purposes.
The Partnership had effectively converted a total of $1.0 billion of its variable-rate debt to fixed rates through the use of several interest rate swap agreements through October 1, 2011. Cash flows related to these interest rate swap agreements were included in interest expense over the term of the agreements. These interest rate swap agreements expired in October 2011. The Partnership had designated all of these interest rate swap agreements and hedging relationships as cash flow hedges.
In order to maintain fixed interest costs on a portion of its domestic term debt beyond the expiration of the swaps entered into in 2006 and 2007, in September 2010 the Partnership entered into several forward-starting swap agreements ("September 2010 swaps") to effectively convert a total of $600 million of variable-rate debt to fixed rates beginning in October 2011. As a result of the February 2011 amendment to the 2010 Credit Agreement, the LIBOR floor on the term loan portion of its credit facilities decreased to 100 bps from 150 bps, causing a mismatch in critical terms of the September 2010 swaps and the underlying debt. Because of the mismatch of critical terms, the Partnership determined the September 2010 swaps, which were originally designated as cash flow hedges, were no longer highly effective, resulting in the de-designation of the swaps as of the end of February 2011. As a result of this ineffectiveness, gains of $7.2 million recorded in AOCI through the date of de-designation are being amortized through December 2015, $6.5 million of which remained to be amortized in AOCI as of March 25, 2012.
In March 2011, the Partnership entered into several additional forward-starting basis-rate swap agreements ("March 2011 swaps") that, when combined with the September 2010 swaps, effectively converted $600 million of variable-rate debt to fixed rates beginning in October 2011. The September 2010 swaps and the March 2011 swaps, which have been jointly designated as cash flow hedges, mature in December 2015 and fix LIBOR at a weighted average rate of 2.46%. For the period that the September 2010 swaps were de-designated, their fair value decreased by $3.3 million, the offset of which was recognized as a direct charge to the Partnership's earnings and recorded to “Net effect of swaps” on the consolidated statement of operations along with the regular amortization of “Other comprehensive income (loss)” balances related to these swaps. No other ineffectiveness related to these swaps was recorded in any period presented.
In May 2011, the Partnership entered into four additional forward-starting basis-rate swap agreements ("May 2011 swaps") that effectively converted another $200 million of variable-rate debt to fixed rates beginning in October 2011. These swaps, which were designated as cash flow hedges, mature in December 2015 and fix LIBOR at a weighted average rate of 2.54%.

10


The fair market value of the September 2010 swaps, the March 2011 swaps, and the May 2011 swaps at March 25, 2012 was a liability of $32.3 million, which was recorded in “Derivative Liability” on the condensed consolidated balance sheet.
In 2007, the Partnership entered into two cross-currency swap agreements, which effectively converted $268.7 million of term debt at the time, and the associated interest payments, related to its wholly owned Canadian subsidiary from variable U.S. dollar denominated debt to fixed-rate Canadian dollar denominated debt. The Partnership originally designated these cross-currency swaps as foreign currency cash flow hedges. Cash flows related to these swap agreements were included in interest expense over the term of the agreement. These swap agreements expired in February 2012.
In May 2011 and July 2011, the Partnership entered into several foreign currency swap agreements to fix the exchange rate on approximately 75% of the termination payment associated with the cross-currency swap agreements that expired in February 2012. The Partnership did not seek hedge accounting treatment on these foreign currency swaps, and as such, changes in fair value of the swaps flowed directly through earnings along with changes in fair value on the related, de-designated cross-currency swaps. In February 2012, all of the cross-currency and related currency swap agreements were settled for $50.5 million.
Fair Value of Derivative Instruments in Condensed Consolidated Balance Sheet:
(In thousands):
 
Condensed Consolidated
Balance Sheet Location
 
Fair Value as of
 
Fair Value as of
 
Fair Value as of
March 25, 2012
 
December 31, 2011
 
March 27, 2011
Derivatives designated as hedging instruments:
 
 
 
 
 
 
 
 
Interest rate swaps
 
Other Assets
 
$

 
$

 
$
3,808

Interest rate swaps
 
Current derivative liability
 

 

 
(33,493
)
Interest rate swaps
 
Derivative Liability
 
(32,280
)
 
(32,400
)
 


Total derivatives designated as hedging instruments
 
 
 
$
(32,280
)
 
$
(32,400
)
 
$
(29,685
)
Derivatives not designated as hedging instruments:
 
 
 
 
 
 
 
 
Foreign currency swaps
 
Current derivative liability
 
$

 
$
(13,155
)
 
$

Cross-currency swaps
 
Current derivative liability
 

 
(37,617
)
 
(57,265
)
Total derivatives not designated as hedging instruments
 
 
 
$

 
$
(50,772
)
 
$
(57,265
)
Net derivative liability
 
 
 
$
(32,280
)
 
$
(83,172
)
 
$
(86,950
)
 
The following table presents our September 2010 swaps, March 2011 swaps, and May 2011 swaps, which became effective October 1, 2011 and mature December 15, 2015, along with their notional amounts and their fixed interest rates.
($'s in thousands)
Interest Rate Swaps
 
Notional Amounts
 
LIBOR Rate
 
$
200,000

 
2.40
%
 
75,000

 
2.43
%
 
50,000

 
2.42
%
 
150,000

 
2.55
%
 
50,000

 
2.42
%
 
50,000

 
2.55
%
 
25,000

 
2.43
%
 
50,000

 
2.54
%
 
30,000

 
2.54
%
 
70,000

 
2.54
%
 
50,000

 
2.54
%
Total $'s / Average Rate
$
800,000

 
2.48
%
 

11


The following table presents our fixed-rate swaps, which matured in October 2011, and the cross-currency swap which matured in February 2012, along with their notional amounts and their fixed interest rates:
($'s in thousands)
Interest Rate Swaps
 
Cross-currency Swaps
 
Notional Amounts
 
LIBOR Rate
 
Notional Amounts
 
Implied Interest Rate
 
$
200,000

 
5.64
%
 
$
255,000

 
7.31
%
 
200,000

 
5.64
%
 
150

 
9.50
%
 
200,000

 
5.64
%
 
 
 
 
 
200,000

 
5.57
%
 
 
 
 
 
100,000

 
5.60
%
 
 
 
 
 
100,000

 
5.60
%
 
 
 
 
Total $'s / Average Rate
$
1,000,000

 
5.62
%
 
$
255,150

 
7.31
%
 
 
 
 
 
 
 
 

Effects of Derivative Instruments on Income (Loss) and Other Comprehensive Income (Loss) for the three-month periods ended March 25, 2012 and March 27, 2011:
 
(In thousands):
 
Amount of Gain (Loss) Recognized in  Accumulated OCI on Derivatives (Effective Portion)
 
Amount and Location of Gain (Loss)
Reclassified from Accumulated OCI into Income
(Effective Portion)
 
Amount and Location of Gain (Loss)
Recognized in Income on Derivative
(Ineffective Portion)
Derivatives designated as
Cash Flow Hedging
Relationships
 
Three months ended
 
Three months ended
 
 
 
Three months ended
 
Three months ended
 
 
 
Three months ended
 
Three months ended
 
3/25/12
 
3/27/11
 
 
 
3/25/12
 
3/27/11
 
 
 
3/25/12
 
3/27/11
Interest rate swaps
 
$
120

 
$
955

 
Interest Expense
 
$
(2,793
)
 
$

 
Net effect of swaps
 
$

 
$
14,494

Total
 
$
120

 
$
955

 
 
 
$
(2,793
)
 
$

 
 
 
$

 
$
14,494

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(In thousands):
 
Amount and Location of Gain (Loss) Recognized
in Income on Derivative
Derivatives not designated as Cash Flow
Hedging Relationships
 
 
 
Three months ended
 
Three months ended
 
 
 
3/25/12
 
3/27/11
Interest rate swaps (1)
 
Net effect of swaps
 

 
(3,342
)
Cross-currency swaps (2)
 
Net effect of swaps
 
(4,999
)
 
(1,812
)
Foreign currency swaps 
 
Net effect of swaps
 
6,278

 

 
 
 
 
$
1,279

 
$
(5,154
)
 
 
 
 
 
 
 
(1)
The September 2010 swaps became ineffective and were de-designated in February 2011.
(2)
The cross-currency swaps became ineffective and were de-designated in August 2009.
In addition to the $1.3 million of net gain recognized in income on the ineffective portion of derivatives and on the derivatives not designated as cash flow hedges (as noted in the tables above), $0.5 million of expense representing the regular amortization of amounts in AOCI for the swaps and $0.2 million of foreign currency gain in the quarter related to the U.S. dollar denominated Canadian term loan were recorded in the condensed consolidated statements of operations for the quarter. The net effect of these amounts resulted in a benefit to earnings for the quarter of $1.0 million recorded in “Net effect of swaps.”

For the three-month period ended March 27, 2011, in addition to the $9.3 million gain recognized in income on the ineffective portion of derivatives noted in the table above, $11.5 million of expense representing the amortization of amounts in AOCI for the swaps and $0.3 million of foreign currency gain in the quarter related to the U.S. dollar denominated Canadian term loan were recorded in “Net effect of swaps” in the condensed consolidated statements of operations. The net effect of these amounts resulted in a charge to earnings of $1.9 million recorded in “Net effect of swaps.” For the period, an additional $9.5 million of amortization of amounts in AOCI for the cross-currency swaps was recorded as a charge to earnings in "Loss on early extinguishment of debt"


12


in the condensed consolidated statements of operations as a result of the debt refinancing and the reduction of the majority of the U.S. dollar denominated Canadian term loan.

Effects of Derivative Instruments on Income (Loss) and Other Comprehensive Income (Loss) for the twelve-month periods ended March 25, 2012 and March 27, 2011:
(In thousands):
 
Amount of Gain (Loss)
Recognized in Accumulated OCI on Derivatives
(Effective Portion)
 
Amount and Location of Gain (Loss)
Reclassified from Accumulated OCI into Income
(Effective Portion)
 
Amount and Location of Gain (Loss)
Recognized in Income on Derivative
(Ineffective Portion)
Derivatives designated as
Cash Flow Hedging
Relationships
 
Twelve months ended
 
Twelve months ended
 
 
 
Twelve months ended
 
Twelve months ended
 
 
 
Twelve months ended
 
Twelve months ended
 
3/25/12
 
3/27/11
 
 
 
3/25/12
 
3/27/11
 
 
 
3/25/12
 
3/27/11
Interest rate swaps
 
$
(36,088
)
 
$
7,249

 
Interest Expense
 
$
(5,816
)
 
$

 
Net effect of swaps
 
$
33,493

 
$
44,181

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

(In thousands):
 
Amount and Location of Gain (Loss) Recognized
in Income on Derivative
Derivatives not designated as Cash Flow Hedging
Relationships
 
 
 
Twelve months ended
 
Twelve months ended
 
 
 
3/25/12
 
3/27/11
Interest rate swaps (1)
 
Net effect of swaps
 
$

 
$
(3,342
)
Cross-currency swaps (2)
 
Net effect of swaps
 
12,911

 
(3,918
)
Foreign currency swaps
 
Net effect of swaps
 
(7,387
)
 

 
 
 
 
$
5,524

 
$
(7,260
)
 
 
 
 
 
 
 
(1)
The September 2010 swaps became ineffective and were de-designated in February 2011.
(2)
The cross-currency swaps became ineffective and were de-designated in August 2009.
In addition to the $39.0 million of gain recognized in income on the ineffective portion of derivatives and on the derivatives not designated as cash flow hedges (as noted in the tables above), $22.7 million of expense representing the amortization of amounts in AOCI for the swaps and a $0.3 million foreign currency loss in the twelve month period related to the U.S. dollar denominated Canadian term loan was recorded during the trailing twelve months ended March 25, 2012 in the condensed consolidated statements of operations. The net effect of these amounts resulted in a benefit to earnings for the trailing twelve month period of $16.0 million recorded in “Net effect of swaps.”
For the twelve month period ending March 27, 2011, in addition to the $36.9 million of gain recognized in income on the ineffective portion of derivatives noted in the table above, $48.5 million of expense representing the amortization of amounts in AOCI for the swaps and a $0.9 million foreign currency loss in the twelve month period related to the U.S. dollar denominated Canadian term loan was recorded during the trailing twelve months ended March 27, 2011 in the condensed consolidated statements of operations. The net effect of these amounts resulted in a charge to earnings for the trailing twelve month period of $12.5 million recorded in “Net effect of swaps.” For the period, an additional $9.5 million of amortization of amounts in AOCI for the cross-currency swaps was recorded as a charge to earnings in "Loss on early extinguishment of debt" in the condensed consolidated statements of operations as a result of the debt refinancing and the reduction of the majority of the U.S. dollar denominated Canadian term loan.
The amounts reclassified from AOCI into income for the periods noted above are in large part the result of the Partnership’s initial three-year requirement to swap at least 75% of its aggregate term debt to fixed rates under the terms of the Amended 2010 Credit Agreement.
 
(7) Fair Value Measurements:
The FASB Accounting Standards Codification (ASC) relating to fair value measurements emphasizes that fair value is a market-based measurement that should be determined based on assumptions (inputs) that market participants would use in pricing an asset or liability. Inputs may be observable or unobservable, and valuation techniques used to measure fair value should maximize the use of relevant observable inputs and minimize the use of unobservable inputs. Accordingly, the FASB’s ASC establishes a hierarchal disclosure framework that ranks the quality and reliability of information used to determine fair values. The hierarchy is associated with the level of pricing observability utilized in measuring fair value and defines three levels of inputs to the fair

13


value measurement process—quoted prices are the most reliable valuation inputs, whereas model values that include inputs based on unobservable data are the least reliable. Each fair value measurement must be assigned to a level corresponding to the lowest level input that is significant to the fair value measurement in its entirety.
The three broad levels of inputs defined by the fair value hierarchy are as follows:
 
Level 1 – inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.
 
Level 2 – inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.
 
Level 3 – inputs to the valuation methodology are unobservable and significant to the fair value measurement.
A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.
 
The table below presents the balances of assets and liabilities measured at fair value as of March 25, 2012, December 31, 2011, and March 27, 2011 on a recurring basis:
 
 
Total
 
Level 1
 
Level 2
 
Level 3
March 25, 2012
 
 
 
 
 
 
 
 
(In thousands)
 
 
 
 
 
 
 
 
Interest rate swap agreements (1)
 
$
(32,280
)
 
$

 
$
(32,280
)
 
$

Net derivative liability
 
$
(32,280
)
 
$

 
$
(32,280
)
 
$

 
 
 
 
 
 
 
 
 
December 31, 2011
 
 
 
 
 
 
 
 
Interest rate swap agreements (1)
 
$
(32,400
)
 
$

 
$
(32,400
)
 
$

Cross-currency swap agreements (2)
 
(37,617
)
 

 
(37,617
)
 

Foreign currency swap agreements (2)
 
(13,155
)
 

 
(13,155
)
 

Net derivative liability
 
$
(83,172
)
 
$

 
$
(83,172
)
 
$

 
 
 
 
 
 
 
 
 
March 27, 2011
 
 
 
 
 
 
 
 
Interest rate swap agreements (3)
 
$
3,808

 
$

 
$
3,808

 
$

Interest rate swap agreements (2)
 
(33,493
)
 

 
(33,493
)
 

Cross-currency swap agreements (2)
 
(57,265
)
 

 
(57,265
)
 

Net derivative liability
 
$
(86,950
)
 
$

 
$
(86,950
)
 
$

(1)
Included in “Derivative Liability” on the Unaudited Condensed Consolidated Balance Sheet
(2)
Included in "Current derivative liability" on the Unaudited Condensed Consolidated Balance Sheet
(3)
Included in "Other assets" on the Unaudited Condensed Consolidated Balance Sheet
Fair values of the interest rate, cross-currency and foreign currency swap agreements are determined using significant inputs, including the LIBOR and foreign currency forward curves, that are considered Level 2 observable market inputs. In addition, the Partnership considered the effect of its credit and non-performance risk on the fair values provided, and recognized an adjustment increasing the net derivative liability by approximately $1.0 million as of March 25, 2012. The Partnership monitors the credit and non-performance risk associated with its derivative counterparties and believes them to be insignificant and not warranting a credit adjustment at March 25, 2012.
There were no assets measured at fair value on a non-recurring basis at March 25, 2012, December 31, 2011, or March 27, 2011.

In 2010, the Partnership concluded based on operating results, as well as updated forecasts, that a review of the carrying value of long-lived assets at California's Great America was warranted. After performing its review, the Partnership determined that a portion of the park's fixed assets, the majority of which were originally recorded with the PPI acquisition, were impaired. As a result, it recognized $62.0 million of fixed-asset impairment during the fourth quarter of 2010.


14


After completing its 2010 annual review of indefinite-lived intangibles for impairment, the Partnership concluded that a portion of trade-names originally recorded with the PPI acquisition were impaired. As a result, the Partnership recognized approximately $2.3 million of trade-name impairment during second and fourth quarters of 2010. A relief-from-royalty model is used to determine whether the fair value of trade-names exceeds their carrying amount. The fair value of the trade-names is determined as the present value of fees avoided by owning the respective trade-name.
The fair value of term debt at March 25, 2012 was approximately $1,156.3 million based on borrowing rates currently available to the Partnership on long-term debt with similar terms and average maturities. The fair value of the Partnership's notes at March 25, 2012 was approximately $355.5 million based on borrowing rates available as of that date to the Partnership on notes with similar terms and maturities. The fair value of the term debt and notes were based on Level 2 inputs.

(8) Earnings per Unit:
Net income (loss) per limited partner unit is calculated based on the following unit amounts:
 
 
Three months ended
 
Twelve months ended
 
 
3/25/2012
 
3/27/2011
 
3/25/2012
 
3/27/2011
 
 
(In thousands except per unit amounts)
Basic weighted average units outstanding
 
55,378

 
55,343

 
55,353

 
55,332

Effect of dilutive units:
 
 
 
 
 
 
 
 
Unit options
 

 

 
2

 

Phantom units
 

 

 
492

 

Diluted weighted average units outstanding
 
55,378

 
55,343

 
55,847

 
55,332

Net income (loss) per unit - basic
 
$
(1.18
)
 
$
(1.53
)
 
$
1.66

 
$
(1.38
)
Net income (loss) per unit - diluted
 
$
(1.18
)
 
$
(1.53
)
 
$
1.64

 
$
(1.38
)
 
 
 
 
 
 
 
 
 
The effect of unit options on the three and twelve months ended March 25, 2012, had they not been out of the money or antidilutive, would have been 2,000 and 47,000 units, respectively. The effect of out-of-the-money and/or antidilutive unit options on the three and twelve months ended March 27, 2011, had they not been out of the money or antidilutive, would have been 79,000 and 250,000 units, respectively.
 
(9) Income and Partnership Taxes:
Under the applicable accounting rules, income taxes are recognized for 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 represent future tax consequences of events that have been recognized differently in the financial statements than for tax purposes. The income tax provision (benefit) for interim periods is determined by applying an estimated annual effective tax rate to the quarterly income (loss) of the Partnership’s corporate subsidiaries. For 2012, the estimated annual effective rate includes the effect of an anticipated adjustment to the valuation allowance that relates to foreign tax credit carry-forwards arising from the corporate subsidiaries. The amount of this adjustment has a disproportionate impact on the annual effective tax rate that results in a significant variation in the customary relationship between the provision for taxes and income before taxes in interim periods. In addition to income taxes on its corporate subsidiaries, the Partnership pays a publicly traded partnership tax (PTP tax) on partnership-level gross income (net revenues less cost of food, merchandise and games). As such, the Partnership’s total provision (benefit) for taxes includes amounts for both the PTP tax and for income taxes on its corporate subsidiaries.

During the quarter the Partnership accrued $1.0 million for unrecognized tax benefits including interest and/or penalties related to state and local tax filing positions. The Partnership recognizes interest and/or penalties related to unrecognized tax benefits in the income tax provision. The Partnership does not anticipate that the balance of the unrecognized tax benefit will change significantly over the next 12 months.
(10) Contingencies:

The Partnership is a party to a number of lawsuits arising in the normal course of business. In the opinion of management, none of these matters is expected to have a material effect in the aggregate on the Partnership's financial statements.





15



(11) Termination of Agreement with Private Equity Firm:
On April 6, 2010, the Partnership and the affiliates of Apollo Global Management (Apollo) mutually terminated the merger agreement originally entered into on December 16, 2009. Consistent with the terms of the agreement, the Partnership paid Apollo $6.5 million to reimburse them for certain expenses incurred in connection with the transaction. In addition, both parties released each other from all obligations with respect to the proposed merger transaction, as well as from any claims arising out of or relating to the merger agreement. The $6.5 million paid to Apollo in April was recognized as a charge to earnings in “Selling, general and administrative” in the second quarter of 2010. The Partnership incurred approximately $10.4 million in costs associated with the terminated merger during 2010, and a total of $16.0 million of costs since the merger was initially announced.

(12) Consolidating Financial Information of Guarantors and Issuers:

Cedar Fair, L.P., Canada's Wonderland Company ("Cedar Canada"), and Magnum Management Corporation ("Magnum") are the co-issuers of the Partnership's 9.125% notes (see Note 5). The notes have been fully and unconditionally guaranteed, on a joint and several basis, by each 100% owned subsidiary of Cedar Fair (other than Cedar Canada and Magnum) that guarantees the Partnership's senior secured credit facilities. There are no non-guarantor subsidiaries.

The following consolidating schedules present condensed financial information for Cedar Fair, L.P., Cedar Canada, and Magnum, the co-issuers, and each 100% owned subsidiary of Cedar Fair (other than Cedar Canada and Magnum), the guarantors (on a combined basis), as of March 25, 2012, December 31, 2011, and March 27, 2011 and for the three and twelve month periods ended March 25, 2012 and March 27, 2011. In lieu of providing separate unaudited financial statements for the guarantor subsidiaries, we have included the accompanying consolidating condensed financial statements.

Since Cedar Fair, L.P., Cedar Canada and Magnum are co-issuers of the notes and co-borrowers under the Amended 2010 Credit Agreement, all outstanding debt has been equally reflected within each co-issuer's March 25, 2012, December 31, 2011 and March 27, 2011 balance sheets in the accompanying consolidating condensed financial statements.

16


CEDAR FAIR, L.P.
CONDENSED CONSOLIDATING BALANCE SHEET
March 25, 2012
(In thousands)
 
 
Cedar Fair L.P. (Parent)
 
Co-Issuer Subsidiary (Magnum)
 
Co-Issuer Subsidiary (Cedar Canada)
 
Guarantor Subsidiaries
 
Eliminations
 
Total
ASSETS
 
 
 
 
 
 
 
 
 
 
 
 
Current Assets:
 
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
 
$

 
$
397

 
$
119

 
$
6,803

 
$

 
$
7,319

Receivables
 

 
82,892

 
59,911

 
370,246

 
(506,356
)
 
6,693

Inventories
 

 
3,321

 
3,678

 
37,487

 

 
44,486

Current deferred tax asset
 

 
11,014

 
772

 
3,334

 

 
15,120

Other current assets
 
359

 
5,907

 
11,851

 
12,293

 

 
30,410

 
 
359

 
103,531

 
76,331

 
430,163

 
(506,356
)
 
104,028

Property and Equipment (net)
 
478,928

 
1,035

 
279,363

 
909,164

 

 
1,668,490

Investment in Park
 
467,408

 
669,235

 
118,514

 
28,943

 
(1,284,100
)
 

Intercompany Note Receivable
 

 
104,165

 

 

 
(104,165
)
 

Goodwill
 
9,061

 

 
125,528

 
111,219

 

 
245,808

Other Intangibles, net
 

 

 
17,776

 
22,831

 

 
40,607

Deferred Tax Asset
 

 
47,646

 

 

 
(47,646
)
 

Intercompany Receivable
 
889,442

 
1,239,210

 
1,294,302

 

 
(3,422,954
)
 

Other Assets
 
26,323

 
16,288

 
9,608

 
1,974

 

 
54,193

 
 
$
1,871,521

 
$
2,181,110

 
$
1,921,422

 
$
1,504,294

 
$
(5,365,221
)
 
$
2,113,126

LIABILITIES AND PARTNERS’ EQUITY
 
 
 
 
 
 
 
 
 
 
 
 
Current Liabilities:
 
 
 
 
 
 
 
 
 
 
 
 
Current maturities of long-term debt
 
$
15,921

 
$
15,921

 
$
15,921

 
$

 
$
(31,842
)
 
$
15,921

Accounts payable
 
60,297

 
232,001

 
26,302

 
215,968

 
(506,356
)
 
28,212

Deferred revenue
 

 

 
5,413

 
45,341

 

 
50,754

Accrued interest
 
3,089

 
1,706

 
5,519

 

 

 
10,314

Accrued taxes
 
4,925

 
340

 
261

 
3,294

 

 
8,820

Accrued salaries, wages and benefits
 

 
26,989

 
781

 
5,792

 

 
33,562

Self-insurance reserves
 

 
4,212

 
1,716

 
15,826

 

 
21,754

Other accrued liabilities
 
462

 
3,312

 
226

 
2,104

 

 
6,104

 
 
84,694

 
284,481

 
56,139

 
288,325

 
(538,198
)
 
175,441

Deferred Tax Liability
 

 

 
58,801

 
124,591

 
(47,646
)
 
135,746

Derivative Liability
 
19,403

 
12,877

 

 

 

 
32,280

Other Liabilities
 

 
2,235

 

 

 

 
2,235

Intercompany Note Payable
 

 

 

 
104,165

 
(104,165
)
 

Long-Term Debt:
 
 
 
 
 
 
 
 
 
 
 
 
Revolving credit loans
 
155,004

 
155,004

 
155,004

 

 
(310,008
)
 
155,004

Term debt
 
1,140,179

 
1,140,179

 
1,140,179

 

 
(2,280,358
)
 
1,140,179

Notes
 
400,373

 
400,373

 
400,373

 

 
(800,746
)
 
400,373

 
 
1,695,556

 
1,695,556

 
1,695,556

 

 
(3,391,112
)
 
1,695,556

 
 
 
 
 
 
 
 
 
 
 
 
 
Equity
 
71,868

 
185,961

 
110,926

 
987,213

 
(1,284,100
)
 
71,868

 
 
$
1,871,521

 
$
2,181,110

 
$
1,921,422

 
$
1,504,294

 
$
(5,365,221
)
 
$
2,113,126



17


CEDAR FAIR, L.P.
CONDENSED CONSOLIDATING BALANCE SHEET
December 31, 2011
(In thousands)
 
 
Cedar Fair L.P. (Parent)
 
Co-Issuer Subsidiary (Magnum)
 
Co-Issuer Subsidiary (Cedar Canada)
 
Guarantor Subsidiaries
 
Eliminations
 
Total
ASSETS
 
 
 
 
 
 
 
 
 
 
 
 
Current Assets:
 
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
 
$

 
$
512

 
$
31,540

 
$
3,472

 
$

 
$
35,524

Receivables
 

 
62,408

 
69,285

 
411,852

 
(535,934
)
 
7,611

Inventories
 

 
1,547

 
2,703

 
28,819

 

 
33,069

Current deferred tax asset
 

 
6,239

 
772

 
3,334

 

 
10,345

Other current assets
 
508

 
13,461

 
1,027

 
7,822

 
(10,852
)
 
11,966

 
 
508

 
84,167

 
105,327

 
455,299

 
(546,786
)
 
98,515

Property and Equipment (net)
 
469,877

 
1,044

 
266,218

 
900,952

 

 
1,638,091

Investment in Park
 
521,441

 
661,533

 
118,514

 
40,550

 
(1,342,038
)
 

Intercompany Note Receivable
 

 
93,845

 

 

 
(93,845
)