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Cedar Fair L.P. Depositary Reports Operating Results (10-Q)

May 07, 2010 | About:
10qk

10qk

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Cedar Fair L.P. Depositary (FUN) filed Quarterly Report for the period ended 2010-03-28.

Cedar Fair L.p. Depositary has a market cap of $789.2 million; its shares were traded at around $14.28 with a P/E ratio of 25.1 and P/S ratio of 0.9. Cedar Fair L.p. Depositary had an annual average earning growth of 9.5% over the past 10 years. GuruFocus rated Cedar Fair L.p. Depositary the business predictability rank of 2.5-star.FUN is in the portfolios of Jim Simons of Renaissance Technologies LLC.

Highlight of Business Operations:

Excluding depreciation, amortization and other non-cash expenses, operating costs and expenses for the quarter increased $5.7 million to $84.0 million from $78.3 million in 2009, primarily attributable to legal and other costs incurred in connection with the terminated merger with Apollo of $3.8 million and the negative impact of exchange rates on our Canadian operations (approximately $1.0 million) in the period. During the second quarter of 2010 we expect to incur additional fees related to the terminated merger, including the $6.5 million break-up fee paid to Apollo in April to reimburse them for certain expenses incurred in connection with the transaction.

Interest expense for the first quarter increased 2% to $29.6 million in 2010 compared with $28.9 million in 2009, due primarily to higher interest-rate spreads on the $900 million of term debt that was extended in August 2009 for a period of two years. Offsetting this somewhat was lower interest rates on $300 million of our term debt, resulting from the expiration of fixed-rate interest rate swaps in July 2009. A net credit for taxes of $57.8 million was recorded to account for the tax attributes of our corporate subsidiaries and publicly traded partnership (PTP) taxes during the first quarter of 2010 compared with a net credit for taxes of $31.9 million in the same period a year ago. To determine the interim period income tax provision (benefit) of our corporate subsidiaries we apply an estimated annual effective tax rate to our year-to-date income (loss). The interim period income tax provision (benefit) is distinct from actual cash taxes paid or payable. Actual cash taxes paid or payable are estimated to be between $20-23 million for the 2010 calendar year.

After interest expense and the credit for taxes, the net loss for the three-month period totaled $39.9 million, or $0.72 per diluted limited partner unit, compared with a net loss of $53.3 million, or $0.97 per unit, a year ago. The current quarter net loss reflects approximately $3.8 million of merger costs (as discussed above) and a $7.6 million non-cash charge to income for the change in the mark-to-market valuation of our interest rate swaps that had gone ineffective or were de-designated for hedge accounting during the year, as well as the related amortization of amounts previously recorded in AOCI. In the prior year, these swaps were highly effective and the changes in mark-to-market valuations were appropriately recorded in AOCI and not through earnings. Excluding these merger costs and non-cash charges on the swaps, our first-quarter net loss would have been $29.2 million, or $0.53 per unit.

Excluding depreciation, amortization and impairment/retirement charges, operating costs and expenses were $621.8 million compared with $628.2 million in 2009. This decrease is primarily due to the successful implementation of numerous cost-savings initiatives in 2009, implemented in anticipation of soft revenues for 2009, and a reduction in variable costs due to a decrease in attendance in 2009. The decrease in operating costs and expenses for the twelve months ended March 28, 2010 was offset by the settlement of a California class-action lawsuit ($9.0 million) and the settlement of a licensing dispute with Paramount Pictures ($2.0 million), as well as approximately $9.4 million in costs related to the terminated merger with Apollo.

Interest expense for the twelve-month period ended March 28, 2010 decreased $244,000 to $125.4 million, due to lower rates on $300 million of term debt resulting from the expiration of fixed-rate swaps in July 2009, lower average debt borrowings, and the accounting effect of our swaps no longer qualifying for hedge accounting beginning in late 2009, offset by higher interest-rate spreads on the $900 million of extended term debt. During the twelve-month period, we recorded a net credit for taxes of $10.9 million to account for the tax attributes of our corporate subsidiaries and PTP taxes. This compares with a provision for taxes of $12.0 million a year ago.

After interest expense and provision for taxes, net income for the twelve months ended March 28, 2010 was $48.8 million, or $0.87 per diluted limited partner unit, compared with net loss of $3.8 million, or $0.07 per diluted limited partner unit, for the twelve months ended March 29, 2009. Included in the results for the twelve months ended March 28, 2010 were $20.4 million of total costs associated with the terminated merger with Apollo and the two litigation settlements and $16.7 million of non-cash accounting charges to income related to the ineffective and de-designated interest rate swaps.

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