(1) Cedar Point and Cedar Point Shores are located on approximately 365 acres, virtually all of which have been developed, on the Cedar Point peninsula in Sandusky, Ohio. The PartnershipWe also ownsown approximately 320505 acres of property on the mainland adjoining the approach to thenear Cedar Point Causeway with approximately 145 acres undeveloped. Cedar Point's Express Hotel, Castaway Bay Indoor Waterpark Resort and an adjoining restaurant, Castaway Bay Marina, two seasonal-employee housing complexes, and Cedar Point Sports Center and Sawmill Creek Resort are located on this property.
ITEM 4. MINE SAFETY DISCLOSURES.
Not applicable.
PART II
ITEM 5. MARKET FOR REGISTRANT'S DEPOSITARY UNITS, RELATED UNITHOLDER MATTERS AND ISSUER
PURCHASES OF DEPOSITARY UNITS.
Cedar Fair, L.P. Depositary Units representing limited partner interests are listed for trading on The New York Stock Exchange under the symbol "FUN". As of February 1, 2019,4, 2022, there were approximately 5,1004,800 registered holders of Cedar Fair, L.P. Depositary Units, representing limited partner interests. Item 12 in this Form 10-K includes information regarding the Partnership'sour equity incentive plan, which is incorporated herein by reference.
The Partnership's long-term debtRestricted Payments, including partnership distributions, are suspended under our credit agreement until the termination of the Additional Restrictions Period (which generally includes the period from the effective date of the Second Amendment until the delivery of the compliance certificate for the fourth quarter of 2022). We may terminate the Additional Restrictions Period prior to December 31, 2022 by achieving compliance with the Senior Secured Leverage Ratio covenant as of the end of a fiscal quarter without giving effect to Deemed EBITDA Quarters for any fiscal quarter.
Our fixed rate note agreements include Restricted Payment provisions.provisions, which could limit our ability to pay partnership distributions. Pursuant to the terms of the indenture governing the Partnership's June 20142027 senior notes, which includes the most restrictive of these Restricted PaymentPayments provisions the Partnershipunder our fixed rate note agreements, if our pro forma Total-Indebtedness-to-Consolidated-Cash-Flow Ratio is greater than 5.25x, we can still make Restricted Payments of $60$100 million annually so long as no default or event of default has occurred and is continuing, and the Partnership can make additional Restricted Payments if the Partnership'scontinuing. If our pro forma Total Indebtedness-to-Consolidated-Cash-FlowTotal-Indebtedness-to-Consolidated-Cash-Flow Ratio is less than or equal to 5.00x.5.25x, we can make Restricted Payments up to our Restricted Payment pool. Our pro forma Total-Indebtedness-to-Consolidated-Cash-Flow Ratio was greater than 5.25x as of December 31, 2021.
Unitholder Return Performance Graph
The graph below shows a comparison of the five-year cumulative total return (assuming all distributions/dividends reinvested) for Cedar Fair, L.P. limited partnership units, the S&P 500 Index, the S&P 400 Index, and the S&P - Movies and Entertainment Index, assuming investment of $100 on December 31, 2013.2016.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Base Period | | | Return |
| | | 2016 | | | 2017 | | 2018 | | 2019 | | 2020 | | 2021 |
Cedar Fair, L.P. | | | $ | 100.00 | | | | $ | 106.47 | | | $ | 82.36 | | | $ | 103.32 | | | $ | 77.27 | | | $ | 98.32 | |
S&P 500 | | | 100.00 | | | | 121.83 | | | 116.49 | | | 153.18 | | | 181.36 | | | 233.43 | |
S&P 400 | | | 100.00 | | | | 116.24 | | | 103.36 | | | 130.44 | | | 148.26 | | | 184.97 | |
S&P Movies and Entertainment | | | 100.00 | | | | 105.02 | | | 105.66 | | | 133.89 | | | 186.22 | | | 181.64 | |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Base Period | | | Return |
| | | 2013 | | | 2014 | | 2015 | | 2016 | | 2017 | | 2018 |
Cedar Fair, L.P. | | | $ | 100.00 |
| | | $ | 102.19 |
| | $ | 125.98 |
| | $ | 152.97 |
| | $ | 162.87 |
| | $ | 125.98 |
|
S&P 500 | | | 100.00 |
| | | 113.69 |
| | 115.26 |
| | 129.04 |
| | 157.21 |
| | 150.33 |
|
S&P 400 | | | 100.00 |
| | | 109.77 |
| | 107.38 |
| | 129.65 |
| | 150.70 |
| | 134.00 |
|
S&P Movies and Entertainment | | | 100.00 |
| | | 117.82 |
| | 106.93 |
| | 118.02 |
| | 123.94 |
| | 124.70 |
|
Issuer Purchases of Equity Securities
The following table summarizes repurchases of Cedar Fair, L.P. Depositary Units representing limited partner interests by the Partnership during the three months ended December 31, 2021:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | (a) | | (b) | | (c) | | (d) |
Period | | Total Number of Units Purchased (1) | | Average Price Paid per Unit | | Total Number of Units Purchased as Part of Publicly Announced Plans or Programs | | Maximum Number (or Approximate Dollar Value) of Units that May Yet Be Purchased Under the Plans or Programs |
September 27 - October 31 | | — | | | — | | | — | | | $ | — | |
November 1 - November 30 | | — | | | — | | | — | | | — | |
December 1 - December 31 | | 1,372 | | | $ | 50.09 | | | — | | | — | |
Total | | 1,372 | | | $ | 50.09 | | | — | | | $ | — | |
(1)All repurchased units were reacquired by the Partnership in satisfaction of tax obligations related to the vesting of restricted units which were granted under the Partnership's Omnibus Incentive Plan.
ITEM 6. SELECTED FINANCIAL DATA.RESERVED.
|
| | | | | | | | | | | | | | | | | | | | |
| | Years Ended December 31, |
| | 2018 | | 2017 (1) | | 2016 | | 2015 (2) | | 2014 (3) |
| | (In thousands, except per unit and per capita amounts) |
Statement of Operations | | | | | | | | | | |
Net revenues | | $ | 1,348,530 |
| | $ | 1,321,967 |
| | $ | 1,288,721 |
| | $ | 1,235,778 |
| | $ | 1,159,605 |
|
Operating income | | 290,519 |
| | 295,211 |
| | 316,939 |
| | 295,331 |
| | 278,332 |
|
Income before taxes | | 161,396 |
| | 216,588 |
| | 249,106 |
| | 134,414 |
| | 114,100 |
|
Net income | | 126,653 |
| | 215,476 |
| | 177,688 |
| | 112,222 |
| | 104,215 |
|
Net income per unit - basic | | $ | 2.25 |
| | $ | 3.84 |
| | $ | 3.18 |
| | $ | 2.01 |
| | $ | 1.88 |
|
Net income per unit - diluted | | $ | 2.23 |
| | $ | 3.79 |
| | $ | 3.14 |
| | $ | 1.99 |
| | $ | 1.86 |
|
Balance Sheet Data | | | | | | | | | | |
Total assets | | $ | 2,024,183 |
| | $ | 2,064,159 |
| | $ | 1,973,181 |
| | $ | 1,963,020 |
| | $ | 2,004,448 |
|
Working capital surplus (deficit) | | (34,510 | ) | | 21,489 |
| | (47,007 | ) | | (14,645 | ) | | (3,767 | ) |
Long-term debt | | 1,657,568 |
| | 1,660,515 |
| | 1,534,211 |
| | 1,536,676 |
| | 1,534,244 |
|
Partners' equity | | 32,416 |
| | 82,946 |
| | 60,519 |
| | 57,009 |
| | 96,217 |
|
Distributions | | | | | | | | | | |
Declared per limited partner unit | | $ | 3.595 |
| | $ | 3.455 |
| | $ | 3.330 |
| | $ | 3.075 |
| | $ | 2.850 |
|
Paid per limited partner unit | | $ | 3.595 |
| | $ | 3.455 |
| | $ | 3.330 |
| | $ | 3.075 |
| | $ | 2.850 |
|
Other Data | | | | | | | | | | |
Depreciation and amortization | | $ | 155,529 |
| | $ | 153,222 |
| | $ | 131,876 |
| | $ | 125,631 |
| | $ | 124,286 |
|
Adjusted EBITDA (4) | | 467,773 |
| | 478,977 |
| | 481,248 |
| | 459,238 |
| | 431,280 |
|
Capital expenditures | | 189,775 |
| | 188,084 |
| | 160,656 |
| | 175,865 |
| | 166,719 |
|
Attendance (5) | | 25,912 |
| | 25,723 |
| | 25,104 |
| | 24,448 |
| | 23,305 |
|
In-park per capita spending (6) | | $ | 47.69 |
| | $ | 47.30 |
| | $ | 46.90 |
| | $ | 46.20 |
| | $ | 45.54 |
|
| |
(1) | Operating results for 2017 include a tax benefit of $54.2 million due to tax law changes, in particular the Tax Cuts and Jobs Act, a charge of $23.1 million for the loss on early debt extinguishment and a charge of $7.6 million for the impairment of the remaining land at Wildwater Kingdom, one of the Partnership's separately gated outdoor water parks which ceased operations in 2016. |
| |
(2) | Operating results for 2015 include a charge of $8.6 million for the impairment of a long-lived asset at Cedar Point. |
| |
(3) | Operating results for 2014 include a charge of $29.3 million for the loss on early debt extinguishment and a charge of $2.4 million for the impairment of long-lived assets at Wildwater Kingdom. |
| |
(4) | Adjusted EBITDA represents earnings before interest, taxes, depreciation, amortization, other non-cash items, and adjustments as defined in the Amended 2017 Credit Agreement and prior credit agreements. Adjusted EBITDA is not a measurement of operating performance computed in accordance with GAAP and should not be considered as a substitute for operating income, net income or cash flows from operating activities computed in accordance with GAAP. We believe that Adjusted EBITDA is a meaningful measure as it is widely used by analysts, investors and comparable companies in our industry to evaluate our operating performance on a consistent basis, as well as more easily compare our results with those of other companies in our industry. Further, management believes Adjusted EBITDA is a meaningful measure of park-level operating profitability and we use it for measuring returns on capital investments, evaluating potential acquisitions, determining awards under incentive compensation plans, and calculating compliance with certain loan covenants. Adjusted EBITDA is provided in the discussion of results of operations that follows as a supplemental measure of the Partnership's operating results and is not intended to be a substitute for operating income, net income or cash flows from operating activities as defined under generally accepted accounting principles. Adjusted EBITDA may not be comparable to similarly titled measures of other companies. A reconciliation of net income to Adjusted EBITDA is provided below. |
| |
(5) | Attendance includes number of guest visits to the Partnership's amusement parks and separately gated outdoor water parks. |
| |
(6) | In-park per capita spending is calculated as revenues generated within our amusement parks and separately gated outdoor water parks along with related tolls and parking revenues, divided by total attendance. Revenues from resort, marina, sponsorship, online transaction fees charged to customers and all other out-of-park operations are excluded from in-park per capita spending statistics. Net revenues consist of in-park revenues and out-of-park revenues less amounts remitted to outside parties under concessionaire arrangements, see Note 2 for further information. |
We believe that Adjusted EBITDA (earnings before interest, taxes, depreciation, amortization, other non-cash items, and adjustments as defined in the Amended 2017 Credit Agreement and prior credit agreements) is a meaningful measure as it is widely used by analysts, investors and comparable companies in our industry to evaluate our operating performance on a consistent basis, as well as more easily compare our results with those of other companies in our industry. Further, management believes Adjusted EBITDA is a meaningful measure of park-level operating profitability and we use it for measuring returns on capital investments, evaluating potential acquisitions, determining awards under incentive compensation plans, and calculating compliance with certain loan covenants. Adjusted EBITDA is provided in the discussion of results of operations that follows as a supplemental measure of our operating results and is not intended to be a substitute for operating income, net income or cash flows from operating activities as defined under generally accepted accounting principles. In addition, Adjusted EBITDA may not be comparable to similarly titled measures of other companies.
The table below sets forth a reconciliation of Adjusted EBITDA to net income for the periods indicated:
|
| | | | | | | | | | | | | | | | | | | | |
| | Years Ended December 31, |
(In thousands) | | 2018 | | 2017 | | 2016 | | 2015 | | 2014 |
Net income | | $ | 126,653 |
| | $ | 215,476 |
| | $ | 177,688 |
| | $ | 112,222 |
| | $ | 104,215 |
|
Interest expense | | 85,687 |
| | 85,603 |
| | 83,863 |
| | 86,849 |
| | 96,286 |
|
Interest income | | (1,515 | ) | | (855 | ) | | (177 | ) | | (64 | ) | | (126 | ) |
Provision for taxes | | 34,743 |
| | 1,112 |
| | 71,418 |
| | 22,192 |
| | 9,885 |
|
Depreciation and amortization | | 155,529 |
| | 153,222 |
| | 131,876 |
| | 125,631 |
| | 124,286 |
|
EBITDA | | 401,097 |
| | 454,558 |
| | 464,668 |
| | 346,830 |
| | 334,546 |
|
Loss on early debt extinguishment | | 1,073 |
| | 23,121 |
| | — |
| | — |
| | 29,261 |
|
Net effect of swaps | | 7,442 |
| | (45 | ) | | (1,197 | ) | | (6,884 | ) | | (2,062 | ) |
Non-cash foreign currency (gain) loss | | 36,294 |
| | (29,041 | ) | | (14,345 | ) | | 80,946 |
| | 40,883 |
|
Non-cash equity compensation expense | | 11,243 |
| | 13,789 |
| | 18,496 |
| | 15,470 |
| | 12,536 |
|
Loss on impairment/retirement of fixed assets, net | | 10,178 |
| | 12,728 |
| | 12,587 |
| | 20,873 |
| | 9,757 |
|
Gain on sale of other assets | | (112 | ) | | (1,877 | ) | | — |
| | — |
| | (921 | ) |
Employment practice litigation costs | | — |
| | 4,867 |
| | — |
| | 259 |
| | 4,953 |
|
Other (1) | | 558 |
| | 877 |
| | 1,039 |
| | 1,744 |
| | 2,327 |
|
Adjusted EBITDA | | $ | 467,773 |
| | $ | 478,977 |
| | $ | 481,248 |
| | $ | 459,238 |
| | $ | 431,280 |
|
(1) Consists of certain costs as defined in the Partnership's Amended 2017 Credit Agreement and prior credit agreements. These items are excluded in the calculation of Adjusted EBITDA and have included certain legal expenses, costs associated with certain ride abandonment or relocation expenses, and severance expenses. This balance also includes unrealized gains and losses on short-term investments.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
Business Overview
We generate our revenues from sales of (1) admission to our amusement parks and water parks, (2) food, merchandise and games both inside and outside our parks, and (3) accommodations, extra-charge products, and other revenue sources. Our principal costs and expenses, which include salaries and wages, operating supplies, maintenance, advertising, utilities and insurance,property taxes, are relatively fixed for ana typical operating season and do not vary significantly with attendance.
Each of our properties is overseen by a park general manager and operates autonomously. Management reviews operating results, evaluates performance and makes operating decisions, including the allocation ofallocating resources, on a property-by-property basis.
Along with attendance and in-park per capita spending statistics, discrete financial information and operating results are prepared at the individual park level for use by the CEO, who is the Chief Operating Decision Maker (CODM), as well as by the Chief Financial Officer, the Chief Operating Officer, the Executive Vice President of Operations, RegionalSenior Vice Presidents and the park general managers.
The following table presents certain financial data expressed as a percent of total net revenues and selective statistical information for the periods indicated.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Years Ended December 31, |
| | 2021 | | 2020 | | 2019 |
| | (In thousands, except per capita spending and percentages) |
Net revenues: | | | | | | | | | | | | |
Admissions | | $ | 674,799 | | | 50.4 | % | | $ | 67,852 | | | 37.4 | % | | $ | 795,271 | | | 53.9 | % |
Food, merchandise and games | | 432,513 | | | 32.3 | % | | 76,921 | | | 42.4 | % | | 473,499 | | | 32.1 | % |
Accommodations, extra-charge products and other | | 230,907 | | | 17.3 | % | | 36,782 | | | 20.3 | % | | 206,155 | | | 14.0 | % |
Net revenues | | 1,338,219 | | | 100.0 | % | | 181,555 | | | 100.0 | % | | 1,474,925 | | | 100.0 | % |
Operating costs and expenses | | 1,030,466 | | | 77.0 | % | | 483,891 | | | 266.5 | % | | 990,716 | | | 67.2 | % |
Depreciation and amortization | | 148,803 | | | 11.1 | % | | 157,549 | | | 86.8 | % | | 170,456 | | | 11.6 | % |
Loss on impairment / retirement of fixed assets, net | | 10,486 | | | 0.8 | % | | 8,135 | | | 4.5 | % | | 4,931 | | | 0.3 | % |
Loss on impairment of goodwill and other intangibles | | — | | | — | % | | 103,999 | | | 57.3 | % | | — | | | — | % |
Loss (gain) on other assets | | 129 | | | — | % | | (11) | | | — | % | | (617) | | | �� | % |
Operating income (loss) | | 148,335 | | | 11.1 | % | | (572,008) | | | (315.1) | % | | 309,439 | | | 21.0 | % |
Interest and other expense, net | | 183,732 | | | 13.7 | % | | 150,222 | | | 82.7 | % | | 98,860 | | | 6.7 | % |
Net effect of swaps | | (19,000) | | | (1.4) | % | | 15,849 | | | 8.7 | % | | 16,532 | | | 1.1 | % |
Loss on early debt extinguishment | | 5,909 | | | 0.4 | % | | 2,262 | | | 1.2 | % | | — | | | — | % |
Loss (gain) on foreign currency | | 6,177 | | | 0.5 | % | | (12,183) | | | (6.7) | % | | (21,107) | | | (1.4) | % |
Provision (benefit) for taxes | | 20,035 | | | 1.5 | % | | (137,915) | | | (76.0) | % | | 42,789 | | | 2.9 | % |
Net (loss) income | | $ | (48,518) | | | (3.6) | % | | $ | (590,243) | | | (325.1) | % | | $ | 172,365 | | | 11.7 | % |
Other data: | | | | | | | | | | | | |
Attendance | | 19,498 | | | | | 2,595 | | | | | 27,938 | | | |
In-park per capita spending | | $ | 62.03 | | | | | $ | 46.38 | | | | | $ | 48.32 | | | |
Impact of COVID-19 Pandemic
The novel coronavirus (COVID-19) pandemic had a material impact on our business in 2020, had a continuing negative impact in 2021 and may have a longer-term negative effect. On March 14, 2020, we closed our properties in response to the spread of COVID-19 and local government mandates. We ultimately resumed only partial operations at 10 of our 13 properties in 2020. Due to soft demand trends upon reopening in 2020, park operating calendars were adjusted, including reduced operating days per week and operating hours within each operating day and earlier closure of certain parks than a typical operating year. Following March 14, 2020, Knott's Berry Farm's partial operations in 2020 were limited to culinary festivals.
In May 2021, we opened all of our U.S. properties for the 2021 operating season on a staggered basis with capacity restrictions, guest reservations, and other operating protocols in place. Our 2021 operating calendars were designed to align with anticipated capacity restrictions, guest demand and labor availability, including fewer operating days in July and August at some of our smaller properties and additional operating days in September and the fourth quarter at most of our properties. As vaccination distribution efforts continued during the second quarter of 2021 and we were able to hire additional labor, we removed most capacity restrictions, guest reservation requirements and other protocols at our U.S. properties beginning in July 2021. We were also able to open our Canadian property, Canada's Wonderland, in July 2021. Canada's Wonderland operated with capacity restrictions, guest reservations, and other operating protocols in place throughout 2021. We adjusted our park operating calendars in 2021 and may continue to adjust future park operating calendars as we respond to changes in guest demand, labor availability and any state and local restrictions. We currently anticipate returning to full park operating calendars for the 2022 operating season at all of our parks. The lingering effects of the COVID-19 pandemic may impact guest demand and labor availability, and it is uncertain the extent to which those effects will impact our operational and financial results. Our future operations are dependent on factors beyond our knowledge or control, including the duration and severity of the COVID-19 pandemic and actions taken to contain its spread and mitigate its public health effects. See Risk Factors at Item 1A.
Despite a delayed start and various operating restrictions in place for the 2021 operating season, our 2021 operating results exceeded our initial expectations, driven by greater consumer demand resulting in higher attendance and in-park per capita spending. As a result, we made progress towards our goal to reduce outstanding debt obtained in response to the negative effects of the COVID-19 by redeeming $450 million of unsecured senior notes in December 2021. The notes redeemed were previously due in 2024.
|
| | | | | | | | | | | | | | | | | | | | | |
| | Years Ended December 31, |
| | 2018 | | 2017 | | 2016 |
| | (In thousands, except per capita spending and percentages) |
Net revenues: | | | | | | | | | | | | |
Admissions | | $ | 737,676 |
| | 54.7 | % | | $ | 734,060 |
| | 55.5 | % | | $ | 716,189 |
| | 55.6 | % |
Food, merchandise and games | | 433,315 |
| | 32.1 | % | | 422,469 |
| | 32.0 | % | | 407,673 |
| | 31.6 | % |
Accommodations, extra-charge products and other | | 177,539 |
| | 13.2 | % | | 165,438 |
| | 12.5 | % | | 164,859 |
| | 12.8 | % |
Net revenues | | 1,348,530 |
| | 100.0 | % | | 1,321,967 |
| | 100.0 | % | | 1,288,721 |
| | 100.0 | % |
Operating costs and expenses | | 892,416 |
| | 66.2 | % | | 862,683 |
| | 65.3 | % | | 827,319 |
| | 64.2 | % |
Depreciation and amortization | | 155,529 |
| | 11.5 | % | | 153,222 |
| | 11.6 | % | | 131,876 |
| | 10.2 | % |
Loss on impairment / retirement of fixed assets, net | | 10,178 |
| | 0.8 | % | | 12,728 |
| | 1.0 | % | | 12,587 |
| | 1.0 | % |
Gain on sale of investment | | (112 | ) | | — | % | | (1,877 | ) | | (0.1 | )% | | — |
| | — | % |
Operating income | | 290,519 |
| | 21.5 | % | | 295,211 |
| | 22.3 | % | | 316,939 |
| | 24.6 | % |
Interest and other expense, net | | 84,354 |
| | 6.3 | % | | 84,633 |
| | 6.4 | % | | 83,686 |
| | 6.5 | % |
Net effect of swaps | | 7,442 |
| | 0.6 | % | | (45 | ) | | — | % | | (1,197 | ) | | (0.1 | )% |
Loss on early debt extinguishment | | 1,073 |
| | 0.1 | % | | 23,121 |
| | 1.7 | % | | — |
| | — | % |
(Gain) loss on foreign currency | | 36,254 |
| | 2.7 | % | | (29,086 | ) | | (2.2 | )% | | (14,656 | ) | | (1.1 | )% |
Provision for taxes | | 34,743 |
| | 2.6 | % | | 1,112 |
| | 0.1 | % | | 71,418 |
| | 5.5 | % |
Net income | | $ | 126,653 |
| | 9.4 | % | | $ | 215,476 |
| | 16.3 | % | | $ | 177,688 |
| | 13.8 | % |
Other data: | | | | | | | | | | | | |
Attendance | | 25,912 |
| | | | 25,723 |
| | | | 25,104 |
| | |
In-park per capita spending | | $ | 47.69 |
| | | | $ | 47.30 |
| | | | $ | 46.90 |
| | |
Critical Accounting Policies
Management's Discussion and Analysis of Financial Condition and Results of Operations is based upon our consolidated financial statements, which were prepared in accordance with accounting principles generally accepted in the United States of America. These principles require us to make judgments, estimates and assumptions during the normal course of business that affect the amounts reported in the Consolidated Financial Statements and related notes. The following discussion addresses our critical accounting policies, which are those that are most important to the portrayal of our financial condition and operating results or involve a higher degree of judgment and complexity (see Note 23 to our Consolidated Financial Statements for a complete discussion of our significant accounting policies). Application of the critical accounting policies described below involves the exercise of judgment and the use of assumptions as to future uncertainties, and as a result, actual results could differ from these estimates and assumptions.
Impairment of Long-Lived Assets
The carrying values of long-livedLong-lived assets, including property and equipment, are reviewed wheneverfor impairment upon the occurrence of events or changes in circumstances that would indicate that the carrying valuesvalue of the assets may not be recoverable. A significant amount of judgment is involved in determining if an indicator of impairment has occurred. Such indicators may include, among others: a significant decrease in the market price of a long-lived asset; a significant adverse change in the extent or manner in which a long-lived asset is being used or in its physical condition; a significant adverse change in legal factors or in the business climate; an accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of a long-lived asset; past, current or future operating or cash flow losses that demonstrate continuing losses associated with the use of a long-lived asset; and a current expectation that a long-lived asset will be sold or disposed significantly before the end of its previously estimated useful life. An impairment loss may be recognized when estimated undiscounted future cash flows expected to result from the use of the asset, including disposition, are less than the carrying value of the asset. The measurement of the impairment loss to be recognized is based on the difference between the fair value and the carrying amounts of the asset.assets. Fair value is generally determined based onusing a discounted cash flow analysis.combination of a cost and market approach. Significant factors considered in the cost approach include replacement cost, reproduction cost, depreciation, physical deterioration, functional obsolescence and economic obsolescence of the assets. The market approach estimates fair value by utilizing market data for similar assets. In order to determine if an asset has been impaired, assets are grouped and tested at the lowest level for which identifiable, independent cash flows are available.
The determination of bothwhether an indicator of impairment has occurred and the estimation of undiscounted and discounted cash flows requires management to make significant estimates and consider an anticipated course of action as of the balance sheet date. Subsequent changes in estimated undiscounted and discounted cash flows arising from changes in anticipated actions could impact the determination of whether impairment exists, the amountestimation of the impairment charge recordedundiscounted cash flows and whether the effects could materially impact the consolidated financial statements.
Due to the negative effects of the COVID-19 pandemic on our forecasted operating results, we tested our long-lived assets for impairment during the first and third quarters of 2020 (see Note 6). Management made significant estimates in performing these impairment tests, including the anticipated time frame to re-open our parks and the related anticipated demand upon re-opening our parks. Actual results could materially differ from these estimates depending on the ultimate extent of the effects of the COVID-19 pandemic. Due to the ongoing development and fluidity of the COVID-19 pandemic, the ultimate extent of the effects of the COVID-19 pandemic cannot be reasonably predicted.
Accounting for Business Combinations
Business combinations are accounted for under the acquisition method of accounting. The amounts assigned to the identifiable assets acquired and liabilities assumed in connection with acquisitions are based on estimated fair values as of the date of the acquisition, with the remainder, if any, recorded as goodwill. The fair values are determined by management, taking into consideration information supplied by the management of the acquired entities, valuations supplied by independent appraisal experts and other relevant information. The valuations are generally based upon future cash flow projections for the acquired assets, discounted to present value. The determination of fair values requires significant judgment by management. If future operating results do not meet expectations or anticipated synergies are not realized at Schlitterbahn Waterpark & Resort New Braunfels and the Schlitterbahn Waterpark Galveston, the Schlitterbahn reporting unit may become further impaired.
Goodwill and Other Intangible Assets
Goodwill and other indefinite-lived intangible assets, including trade-names, are reviewed for impairment annually, or more frequently if indicators of impairment exist. A significant amount of judgment is involved in determining if an indicator of impairment has occurred. Such indicators may include, among others: a significant decline in expected future cash flows; a sustained, significant decline in equity price and market capitalization; a significant adverse change in legal factors or in the business climate; unanticipated competition; the testing for recoverability of a significant asset group within a reporting unit; and slower growth rates. Any adverse changeThe fair value of a reporting unit is established using a combination of an income (discounted cash flow) approach and market approach. The income approach uses a reporting unit's projection of estimated operating results and discounted cash flows using a weighted-average cost of capital that reflects current market conditions. Estimated operating results are established using management's best estimates of economic and market conditions over the projected period including growth rates in these factors could have arevenues and costs, estimates of future expected changes in operating margins and cash expenditures. Other significant impact onestimates and assumptions include terminal value growth rates, future estimates of capital expenditures and changes in future working capital requirements. A market approach estimates fair value by applying cash flow multiples to the recoverability
reporting unit's operating performance. The multiples are derived from comparable publicly traded companies with similar operating and could have a material impact on our consolidated financial statements.
We completed the review of goodwill and other indefinite-lived intangibles asinvestment characteristics of the first days of the fourth quarter of 2018 and 2017 and determined goodwill and other indefinite-lived intangibles were not impaired at these testing dates.reporting units.
It is possible that our assumptions about future performance, as well as the economic outlook and related conclusions regarding valuation, could change adversely, which may result in additional impairment that would have a material effect on our financial position and results of operations in future periods.
Due to the negative effects of the COVID-19 pandemic on our forecasted operating results, we tested our goodwill and indefinite-lived intangible assets for impairment during the first and third quarters of 2020 (see Note 7). Management made significant estimates in performing these impairment tests, including the anticipated time frame to re-open our parks and the related anticipated demand upon re-opening our parks. Actual results could materially differ from these estimates depending on the ultimate extent of the effects of the COVID-19 pandemic. Due to the ongoing development and fluidity of the COVID-19 pandemic, the ultimate extent of the effects of the COVID-19 pandemic cannot be reasonably predicted. In conjunction with our annual measurement date, we completed the review of goodwill and other indefinite-lived intangibles as of the first days of the fourth quarter of 2021 and 2020 and determined goodwill and other indefinite-lived intangibles were not further impaired as of these testing dates.
Self-Insurance Reserves
ReservesSelf-insurance reserves are recorded for the estimated amounts of guest and employee claims and related expenses incurred each period. Reserves are established for both identified claims and incurred but not reported (IBNR) claims. Such amounts("IBNR") claims and are accrued forrecorded when claim amounts become probable and estimable. Reserves for identified claims are based upon our own historical claimsclaim experience and third-party estimates of settlement costs. Reserves for IBNR claims which are not material to our consolidated financial statements, are based upon our own claims data history. All self-insuranceSelf-insurance reserves are periodically reviewed for changes in facts and circumstances and adjustments are made as necessary. The ultimate cost for identified claims can be difficult to predict due to the unique facts and circumstances associated with each claim.
Revenue Recognition
As disclosed within the consolidated statements of operations and comprehensive (loss) income, revenues are generated from sales of (1) admission to our amusement parks and water parks, (2) food, merchandise and games both inside and outside the parks, and (3) accommodations, extra-charge products, and other revenue sources. Admission revenues include amounts paid to gain admission into our parks, including parking fees. Revenues related to extra-charge products, including premium benefit offerings such as front-of-line products, and online transaction fees charged to customers are included in "Accommodations, extra-charge products and other". Due to our highly seasonal operations, a substantial portion of our revenues are generated during an approximate 130- to 140-day operating season. Most revenues are recognized on a daily basis based on actual guest spend at theour properties. Revenues from multi-use products, including season-long products for admission, dining, beverage and other products, are recognized over the estimated number of uses expected for each type of product. The estimated number of uses is reviewed and may be updated periodically during the operating season prior to the ticket or product expiration, which generally occurs no later than the close of the operating season. The number of uses is estimated based on historical usage adjusted for current period trends. For any bundled
Due to the effects of the COVID-19 pandemic, we extended the validity of our 2020 season-long products that include multiple performance obligations, revenue is allocated usingthrough the retail price2021 operating season in order to ensure our season pass holders received a full season of each distinct performance obligation and any inherent discounts are allocated based on the gross margin and expected redemption of each performance obligation. We do not typically provide for refunds or returns.
In some instances, we arrange with outside parties ("concessionaires") to provide goodsaccess to our guests, typically food and merchandise, and we act as an agent, resultingparks. The extended validity of the 2020 season-long products resulted in net revenue recorded within the income statement. Concessionaire arrangement revenues are recognized over the operating season and are variable. Sponsorship revenues and marina revenues, which are classified as "Accommodations, extra-charge products
and other" within the income statement, are recognized over the park operating season which represents the period in which the performance obligations are satisfied. Sponsorship revenues are typically fixed. However, some sponsorship revenues are variable based on achievement of specified operating metrics. We estimate variable revenues and perform a constraint analysis using both historical information and current trends to determine thesignificant amount of revenue that is not probabledeferred from 2020 into 2021. In addition to the extended validity through 2021, Knott's Berry Farm also offered a day-for-day extension into calendar year 2022 for 2020 and 2021 season-long products for every day the park was closed in 2021, and Canada's Wonderland extended its 2020 and 2021 season-long products through September 5, 2022. In order to calculate revenue recognized on extended season-long products, management made significant estimates regarding the estimated number of a significant reversal. For additional informationuses expected for these season-long products for admission, dining, beverage and other products, including during interim periods. Actual results could materially differ from these estimates depending on our revenue recognitionthe ultimate extent of the effects of the COVID-19 pandemic. Due to the ongoing development and related receivables and contract liabilities, see Note 2 to our Consolidated Financial Statements.fluidity of the COVID-19 pandemic, the ultimate extent of the effects of the COVID-19 pandemic cannot be reasonably predicted.
Income Taxes
Our legal entity structure includes both partnerships and corporate subsidiaries. As aWe are subject to publicly traded partnership wetax ("PTP tax") on certain partnership level gross income (net revenues less cost of food, merchandise, and games revenues), state and local income taxes on partnership income, U.S. federal state and local income taxes on income from our corporate subsidiaries and foreign income taxes on our foreign subsidiary. As such, the total (benefit) provision for taxes includes amounts for the PTP gross income tax and federal, state, local and foreign income taxes. Under applicable accounting rules, the total (benefit) provision for income taxes includes the amount of taxes payable for the current year and the impact of deferred tax assets and liabilities, which represents future tax consequences of events that are subject to an entity-level tax (the "PTP tax"). Accordingly, the Partnership itself is not subject to corporate income taxes; rather, the Partnership's tax attributes (except those of the corporate subsidiaries) are includedrecognized in different periods in the financial statements than for tax returns of our partners. Our corporate subsidiaries are subject to entity-level income taxes. Our "Provision for taxes" includes both the PTP tax and the income taxes from the corporate subsidiaries.purposes.
Our corporate subsidiaries account for income taxes under the asset and liability method. Accordingly, deferred tax assets and liabilities are recognized for the future book and tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are determined using enacted tax rates expected to apply in the year in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax law is recognized in income at the time of enactment of such change in tax law. Any interest or penalties due for payment of income taxes are included in the provision for income taxes.
We record a valuation allowance if, based on the weight of available evidence, it is more likely than not that some portion, or all, of a deferred tax asset will not be realized. The need for this allowance is based on several factors including the ten-year carryforward period allowed for excess foreign tax credits, experience to date of foreign tax credit limitations, carryforward periods of state net operating losses, and management's long termlong-term estimates of domestic and foreign source income.
As of December 31, 2018, we had recorded a $6.4 million valuation allowance related to an $8.8 million deferred tax asset for foreign tax credit carryforwards. During the fourth quarter of 2018, we recognized a $2.3 million increase in the valuation allowance based on management's updated projection of future foreign tax credit utilization.
There is inherent uncertainty in the estimates used to project the amount of foreign tax credit and state net operating loss carryforwards that are more likely than not to be realized. It is possible that our future income projections, as well as the economic outlook and related conclusions regarding the valuation allowanceallowances could change, which may result in additional valuation allowance being recorded or may result in additional valuation allowance reductions, and which may have a material negative or positive effect on our reported financial position and results of operations in future periods.
Adjusted EBITDA
Adjusted EBITDA represents earnings before interest, taxes, depreciation, amortization, other non-cash items, and adjustments as defined in our current and prior credit agreements. Adjusted EBITDA is not a measurement of operating performance computed in accordance with generally accepted accounting principles ("GAAP") and should not be considered as a substitute for operating income, net income or cash flows from operating activities computed in accordance with GAAP. We believe that Adjusted EBITDA is a meaningful measure as it is widely used by analysts, investors and comparable companies in our industry to evaluate our operating performance on a consistent basis, as well as more easily compare our results with those of other companies in our industry. Further, management believes Adjusted EBITDA is a meaningful measure of park-level operating profitability and we use it for measuring returns on capital investments, evaluating potential acquisitions, determining awards under incentive compensation plans, and calculating compliance with certain loan covenants. Adjusted EBITDA is provided in the discussion of results of operations that follows as a supplemental measure of our operating results and is not intended to be a substitute for operating income, net income or cash flows from operating activities as defined under GAAP. In addition, Adjusted EBITDA may not be comparable to similarly titled measures of other companies.
The Tax Cuts and Jobs Act (the "Act") was signed into law on December 22, 2017. The Act made significant changestable below sets forth a reconciliation of Adjusted EBITDA to U.S. tax law and, among other things, reduced federal corporate tax rates from 35% to 21%. The accounting treatmentnet (loss) income for the periods indicated:
| | | | | | | | | | | | | | | | | | | | |
| | Years Ended December 31, |
(In thousands) | | 2021 | | 2020 | | 2019 |
Net (loss) income | | $ | (48,518) | | | $ | (590,243) | | | $ | 172,365 | |
Interest expense | | 184,032 | | | 150,669 | | | 100,364 | |
Interest income | | (94) | | | (460) | | | (2,033) | |
Provision (benefit) for taxes | | 20,035 | | | (137,915) | | | 42,789 | |
Depreciation and amortization | | 148,803 | | | 157,549 | | | 170,456 | |
EBITDA | | 304,258 | | | (420,400) | | | 483,941 | |
Loss on early debt extinguishment | | 5,909 | | | 2,262 | | | — | |
Net effect of swaps | | (19,000) | | | 15,849 | | | 16,532 | |
Non-cash foreign currency loss (gain) | | 6,255 | | | (12,011) | | | (21,061) | |
Non-cash equity compensation expense | | 15,431 | | | (209) | | | 12,434 | |
Loss on impairment/retirement of fixed assets, net | | 10,486 | | | 8,135 | | | 4,931 | |
Loss on impairment of goodwill and other intangibles | | — | | | 103,999 | | | — | |
Loss (gain) on other assets | | 129 | | | (11) | | | (617) | |
Acquisition-related costs | | — | | | 16 | | | 7,162 | |
| | | | | | |
Other (1) | | 1,173 | | | 359 | | | 1,351 | |
Adjusted EBITDA | | $ | 324,641 | | | $ | (302,011) | | | $ | 504,673 | |
(1) Consists of these tax law changes was complex, and the SEC staff issued Staff Accounting Bulletin No. 118 ("SAB 118") to address the application of U.S. GAAP in situations when a registrant did not have the necessary information available, prepared, or analyzed in reasonable detail to complete the accounting for certain tax effects of the Act. We recognized the final tax impacts related to the reduction in tax rates including the revaluation of deferred tax assets and liabilitiescosts as defined in our consolidated financial statements forcurrent and prior credit agreements. These items are excluded from the year ended December 31, 2018. The final impact differed from our provisional amounts by $1.3 million.calculation of Adjusted EBITDA and have included certain legal expenses and severance expenses. This balance also includes unrealized gains and losses on short-term investments.
Results of Operations
We believe the following are key operational measures in our managementmanagerial and operational reporting, and they are used as major factors in significant operational decisions:decisions as they are primary drivers of our financial and operational performance:
Attendance is defined as the number of guest visits to our amusement parks and separately gated outdoor water parks.
In-park per capita spending is calculated as revenues generated within our amusement parks and separately gated outdoor water parks along with related tolls and parking revenues (in-park revenues), divided by total attendance.
Out-of-park revenues are defined as revenues from resort, out-of-park food and retail locations, marina, sponsorship, online transaction fees charged to customers and all other out-of-park operations.
Net revenues consist of in-park revenues and out-of-park revenues less amounts remitted to outside parties under concessionaire arrangements. See arrangements (see Note 2 - Summary5).
2021 vs. 2020
Due to the effects of Significant Accounting Policiesthe COVID-19 pandemic, the results for further information.
2018 vs. 2017
the year ended December 31, 2021 were not directly comparable with the results for the year ended December 31, 2020. The year ended December 31, 20182021 included 2,0611,765 operating days compared with 2,049487 operating days for the year ended December 31, 2017. 2020.
Due to the effects of the COVID-19 pandemic, we postponed the opening of our parks for the 2021 operating season to May 2021, when all of our properties opened on a staggered basis except for our Canadian property, Canada's Wonderland, which opened in July 2021. Upon opening in 2021, park operating calendars were reduced, guest reservations were required, and some operating restrictions were in place. We removed most capacity restrictions, guest reservation requirements and other protocols at our U.S. properties beginning in July 2021. Operating restrictions remained in place at our Canadian property throughout 2021. We adjusted our 2021 operating calendars to reflect anticipated changes in guest demand, labor availability and state and local restrictions by including fewer operating days in July and August at some of our smaller properties and by including additional operating days in September and the fourth quarter at most of our properties. The year ended December 31, 2021 also included results prior to the May 2021 opening of our parks from limited out-of-park operations, including the operation of some of our hotel properties and a culinary festival at Knott's Berry Farm from March 5, 2021 through May 2, 2021.
For the year ended December 31, 2020 and due to the effects of the COVID-19 pandemic, our properties closed on March 14, 2020. Eight of our 13 properties resumed partial operations on a staggered basis beginning in the second quarter of 2020 with opening dates beginning in mid-June and continuing through mid-July. During this time, we also reopened operations at some of our out-of-park operations, such as hotel operations. Due to soft demand trends upon reopening, park operating calendars were adjusted for the remainder of 2020, including reduced operating days per week and operating hours within each operating day. In addition, some of our reopened parks closed earlier than the park's pre-pandemic operating calendar. Two additional parks reopened on weekends in November and December of 2020. Following March 14, 2020, Knott's Berry Farm's partial operations were limited to culinary festivals which were classified as out-of-park revenues. The 2020 results also included daily operations at Knott's Berry Farm and 16 operating days at the Schlitterbahn parks prior to the March 14, 2020 closure of our properties. Attendance, in-park per capita spending and operating day statistics for 2020 and 2021 exclude the Knott's Berry Farm culinary festivals.
The following table presents key financial information and operating statistics for the years ended December 31, 20182021 and December 31, 2017:2020:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | Increase (Decrease) |
| | December 31, 2021 | | December 31, 2020 | | $ | | % |
| | (Amounts in thousands, except for per capita spending) |
Net revenues | | $ | 1,338,219 | | | $ | 181,555 | | | $ | 1,156,664 | | | N/M |
Operating costs and expenses | | 1,030,466 | | | 483,891 | | | 546,575 | | | 113.0 | % |
Depreciation and amortization | | 148,803 | | | 157,549 | | | (8,746) | | | (5.6) | % |
Loss on impairment/retirement of fixed assets, net | | 10,486 | | | 8,135 | | | 2,351 | | | N/M |
Loss on impairment of goodwill and other intangibles | | — | | | 103,999 | | | (103,999) | | | N/M |
Loss (gain) on other assets | | 129 | | | (11) | | | 140 | | | N/M |
Operating income (loss) | | $ | 148,335 | | | $ | (572,008) | | | $ | 720,343 | | | N/M |
| | | | | | | | |
Other Data: | | | | | | | | |
Adjusted EBITDA (1) | | $ | 324,641 | | | $ | (302,011) | | | $ | 626,652 | | | N/M |
| | | | | | | | |
Attendance | | 19,498 | | | 2,595 | | | 16,903 | | | N/M |
In-park per capita spending | | $ | 62.03 | | | $ | 46.38 | | | $ | 15.65 | | | 33.7 | % |
Out-of-park revenues | | $ | 167,978 | | | $ | 67,375 | | | $ | 100,603 | | | 149.3 | % |
|
| | | | | | | | | | | | | | | |
| | | | | | Increase (Decrease) |
| | 12/31/2018 | | 12/31/2017 | | $ | | % |
| | (Amounts in thousands, except for per capita spending) |
Net revenues | | $ | 1,348,530 |
| | $ | 1,321,967 |
| | $ | 26,563 |
| | 2.0 | % |
Operating costs and expenses | | 892,416 |
| | 862,683 |
| | 29,733 |
| | 3.4 | % |
Depreciation and amortization | | 155,529 |
| | 153,222 |
| | 2,307 |
| | 1.5 | % |
Loss on impairment/retirement of fixed assets, net | | 10,178 |
| | 12,728 |
| | (2,550 | ) | | N/M |
|
Gain on sale of investment | | (112 | ) | | (1,877 | ) | | 1,765 |
| | N/M |
|
Operating income | | $ | 290,519 |
| | $ | 295,211 |
| | $ | (4,692 | ) | | (1.6 | )% |
N/M - Not meaningful | | | | | | | | |
Other Data: | | | | | | | | |
Adjusted EBITDA (1) | | $ | 467,773 |
| | $ | 478,977 |
| | $ | (11,204 | ) | | (2.3 | )% |
Adjusted EBITDA margin (2) | | 34.7 | % | | 36.2 | % | | — |
| | (1.5 | )% |
Attendance | | 25,912 |
| | 25,723 |
| | 189 |
| | 0.7 | % |
In-park per capita spending | | $ | 47.69 |
| | $ | 47.30 |
| | $ | 0.39 |
| | 0.8 | % |
Out-of-park revenues | | $ | 152,216 |
| | $ | 143,763 |
| | $ | 8,453 |
| | 5.9 | % |
N/M Not meaningful either due to the nature of the expense line-item or due to minimal operations in 2020
(1) For additional information regarding Adjusted EBITDA, including how we define and use Adjusted EBITDA, as well as a reconciliation from net (loss) income, see page 20.
Consolidated net revenues totaled $1.3 billion for the year ended December 31, 2021 compared with $181.6 million for 2020. This increase in net revenues was attributable to the 1,278 operating day increase in 2021 resulting in a 16.9 million-visit increase in attendance and a $100.6 million increase in out-of-park revenues. In-park per capita spending for the year ended December 31, 2021 increased 34% to $62.03, which represented higher levels of guest spending across all key revenue categories, particularly admissions, extra-charge attractions, including front-of-line Fast Lane products, and food and beverage, and was driven by increases in pricing and volume. The increase in net revenues included a $6.5 million favorable impact of foreign currency exchange rates at our Canadian park.
Operating costs and expenses for the year ended December 31, 2021 increased to $1.0 billion from $483.9 million for 2020. This was the result of an $84.5 million increase in cost of food, merchandise and games revenues ("COGS"), a $350.5 million increase in operating expenses, and a $111.6 million increase in selling, general, and administrative expenses ("SG&A"), all of which were largely the result of the 1,278 operating day increase in 2021. While the majority of the $350.5 million increase in operating expenses was attributable to the increase in operating days, there was also a meaningful increase in seasonal labor rate in order to recruit employees in a challenging labor market, as well as higher full-time wages, including accrued bonus plans. Similarly, the $111.6 million increase in SG&A expense was driven by resumed park operations in 2021. However, the increase in SG&A expense was also driven by an increase in full-time wages, particularly for accrued bonus plans and equity-based compensation plans, as well as consulting fees incurred in 2021 related to a business optimization program. The increase in operating costs and expenses included a $3.4 million unfavorable impact of foreign currency exchange rates at our Canadian park.
Depreciation and amortization expense for the year ended December 31, 2021 decreased $8.7 million compared with 2020 due primarily to the full depreciation of 15-year useful lived property and equipment from our 2006 acquisition in 2021. The loss on impairment / retirement of fixed assets for 2021 was $10.5 million compared with $8.1 million for 2020. The loss on impairment / retirement of fixed assets for 2021 included retirements of assets in the normal course of business, as well as the impairment of a few specific assets in the second half of 2021. The loss on impairment / retirement of fixed assets for 2020 included a $2.7 million impairment charge with respect to the Schlitterbahn parks' long-lived assets triggered by the effects of the COVID-19 pandemic during the first quarter of 2020 (see ItemNote 6), "Selected Financial Data"as well as the impairment of two specific assets during the first quarter of 2020. Similarly triggered by the anticipated effects of the COVID-19 pandemic, the loss on impairment of goodwill and other intangibles for 2020 included a $73.6 million, $6.8 million and $7.9 million impairment of goodwill at the Schlitterbahn parks, goodwill at Dorney Park, and the Schlitterbahn trade name, respectively, during the first quarter of 2020, and an $11.3 million, $2.3 million and $2.2 million impairment of goodwill at the Schlitterbahn parks, goodwill at Dorney Park, and the Schlitterbahn trade name, respectively, during the third quarter of 2020 (see Note 7).
After the items above, operating income for 2021 totaled $148.3 million compared with an operating loss of $572.0 million for 2020.
Interest expense for 2021 increased $33.4 million due to interest incurred on the 2025 senior notes issued in April 2020 and the 2028 senior notes issued in October 2020. The net effect of our swaps resulted in a $19.0 million benefit to earnings for 2021 compared with a $15.8 million charge to earnings for 2020. The difference was attributable to the change in fair market value of our swap portfolio. We recognized a loss on early debt extinguishment of $5.9 million in 2021 related to a full redemption of the 2024 senior notes, and we recognized a $2.3 million loss on early debt extinguishment in 2020 related to the 2020 refinancing events (see Note 8). During 2021, we also recognized a $6.2 million net charge to earnings for foreign currency gains and losses compared with a $12.2 million net benefit to earnings for 2020. Both amounts primarily represent remeasurement of the U.S.-dollar denominated debt recorded at our Canadian entity from the U.S.-dollar to the legal entity's functional currency.
For 2021, a provision for taxes of $20.0 million was recorded to account for PTP taxes and federal, state, local and foreign income taxes compared with a benefit for taxes of $137.9 million recorded for 2020. The difference in provision for taxes was attributable to a larger pretax loss in 2020 from our taxable subsidiaries, as well as expected benefits from the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act"), which was signed into law on March 27, 2020. The CARES Act resulted in various changes to the U.S. tax law, including, among other things, allowing net operating losses arising in tax years 2018 through 2020 to be carried back to the preceding five taxable years and removing the limitation that such losses only offset 80% of taxable income. As a result of these changes, we expect to recognize two benefits. First, we carried back the tax year 2020 losses incurred by our corporate subsidiaries, which will result in the refund of a portion of federal income taxes paid during the carryback period of approximately $79.7 million. Second, the annual effective tax rate for 2021 and for 2020 included a net benefit of $1.7 million and $18.1 million, respectively, from carrying back the tax year 2020 losses of the corporate subsidiaries. This tax benefit represents an estimated incremental benefit of tax loss carrybacks for periods when the federal income tax rate was greater than the current 21% rate. The overall benefit of the carryback of losses was decreased by $4.7 million and $16.1 million in 2021 and 2020, respectively, for a projected valuation allowance on foreign tax credits originally utilized during the carryback period which would be released as a result of the loss carryback but which are not expected to be utilized.
After the items above, net loss for 2021 totaled $48.5 million, or $0.86 per diluted limited partner unit, compared with a net loss of $590.2 million, or $10.45 per diluted unit, for 2020.
For 2021, Adjusted EBITDA totaled $324.6 million compared with a $302.0 million Adjusted EBITDA loss for 2020. The increase in Adjusted EBITDA was primarily due to the impact of COVID-19 related park closures in 2020 and the related improvement in attendance, in-park per capita spending and out-of-park revenues from reopening parks in 2021.
2021 vs. 2019
As described above, the results for the year ended December 31, 2021 were not directly comparable with the results for the year ended December 31, 2020 due to the effects of the COVID-19 pandemic. The results for the year ended December 31, 2021 were more comparable with the results for the year ended December 31, 2019. As a result, we have included analysis comparing our 2021 results with our 2019 results. However, the 2021 results are also not directly comparable with the 2019 results due to the postponed opening of our parks for the 2021 operating season until May 2021, as well as operating restrictions in place upon opening in 2021, compared with a pre-pandemic operating season in 2019. The year ended December 31, 2021 included 1,765 operating days compared with a total of 2,224 operating days for the year ended December 31, 2019. The following table presents key financial information and operating statistics for the years ended December 31, 2021 and December 31, 2020:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | Increase (Decrease) |
| | December 31, 2021 | | December 31, 2019 | | $ | | % |
| | (Amounts in thousands, except for per capita spending) |
Net revenues | | $ | 1,338,219 | | | $ | 1,474,925 | | | $ | (136,706) | | | (9.3) | % |
Operating costs and expenses | | 1,030,466 | | | 990,716 | | | 39,750 | | | 4.0 | % |
Depreciation and amortization | | 148,803 | | | 170,456 | | | (21,653) | | | (12.7) | % |
Loss on impairment/retirement of fixed assets, net | | 10,486 | | | 4,931 | | | 5,555 | | | N/M |
| | | | | | | | |
Loss (gain) on other assets | | 129 | | | (617) | | | 746 | | | N/M |
Operating income | | $ | 148,335 | | | $ | 309,439 | | | $ | (161,104) | | | (52.1) | % |
| | | | | | | | |
Other Data: | | | | | | | | |
Adjusted EBITDA (1) | | $ | 324,641 | | | $ | 504,673 | | | $ | (180,032) | | | (35.7) | % |
Adjusted EBITDA margin (2) | | 24.3 | % | | 34.2 | % | | — | | | (9.9) | % |
Attendance | | 19,498 | | | 27,938 | | | (8,440) | | | (30.2) | % |
In-park per capita spending | | $ | 62.03 | | | $ | 48.32 | | | $ | 13.71 | | | 28.4 | % |
Out-of-park revenues | | $ | 167,978 | | | $ | 168,708 | | | $ | (730) | | | (0.4) | % |
N/M Not meaningful due to the nature of the expense line-item
(1) For additional information regarding Adjusted EBITDA, including how we define and use Adjusted EBITDA, as well as a reconciliation from net (loss) income, see page 16.20.
(2) Adjusted EBITDA margin (Adjusted EBITDA divided by net revenues) is not a measurement computed in accordance with generally accepted accounting principles ("GAAP") or a substitute for measures computed in accordance with GAAP and may not be comparable to similarly titled measures of other companies. We provide Adjusted EBITDA margin because we believe the measure provides a meaningful metricmeasure of operating profitability.
ConsolidatedFor the year ended December 31, 2021, net revenues totaled $1,348.5 million$1.3 billion compared with $1.5 billion for 2019. The decrease in net revenues reflected the impact of an 8.4 million-visit, or 30%, decline in attendance partially offset by the impact of a $13.71, or 28%, increase in in-park per capita spending. The decrease in net revenues and attendance was primarily attributable to 459 fewer operating days in 2021. Out-of-park revenues for the year ended December 31, 2018, increasing $26.6 million, from $1,322.0 million for 2017. This reflects the impact of increases in attendance, in-park per capita spending, and2021 were comparable to 2019. Lower out-of-park revenues compared withthat resulted from the prior year. The 189,000 visit, or 0.7%, increasedelayed opening of our parks in attendance was driven2021 until May 2021 and the temporary closure of two hotel properties for renovations during 2021 were mostly offset by higher season pass visitation in the last five months of the year, including increased attendance during WinterFest, a holiday event operating during November and December. The increase in WinterFest attendance related primarily to a new event held at Kings Dominion. Attendance in the first seven months of 2018 was lower than the prior year driven by the impact of inclement weather at our seasonal amusement parks and a decline in season pass sales at Kings Island. The $0.39, or 0.8%, increase in in-park per capita spending was attributable to growth in our food and beverage programs, extra charge attractions and merchandise. The $8.5 million, or 5.9%, increase inadditional out-of-park revenues was largely attributable to increasesfrom the Knott's Berry Farm culinary festival in resort property revenues driven by higher occupancy rates and an increase in average daily room rates, particularly at Cedar Point. The increase in net revenues was net of a $2.3 million unfavorable impact of foreign currency exchange related to our Canadian park.2021.
Operating costs and expenses for the year ended December 31, 2021 increased 3.4%, or $29.7$39.8 million to $892.4 million from $862.7 million for 2017.compared with 2019. This increase was the result of a $3.9 million increase in cost of goods sold, a $26.2$56.0 million increase in operating expenses offset by a $13.8 million decrease in COGS and comparable selling, general, and administrativea $2.5 million decrease in SG&A expense, all of which were impacted by the result of fewer operating days in 2021. Operating expenses ("SG&A"). The $3.9 millionincreased compared with 2019 despite fewer operating days due to a meaningful increase in cost of goods sold relatedthe seasonal labor rate in order to the growthrecruit employees in our food and beverage programs. Cost of goods sold,a challenging labor market, as well as higher full-time wages attributable to an increase in headcount. Seasonal labor hours declined in 2021 compared to 2019. The decrease in COGS was attributable to fewer operating days in 2021. COGS as a percentage of food, merchandise and games revenue in 2021 was comparable for both periods. Approximately half of the
$26.2 million increaseto 2019. The decrease in operating expenses was due to increased seasonal wages driven by planned hourly rate increases. The increase in operating expenses was also attributable to increased full-time and maintenance labor driven by both planned head count and rate increases. Lastly, the increase in operating expenses was due to increased operating supplies for personnel related costs including associate housing and for incremental costs related to WinterFest, particularly for the new event at Kings Dominion. SG&A expense was comparableprimarily due to higher merchant feesless advertising expense due to fewer operating days and increased technology related costs in 2018a more efficient marketing program offset by a reserve established in 2017 for an employment practice claim settlement of $4.9 million. The increase in operating costsfull-time wages, particularly for accrued bonus plans and expenses was net of a $1.2 million favorable impact of foreign currency exchange related to our Canadian park.equity-compensation plans.
Depreciation and amortization expense for 2018 increased $2.3the year ended December 31, 2021 decreased $21.7 million compared with 2019 due primarily to the prior year. The increasefull depreciation of 15-year useful lived property and equipment from our 2006 acquisition in expense was attributable to growth2021, as well as the change in capital improvements offset by the impact of changes in the estimated useful liveslife of specifica long-lived assets,asset at Kings Dominion in particular at Cedar Point and Dorney Park in the prior period.2019. The loss on impairment / retirement of fixed assets for 20182021 was $10.2$10.5 million reflecting the retirement of a specific asset in the second quarter of 2018 and the impairment of two specific assets in the third quarter of 2018. This is compared with the $12.7$4.9 million for 2019. The loss on impairment / retirement of fixed assets for 2017 reflecting a charge of $7.6 million for2021 included the impairment of the remaining land at Wildwater Kingdom, one of our separately gated outdoor water parks which ceased operations in 2016, and the impairment ofa few specific assets in the normal coursesecond half of business at several of our properties. A $0.1 million and $1.9 million gain on sale of investment was recognized for the liquidation of a preferred equity investment during the fourth quarter of 2018 and third quarter of 2017, respectively.2021.
After the items above, operating income decreased $4.7for 2021 totaled $148.3 million to $290.5 million for 2018 fromcompared with operating income of $295.2$309.4 million for 2017.2019.
Interest expense for 2018 was comparable2021 increased $83.7 million due to interest incurred on the prior year.2025 senior notes and the 2028 senior notes, both of which were issued in 2020. The net effect of our swaps resulted in a $7.4$19.0 million benefit to earnings for 2021 compared with a $16.5 million charge to earnings for 2018 compared with an immaterial impact to earnings for 2017.2019. The difference reflects changeswas attributable to the change in fair market value for these swaps. During 2018, weof our swap portfolio. We recognized a $1.1 million loss on early debt extinguishment of $5.9 million in connection with amending our 2017 Credit Agreement, as compared with a $23.1 million loss on early debt extinguishment2021 related to our refinancing ina full redemption of the first half of 2017, as described in 2024 senior notes (see Note 58 to the Consolidated Financial Statements. We). During 2021, we also recognized a $36.3$6.2 million net charge to earnings for foreign currency gains and losses in 2018 compared with a $29.1$21.1 million net benefit to earnings for 2017.2019. Both amounts primarily representedrepresent remeasurement of the U.S.-dollar denominated debt recorded at our Canadian entity from the applicable currencyU.S.-dollar to the legal entity's functional currency.
For 2018,2021, a provision for taxes of $34.7$20.0 million was recorded to account for PTP taxes and federal, state, local and foreign income taxes on our corporate subsidiaries. This comparescompared with a provision for taxes of $42.8 million recorded for 2017 of $1.1 million.2019. The increasedecrease in tax provision in the current year relates primarily to the prior year implementation of the Tax Cuts and Jobs Act (the "Act"), whichfor taxes was signed into law on December 22, 2017. The Act included numerous changes to the tax law, including a reduction in the federal corporate income tax rate from 35% to 21%. Since our corporate subsidiaries have a March tax year end, the applicable tax rate for the tax year ended March 25, 2018 was a 31.8% blended rate that was based on the applicable statutory rates and the number of days in each period within the taxable year before and after the effective date of the change in tax rate. For tax years following March 2018, the applicable tax rate will be 21%. Also, the change in tax rate required that we remeasure deferred tax balances that are expected to be realized following enactment using the applicable tax rates. As a result of the Act, we recognized a $49.2 million deferred tax benefit and a $6.1 million current income tax benefit in 2017 compared with a $1.3 million deferred tax benefit and an $8.6 million current income tax benefit in 2018. The $1.3 million deferred tax benefit in 2018 reflects the adjustment from our 2017 provisional amounts under SAB 118 to the final impact of the Act. Cash taxes paid in 2018 were $42.2 million compared with $56.0 million in 2017 dueattributable to a decrease in pretax income from our corporatetaxable subsidiaries and the decrease in federal statutory income tax rate from the Act. For 2019, cash taxes to be paid or payable are estimated to be approximately $45 million.during 2021.
After the items above, net incomeloss for 20182021 totaled $126.7$48.5 million, or $2.23$0.86 per diluted limited partner unit, compared with net income of $215.5$172.4 million, or $3.79$3.03 per diluted unit, for 2017.2019.
For 2018,2021, Adjusted EBITDA decreased to $467.8totaled $324.6 million from $479.0compared with $504.7 million for 2017. The $11.2 million decrease in Adjusted EBITDA is a result of higher operating costs and expenses associated with labor, especially seasonal wages due to planned rate increases, operating supplies and other planned spending out-pacing revenue growth. As a result,2019. Similarly, our Adjusted EBITDA margin for 2021 decreased compared with the Adjusted EBITDA margin for 2019. The decreases in Adjusted EBITDA and Adjusted EBITDA margin were both largely due to the postponed opening of our parks for the 2021 operating season until May 2021, other COVID-19 related operating calendar changes and restrictions, as well as significantly increased labor costs in 2021 due to labor rate pressures.
In order to provide a more meaningful comparison of our key operational measures, we have provided comparable same-day statistics for attendance and in-park per capita spending. These supplemental comparisons were used by 150management for operational decisions during 2021. We believe these supplemental key operational measures provide a more meaningful measure of demand and guest spending trends on an annual basis points.
Results of Operations
2017 vs. 2016
The year ended December 31, 2017 included 2,049due to the material variances in operating days compared with 2,080between years.
For attendance and in-park per capita spending, the comparable same-day statistics compare the results from 1,695 operating days for the year ended December 31, 2016. On a same-park basis (excluding Wildwater Kingdom, one of2021 with the Partnership's separately gated outdoor water parks which was closed after the 2016comparable 1,695 operating season),days for the year ended December 31, 20162019. The 1,695 operating days for the year ended December 31, 2021 included the 1,765 total operating days for the period less 70
operating days from the Schlitterbahn parks which were acquired on July 1, 2019. As a totalresult, on a comparable same-day basis, we excluded $15.4 million of 1,997in-park revenues and 0.3 million visits for the year ended December 31, 2021. We also excluded $239.0 million of in-park revenues and 5.3 million visits for the year ended December 31, 2019 to exclude the results of 2019 operating days without equivalent 2021 operating days. No adjustments otherwise were made to the daily data from either period, including no adjustments to reflect the impact of fewer operating hours within an operating day or operating restrictions in place in 2021.
Attendance for the year ended December 31, 2021 represented approximately 85% of attendance for the year ended December 31, 2019 on a comparable same-day basis driven by season pass attendance and general admission and offset by an expected slower recovery in group sales attendance. In-park per capita spending for the year ended December 31, 2021 represented approximately 127% of in-park per capita spending for the year ended December 31, 2019 on a comparable same-day basis. The increase in in-park per capita spending on a comparable same-day basis was attributable to increases in all key spending categories, particularly admission, extra-charge attractions, including front-of-line Fast Lane products, and food and beverage. Attendance and in-park per capita spending as a percentage of 2019 results on a comparable same-day basis increased from the initial opening of our parks in May 2021 through the end of the year. Due to the nature of out-of-park revenues, we are not able to produce comparable same-day statistics.
2020 vs. 2019
The results for the year ended December 31, 2020 were not directly comparable with the results for the year ended December 31, 2019 due to park closures and operating calendar changes associated with the COVID-19 pandemic. On March 14, 2020, we closed our properties in response to the spread of COVID-19. We ultimately resumed only partial operations at 10 of our 13 properties in 2020. Beginning in the second quarter of 2020, we resumed partial operations at eight properties on a staggered basis with opening dates starting in mid-June and continuing through mid-July. We also reopened operations at some of our out-of-park attractions at this time, such as hotel operations. Attendance upon reopening was impacted by the ongoing effects of the pandemic and was below original expectations. Due to these soft demand trends upon reopening, park operating calendars were adjusted for the remainder of 2020, including reduced operating days per week and operating hours within each operating day. In addition, some of our reopened parks closed earlier in 2020 than the park's pre-pandemic operating calendar. Two parks, Cedar Point and Kings Island, remained open in 2020 after Labor Day. Two additional parks, Carowinds and Kings Dominion, reopened on weekends in November and December to host abbreviated versions of their traditional WinterFest events. Following March 14, 2020, Knott's Berry Farm's partial operations were limited to culinary festivals. Net revenues from these limited operations at Knott's Berry Farm were classified as out-of-park revenues. Attendance, in-park per capita spending and operating day statistics for 2020 exclude these limited operations at Knott's Berry Farm.
As a result of the effects of the COVID-19 pandemic, the year ended December 31, 2020 included 487 operating days compared with 2,224 operating days for the year ended December 31, 2019. The following table presents key financial information and operating statistics for the years ended December 31, 20172020 and December 31, 2016:2019:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | Increase (Decrease) |
| | December 31, 2020 | | December 31, 2019 | | $ | | % |
| | (Amounts in thousands, except for per capita spending) |
Net revenues | | $ | 181,555 | | | $ | 1,474,925 | | | $ | (1,293,370) | | | (87.7) | % |
Operating costs and expenses | | 483,891 | | | 990,716 | | | (506,825) | | | (51.2) | % |
Depreciation and amortization | | 157,549 | | | 170,456 | | | (12,907) | | | (7.6) | % |
Loss on impairment/retirement of fixed assets, net | | 8,135 | | | 4,931 | | | 3,204 | | | N/M |
Loss on impairment of goodwill and other intangibles | | 103,999 | | | — | | | 103,999 | | | N/M |
Gain on sale of investment | | (11) | | | (617) | | | 606 | | | N/M |
Operating (loss) income | | $ | (572,008) | | | $ | 309,439 | | | $ | (881,447) | | | N/M |
| | | | | | | | |
Other Data: | | | | | | | | |
Adjusted EBITDA (1) | | $ | (302,011) | | | $ | 504,673 | | | $ | (806,684) | | | N/M |
| | | | | | | | |
Attendance | | 2,595 | | | 27,938 | | | (25,343) | | | (90.7) | % |
In-park per capita spending | | $ | 46.38 | | | $ | 48.32 | | | $ | (1.94) | | | (4.0) | % |
Out-of-park revenues | | $ | 67,375 | | | $ | 168,708 | | | $ | (101,333) | | | (60.1) | % |
|
| | | | | | | | | | | | | | | |
| | | | | | Increase (Decrease) |
| | 12/31/2017 | | 12/31/2016 | | $ | | % |
| | (Amounts in thousands, except for per capita spending) |
Net revenues | | $ | 1,321,967 |
| | $ | 1,288,721 |
| | $ | 33,246 |
| | 2.6 | % |
Operating costs and expenses | | 862,683 |
| | 827,319 |
| | 35,364 |
| | 4.3 | % |
Depreciation and amortization | | 153,222 |
| | 131,876 |
| | 21,346 |
| | 16.2 | % |
Loss on impairment/retirement of fixed assets, net | | 12,728 |
| | 12,587 |
| | 141 |
| | N/M |
|
Gain on sale of investment | | (1,877 | ) | | — |
| | (1,877 | ) | | N/M |
|
Operating income | | $ | 295,211 |
| | $ | 316,939 |
| | $ | (21,728 | ) | | (6.9 | )% |
N/M - Not meaningful | | | | | | | | |
Other Data: | | | | | | | | |
Adjusted EBITDA (1) | | $ | 478,977 |
| | $ | 481,248 |
| | $ | (2,271 | ) | | (0.5 | )% |
Adjusted EBITDA margin (2) | | 36.2 | % | | 37.3 | % | | — |
| | (1.1 | )% |
Attendance | | 25,723 |
| | 25,104 |
| | 619 |
| | 2.5 | % |
In-park per capita spending | | $ | 47.30 |
| | $ | 46.90 |
| | $ | 0.40 |
| | 0.9 | % |
Out-of-park revenue | | $ | 143,763 |
| | $ | 146,137 |
| | $ | (2,374 | ) | | (1.6 | )% |
N/M Not meaningful either due to the nature of the expense line-item or due to minimal operations in 2020
(1) For additional information regarding Adjusted EBITDA, including how we define and use Adjusted EBITDA, as well as a reconciliation from net
(loss) income, see
Item 6, "Selected Financial Data", on page 16.20.(2) Adjusted EBITDA margin (Adjusted EBITDA divided by net revenues) is not a measurement computed in accordance with generally accepted accounting principles ("GAAP") or a substitute for measures computed in accordance with GAAP and may not be comparable to similarly titled measures of other companies. We provide Adjusted EBITDA margin because we believe the measure provides a meaningful metric of operating profitability.
Consolidated net revenues totaled $1,322.0$181.6 million for the year ended December 31, 2017, increasing $33.2 million,2020, decreasing $1.3 billion, from $1,288.7 million$1.5 billion for 2016.2019. This reflected an increasethe impact of a 25.3 million-visit decrease in both attendance, anda $1.94 decrease in in-park per capita spending. Out-of-park
spending, and a $101.3 million decrease in out-of-park revenues, decreased $2.4 million compared with 2016.all of which were heavily impacted by the aforementioned park closures and operating calendar changes. The 619,000 visit, or 2.5%, increasedecrease in attendance was driven by higher season pass visitation andalso due to soft initial demand upon re-opening our parks in 2020. However, demand steadily increased from 20-25% of comparable 2019 attendance during WinterFest, a holiday event operating during November and December.levels upon initially reopening up to 55% of comparable 2019 attendance levels in September 2020. The increase in WinterFest attendance related primarily to three new events in 2017 held at Kings Island, Carowinds, and Worlds of Fun. The $0.40, or 0.9%, increasedecrease in in-park per capita spending was primarilythe result of less guest spending on extra-charge products, specifically front-of-line products, and admission attributable to growth in oura higher season pass mix. In-park per capita spending on food, merchandise and beverage programs, and the closure of Wildwater Kingdom.games increased compared with 2019. The $2.4 million, or 1.6%, decrease in out-of-park revenues was dueprimarily attributable to revenues receiveda decline in 2016 from Super Bowl 50 special events andaccommodations revenue related to a decrease in occupancy due to the closures of our parks, as well as a decrease in online transaction fee revenue recognized during 2017. Foreigndue to a decline in online sales volume. Net revenues were not materially impacted by foreign currency exchange rates had an immaterial impact on net revenues.rates.
Operating costs and expenses for 2017 increased 4.3%the year ended December 31, 2020 decreased 51.2%, or $35.4$506.8 million, to $862.7$483.9 million from $827.3$990.7 million for 2016. This increase2019. The decrease was the result of a $4.2$98.3 million increasedecrease in cost of goods sold,COGS, a $19.2$294.4 million increasedecrease in operating expenses, and an $11.9a $114.1 million increasedecrease in SG&A expense. The $4.2 million increasedecrease in cost of goods sold relatedCOGS was due to the growthdecline in our foodsales volume due to park closures, operating calendar changes and beverage programs, as well as higher attendance levels. Cost of goods sold, as a percentage of food, merchandise, and games revenue, was comparable for both 2017 and 2016.soft initial demand at parks that opened in 2020. The $19.2$294.4 million increasedecrease in operating expenses was primarily dueattributable to higher$167.5 million of seasonal labor costs driven by rate increases, especially in California,savings, as well as incremental labor hours especially relatedreductions in operating supplies, maintenance supplies, utilities, entertainment-related fees and insurance attributable to WinterFest.closed properties, abbreviated operating calendars and fewer offerings at our parks in 2020. In addition, full-time wages increased as a result of incremental head count and normal merit increases, as well as increased maintenance labor associated with WinterFest. Lastly, operating supply expense increaseddecreased due to incremental special and seasonal events, especially for WinterFest, and the openinga decline in anticipated payout of several large capital projects that began operationbonus plans in 2017.2020. The $11.9$114.1 million increasedecrease in SG&A expense was attributable to $57.5 million of advertising expense savings, as well as a reserve for an employment practice settlement claimreduction in transaction fee expense due to a decline in online sales volume, a decline in the anticipated payout of $4.9 million, increased marketing expense, higher merchant fees,outstanding equity-based compensation and increased technology relatedbonus plans, and 2019 acquisition-related costs. ForeignOperating costs and expenses were not materially impacted by foreign currency exchange rates had an immaterial impact on operating costs and expenses.rates.
Depreciation and amortization expense for 2017 increased $21.32020 decreased $12.9 million compared with 2016. The increase was attributable2019 primarily due to athe 2019 change in the estimated useful liveslife of specifica long-lived assets, in particularasset at Cedar Point and Dorney Park, as well as growth in capital improvements.Kings Dominion. The loss on impairment / retirement of fixed assets for 20172020 was $12.7$8.1 million reflecting a charge of $7.6compared with $4.9 million for the impairment of the remaining land at Wildwater Kingdom and the retirement of assets in the normal course of business at several of our properties. This was compared with the $12.6 million2019. The loss on impairment / retirement of fixed assets for 2016 reflecting2020 included a $2.7 million impairment charge with respect to the retirementSchlitterbahn parks' long-lived assets triggered by the effects of the COVID-19 pandemic during the first quarter of 2020 (see Note 6), as well as the impairment of two specific assets induring the normal course
first quarter of
business. During2020. Similarly triggered by the anticipated effects of the COVID-19 pandemic, the loss on impairment of goodwill and other intangibles for 2020 included a $73.6 million, $6.8 million and $7.9 million impairment of goodwill at the Schlitterbahn parks, goodwill at Dorney Park, and the Schlitterbahn trade name, respectively, during the first quarter of 2020, and an $11.3 million, $2.3 million and $2.2 million impairment of goodwill at the Schlitterbahn parks, goodwill at Dorney Park, and the Schlitterbahn trade name, respectively, during the third quarter of
2017,2020 (see Note 7). During the first quarter of 2019, a $1.9$0.6 million gain on sale of investment was recognized for additional proceeds from the liquidation of a preferred equity investment.
After the items above, operating income decreased $21.7loss for 2020 totaled $572.0 million to $295.2 million for 2017 fromcompared with operating income of $316.9$309.4 million for 2016.2019.
Interest expense for 20172020 increased $1.7$50.3 million compared with 2016. The increase was attributabledue to an increaseinterest incurred on the 2025 senior notes issued in outstanding term debt.April 2020 and on the 2029 senior notes issued in June 2019. The net effect of our swaps resulted in an immaterial impacta $15.8 million charge to earnings for 20172020 compared with a $1.2$16.5 million benefitcharge to earnings for 2016.2019. The difference reflectedwas attributable to the amortization of amounts in OCI in our de-designated swap portfolio offset by changeschange in fair market value for these swaps.of our swap portfolio. We recognized a $23.1$2.3 million loss on early debt extinguishment during 2017 as a result of the April 2017 debt refinancing. Werelated to our 2020 refinancing events (see Note 8). During 2020, we also recognized a $29.1$12.2 million net benefit to earnings for foreign currency gains and losses in 2017 compared with a $14.7$21.1 million net benefit to earnings for 2016.2019. Both amounts primarily represented remeasurement of the U.S.-dollar denominated debt recorded at our Canadian entity from the applicable currencyU.S.-dollar to the legal entity's functional currency.
For 2017,2020, a provisionbenefit for taxes of $1.1$137.9 million was recorded to account for PTP taxes and federal, state, local and foreign income taxes on our corporate subsidiaries. This compared with a provision for taxes recorded for 20162019 of $71.4$42.8 million. The decreaseincrease in tax provisionbenefit for taxes was attributable to an increase in 2017 related primarily to implementation ofpretax loss from our taxable subsidiaries, as well as expected benefits from the Tax Cuts and JobsCARES Act. The CARES Act (the "Act"), which was signed into law on December 22, 2017. The Act included numerousresulted in various changes to the U.S. tax law, including, a reduction in the federal corporate income tax rate from 35% to 21%. Since our corporate subsidiaries have a March tax year end, the applicable tax rate for the tax year ended March 25, 2018 was a 31.8% blended rate based on the applicable statutory rates and the number of days in each period within the taxable year before and after the effective date of the changeamong other things, allowing net operating losses arising in tax rate. For tax years following March 2018 through 2020 to be carried back to the applicable tax rate will be 21%.preceding five taxable years and removing the limitation that such losses only offset 80% of taxable income. As a result of these changes, we expected to recognize two benefits. First, we expected to carryback the reduction2020 losses incurred by our corporate subsidiaries, which would result in the refund of a portion of federal income taxes paid during the carryback period of approximately $55.4 million as of December 31, 2020. Second, the annual effective tax rate for 2020 included a net benefit of $18.1 million from carrying back the projected 2020 losses of the corporate subsidiaries. This tax benefit represented an estimated $34.2 million incremental benefit of tax loss carrybacks for periods when the federal income tax rate we recognizedwas greater than the current 21% rate. The estimated $34.2 million benefit was decreased by $16.1 million in 2020 for a $6.1 million current incomeprojected valuation allowance on foreign tax benefit. Also,credits originally utilized during the change in tax rate required that we remeasure deferred tax balances that arecarryback period which would be released as a result of the loss carryback but which were not expected to be realized following enactment using the applicable tax rates. As a result of this remeasurement of our net deferred tax liability, we recognized a $49.2 million deferred tax benefit. The sum of these effects was recorded as a tax benefit in the consolidated statement of operations and comprehensive income for the year ended December 31, 2017. Cash taxes paid in 2017 were $56.0 million compared with $44.5 million in 2016. The change in cash taxes related to 2016 utilization of employment and foreign tax credits.utilized.
After the items above, net incomeloss for 20172020 totaled $215.5$590.2 million, or $3.79$10.45 per diluted limited partner unit, compared with net income of $177.7$172.4 million, or $3.14$3.03 per diluted unit, for 2016.2019.
For 2017,2020, Adjusted EBITDA decreased to $479.0loss totaled $302.0 million from $481.2compared with a $504.7 million Adjusted EBITDA for 2016.2019. The $2.3 million decreasevariance in Adjusted EBITDA was due to decreased net revenues offset somewhat by expense savings attributable to park closures and operating calendar changes as a result of the COVID-19 pandemic.
Liquidity and Capital Resources
Our principal sources of liquidity typically include cash from operating activities, funding from our long-term debt obligations and existing cash on hand. Due to the seasonality of our business, we typically fund pre-opening operations with revolving credit borrowings. Revolving credit borrowings are typically reduced with our positive cash flow during the seasonal operating period. Our primary uses of liquidity typically include operating expenses, partnership distributions, capital expenditures, interest payments and income tax obligations.
Due to the negative effects of the COVID-19 pandemic, we took steps in 2020 to secure additional liquidity and to obtain relief from certain financial covenants including issuing $1.3 billion of senior notes, amending our term debt and revolving credit agreement, reducing operating expenses, including labor costs, suspending capital expenditures, and suspending quarterly partnership distributions. Due to limited open operations, our 2020 and first quarter 2021 liquidity needs were funded from cash on hand from the recently issued senior notes. We began generating positive cash flows from operations during the second quarter of 2021. Despite a delayed start and various operating restrictions in place for the 2021 operating season, our 2021 operating results exceeded our initial expectations, driven by higher operating costsconsumer demand driving both attendance and expenses associated with labor, marketing, merchant fees, and other planned spending out-pacing revenue growth, specifically attendance growth.in-park per capita spending. As a result, we subsequently redeemed all of our Adjusted EBITDA margin decreased by 110 basis points.
On a same-park basis (excluding Wildwater Kingdom), net revenues increased by $38.7 million2024 senior notes in December 2021. We expect to $1,322.0 million for the year ended December 31, 2017fund our 2022 liquidity needs with cash from $1,283.3 million for 2016. This was the result of an 856,000-visit increase in attendanceoperating activities and a $0.17 increase in in-park per capita spending on a same-park basis. Operating costs and expenses (including depreciation and amortization, loss on impairment of fixed assets and gain on sale of investment) on a same-park basis increased $61.2 million resulting in a $22.5 million decrease in same-park operating income.
Financial Condition
We ended 2018 in sound condition with respect to both liquidity and cash flow. The working capital ratio (current assets divided by current liabilities) was 0.9 asborrowings from our revolving credit facility. As of December 31, 20182021, we had cash on hand of $61.1 million and was 1.1 as$359.2 million of December 31, 2017. There was a $60.9 million decreaseavailable borrowings under our revolving credit facility. Based on this level of liquidity, we have concluded that we will have sufficient liquidity to satisfy our obligations and remain in cash and cash equivalents as of December 31, 2018 comparedcompliance with the balance as of December 31, 2017. The net cash proceeds from our debt refinancingcovenants at least through the first quarter of 2023.
As restrictions to mitigate the spread of COVID-19 have largely been lifted and our properties have mostly been able to resume full operations, management is focused on driving profitable and sustainable growth in 2017 significantly impacted the working capital ratiobusiness, reducing the Partnership's outstanding debt, and changereinstating the quarterly Partnership distribution. We expect to invest between $200 million and $215 million in cash position. Cash and credit facilities are in place to fund current liabilities, capital expenditures partnership distributions,for the 2022 operating season, which will include the completion of several resort renovation projects, and pre-opening expensesinvestments to expand our park offerings and develop new revenue centers, and technology enhancements, such as required.cashless parks, touch-free transactions and labor management tools.
Following the issuance of $1.3 billion of senior notes in 2020 and the redemption of the 2024 senior notes in December 2021, we anticipate $150 million in annual cash interest in 2022 of which 75% of the payments occur in the second and fourth quarter. We are expecting to receive $79.7 million in tax refunds attributable to the tax year 2020 net operating loss being carried back to prior years in the United States and an additional $9.5 million in tax refunds attributable to net operating losses being carried back to prior years in Canada. We anticipate receiving these tax refunds during 2022. In 2022, we anticipate cash payments for income taxes to range from $45 million to $60 million, exclusive of these tax refunds.
Operating Activities
Net cash from operating activities in 2018 increased $19.62021 totaled $201.2 million to $350.7 million from $331.2compared with net cash for operating activities of $416.5 million in 2017. Net2020 and net cash from operating activities in 2017 decreased $27.2 million to $331.2 million from $358.3of $403.0 million in 2016.2019. The fluctuations in operating cash flowsvariance between years was largely attributable to changeslower earnings in working capital driven primarily by changes in deferred revenue and income tax payments.
Investing Activities
Investing activities consist principally of capital investments we make in our parks and resort properties. During 2018, cash spent on capital expenditures totaled $189.8 million attributable to capital for marketable new rides and attractions,2020, and to a lesser extent infrastructurein 2021, as a result of disrupted operations due to the COVID-19 pandemic.
Cash interest payments totaled $174.3 million in 2021 compared with $130.4 million in 2020. The increase in cash interest payments from 2020 was attributable to a full year of interest paid on the 2025 senior notes and resort properties. During 2017,2028 senior notes which were issued during 2020. Cash interest payments in 2020 increased $44.8 million compared to 2019 due to a partial year of interest paid on the 2025 senior notes in 2020 offset by less outstanding term debt in 2020 following a $463.3 million prepayment in the second quarter of 2020. Cash payments for income taxes totaled $10.1 million in 2021 compared with $1.8 million in 2020 and $40.8 million in 2019. The variance between years for cash spent onpayments for income taxes was attributable to the impact of disrupted operations in 2020, and to a lesser extent 2021.
Investing Activities
Net cash for investing activities in 2021 totaled $57.8 million, a decrease of $63.0 million compared with 2020. The decrease from 2020 was attributable to less spending in 2021 as we continued to recover from the effects of the COVID-19 pandemic. Net cash for investing activities in 2020 decreased $479.4 million compared with 2019. The decrease from 2019 was attributable to two causes. First, in 2020 and due to the effects of the COVID-19 pandemic, we reduced our capital spending by approximately $60 million from our initial capital expenditures totaled $188.1 million. During 2017, we also received $3.3 million of proceeds from the sale of a preferred equity investment in a non-public entity. During 2016, cash spent on capital expenditures totaled $160.7 million. During 2016, we also purchased identifiable intangible assets for $0.6 million.
Historically, we have been able to improve our revenues and profitability by continuing to make substantial capital investments in our park and resort facilities. This has enabled usbudget to maintain or increase attendance levels, as well as to generate increasesflexibility and retain liquidity. Second, in in-park per capita spending2019, net cash for investing activities included the acquisitions of the Schlitterbahn parks and revenues from guest accommodations. ForSawmill Creek Resort and the 2019 operating season, we will be investing approximately $140 million on infrastructure and marketable new rides and attractions, and anticipate investing an additional $30 million to $40 million in incremental opportunities such as resort properties, employee housing and an indoor sports facility near Cedar Point. Infrastructure and marketable capital investments will include two thrill-packed roller coasters in unique themed areas at Canada's Wonderland and Carowinds, and a new, immersive experience attraction at Cedar Point. In addition, we will add new attractions to appeal to kids, tweens and families, introduce new and upgraded dining venues and catering areas, and expand our festival and event offerings. In particular, we will extend the operating season at Canada's Wonderland for a new WinterFest holiday event, bringing the total to sevenpurchase of our amusement parks with winter holiday events. Lastly, a new hotel at Carowinds is expected to open in late 2019, strengthening our appeal for a multi-day guest experience.
In addition, during November 2018, we exercised our right of first refusal under the Santa Clara land lease to purchase the land at California's Great America from the lessor, the City of Santa Clara, for $150 million. We are in the processClara.
Financing Activities
Net cash utilized for financing activities in 20182021 totaled $216.6$466.4 million compared with $106.4net cash from financing activities of $730.9 million in 2017. This increase is primarily2020. The variance in net cash (for) from financing activities was due to incremental borrowings under our senior secured term loan facility under the Amended 2017 Credit Agreement in the prior year as a resultfull redemption of the 2024 senior notes in 2021 and the April 2017 refinancing.
2020 refinancing events and the issuance of the 2028 senior notes in 2020. Net cash utilizedfrom financing activities in 2020 increased $460.4 million compared with net cash for financing activities in 2017 totaled $106.4 million,2019. The increase from 2019 was primarily attributable to the net cash proceeds from the April 2020 financing events and the issuance of the 2028 senior notes in 2020 compared with $194.5 millionthe 2029 senior notes issuance in 2016. This decrease reflects incremental debt borrowings due to the April 2017 refinancing,2019. The increase from 2019 was somewhat offset by other impactsthe suspension of quarterly partnership distributions following the April 2017 refinancing including payment of debt issuance costs and early termination penalties.first quarter 2020 partnership distribution.
Liquidity and Capital Resources
Contractual Obligations
As of December 31, 2018,2021, our primary contractual obligations consisted of outstanding long-term debt beforeagreements and related derivative agreements. Before reduction for debt issuance costs and original issue discount, our long-term debt agreements consisted of the following:
•$500264 million of 5.375% senior unsecuredsecured term debt, maturing in April 2024 under the 2017 Credit Agreement, as amended. The term debt bears interest at London InterBank Offering Rate ("LIBOR") plus 175 bps, under amendments we entered into on March 14, 2018. The pricing terms for the 2018 amendment reflected $0.9 million of Original Issue Discount ("OID"). Following a $463.3 million prepayment during the second quarter of 2020, we do not have any required remaining quarterly payments. Therefore, we had no current maturities as of December 31, 2021.
•$1.0 billion of 5.500% senior secured notes, maturing in April 2027,May 2025, issued at par. The 2025 senior notes and the related guarantees are secured by first-priority liens on the issuers' and the guarantors' assets that secure all the obligations under our credit facilities. Prior to April 15, 2020,May 1, 2022, up to 35% of the 2025 senior notes may be redeemed with net cash proceeds of certain equity offerings at a price equal to 105.375%105.500% of the principal amount thereof, together with accrued and unpaid interest and additional interest, if any. The 2025 senior notes may be redeemed, in whole or in part, at any time prior to May 1, 2022 at a price equal to 100% of the principal amount of the notes redeemed plus a "make-whole" premium together with accrued and unpaid interest and additional interest, if any, to the redemption date. Thereafter, the 2025 senior notes may be redeemed, in whole or in part, at various prices depending on the date redeemed. The 2025 senior notes pay interest semi-annually in May and November.
•$500 million of 5.375% senior unsecured notes, maturing in April 2027, issued at par. The 2027 senior notes may be redeemed, in whole or in part, at any time prior to April 15, 2022 at a price equal to 100% of the principal amount of the notes redeemed plus a "make-whole" premium, together with accrued and unpaid interest and additional interest, if any, to the redemption date. Thereafter, the 2027 senior notes may be redeemed, in whole or in part, at various prices depending on the date redeemed. The 2027 senior notes pay interest semi-annually in April and October.
•$450300 million of 5.375%6.500% senior unsecured notes, maturing in June 2024,October 2028, issued at par. Prior to October 1, 2023, up to 35% of the 2028 senior notes may be redeemed with the net cash proceeds of certain equity offerings at a price equal to 106.500% of the principal amount thereof, together with accrued and unpaid interest and additional interest, if any. The 2028 senior notes may be redeemed, in whole or in part, at any time prior to JuneOctober 1, 20192023 at a price equal to 100% of the principal amount of the notes redeemed plus a "make-whole" premium together with accrued and unpaid interest and additional interest, if any, to the redemption date. Thereafter, the 2028 senior notes may be redeemed, in whole or in part, at various prices depending on the date redeemed. The 2028 senior notes pay interest semi-annually in JuneApril and December.
October.
•$735500 million of 5.250% senior secured term debt,unsecured notes, maturing in AprilJuly 2029, issued at par. Prior to July 15, 2022, up to 35% of the 2029 senior notes may be redeemed with the net cash proceeds of certain equity offerings at a price equal to 105.250% of the principal amount thereof, together with accrued and unpaid interest and additional interest, if any. The 2029 senior notes may be redeemed, in whole or in part, at any time prior to July 15, 2024 under our Amended 2017 Credit Agreement. at a price equal to 100% of the principal amount of the notes redeemed plus a "make-whole" premium together with accrued and unpaid interest and additional interest, if any, to the redemption date. Thereafter, the 2029 senior notes may be redeemed, in whole or in part, at various prices depending on the date redeemed. The term debt bears2029 senior notes pay interest at London InterBank Offering Rate ("LIBOR") plus 175 basis points (bps), under amendments we entered into on March 14, 2018. The pricing terms for the amendment reflected $0.9 million of Original Issue Discount ("OID"). The term loan amortizes $7.5 million annually. We have $5.6 million of current maturities as of December 31, 2018.
semi-annually in January and July.
•No borrowings under the $275$375 million senior secured revolving credit facility under our Amended 2017 Credit Agreementcurrent credit agreement with a Canadian sub-limit of $15$15 million. $300 million. Borrowings under of the senior secured revolving credit facility bearbears interest at LIBOR plus 350 bps or Canadian Dollar Offered Rate ("CDOR") plus 200 bps. The revolving credit facility is scheduled to mature in April 2022250 bps and also provides for the issuance of documentary and standby letters of credit. The Amended 2017 Credit Agreement requires the payment of a 37.562.5 bps commitment fee per annum on the unused portion of the credit facilities.
As of December 31, 2018 and December 31, 2017, before reduction for debt issuance costs and original issue discount, we had $735.0 The remaining $75 million of variable-rate term debt, $950.0the revolving credit facility bears interest at LIBOR plus 300 bps or CDOR plus 200 bps and requires the payment of a 37.5 bps commitment fee per annum on the unused portion of the credit facilities. $300 million of outstanding fixed-rate notes, and no borrowings outstanding under ourthe revolving credit facility.facility is scheduled to mature in December 2023 and $75 million of the revolving credit facility is scheduled to mature in April 2022. The credit agreement provides for the issuance of documentary and standby letters of credit. After letters of credit, which totaled $15.4$15.8 million as of December 31, 20182021 and $15.9 million as of December 31, 2017,2020, we had available borrowings under our revolving credit facility of $259.6$359.2 million as of December 31, 2021 and $259.1$359.1 million respectively. Theas of December 31, 2020. Our
letters of credit are primarily in place to backstop insurance arrangements. We did not borrow on the revolving credit facility during 2021. During the year ended December 31, 2020, the maximum outstanding balance under our revolving credit facility was $60.0$140.0 million.
On December 17, 2021, we redeemed $450 million duringof 5.375% senior unsecured notes, which otherwise would have matured in June 2024, at a redemption price equal to 100.896% of the year endedprincipal amount plus accrued and unpaid interest. We further amended the 2017 Credit Agreement in December 31, 2018 and $110.0 million during2021 to allow for the year ended December 31, 2017.redemption of the 2024 senior notes.
As of December 31, 2018, we have eight interest rate swap agreements that convert $500 million of variable-rate debt to a fixed rate. Four of these agreements fix our variable-rate debt at 4.39%2021 and mature on December 31, 2020. The other four agreements fix our variable-rate debt at 4.63% for the period December 31, 2020, through December 31, 2023. As of December 31, 2017, we had four interest rate swap agreements with a notional value of $500 million that convert $500 million of variable-rate debtone-month variable rate LIBOR to a fixed rate of 4.39% and mature on2.88% through December 31, 2020.2023. This results in a 4.63% fixed interest rate for borrowings under our senior secured term loan facility after the impact of interest rate swap agreements. None of our interest rate swapsswap agreements were designated as cash flow hedges in the periods presented. As of December 31, 2018,2021 and December 31, 2020, the fair market value of our swap portfolio was a liability of $6.7 million compared with a liability of $8.7 million as of December 31, 2017. In both periods presented, the fair value of our swap portfolio was classified as long-term and recorded in "Derivative Liability". Additional detail regarding our swap arrangements is provided in Note 6 to our Consolidated Financial Statements. within the consolidated balance sheets.
The Amended 2017 Credit Agreement, includesas amended, includes: (i) a ConsolidatedSenior Secured Leverage Ratio of 4.50x Total First Lien Senior Secured Debt-to-Consolidated EBITDA starting with the first quarter of 2022, which if breachedwill step down to 4.00x in the second quarter of 2023 and which will step down further to 3.75x in the third quarter of 2023, with the covenant calculations for any reasonthe first, second, and not cured could resultthird quarters in an event2022 to include Consolidated EBITDA from the second, third and fourth quarters of default. The ratio is setthe fiscal year ended December 31, 2019 in lieu of the Consolidated EBITDA for the corresponding quarters in 2021 ("Deemed EBITDA Quarters"); (ii) a requirement that we maintain a minimum liquidity level of at a maximum of 5.50x Consolidated Total Debt-to-Consolidated EBITDA. Asleast $125 million, tested at all times, until the earlier of December 31, 2018, we2022 or the termination of the Additional Restrictions Period (which generally includes the period from the effective date of the Second Amendment until the delivery of the compliance certificate for the fourth quarter of 2022); and (iii) a suspension of certain Restricted Payments, including partnership distributions, under the credit agreement until the termination of the Additional Restrictions Period. We may terminate the Additional Restrictions Period prior to December 31, 2022 by achieving compliance with the Senior Secured Leverage Ratio covenant as of the end of a fiscal quarter without giving effect to Deemed EBITDA Quarters for any fiscal quarter. We were in compliance with thisthe applicable financial condition covenant and all other covenants under the Amended 2017 Credit Agreement.our credit agreement during 2021.
Our long-term debtfixed rate note agreements include Restricted Payment provisions.provisions, which could limit our ability to pay partnership distributions. Pursuant to the terms of the indenture governing the June 20142027 senior notes, which includes the most restrictive of these Restricted Payments provisions under our fixed rate note agreements, if our pro forma Total-Indebtedness-to-Consolidated-Cash-Flow Ratio is greater than 5.25x, we can still make Restricted Payments of $60$100 million annually so long as no default or event of default has occurred and is continuing, and we can make additional Restricted Payments ifcontinuing. If our pro forma Total-Indebtedness-to-Consolidated-Cash-Flow Ratio is less than or equal to 5.00x.5.25x, we can make Restricted Payments up to our Restricted Payment pool. Our pro forma Total-Indebtedness-to-Consolidated-Cash-Flow Ratio was greater than 5.25x as of December 31, 2021.
As market conditions warrant, we may from time to time repurchase our outstanding debt securities, issued by the Partnership, in privately negotiated or open market transactions, by tender offer, exchange offer or otherwise.
In accordance with
Financial and Non-Financial Disclosure About Issuers and Guarantors of our debt provisions, on October 30, 2018,Registered Senior Notes
As discussed within the Long-Term Debt footnote at Note 8, we announcedhad four tranches of fixed rate senior notes outstanding at December 31, 2021: the declaration of a distribution of $0.925 per limited partner unit, which was paid2025, 2027, 2028 and 2029 senior notes. The 2024 senior notes were fully redeemed on December 17, 2018.
Existing2021. The 2024, 2027, 2028 and 2029 senior notes (the “registered senior notes”) were registered under the Securities Act of 1933. The 2025 senior notes were sold in a private placement in reliance on exemptions from registration under the Securities Act of 1933. Cedar Fair, L.P., Canada's Wonderland Company ("Cedar Canada"), and Magnum Management Corporation ("Magnum") were the co-issuers of the 2024 senior notes. Cedar Fair, L.P., Cedar Canada, Magnum, and Millennium Operations LLC (“Millennium”) are the co-issuers of the 2027, 2028 and 2029 senior notes. Our senior notes have been irrevocably and unconditionally guaranteed, on a joint and several basis, by each wholly owned subsidiary of Cedar Fair (other than the co-issuers) that guarantees our credit facilities under our credit agreement. A full listing of the issuers and cash flowsguarantors of our registered senior notes can be found within Exhibit 22, and additional information with respect to our registered senior notes and the related guarantees follows.
The 2027, 2028 and 2029 senior notes each rank equally in right of payment with all of each issuer’s existing and future senior unsecured debt, including the other registered senior notes. However, the 2027, 2028 and 2029 senior notes rank effectively junior to our secured debt under the 2017 Credit Agreement, as amended, and the 2025 senior notes to the extent of the value of the assets securing such debt.
In the event that the co-issuers (except for Cedar Fair, L.P.) or any subsidiary guarantor is released from operationsits obligations under our senior secured credit facilities (or the 2017 Credit Agreement, as amended), such entity will also be released from its obligations under the registered senior notes. In addition, the co-issuers (except for Cedar Fair, L.P.) or any subsidiary guarantor can be released from its obligations under the 2027, 2028 and 2029 senior notes under the following circumstances, assuming the associated transactions are expectedin compliance with the applicable provisions of the indentures governing the 2027, 2028 and 2029 senior notes: i) any direct or indirect sale, conveyance or other disposition of the capital stock of such entity following which the entity ceases to be sufficienta direct or indirect subsidiary of Cedar Fair or a sale or disposition of all or substantially all of the assets of such entity; ii) if such entity is dissolved or liquidated; iii) if we designate such entity as an Unrestricted Subsidiary; iv) upon transfer of such entity in a qualifying transaction if following such transfer the entity ceases to meet working capital needs, debt service, partnership distributionsbe a direct or indirect Restricted Subsidiary of Cedar Fair or is a Restricted Subsidiary that is not a guarantor under any credit facility; or v) in the case of the subsidiary guarantors, upon a discharge of the indenture or upon any legal defeasance or covenant defeasance of the indenture.
The obligations of each guarantor are limited to the extent necessary to prevent such guarantee from constituting a fraudulent conveyance or fraudulent transfer under applicable law. This provision may not, however, protect a guarantee from being voided under fraudulent transfer law, or may reduce the applicable guarantor’s obligation to an amount that effectively makes its guarantee worthless. If a guarantee were rendered voidable, it could be subordinated by a court to all other indebtedness of the guarantor, and planned capital expenditures fordepending on the foreseeable future.amount of such indebtedness, could reduce the guarantee to zero. Each guarantor that makes a payment or distribution under a guarantee is entitled to a pro rata contribution from each other guarantor based on the respective net assets of the guarantors.
Contractual Obligations
The following table summarizes certain obligations (on an undiscounted basis)tables provide summarized financial information for each of our co-issuers and guarantors of the 2024, 2027, 2028 and 2029 senior notes (the "Obligor Group"). We presented each entity that is or was a co-issuer of any series of the registered senior notes separately. The subsidiaries that guarantee the 2027, 2028 and 2029 senior notes are presented on a combined basis with intercompany balances and transactions between entities in such guarantor subsidiary group eliminated. Intercompany balances and transactions between the co-issuers and guarantor subsidiaries have not been eliminated. The subsidiaries that guaranteed the 2024 senior notes included the guarantor subsidiary group, as well as Millennium. Millennium is a co-issuer under the 2027, 2028 and 2029 senior notes and was a guarantor under the 2024 senior notes. Certain subsidiaries of Cedar Fair did not guarantee our credit facilities or senior notes as the assets and results of operations of these subsidiaries were immaterial (the "non-guarantor" subsidiaries). The summarized financial information excludes results of the non-guarantor subsidiaries and does not reflect investments of the Obligor Group in the non-guarantor subsidiaries. The Obligor Group's amounts due from, amounts due to, and transactions with the non-guarantor subsidiaries have not been eliminated and included intercompany receivables from non-guarantors of $14.0 million and $11.5 million as of December 31, 2018:2021 and December 31, 2020, respectively.
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| Payments Due by Period |
(In thousands) | Total | | 2019 | | 2020-2021 | | 2022-2023 | | 2024 - Thereafter |
Long-term debt (1) | $ | 2,205,956 |
| | $ | 87,694 |
| | $ | 178,394 |
| | $ | 177,325 |
| | $ | 1,762,543 |
|
Capital expenditures (2) | 82,921 |
| | 70,828 |
| | 12,093 |
| | — |
| | — |
|
Lease & other obligations (3) | 147,951 |
| | 22,087 |
| | 17,840 |
| | 16,515 |
| | 91,509 |
|
Total | $ | 2,436,828 |
| | $ | 180,609 |
| | $ | 208,327 |
| | $ | 193,840 |
| | $ | 1,854,052 |
|
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Summarized Financial Information
(In thousands) | | Cedar Fair L.P. (Parent) | | Magnum (Co-Issuer Subsidiary) | | Cedar Canada (Co-Issuer Subsidiary) | | Millennium (Co-Issuer 2027, 2028 & 2029 Guarantor 2024) | | Guarantor Subsidiaries (1) | | | | |
Balance as of December 31, 2021 | | | | | | | | | | | | |
Current Assets | | $ | 517 | | | $ | 97,221 | | | $ | 96,042 | | | $ | 572,865 | | | $ | 1,187,211 | | | | | |
Non-Current Assets | | (138,126) | | | 1,647,952 | | | 540,332 | | | 2,368,737 | | | 2,145,307 | | | | | |
Current Liabilities | | 410,779 | | | 1,331,130 | | | 29,050 | | | 227,483 | | | 58,949 | | | | | |
Non-Current Liabilities | | 147,021 | | | 21,274 | | | 24,043 | | | 2,385,100 | | | 97,803 | | | | | |
Balance as of December 31, 2020 | | | | | | | | | | | | |
Current Assets | | $ | 421 | | | $ | 33,985 | | | $ | 44,465 | | | $ | 464,779 | | | $ | 1,044,779 | | | | | |
Non-Current Assets | | (30,651) | | | 995,507 | | | 528,281 | | | 2,311,502 | | | 1,820,745 | | | | | |
Current Liabilities | | 488,799 | | | 573,244 | | | 18,235 | | | 200,107 | | | 40,412 | | | | | |
Non-Current Liabilities | | 146,106 | | | 44,778 | | | 461,903 | | | 2,370,939 | | | 91,835 | | | | | |
| |
(1) | Represents maturities and mandatory payments on long-term debt obligations, fixed interest on senior notes, variable interest on term debt assuming LIBOR interest rates as of December 31, 2018, and the impact of our various derivative contracts. See Note 5 to our Consolidated Financial Statements for further information. |
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(2) | Represents contractual obligations in place at year-end for the purchase of new rides, facilities, and attractions. Obligations not denominated in U.S. dollars have been converted based on the currency exchange rates as of December 31, 2018. |
| |
(3) | Represents contractual lease and purchase obligations in place at year-end. Obligations not denominated in U.S. dollars have been converted based on the currency exchange rates as of December 31, 2018. |
Off-Balance Sheet Arrangements
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Summarized Statement of Operations
(In thousands) | | Cedar Fair L.P. (Parent) | | Magnum (Co-Issuer Subsidiary) | | Cedar Canada (Co-Issuer Subsidiary) | | Millennium (Co-Issuer 2027 & 2029 Guarantor 2024) | | Guarantor Subsidiaries (1) | | | | |
Year Ended December 31, 2021 | | | | | | | | | | | | |
Net revenues | | $ | 35,908 | | | $ | 363,340 | | | $ | 75,353 | | | $ | 1,449,022 | | | $ | 344,778 | | | | | |
Operating income (loss) | | 31,808 | | | (156,079) | | | 12,545 | | | 136,844 | | | 124,405 | | | | | |
Net (loss) income | | (46,741) | | | (34,647) | | | 1,967 | | | — | | | 62,586 | | | | | |
| | | | | | | | | | | | | | |
Year Ended December 31, 2020 | | | | | | | | | | | | |
Net revenues | | $ | — | | | $ | 102 | | | $ | 440 | | | $ | 510,077 | | | $ | 150,439 | | | | | |
Operating (loss) income | | (198,769) | | | (322,420) | | | (37,655) | | | 109,688 | | | (121,437) | | | | | |
Net loss | | (588,690) | | | (359,984) | | | (54,046) | | | — | | | (149,704) | | | | | |
We had $15.4
(1)With respect to the 2024 senior notes, if the financial information presented for Millennium was combined with that of the other guarantor subsidiaries that have been presented on a combined basis, the following additional intercompany balances and transactions between Millennium and such other guarantor entities would be eliminated: Current Assets and Current Liabilities - $13.4 million of letters of credit, which are primarily in place to backstop insurance arrangements, outstanding on our revolving credit facility as of December 31, 2018. We have no2021 and $12.7 million as of December 31, 2020; Non-Current Assets - $2,254.9 million as of December 31, 2021 and $2,201.8 million as of December 31, 2020; and Net revenues - $126.6 million as of December 31, 2021 and $130.3 million as of December 31, 2020. Combined amounts for all guarantors of the 2024 senior notes for all other significant off-balance sheet financing arrangements.line items within the table would be computed by adding the amounts in the Millennium and Guarantor Subsidiaries columns.
Quantitative and Qualitative Disclosures about Market Risk
We are exposed to market risks from fluctuations in interest rates and to a lesser extent on currency exchange rates on our operations in Canada, and from time to time, on imported rides and equipment. The objective of our financial risk management is to reduce the potential negative impact of interest rate and foreign currency exchange rate fluctuations to acceptable levels. We do not acquire market risk sensitive instruments for trading purposes.
We manage interest rate risk through the use ofusing a combination of fixed-rate long-term debt, interest rate swaps that fix a portion of our variable-rate long-term debt, and variable-rate borrowings under our revolving credit facility. Translation exposures with regard to our Canadian operations are not hedged.
None of our interest rate swap agreements are designated as hedging instruments. Changes in fair value of derivative instruments that do not qualify for hedge accounting or were de-designated are reported as "Net effect of swaps" in the consolidated statementstatements of operations and comprehensive income. Additionally, the "Other comprehensive income (loss)" related to interest rate swaps that have been de-designated is amortized through the original maturity of the interest rate swap and reported as a component of "Net effect of swaps" in the consolidated statement of operations and comprehensive income.
As of December 31, 2018,2021, on an adjusted basis after giving effect to the impact of interest rate swap agreements, and before reduction for debt issuance costs and original issue discount, $1,450 millionall of our outstanding long-term debt represented fixed-rate debt and $235 million represented variable-rate debt. Assuming an average balance on ourexcept for revolving credit borrowings. Assuming no revolving credit borrowings, of approximately $13.2 million, a hypothetical 100 bps increase in 30-day LIBOR on our variable-rate debt (not(including term debt and not considering the impact of our interest rate swaps) would lead to an increase of approximately $7.5$2.6 million in annual cash interest costs.costs over the next twelve months.
Assuming a hypothetical 100 bps increase in 30-day LIBOR, the amount of net cash interest paid on our derivative portfolio would decrease by $5.0$2.6 million over the next year.twelve months.
A uniform 10% strengthening of the U.S. dollar relative to the Canadian dollar would result in a $3.0$1.0 million decrease in annual operating income.income for the year ended December 31, 2021.
Impact of Inflation
Substantial increases in costs and expenses could impact our operating results to the extent such increases could not be passed along to our guests. In particular, the majority of our employees are seasonal and are paid hourly rates which are consistent with federal and state minimum wage laws. In addition, increases in full-time labor, supplies, taxes, and utility expenses could have an impact on our operating results. Historically, we have been able to pass along cost increases to guests through increases in admission, food, merchandise and other prices, and we believe that we will continue to have the ability to do so over the long term.
Forward Looking Statements
Some of the statements contained in this report (including the "Management's Discussion and Analysis of Financial Condition and Results of Operations" section) that are not historical in nature are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including statements as to our expectations, beliefs and strategies regarding the future. These forward-looking statements may involve risks and uncertainties that are difficult to predict, may be beyond our control and could cause actual results to differ materially from those described in such statements. Although we believe that the expectations reflected in such forward-looking statements are reasonable, we can give no assurance that such expectations will prove to be correct.correct, including the timing of any debt paydown or payment of partnership distributions, or that our growth strategies will achieve the targeted results. Important factors, including those listed under Item 1A in this Form 10-K could adversely affect our future financial performance, as well as the timing of any debt paydown or payment of partnership distributions, and our growth strategies, and cause actual results to differ materially from our expectations. In addition, the proposed purchase of the land currently leased from the City of Santa Clara is subject to the risk that we may be unable to obtain the required governmental approval, that any conditions to the purchase are not satisfied or that required approvals may not be able to be obtained on expected or acceptable terms, which could cause the parties to abandon the transaction. We do not undertake any obligation to publicly update or revise any forward-looking statements to reflect future events, information or circumstances that arise after the filing date of this document.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
The information appearing under the subheading "Quantitative and Qualitative Disclosures about Market Risk" under the heading "Management's Discussion and Analysis of Financial Condition and Results of Operations" of this Report is incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
Quarterly operating results for 2018 and 2017 are presented in the table below:CEDAR FAIR, L.P.
FINANCIAL STATEMENTS INDEX |
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Unaudited (In thousands, except per unit amounts) | | Net revenues | | Operating income (loss) | | Net income (loss) | | Net income (loss) per limited partner unit-basic | | Net income (loss) per limited partner unit-diluted |
2018 | | | | | | | | | | |
1st Quarter | | $ | 54,727 |
| | $ | (75,647 | ) | | $ | (83,400 | ) | | $ | (1.49 | ) | | $ | (1.49 | ) |
2nd Quarter | | 380,316 |
| | 68,249 |
| | 19,243 |
| | 0.34 |
| | 0.34 |
|
3rd Quarter | | 663,703 |
| | 258,572 |
| | 213,307 |
| | 3.79 |
| | 3.76 |
|
4th Quarter | | 249,784 |
| | 39,345 |
| | (22,497 | ) | | (0.40 | ) | | (0.40 | ) |
| | $ | 1,348,530 |
| | $ | 290,519 |
| | $ | 126,653 |
| | 2.25 |
| | 2.23 |
|
2017 | | | | | | | | | | |
1st Quarter | | $ | 48,318 |
| | $ | (75,961 | ) | | $ | (64,754 | ) | | $ | (1.16 | ) | | $ | (1.16 | ) |
2nd Quarter | | 392,798 |
| | 95,313 |
| | 31,368 |
| | 0.56 |
| | 0.55 |
|
3rd Quarter | | 652,689 |
| | 256,139 |
| | 191,315 |
| | 3.41 |
| | 3.38 |
|
4th Quarter (1) | | 228,162 |
| | 19,720 |
| | 57,547 |
| | 1.03 |
| | 1.01 |
|
| | $ | 1,321,967 |
| | $ | 295,211 |
| | $ | 215,476 |
| | 3.84 |
| | 3.79 |
|
Cedar Fair, L.P.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the auditaudits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. fraud, and whether effective internal control over financial reporting was maintained in all material respects.
We have served as the Partnership’s auditor since 2004.
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
CEDAR FAIR, L.P.
CEDAR FAIR, L.P.
Cedar Fair, L.P. (together with its affiliated companies, the "Partnership") is a Delaware limited partnership that commenced operations in 1983 when it acquired Cedar Point, Inc., and became a publicly traded partnership in 1987. The Partnership's general partner is Cedar Fair Management, Inc., an Ohio corporation (the “General Partner”), whose shares are held by an Ohio trust. The General Partner owns a 0.001% interest in the Partnership's income, losses and cash distributions, except in defined circumstances, and has full responsibility for management of the Partnership. As of December 31, 2018,2021, there were 56,563,93356,854,214 outstanding limited partnership units listed on The New York Stock Exchange, net of 498,050207,769 units held in treasury. As of December 31, 2017,2020, there were 56,358,79256,706,338 outstanding limited partnership units listed, net of 703,191355,645 units held in treasury.
The General Partner may, with the approval of a specified percentage of the limited partners, make additional capital contributions to the Partnership, but is only obligated to do so if the liabilities of the Partnership cannot otherwise be paid or there exists a negative balance in its capital account at the time of its withdrawal from the Partnership. The General Partner, in accordance with the terms of the Partnership Agreement, is required to make regular cash distributions on a quarterly basis of all the Partnership's available cash, as defined in the Partnership Agreement. InFollowing the closure of our parks in March 2020 in response to COVID-19 health recommendations, the Board of Directors suspended quarterly partnership distributions to maintain flexibility and additional liquidity. The Board of Directors is committed to reinstitute quarterly partnership distributions in accordance with the Partnership Agreement when it is appropriate to do so, and restrictions withinit is permissible under the Partnership's Amended 2017 Credit Agreement, as amended, and prior credit agreements, the General Partner paid $3.595 per limited partner unit in distributions, or approximately $203.2 million in aggregate, in 2018.our other debt covenants.
The consolidated financial statements include the accounts of the Partnership and its subsidiaries, all of which are wholly owned.owned or the Partnership is the primary beneficiary. Intercompany transactions and balances are eliminated in consolidation.
The U.S. dollar is theour reporting currency for the Partnership and the functional currency for the majoritymost of the Partnership'sour operations. The financial statements of the Partnership'sour Canadian subsidiary are measured using the Canadian dollar as its functional currency. Assets and liabilities are translated into U.S. dollars at the appropriate spot rates as of the balance sheet date, while income and expenses are translated at average monthly exchange rates. Translation gains and losses are included as components of accumulated other comprehensive (loss) income in partners' equity.equity (deficit). Gains or losses from remeasuring foreign currency transactions from the transaction
Property and equipment are recorded at cost. Expenditures made to maintain such assets in their original operating condition are expensed as incurred, and improvements and upgrades are generally capitalized. Depreciation is computed on a straight-line basis over the estimated useful lives of the assets. Depreciation expense totaled $154.9$148.4 million in 2018, $152.52021, $157.0 million in 2017,2020, and $131.2$169.8 million in 2016.2019.
Self-Insurance Reserves
ReservesSelf-insurance reserves are recorded for the estimated amounts of guest and employee claims and related expenses incurred each period. Reserves are established for both identified claims and incurred but not reported (IBNR) claims. Such amounts("IBNR") claims and are accrued forrecorded when claim amounts become probable and estimable. Reserves for identified claims are based upon the Partnership's ownour historical claimsclaim experience and third-party estimates of settlement costs. Reserves for IBNR claims which are not material to our consolidated financial statements, are based upon the Partnership's ownour claims data history. All self-insuranceSelf-insurance reserves are periodically reviewed for changes in facts and circumstances and adjustments are made as necessary. As of December 31, 20182021 and December 31, 2017,2020, the accrued self-insurance reserves totaled $24.0$24.6 million and $25.1$22.3 million, respectively.
Derivative Financial Instruments
The Partnership isWe are exposed to market risks, primarily resulting from changes in interest rates and currency exchange rates. To manage these risks, itwe may enter into derivative transactions pursuant to itsour overall financial risk management program. The Partnership doesWe do not use derivative financial instruments for trading purposes.
The Partnership accounts for the use of derivative financial instruments according to FASB ASC 815 - Derivatives and Hedging. As of December 31, 2018, the Partnership2021, we had no derivatives designated as cash flow hedges. Instruments that do not qualify for hedge accounting or were de-designated are prospectively adjusted to fair value each reporting period through "Net effect of swaps".
Leases
We have commitments under various operating leases. Right-of-use assets and lease liabilities are recognized at the present value of the future lease payments at the lease commencement date. The discount rate used to determine the present value of the future lease payments is our incremental borrowing rate as the rate implicit in most of our leases is not readily determinable. As a practical expedient, a relief provided in the accounting standard to simplify compliance, we do not recognize right-of-use assets and lease liabilities for leases with an original term of one year or less and have elected to not separate lease components from non-lease components. The current portion of our lease liability is recorded within "Other accrued liabilities" in the consolidated balance sheets.
Revenue Recognition and related receivables and contract liabilities
The Partnership adopted Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers ("ASU 2014-09") effective January 1, 2018 using the modified retrospective method. The adoption of the standard did not have a material effect on the consolidated financial statements. The Partnership's accounting policy as a result of adopting ASU 2014-09 is discussed below:
As disclosed within the consolidated statements of operations and comprehensive (loss) income, revenues are generated from sales of (1) admission to the Partnership'sour amusement parks and water parks, (2) food, merchandise and games both inside and outside the parks, and (3) accommodations, extra-charge products, and other revenue sources. Admission revenues include amounts paid to gain admission into the Partnership'sour parks, including parking fees. Revenues related to extra-charge products, including premium benefit offerings such as front-of-line products, and online transaction fees charged to customers are included in "Accommodations, extra-charge products and other".
The following table presents the Partnership's revenues disaggregated by revenues generated within the parks and revenues generated from out-of-park operations less amounts remitted to outside parties under concessionaire arrangements, described below, for the periods presented:
|
| | | | | | | | | | | | |
| | Years Ended December 31, |
(In thousands) | | 2018 | | 2017 | | 2016 |
In-park revenues | | $ | 1,235,742 |
| | $ | 1,216,698 |
| | $ | 1,177,447 |
|
Out-of-park revenues | | 152,216 |
| | 143,763 |
| | 146,137 |
|
Concessionaire remittance | | (39,428 | ) | | (38,494 | ) | | (34,863 | ) |
Net revenues | | $ | 1,348,530 |
| | $ | 1,321,967 |
| | $ | 1,288,721 |
|
Due to the Partnership'sour highly seasonal operations, a substantial portion of the Partnership'sour revenues typically are generated during an approximate 130- to 140-day operating season. Most revenues are recognized on a daily basis based on actual guest spend at theour properties. Revenues from multi-use products, including season-long products for admission, dining, beverage and other products, are recognized over the estimated number of uses expected for each type of product. The estimated number of uses is reviewed and may be updated periodically during the operating season prior to the ticket or product expiration, which generally occurs no later than the close of the operating season. The number of uses is estimated based on historical usage adjusted for current period trends. For any bundled products that include multiple performance obligations, revenue is allocated using the retail price of each distinct performance obligation and any inherent discounts are allocated based on the gross margin and expected redemption of each performance obligation. The Partnership doesWe do not typically provide for refunds or returns.
In some instances, the Partnership arrangeswe arrange with outside parties ("concessionaires") to provide goods to guests, typically food and merchandise, and the Partnership actswe act as an agent, resulting in net revenuerevenues recorded within the income statement.consolidated statements of operations and comprehensive (loss) income. Concessionaire arrangement revenues are recognized over the operating season and are variable. Sponsorship revenues and marina revenues, which are classified as "Accommodations, extra-charge products and other" within the income statement,other," are recognized over the park operating season which represents the period in which the performance obligations are satisfied. Sponsorship revenues are typically fixed. However, some sponsorship revenues are variable based on achievement of specified operating metrics. The Partnership estimatesWe estimate variable revenues and performsperform a constraint analysis using both historical information and current trends to determine the amount of revenue that is not probable of a significant reversal.
Many products, including season-long products, are sold to customers in advance, resulting in a contract liability ("deferred revenue"). Deferred revenue is at its highest immediately prior to the peak summer season, and at its lowest in the fall after the peak summer season and at the beginning of the selling season for the next year's products. Season-long products represent the majority of the deferred revenue balance in any given period.
Of the $86.1 million of deferred revenue recorded as of January 1, 2018, 88% was related to season-long products. The remainder was related to deferred online transaction fees charged to customers, advanced ticket sales, marina deposits, advanced resort reservations, and other deferred revenue. Deferred revenue outstanding as of January 1, 2018 was recognized by December 31, 2018 with the exception of an immaterial amount
of deferred revenue for prepaid products such as gift cards and prepaid games cards. The difference in the opening and closing balances of the Partnership's deferred revenue balance in the current period was attributable to additional season-long product sales during the current year for the 2019 operating season.
Payment is due immediately on the transaction date for most products. The Partnership's receivable balance includes outstanding amounts on installment purchase plans which are offered for season-long products (and other select products for specific time periods), and includes sales to retailers, group sales and catering activities which are billed. Installment purchase plans vary in length from three monthly installments to twelve monthly installments. Payment terms for billings are typically net 30 days. Receivables are highest in the peak summer months and the lowest in the winter months. The Partnership is not exposed to a significant concentration of customer credit risk. As of December 31, 2018 and December 31, 2017, the Partnership recorded a $2.6 million and $2.2 million allowance for doubtful accounts, respectively, representing estimated defaults on installment purchase plans. The default estimate is calculated using the historical default rate adjusted for current period trends. The allowance for doubtful accounts is recorded as a reduction of deferred revenue to the extent revenue has not been recognized on the corresponding season-long products.
Most deferred revenue from contracts with customers is classified as current within the balance sheet. However, a portion of deferred revenue from contracts with customers is typically classified as non-current during the third quarter relateddue to season-long products sold starting in the current season for use in the subsequent season. Season-long products are typically sold beginning in August of the year preceding the operating season. Season-long products may subsequently be recognized 12 to 16 months after purchase depending on the date of sale. The Partnership estimatesWe estimate the number of uses expected outside of the next twelve months for each type of product and classifiesclassify the related deferred revenue as non-current.non-current in the consolidated balance sheets.
With the exception ofExcept for the non-current deferred revenue described above, the Partnership'sour contracts with customers typically have an original duration of one year or less. For these short-term contracts, the Partnership useswe use the practical expedient a relief provided in the accounting standard to simplify compliance, applicable to such contracts and hashave not disclosed the transaction price for the remaining performance obligations as of the end of each reporting period or when the Company expectswe expect to recognize this revenue. Further, the Partnership haswe elected to recognize incremental costs of obtaining a contract as an expense when incurred as the amortization period of the asset would be less than one year. Lastly, the Partnership haswe elected not to adjust consideration
for the effects of significant financing components in the form of our installment purchase plans asbecause the period between when the entity transfers the promised service to the customer and when the customer pays for that service doesterms of these plans do not exceed one year.
Advertising Costs
Production costs of commercials and programming are expensed in the year first aired. All other costs associated with advertising, promotion and marketing programs are expensed as incurred, or for certain costs, over each park's operating season. Advertising expense totaled $65.5 million in 2018, $63.9 million in 2017 and $60.8 million in 2016. Certain prepaid costs incurred through year-end for the following year's advertising programs are included within "Other current assets" in Other current assets.the consolidated balance sheets. Advertising expense totaled $37.0 million in 2021, $10.5 million in 2020 and $67.9 million in 2019. Due to the effects of the COVID-19 pandemic, we suspended all advertising costs in 2020 effective April 2020. For those parks which ultimately opened in 2020, we incurred limited incremental advertising expense for the remainder of 2020 to correspond with lower than typical attendance levels and abbreviated park operating calendars. In 2021, we also incurred less advertising costs than in previous years due to fewer operating days in the year, as well as the execution of a more efficient marketing program.
Equity-Based Compensation
The Partnership accounts for equity-based compensation in accordance with FASB ASC 718 - Compensation - Stock Compensation which requires measurement ofWe measure compensation cost for all equity-based awards at fair value on the date of grant and recognition ofgrant. We recognize the compensation cost over the service period for awards expected to vest. The Partnership recognizesperiod. We recognize forfeitures as they occur.
Income Taxes
The Partnership'sOur legal entity structure includes both partnerships and corporate subsidiaries. As aWe are subject to publicly traded partnership tax ("PTP tax") on certain partnership level gross income (net revenues less cost of food, merchandise, and games revenues), state and local income taxes on partnership income, U.S. federal state and local income taxes on income from our corporate subsidiaries and foreign income taxes on our foreign subsidiary. As such, the Partnership is subject to an entity-leveltotal (benefit) provision for taxes includes amounts for the PTP gross income tax (the "PTP tax"). Accordingly,and federal, state, local and foreign income taxes. Under applicable accounting rules, the Partnership itself is not subject to corporatetotal (benefit) provision for income taxes; rather,taxes includes the Partnership'samount of taxes payable for the current year and the impact of deferred tax attributes (except thoseassets and liabilities, which represents future tax consequences of the corporate subsidiaries)events that are includedrecognized in different periods in the financial statements than for tax returns of its partners. The Partnership's corporate subsidiaries are subject to entity-level income taxes.purposes.
Neither the Partnership's financial reporting income, nor the cash distributions to unitholders, can be used as a substitute for the detailed tax calculations that the Partnershipwe must perform annually for itsour partners. Net income from the Partnership is not treated as passive income for federal income tax purposes. As a result, partners subject to the passive activity loss rules are not permitted to offset income from the Partnership with passive losses from other sources.
The Partnership'sOur corporate subsidiaries account for income taxes under the asset and liability method. Accordingly, deferred tax assets and liabilities are recognized for the future book and tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are determined using enacted tax rates expected to apply in the year in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax law is recognized in income at the time of enactment of such change in tax law. Any interest or penalties due for payment of income taxes are included in the (benefit) provision for income taxes. The Partnership's total provision for taxes includes PTP taxes owed (see Note 9 to the Consolidated Financial Statements).
Earnings Per Unit
For purposes of calculating the basic and diluted earnings per limited partner unit, no adjustments have been made to the reported amounts of net (loss) income. The unit amounts used in calculating the basic and diluted earnings per limited partner unit for the years ended December 31, 2018, 20172021, 2020 and 20162019 are as follows:
| | | | | | | | | | | | | | | | | | | | |
| | Years Ended December 31, |
(In thousands, except per unit amounts) | | 2021 | | 2020 | | 2019 |
Basic weighted average units outstanding | | 56,610 | | | 56,476 | | | 56,349 | |
Effect of dilutive units: | | | | | | |
| | — | | | — | | | 50 | |
| | — | | | — | | | 118 | |
| | — | | | — | | | 275 | |
| | — | | | — | | | 129 | |
| | | | | | |
Diluted weighted average units outstanding | | 56,610 | | | 56,476 | | | 56,921 | |
Net (loss) income per unit - basic | | $ | (0.86) | | | $ | (10.45) | | | $ | 3.06 | |
Net (loss) income per unit - diluted | | $ | (0.86) | | | $ | (10.45) | | | $ | 3.03 | |
|
| | | | | | | | | | | | |
| | Years Ended December 31, |
| | 2018 | | 2017 | | 2016 |
| | (In thousands, except per unit amounts) |
Basic weighted average units outstanding | | 56,212 |
| | 56,061 |
| | 55,933 |
|
Effect of dilutive units: | | | | | | |
| | 48 |
| | 42 |
| | 31 |
|
| | 135 |
| | 188 |
| | 181 |
|
| | 312 |
| | 324 |
| | 288 |
|
| | 153 |
| | 185 |
| | 129 |
|
Diluted weighted average units outstanding | | 56,860 |
| | 56,800 |
| | 56,562 |
|
Net income per unit - basic | | $ | 2.25 |
| | $ | 3.84 |
| | $ | 3.18 |
|
Net income per unit - diluted | | $ | 2.23 |
| | $ | 3.79 |
| | $ | 3.14 |
|
TheThere were approximately 0.4 million and 0.3 million potentially dilutive units excluded from the computation of diluted loss per limited partner unit for the years ended December 31, 2021 and 2020, respectively, as their effect of out-of-the-money and/or antidilutive unit options, had they not been out of the money or antidilutive, would have been immaterialanti-dilutive due to the net loss in all periods presented.the period.
Adopted Accounting Pronouncements
In February 2016,December 2019, the FASB issued Accounting Standards Update No. 2016-02, Leases2019-12, Simplifying the Accounting for Income Taxes ("ASU 2016-02"2019-12"). The ASU requires the recognition of lease assets and lease liabilities within the balance sheet by lessees for operating leases, as well as requires additional disclosures in the consolidated financial statements regarding the amount, timing, and uncertainty of cash flows arising from leases. The ASU does not significantly change the recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee, nor does the ASU change2019-12 simplifies the accounting appliedfor income taxes by a lessor.removing specific exceptions and clarifying and amending existing guidance under Topic 740, Income Taxes. ASU 2016-02 is effective for annual and interim periods beginning after December 15, 2018. The ASU can be adopted using either the modified retrospective approach, which requires application of the new standard at the beginning of the earliest comparative period presented, or the comparative reporting approach allowable under ASU 2018-11, which requires application of the new standard at the adoption date. The Partnership adopted this standard in the first quarter of 2019 using the comparative reporting approach. The Partnership elected not to reassess: whether any expired or existing contracts are or contain leases; the lease classification of any expired or existing leases; and the initial direct costs for any existing leases. The adoption of the standard is expected to result in the recognition of right-of-use assets and corresponding lease liabilities between $65.0 million and $75.0 million for the Partnership's Santa Clara land lease, as well as other operating leases.
Other Adopted Accounting Pronouncements
In February 2018, the FASB issued Accounting Standards Update No. 2018-02, Reclassification of Certain Tax Effects from Accumulated Comprehensive Income ("ASU 2018-02"). The ASU allows a reclassification from accumulated other comprehensive income to retained earnings of stranded tax effects resulting from the Tax Cuts and Jobs Act. ASU 2018-022019-12 is effective for fiscal years after December 15, 2018,2020 and interim periods within those fiscal years. Early adoption is permitted, including adoption in any interim period, and thebut all amendments canmust be applied eitheradopted in the periodsame period. The allowable adoption methods differ under the various amendments. We adopted ASU 2019-12 as of adoption or retrospectively to each period in whichJanuary 1, 2021. The standard did not have an effect on the effect of the change in the U.S. federal corporate income tax rate in the Tax Cutsconsolidated financial statements and Jobs Act is recognized. The Partnership elected to adopt ASU 2018-02 in the first quarter of 2018. The amendment was applied in the period of adoption and resulted in a $0.4 million reclassification from accumulated other comprehensive income to limited partners' equity during the first quarter ended March 25, 2018.related disclosures.
In August 2018,November 2021, the FASB issued Accounting Standards Update No. 2018-15, Customer's Accounting2021-10, Disclosures by Business Entities about Government Assistance ("ASU 2021-10"). ASU 2021-10 requires annual disclosures about transactions with a government that are accounted for Implementation Costs Incurred inby applying a Cloud Computing Arrangement that is a Service Contract ("grant or contribution accounting model by analogy. ASU 2018-15"). The ASU aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The capitalized implementation costs of a hosting arrangement that is a service contract will be expensed over the term of the hosting arrangement. ASU 2018-152021-10 is effective for financial statements issued for annual and interim periods beginning after December 15, 2019.2021. Early adoptionapplication is permitted, including adoption in any interim period.permitted. The amendments can be applied either prospectively or retrospectively. We adopted ASU 2021-10 retrospectively by providing the prescribed annual disclosures as part of these financial statements within the Income and Partnership Taxes footnote (see Note 12).
New Accounting Pronouncements
In March 2020, the FASB issued Accounting Standards Update No. 2020-04, Facilitation of the Effects of Reference Rate Reform on Financial Reporting ("ASU 2020-04"). ASU 2020-04 provides optional guidance to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on contracts, hedging relationships, and other transactions that reference London Interbank Offered Rate ("LIBOR") or prospectivelyanother reference rate expected to all implementation costs incurred afterbe discontinued because of reference rate reform. ASU 2020-04 is effective as of March 12, 2020 through December 31, 2022. In January 2021, the adoption date.FASB amended ASU 2020-04 by issuing Accounting Standards Update No. 2021-01, Reference Rate Reform Scope ("ASU 2021-01"). ASU 2021-01 clarifies the scope of optional expedients and exceptions to derivatives that are affected by the discounting transition. We are in the process of evaluating the effect these standards will have on the consolidated financial statements and related disclosures.
(4) Acquisitions:
On July 1, 2019, we completed the acquisition of 2 water parks and 1 resort in Texas, the Schlitterbahn Waterpark & Resort New Braunfels and the Schlitterbahn Waterpark Galveston ("Schlitterbahn parks"), for a cash purchase price of $257.7 million. The Partnership adopted this standardacquisition increased our presence in growing and attractive markets and further diversified our portfolio of properties. The Schlitterbahn parks are included within our single reportable segment of amusement/water parks with accompanying resort facilities.
The purchase price was allocated to the underlying assets acquired and liabilities assumed based upon management's estimated fair values at the date of acquisition. To the extent the purchase price exceeded the estimated fair value of the net identifiable tangible and intangible assets acquired, such excess was allocated to goodwill. Based on the fair value of the assets acquired and the liabilities assumed, goodwill of $178.0 million, property and equipment of $58.1 million, an indefinite-lived trade name of $23.2 million, covenants not to compete of $0.2 million and a net working capital deficit of $3.3 million were recorded. We also assumed a lease commitment for the land on which Schlitterbahn Waterpark Galveston is located. This land lease resulted in the recognition of an additional right-of-use asset totaling $6.8 million and an additional corresponding lease liability totaling $5.3 million. All goodwill is expected to be deductible for income tax purposes.
Due to the negative effects of the COVID-19 pandemic on our forecasted operating results, we tested the long-lived assets, goodwill and indefinite-lived intangible assets of the Schlitterbahn parks for impairment during the first and third quarters of 2020. This resulted in impairment charges at the Schlitterbahn parks of $2.7 million for long-lived assets, $73.6 million for goodwill and $7.9 million for the Schlitterbahn trade name during the first quarter of 2020, and $11.3 million for goodwill and $2.2 million for the Schlitterbahn trade name during the third quarter of 20182020 (see Note 6 and Note 7).
The results of the Schlitterbahn parks' operations from the date of acquisition, including $63.9 million, $10.9 million and $42.5 million of net revenues; and $7.8 million of net income, $121.7 million of net loss and $12.0 million of net income, are included within the consolidated statements of operations and comprehensive (loss) income for the years ended December 31, 2021, December 31, 2020 and December 31, 2019, respectively. If we had acquired the Schlitterbahn parks on January 1, 2019, our results for the year ended December 31, 2019 would have included net revenues and net income of approximately $69 million and $11 million, respectively. Related acquisition transaction costs totaled $7.0 million for the year ended December 31, 2019 and were included within "Selling, general and administrative expenses".
(5) Revenue Recognition:
As disclosed within the consolidated statements of operations and comprehensive (loss) income, revenues are generated from sales of (1) admission to our amusement parks and water parks, (2) food, merchandise and games both inside and outside the parks, and (3) accommodations, extra-charge products, and other revenue sources. Admission revenues include amounts paid to gain admission into our parks, including parking fees. Revenues related to extra-charge products, including premium benefit offerings such as front-of-line products, and online transaction fees charged to customers are included in "Accommodations, extra-charge products and other".
The following table presents net revenues disaggregated by revenues generated within the parks and revenues generated from out-of-park operations less amounts remitted to outside parties under concessionaire arrangements for the periods presented. The amounts are not comparable due to the effects of the COVID-19 pandemic.
| | | | | | | | | | | | | | | | | | | | |
| | Years Ended December 31, |
(In thousands) | | 2021 | | 2020 | | 2019 |
In-park revenues | | $ | 1,209,505 | | | $ | 120,370 | | | $ | 1,349,903 | |
Out-of-park revenues | | 167,978 | | | 67,375 | | | 168,708 | |
Concessionaire remittance | | (39,264) | | | (6,190) | | | (43,686) | |
Net revenues | | $ | 1,338,219 | | | $ | 181,555 | | | $ | 1,474,925 | |
Many products, including season-long products, are sold to customers in advance, resulting in a contract liability ("deferred revenue"). Deferred revenue is typically at its highest immediately prior to the peak summer season, and at its lowest at the beginning of the calendar year following the close of our parks' operating seasons. Season-long products represent most of the deferred revenue balance in any given period.
Due to the effects of the COVID-19 pandemic, we extended the validity of our 2020 season-long products through the 2021 operating season in order to ensure our season pass holders received a full season of access to our parks. In addition, four of our parks provided their season pass holders a loyalty reward to be used on purchases within the park during the 2021 operating season. We identified the loyalty reward as a separate performance obligation and allocated revenue to the season pass and loyalty reward in a manner consistent with other bundled products. The extended validity of the 2020 season-long products, and to a much lesser extent the loyalty reward offering, resulted in a significant amount of revenue deferred from 2020 into 2021.
All 2020 and 2021 season-long product revenue has been recognized as of December 31, 2021 except for season-long product extensions into 2022 at two parks. In the first quarter of 2021, Knott's Berry Farm offered a further day-for-day extension into calendar year 2022 for 2020 and 2021 season-long products for every day the park was closed in 2021, as well as a further extension for out-of-state season pass holders due to more restrictive state guidelines for out-of-state visitors. In the second quarter of 2021, Canada's Wonderland extended its 2020 and 2021 season-long products through September 5, 2022. No other parks offered similar plans. We expect deferred revenue related to these further extended season-long products to be realized within 12 months from the balance sheet date.
In order to calculate revenue recognized on these extended season-long products, management made significant estimates regarding the estimated number of uses expected for these season-long products for admission, dining, beverage and other products, including during interim periods. Actual results could materially differ from these estimates depending on the ultimate extent of the effects of the COVID-19 pandemic.
Of the $183.4 million of current deferred revenue recorded as of January 1, 2021, 90% was related to season-long products. The remainder was related to deferred online transaction fees charged to customers, advanced ticket sales, marina deposits, advanced resort reservations, and other deferred revenue. During the year ended December 31, 2021, approximately $163 million of the deferred revenue balance as of January 1, 2021 was recognized. Typically, all deferred revenue as of January 1, 2021 would have been recognized by December 31, 2021 except for an immaterial amount of deferred revenue for prepaid products such as gift cards and prepaid games cards. The deferred revenue unrecognized from the $183.4 million of current deferred revenue recorded as of January 1, 2021 was due to the extension of the validity of our 2020 and 2021 season-long products into the 2022 operating season at two of our parks. As of January 1, 2021, we also had recorded $10.5 million of non-current deferred revenue which largely represented prepaid lease payments for a portion of the California's Great America parking lot. The prepaid lease payments are being recognized through 2039.
Payment is due immediately on the transaction date for most products. Our receivable balance includes outstanding amounts on installment purchase plans which are offered for season-long products (and other select products for specific time periods), and includes sales to retailers, group sales and catering activities which are billed. Installment purchase plans vary in length from 3 monthly installments to 12 monthly installments. Payment terms for billings are typically net 30 days. Receivables in a typical operating year are highest in the peak summer months and lowest in the winter months. We are not exposed to a significant concentration of customer credit risk. As of December 31, 2021 and December 31, 2020, we recorded a $5.7 million and $8.7 million allowance for doubtful accounts, respectively, representing estimated defaults on installment purchase plans. The default estimate is calculated using historical default rates adjusted for current period trends. The allowance for doubtful accounts is recorded as a reduction of deferred revenue to the prospective method. The Partnership anticipatesextent revenue has not been recognized on the standardcorresponding season-long products. Due to lengthenthe effects of the COVID-19 pandemic and given the uncertainty around the timing of expense recognition associated with upcoming cloud-based projects.the reopening of our parks, we paused collections on our installment purchase plans in April 2020. For those parks which opened during the summer of 2020, we resumed collections of guest payments on installment purchase products as each of these parks opened for the 2020 operating season. For those parks which did not open during the summer of 2020, we resumed collections of guest payments in April 2021, except for Canada's Wonderland where we resumed collections in June 2021. As of December 31, 2021, all 2020 and 2021 installment plans had concluded.
(3)
(6) Long-Lived Assets:
Long-lived assets are reviewed for impairment upon the occurrence of events or changes in circumstances that would indicate that the carrying value of the assets may not be recoverable. In order to determine if an asset has been impaired, assets are grouped and tested at the lowest level for which identifiable, independent cash flows are available. A significant amount of judgment is involved in determining if an indicator of impairment has occurred. Such indicators may include, among others: a significant declinedecrease in expected future cash flows;the market price of a sustained,long-lived asset; a significant declineadverse change in equity price and market capitalization;the extent or manner in which a long-lived asset is being used or in its physical condition; a significant adverse change in legal factors or in the business climate; unanticipated competition;an accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of a long-lived asset; past, current or future operating or cash flow losses that demonstrate continuing losses associated with the use of a long-lived asset; and slower growth rates.a current expectation that a long-lived asset will be sold or disposed significantly before the end of its previously estimated useful life. Any adverse change in these factors could have a significant impact on the recoverability of these assets and could have a material impact on the Partnership's consolidated financial statements.
TheWe concluded indicators of impairment did not exist during 2021. We based our conclusion on our financial performance projections, as well as an updated analysis of macroeconomic and industry-specific conditions. During the first and third quarters of 2020 and due to the negative effects of the COVID-19 pandemic on our forecasted operating results, we tested our long-lived assetassets for impairment. We concluded the estimated fair values of the long-lived assets at the Schlitterbahn parks no longer exceeded the related carrying values during the first quarter of 2020. Therefore, we recorded a $2.7 million impairment test involves a two-step process. The first step is a comparison of each asset group'scharge equal to the difference between the fair value and the carrying value to its estimated undiscounted future cash flows expected to result from the useamounts of the assets in "Loss on impairment / retirement of fixed assets" within the consolidated statement of operations and comprehensive loss during the first quarter of 2020. The fair value of the long-lived assets was determined using a real and personal property appraisal which was performed in accordance with ASC 820 - Fair Value Measurement. We performed additional impairment testing during the third quarter of 2020 due to a further decline in our financial performance projections. Our impairment testing during the third quarter of 2020 resulted in no further impairment of our long-lived assets. Management made significant estimates in performing the impairment tests, including disposition. Projected futurethe anticipated time frame to re-open our parks and the related anticipated demand upon re-opening our parks. Actual results could materially differ from these estimates depending on the ultimate extent of the effects of the COVID-19 pandemic.
Remaining acreage from the former WildWater Kingdom, a separately gated outdoor water park located near Cleveland in Aurora, Ohio, was recorded within "Other Assets" in the prior period consolidated balance sheet ($2.1 million as of December 31, 2020). All remaining acreage from this property was sold during the second quarter of 2021.
(7) Goodwill and Other Intangible Assets:
Goodwill and other indefinite-lived intangible assets, including trade names are reviewed for impairment annually, or more frequently if indicators of impairment exist. During 2021, we concluded indicators of impairment did not exist. We based our conclusion on our financial performance projections, as well as an updated analysis of macroeconomic and industry-specific conditions. During the first and third quarters of 2020 and due to the negative effects of the COVID-19 pandemic on our forecasted operating results, we tested our goodwill and indefinite-lived intangible assets for impairment. We concluded the estimated fair value of goodwill at the Schlitterbahn parks and Dorney Park reporting units, and the estimated fair value of the Schlitterbahn trade name no longer exceeded their carrying values. Therefore, we recorded a $73.6 million, $6.8 million and $7.9 million impairment of goodwill at the Schlitterbahn parks, goodwill at Dorney Park, and the Schlitterbahn trade name, respectively, during the first quarter of 2020. We also recorded an $11.3 million, $2.3 million and $2.2 million impairment of goodwill at the Schlitterbahn parks, goodwill at Dorney Park, and the Schlitterbahn trade name, respectively, during the third quarter of 2020. The impairment charges were equal to the amount by which the carrying amounts exceeded the assets' fair value and were recorded in "Loss on impairment of goodwill and other intangibles" within the consolidated statement of operations and comprehensive loss. We performed our annual impairment test as of the first days of the fourth quarter in 2021 and 2020, respectively, and concluded there was no further impairment of the carrying value of goodwill or other indefinite-lived intangible assets in either period.
The fair value of our reporting units was established using a combination of an income (discounted cash flow) approach and market approach. The income approach used each reporting unit's projection of estimated operating results and discounted cash flows reflect management'susing a weighted-average cost of capital that reflected current market conditions. Estimated operating results were established using our best estimates of economic and market conditions over the projected period including growth rates in revenues and costs, estimates of future expected changes in operating margins and cash expenditures.expenditures, the anticipated time frame to re-open our parks, and the related anticipated demand upon re-opening our parks. Other significant estimates and assumptions includeincluded terminal value growth rates. Ifrates, future estimates of capital expenditures and changes in future working capital requirements. The market approach estimated fair value by applying cash flow multiples to each reporting unit's operating performance. The multiples were derived from comparable publicly traded companies with similar operating and investment characteristics of the reporting units. The impairment charges recognized were for the amount by which the reporting unit's carrying amount exceeded its fair value.
Our indefinite-lived intangible assets consist of trade names. The fair value of the asset group is higher than its undiscounted future cash flows, there is an indication thatour trade names was calculated using a relief-from-royalty model. The impairment exists and the second step must be performed to measurecharges recognized were for the amount by which the trade name's carrying amount exceeded its fair value.
Management made significant estimates calculating the fair value of our reporting units and trade names. Actual results could materially differ from these estimates depending on the asset group to its carrying value in a manner consistent with the highest and best use of those assets. The Partnership estimates fair value of operating assets using an income (discounted cash flows) approach, which uses an asset group's projection of estimated operating results and cash flows that is discounted using a weighted-average cost of capital reflective of current market conditions. If the fair valueultimate extent of the assets is less than their carrying value, an impairment charge is recorded for the difference.
Non-operating assets are evaluated for impairment based on changes in market conditions. When changes in market conditions are observed, impairment is estimated using a market-based approach. If the estimated fair valueeffects of the non-operating assets is less than their carrying value, an impairment charge is recorded for the difference.COVID-19 pandemic.
During the third quarter of 2016, the Partnership ceased operations of one of its separately gated outdoor water parks, Wildwater Kingdom, located near Cleveland in Aurora, Ohio. At the date that Wildwater Kingdom ceased operations, the only remaining long-lived asset was the approximate 670 acres of land owned by the Partnership. This land had an associated carrying value of $17.1 million. The Partnership assessed the remaining asset and concluded there was no impairment during the third quarter of 2016. In the fourth quarter of 2017, the Partnership recorded a $7.6 million impairment charge based on recent information from ongoing marketing activities. The amount was recorded in "Loss on impairment / retirement of fixed assets, net"Changes in the consolidated statement of operations and comprehensive income. The remaining Wildwater Kingdom acreage, reduced by acreage sold, is recorded within "Other Assets" in the consolidated balance sheet ($9.0 million as of December 31, 2018 and 2017).
(4) Goodwill and Other Intangible Assets:
Goodwill and other indefinite-lived intangible assets, including trade-names are reviewed for impairment annually, or more frequently if indicators of impairment exist. The Partnership performed its annual impairment test as of the first days of the fourth quarter in 2018 and 2017, respectively, and concluded there was no impairment of the carrying value of goodwill or other indefinite-lived intangible assets in either period.
A summary of changes in the Partnership's carrying value of goodwill for the years ended December 31, 20182021 and December 31, 2017 is as follows:2020 were:
| | | | | | | | |
(In thousands) | | Goodwill |
Balance as of December 31, 2019 | | $ | 359,654 | |
Impairment | | (93,929) | |
Foreign currency exchange translation | | 1,236 | |
Balance as of December 31, 2020 | | $ | 266,961 | |
Impairment | | — | |
Foreign currency exchange translation | | 271 | |
Balance as of December 31, 2021 | | $ | 267,232 | |
|
| | | | | | | | | | | | |
(In thousands) | | Goodwill (gross) | | Accumulated Impairment Losses | | Goodwill (net) |
Balance as of December 31, 2016 | | $ | 259,528 |
| | $ | (79,868 | ) | | $ | 179,660 |
|
Foreign currency exchange translation | | 4,170 |
| | — |
| | 4,170 |
|
Balance as of December 31, 2017 | | 263,698 |
| | (79,868 | ) | | 183,830 |
|
Foreign currency exchange translation | | (5,111 | ) | | — |
| | (5,111 | ) |
Balance as of December 31, 2018 | | $ | 258,587 |
| | $ | (79,868 | ) | | $ | 178,719 |
|
As of December 31, 20182021 and December 31, 2017, the Partnership's2020, other intangible assets consisted of the following:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
(In thousands) | | Weighted Average Amortization Period | | Gross Carrying Amount | | Accumulated Amortization | | Net Carrying Value |
December 31, 2021 | | | | | | | | |
Other intangible assets: | | | | | | | | |
Trade names | | — | | | $ | 49,515 | | | $ | — | | | $ | 49,515 | |
License / franchise agreements | | 12.0 years | | 4,262 | | | (3,783) | | | 479 | |
Total other intangible assets | | | | $ | 53,777 | | | $ | (3,783) | | | $ | 49,994 | |
| | | | | | | | |
December 31, 2020 | | | | | | | | |
Other intangible assets: | | | | | | | | |
Trade names | | — | | | $ | 49,454 | | | $ | — | | | $ | 49,454 | |
License / franchise agreements | | 7.1 years | | 4,259 | | | (3,425) | | | 834 | |
Total other intangible assets | | | | $ | 53,713 | | | $ | (3,425) | | | $ | 50,288 | |
|
| | | | | | | | | | | | | | | |
(In thousands) | | Weighted Average Amortization Period | | Gross Carrying Amount | | Accumulated Amortization | | Net Carrying Value |
December 31, 2018 | | | | | | | | |
Other intangible assets: | | | | | | | | |
Trade names | | — |
| | $ | 35,394 |
| | $ | — |
| | $ | 35,394 |
|
License / franchise agreements | | 6.9 years |
| | 3,379 |
| | (2,397 | ) | | 982 |
|
Total other intangible assets | | | | $ | 38,773 |
| | $ | (2,397 | ) | | $ | 36,376 |
|
| | | | | | | | |
December 31, 2017 | | | | | | | | |
Other intangible assets: | | | | | | | | |
Trade names | | — |
| | $ | 36,531 |
| | $ | — |
| | $ | 36,531 |
|
License / franchise agreements | | 5.9 years |
| | 3,360 |
| | (1,827 | ) | | 1,533 |
|
Total other intangible assets | | | | $ | 39,891 |
| | $ | (1,827 | ) | | $ | 38,064 |
|
Amortization expense of finite-lived other intangible assets for 2018, 20172021, 2020 and 20162019 was immaterial and is expected to be immaterial going forward.
(5)(8) Long-Term Debt:
Long-term debt as of December 31, 20182021 and December 31, 20172020 consisted of the following:
| | | | | | | | | | | | | | |
(In thousands) | | December 31, 2021 | | December 31, 2020 |
| | | | |
U.S. term loan averaging 1.85% in 2021; 2.70% in 2020 (due 2017-2024) (1) | | $ | 264,250 | | | $ | 264,250 | |
Notes | | | | |
2024 U.S. fixed rate senior unsecured notes at 5.375% | | — | | | 450,000 | |
2025 U.S. fixed rate senior secured notes at 5.500% | | 1,000,000 | | | 1,000,000 | |
2027 U.S. fixed rate senior unsecured notes at 5.375% | | 500,000 | | | 500,000 | |
2028 U.S. fixed rate senior unsecured notes at 6.500% | | 300,000 | | | 300,000 | |
2029 U.S. fixed rate senior unsecured notes at 5.250% | | 500,000 | | | 500,000 | |
| | 2,564,250 | | | 3,014,250 | |
Less current portion | | — | | | — | |
| | 2,564,250 | | | 3,014,250 | |
Less debt issuance costs and original issue discount | | (45,314) | | | (60,006) | |
| | $ | 2,518,936 | | | $ | 2,954,244 | |
|
| | | | | | | | |
(In thousands) | | December 31, 2018 | | December 31, 2017 |
Term debt (1) | | | | |
April 2017 U.S. term loan averaging 3.83% in 2018; 3.43% in 2017 (due 2017-2024) | | $ | 735,000 |
| | $ | 735,000 |
|
Notes | | | | |
April 2017 U.S. fixed rate notes at 5.375% (due 2027) | | 500,000 |
| | 500,000 |
|
June 2014 U.S. fixed rate notes at 5.375% (due 2024) | | 450,000 |
| | 450,000 |
|
| | 1,685,000 |
| | 1,685,000 |
|
Less current portion | | (5,625 | ) | | — |
|
| | 1,679,375 |
| | 1,685,000 |
|
Less debt issuance costs and original issue discount | | (21,807 | ) | | (24,485 | ) |
| | $ | 1,657,568 |
| | $ | 1,660,515 |
|
(1)The weighted average interest rates do not reflect the effect of interest rate swap agreements (see Note 9). | |
(1) | The average interest rates do not reflect the effect of interest rate swap agreements (see Note 6 to the Consolidated Financial Statements). |
Term Debt and Revolving Credit Facilities
In April 2017, the Partnership issued $500 million of 5.375% senior unsecured notes ("April 2017 notes"), maturing in 2027. The net proceeds from the offering of the April 2017 notes, together with borrowings under the 2017 Credit Agreement (defined below), were used to redeem all
of the Partnership's 5.25% senior unsecured notes due 2021 ("March 2013 notes"), and pay accrued interest and transaction fees and expenses, to repay in full all amounts outstanding under its existing credit facilities and for general corporate purposes. The redemption of the March 2013 notes and repayments of the amounts outstanding under the existing credit facilities resulted in the write-off of debt issuance costs of $7.7 million and debt premium payments of $15.5 million. Accordingly, the Partnership recorded a loss on debt extinguishment of $23.1 million during the year ended December 31, 2017.
Concurrently with the April 2017 notes issuance, the Partnershipwe amended and restated itsour existing $885 million credit agreement (the "2013"2017 Credit Agreement"), which included a $630 millionincludes our senior secured term loan facility and a $255 million senior secured revolving credit facility. The $1,025 million amended and restated credit agreement (the "2017 Credit Agreement") includes a $750 million senior secured term loan facility and a $275 million senior secured revolving credit facility. Theunder the 2017 Credit Agreement was amendedmatures on April 15, 2024 and, following an amendment in March 14, 2018, (subsequently referred to as the "Amended 2017 Credit Agreement"). Specifically, thebears interest rate for the senior secured term loan facility was amended toat London InterBank Offered Rate ("LIBOR") plus 175 basis points (bps). The pricing terms for the March 2018 amendment reflected $0.9 million of Original Issue Discount ("OID") and resulted in the write-off of debt issuance costs of $1.1 million which was recorded. In April 2020, as a lossresult of the anticipated effects of the COVID-19 pandemic, we
further amended the 2017 Credit Agreement (the "Second Amendment") to suspend and revise certain financial covenants, and to adjust the interest rate on earlyand reflect additional commitments and capacity for our revolving credit facility. In conjunction with the Second Amendment, we prepaid $463.3 million of our outstanding senior secured term loan facility. Following the prepayment, we do not have any required remaining scheduled quarterly payments on our senior secured term loan facility. We may prepay some or all of our term debt extinguishment during the first quarterwithout premium or penalty at any time. A schedule of 2018. Theminimum annual maturities for our senior secured term loan facility matures April 15, 2024.follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(In thousands) | 2022 | | 2023 | | 2024 | | 2025 | | 2026 | | 2027 and beyond | | Total |
U.S. term loan | — | | | — | | | $ | 264,250 | | | — | | | — | | | — | | | $ | 264,250 | |
In September 2020, in response to the continuing effects of the COVID-19 pandemic, we further amended the 2017 Credit Agreement (the "Third Amendment") to further suspend and revise certain of the financial covenants and extend the maturity of and adjust the terms that apply to a portion of our senior secured revolving credit facility. We also amended the 2017 Credit Agreement in December 2021 to allow for the redemption of the 2024 senior notes. The facilities provided under the Amended 2017 Credit Agreement are collateralized by substantially all of the assets of the Partnership.
Revolving Credit Loans
TheIn connection with the Second Amendment, we received additional commitments under the U.S. senior secured revolving credit facility of $100 million bringing our total senior secured revolving credit facility capacity under the Amended 2017 Credit Agreement has a combined limit of $275to $375 million with a Canadian sub-limit of $15 million. Borrowings under theSenior secured revolving credit facility bearborrowings following the Second Amendment bore interest at LIBOR plus 300 bps or Canadian Dollar Offered Rate ("CDOR") plus 200 bps. The revolving credit facility is scheduled to mature in April 2022bps and also provides for the issuance of documentary and standby letters of credit. As of December 31, 2018, no borrowings under the revolving credit facility were outstanding and standby letters of credit totaled $15.4 million. After letters of credit, the Partnership had $259.6 million of available borrowings under its revolving credit facility as of December 31, 2018. The maximum outstanding revolving credit facility balance during 2018 was $60 million. The Amended 2017 Credit Agreement requiresrequired the payment of a 37.5 bps commitment fee per annum on the unused portion of the revolving credit facilities.
Term Debt
facility. The $750revolving credit facility was scheduled to mature in April 2022 under the Second Amendment. In September 2020, the Third Amendment extended the maturity date of $300 million of the $375 million senior secured term loanrevolving credit facility to December 2023 (which portion of the facility is subsequently referred to as the "2023 Revolving Credit Facility Capacity"). Under the Third Amendment, the 2023 Revolving Credit Facility Capacity bears interest at LIBOR plus 350 bps or CDOR plus 250 bps and requires the payment of a 62.5 bps commitment fee per annum on the unused portion of the 2023 Revolving Credit Facility Capacity, in each case without any step-downs. The terms of the remaining $75 million available under the Amendedsenior secured revolving credit facility remain unchanged from the Second Amendment. Prior to the Second Amendment and Third Amendment, our senior secured revolving credit facility had a combined limit of $275 million with a Canadian sub-limit of $15 million and bore interest at LIBOR or CDOR plus 200 bps. The 2017 Credit Agreement has a maturity datealso provides for the issuance of April 15, 2024documentary and an interest ratestandby letters of LIBOR plus 175 bps. The term loan amortizes at $7.5 million annually. The minimum maturities of term debt under the Amended 2017 Credit Agreement are as follows:credit.
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
(In thousands) | 2019 | | 2020 | | 2021 | | 2022 | | 2023 | | 2024 & Beyond | | Total |
April 2017 U.S. term loan averaging 3.83% in 2018; 3.43% in 2017 (due 2017-2024) | $ | 5,625 |
| | $ | 7,500 |
| | $ | 7,500 |
| | $ | 7,500 |
| | $ | 7,500 |
| | $ | 699,375 |
| | $ | 735,000 |
|
As of December 31, 2018, there2021 and December 31, 2020, no amounts were $5.6outstanding under the revolving credit facility. After letters of credit of $15.8 million and $15.9 million, we had $359.2 million and $359.1 million of current maturities outstanding.available borrowings under our revolving credit facility as of December 31, 2021 and December 31, 2020, respectively. We did not borrow on the revolving credit facility during 2021.
Notes
In April 2020, as a result of the anticipated effects of the COVID-19 pandemic and in connection with the Second Amendment, we issued $1.0 billion of 5.500% senior secured notes due 2025 ("2025 senior notes") in a private placement. The Partnership2025 senior notes and the related guarantees are secured by first-priority liens on the issuers' and the guarantors' assets that secure all the obligations under our credit facilities. The net proceeds from the offering of the 2025 senior notes were used to repay $463.3 million of our then-outstanding senior secured term loan facility. The remaining amount was for general corporate and working capital purposes, including fees and expenses related to the transaction.
The 2025 senior notes pay interest semi-annually in May and November, with the principal due in full on May 1, 2025. Prior to May 1, 2022, up to 35% of the 2025 senior notes may prepay somebe redeemed with the net cash proceeds of certain equity offerings at a price equal to 105.500% of the principal amount thereof, together with accrued and unpaid interest and additional interest, if any. The 2025 senior notes may be redeemed, in whole or in part, at any time prior to May 1, 2022 at a price equal to 100% of the principal amount of the notes redeemed plus a "make-whole" premium together with accrued and unpaid interest and additional interest, if any, to the redemption date. Thereafter, the 2025 senior notes may be redeemed, in whole or in part, at various prices depending on the date redeemed.
In June 2014, we issued $450 million of 5.375% senior unsecured notes due 2024 ("2024 senior notes"). The 2024 senior notes paid interest semi-annually in June and December, with the principal due in full on June 1, 2024. On December 17, 2021, we redeemed all of its termthe 2024 senior notes at a redemption price equal to 100.896% of the principal amount plus accrued and unpaid interest. As a result, we recognized a $5.9 million loss on early debt withoutextinguishment during the fourth quarter of 2021, inclusive of debt premium or penalty at any time.payments of $4.1 million and the write-off of debt issuance costs of $1.8 million.
Notes
TheIn April 2017, we issued $500 million of 5.375% senior unsecured notes due 2027 ("2027 senior notes"). The 2027 senior notes pay interest semi-annually in April and October, with the principal due in full on April 15, 2027. Prior to April 15, 2020, up to 35% of the notes may be redeemed with the net cash proceeds of certain equity offerings at a price equal to 105.375% of the principal amount thereof, together with accrued and unpaid interest and additional interest, if any. The 2027 senior notes may be redeemed, in whole or in part, at any time prior to April 15, 2022 at a price equal to 100% of the principal amount of the notes redeemed plus a "make-whole" premium together with accrued and unpaid interest and additional interest, if any, to the redemption date. Thereafter, the 2027 senior notes may be redeemed, in whole or in part, at various prices depending on the date redeemed.
Cedar Fair, L.P., Canada's Wonderland Company ("Cedar Canada"), Magnum Management Corporation ("Magnum"), and Millennium Operations LLC ("Millennium") are the co-issuers of the April 2017 notes and co-borrowers of the senior secured credit facilities. Both the notes and senior secured credit facilities have been fully and unconditionally guaranteed, on a joint and several basis, by each 100% owned subsidiary of Cedar Fair (other than Cedar Canada, Magnum and Millennium). There are no non-guarantor subsidiaries.
In June 2014, the Partnership2019, we issued $450$500 million of 5.375%5.250% senior unsecured notes due 2029 ("June 20142029 senior notes"). The June 20142029 senior notes pay interest semi-annually in JuneJanuary and December,July, with the principal due in full on June 1, 2024.July 15, 2029. Prior to July 15, 2022, up to 35% of the 2029 senior notes may be redeemed with the net cash proceeds of certain equity offerings at a price equal to 105.250% of the principal amount thereof, together with accrued and unpaid interest and additional interest, if any. The 2029 senior notes may be redeemed, in whole or in part, at any time prior to June 1, 2019July 15, 2024 at a price equal to 100% of the principal amount of the notes redeemed plus a “make-whole”"make-whole" premium together with accrued and unpaid interest and additional interest, if any, to the redemption date. Thereafter, the 2029 senior notes may be redeemed, in whole or in part, at various prices depending on the date redeemed.
Cedar Fair, L.P., Canada’s Wonderland Company ("Cedar Canada"), and Magnum Management Corporation ("Magnum") areIn October 2020, in response to the co-issuerscontinuing effects of the June 2014 notes.COVID-19 pandemic, we issued $300 million of 6.500% senior unsecured notes due 2028 ("2028 senior notes"). The June 2014net proceeds from the offering of the 2028 senior notes have been fullywas for general corporate and unconditionally guaranteed,working capital purposes, including fees and expenses related to the transaction. The 2028 senior notes pay interest semi-annually in April and October with the principal due in full on October 1, 2028. Prior to October 1, 2023, up to 35% of the 2028 senior notes may be redeemed with the net cash proceeds of certain equity offerings at a jointprice equal to 106.500% of the principal amount thereof, together with accrued and several basis, by eachunpaid interest, if any. The 2028 senior notes may be redeemed, in whole or in part, at any time prior to October 1, 2023 at a price equal to 100% owned subsidiary of Cedar Fair (other than Cedar Canadathe principal amount of the notes redeemed plus a "make-whole" premium together with accrued and Magnum). There are no non-guarantor subsidiaries.unpaid interest and additional interest, if any, to the redemption date. Thereafter, the 2028 senior notes may be redeemed, in whole or in part, at various prices depending on the date redeemed.
As market conditions warrant, the Partnershipwe may from time to time repurchase our outstanding debt securities issued by the Partnership, in privately negotiated or open market transactions, by tender offer, exchange offer or otherwise.
Covenants
The Amended 2017 Credit Agreement, includesas amended, includes: (i) a ConsolidatedSenior Secured Leverage Ratio of 4.50x Total First Lien Senior Secured Debt-to-Consolidated EBITDA starting with the first quarter of 2022, which if breachedwill step down to 4.00x in the second quarter of 2023 and which will step down further to 3.75x in the third quarter of 2023, with the covenant calculations for any reasonthe first, second, and not cured could resultthird quarters in an event2022 to include Consolidated EBITDA from the second, third and fourth quarters of default. The ratio is setthe fiscal year ended December 31, 2019 in lieu of the Consolidated EBITDA for the corresponding quarters in 2021 ("Deemed EBITDA Quarters"); (ii) a requirement that we maintain a minimum liquidity level of at a maximum of 5.50x Consolidated Total Debt-to-Consolidated EBITDA. Asleast $125 million, tested at all times, until the earlier of December 31, 2018,2022 or the Partnership wastermination of the Additional Restrictions Period (which generally includes the period from the effective date of the Second Amendment until the delivery of the compliance certificate for the fourth quarter of 2022); and (iii) a suspension of certain Restricted Payments, including partnership distributions, under the credit agreement until the termination of the Additional Restrictions Period. We may terminate the Additional Restrictions Period prior to December 31, 2022 by achieving compliance with the Senior Secured Leverage Ratio covenant as of the end of a fiscal quarter without giving effect to Deemed EBITDA Quarters for any fiscal quarter. We were in compliance with this financial condition covenant and all otherthe applicable financial covenants under the Amended 2017 Credit Agreement.our credit agreement during 2021.
The Partnership's long-term debtOur fixed rate note agreements include Restricted Payment provisions.provisions, which could limit our ability to pay partnership distributions. Pursuant to the terms of the indenture governing the Partnership's June 20142027 senior notes, which includes the most restrictive of these Restricted Payments provisions the Partnershipunder our fixed rate note agreements, if our pro forma Total-Indebtedness-to-Consolidated-Cash-Flow Ratio is greater than 5.25x, we can still make Restricted Payments of $60$100 million annually so long as no default or event of default has occurred and is continuing, and the Partnership can make additional Restricted Payments if the Partnership'scontinuing. If our pro forma Total-Indebtedness-to-Consolidated-Cash-Flow Ratio is less than or equal to 5.00x.5.25x, we can make Restricted Payments up to our Restricted Payment pool. Our pro forma Total-Indebtedness-to-Consolidated-Cash-Flow Ratio was greater than 5.25x as of December 31, 2021.
(6)(9) Derivative Financial Instruments:
Derivative financial instruments are used within the Partnership’sour overall risk management program to manage certain interest rate and foreign currency risks. By utilizing a derivative instrument to hedge exposure to LIBOR rate changes, the Partnership iswe are exposed to counterparty credit risk, in particular the failure of the counterparty to perform under the terms of the derivative contract. To mitigate this risk, hedging instruments are placed with a counterparty that the Partnership believeswe believe poses minimal credit risk. The Partnership doesWe do not use derivative financial instruments for trading purposes.
During the first quarterAs of 2016, the Partnership amended its fourDecember 31, 2021 and December 31, 2020, we had 4 interest rate swap agreements with a notional value of $500 million that convert one-month variable rate LIBOR to extend eacha fixed rate of the maturities to2.88% through December 31, 2020 and convert $500 million2023. This resulted in a 4.63% fixed interest rate for borrowings under our senior secured term loan facility after the impact of variable-rate debt to a rate of 4.39%. During the second quarter of 2018, the Partnership entered into four additional interest rate swap agreements that convert the same notional amount to a rate of 4.63% for the period December 31, 2020 through December 31, 2023.agreements. None of the interest rate swap agreements are designated as hedging instruments. The fair market value of the Partnership'sour swap portfolio, was recorded onincluding the location within the consolidated balance sheets, within "Derivative Liability" as of December 31, 2018 and December 31, 2017for the periods presented were as follows:
| | | | | | | | | | | | | | |
(In thousands) | Balance Sheet Location | December 31, 2021 | | December 31, 2020 |
Derivatives not designated as hedging instruments: | | | | |
| | | | |
Interest rate swaps | Derivative Liability | $ | (20,086) | | | $ | (39,086) | |
| | | | |
|
| | | | | | | |
(In thousands) | December 31, 2018 | | December 31, 2017 |
Derivatives not designated as hedging instruments: | | | |
Interest rate swaps | $ | (6,705 | ) | | $ | (8,722 | ) |
Instruments that do not qualify for hedge accounting or were de-designated are prospectively adjusted to fair value each reporting period through "Net effect of swaps" within the consolidated statements of operations and comprehensive (loss) income. The amounts that were previously recorded as a component of AOCI prior to de-designation are reclassified to earnings, and a corresponding realized gain or loss is recognized when the forecasted cash flow occurs. As a result of the first quarter 2016 amendments, the previously existing interest rate swap agreements were de-designated, and the amounts previously recorded in AOCI were amortized into earnings through the original December 31, 2018 maturity. Therefore, all losses in AOCI related to the effective cash flow hedge contracts prior to de-designation have been reclassified to earnings as of December 31, 2018.
The (gains) losses recognized in income on derivatives not designated as cash flow hedges were recorded in "Net effect of swaps" within the income statement for the periods presented as follows:
|
| | | | | | | | | | | | |
| | Years Ended December 31, |
(In thousands) | | 2018 | | 2017 | | 2016 |
Change in fair market value | | $ | (2,017 | ) | | $ | (9,504 | ) | | $ | (9,868 | ) |
Amortization of amounts in AOCI | | 9,459 |
| | 9,459 |
| | 8,671 |
|
Net effect of swaps | | $ | 7,442 |
| | $ | (45 | ) | | $ | (1,197 | ) |
(7)(10) Partners' Equity and Equity-Based Compensation:
Special L.P. Interests
In accordance with the Partnership Agreement, certain partners were allocated $5.3$5.3 million of 1987 and 1988 taxable income (without any related cash distributions) for which they received Special L.P. Interests. The Special L.P. Interests do not participate in cash distributions and have no voting rights. However, the holders of Special L.P. Interests will receive in the aggregate $5.3$5.3 million upon liquidation of the Partnership.
Equity-Based Incentive Plan
The 2016 Omnibus Incentive Plan was approved by the Partnership'sour unitholders in June 2016 and allows the awarding of up to 2.8 million unit options and other forms of equity as determined by the Compensation Committee of the Board of Directors as an element of compensation to senior management, key employees and other key employees.directors. The 2016 Omnibus Incentive Plan superseded the 2008 Omnibus Incentive Plan which was approved by the Partnership'sour unitholders in May 2008 and allowed the awarding of up to 2.5 million unit options and other forms of equity. Outstanding awards under the 2008 Omnibus Incentive Plan continue to be in effect and are governed by the terms of that plan. The 2016 Omnibus Incentive Plan provides an opportunity for officers, directors, and eligible persons to acquire an interest in the growth and performance of the Partnership'sour units and provides employees annual and long-term incentive awards as determined by the Board of Directors. Under the 2016 Omnibus Incentive Plan, the Compensation Committee of the Board of Directors may grant unit options, unit appreciation rights, restricted units, performance awards, other unit awards, cash incentive awards and unrestricted unit awards. The awards granted by the Compensation Committee fall into two categories, Awards Payable in Cash or Equity, and Awards Payable in Equity. The impact of these awards is more fully described below.
Equity-based compensation expense recognized in the consolidated statements of operations and comprehensive (loss) income within "Selling, General and Administrative Expense" for the applicable periods was as follows:
| | | | | | | | | | | | | | | | | | | | |
| | Years Ended December 31, |
(In thousands) | | 2021 (1) | | 2020 (2) | | 2019 |
Awards Payable in Cash or Equity | | | | | | |
| | | | | | |
| | | | | | |
Deferred units | | $ | 1,014 | | | $ | (588) | | | $ | 611 | |
Awards Payable in Equity | | | | | | |
Performance units | | 10,554 | | | (5,270) | | | 5,535 | |
Restricted units | | 4,878 | | | 5,061 | | | 6,375 | |
| | | | | | |
Total equity-based compensation expense | | $ | 16,446 | | | $ | (797) | | | $ | 12,521 | |
|
| | | | | | | | | | | | |
| | Years Ended December 31, |
(In thousands) | | 2018 | | 2017 | | 2016 |
Awards Payable in Cash or Equity | | | | | |
|
|
Performance units | | $ | — |
| | $ | 507 |
| | $ | 4,586 |
|
Deferred units | | (266 | ) | | 627 |
| | 993 |
|
Awards Payable in Equity | | | | | | |
Performance units | | 5,413 |
| | 8,822 |
| | 7,519 |
|
Restricted units | | 5,830 |
| | 4,612 |
| | 3,856 |
|
Unit Options | | — |
| | — |
| | 5 |
|
Total equity-based compensation expense | | $ | 10,977 |
| | $ | 14,568 |
| | $ | 16,959 |
|
(1) Due to the effects of the COVID-19 pandemic on 2020 results, the 2018-2020 three-year performance plan was below the payout threshold. Given that two full years of the program were completed, the 2018-2020 performance unit awards were modified to allow for a payout taking into account 2018-2019 results, management's performance relative to 2020 COVID-19 strategic goals and 2020 pre-COVID-19 forecast, resulting in $3.9 million of additional expense recognized during the year ended December 31, 2021.
(2) The market value of our deferred unit awards and the anticipated payout of our annual performance unit awards decreased due to the effects of the COVID-19 pandemic resulting in expense reversed during the year ended December 31, 2020.
Awards Payable in Cash or Equity
Performance Units
During the year ended December 31, 2018, no performance units payable in cash or equity were awarded. The number of performance units issuable under these awards are contingently based upon certain performance targets over a three-year period and these awards can be settled with cash, limited partnership units, or a combination of both as determined by the Compensation Committee, after the end of the performance period. Certain of these types of performance units were awarded in prior years. The effect of these outstanding performance unit awards for which the performance condition had been met has been included in the diluted earnings per unit calculation, as a portion of the awards were paid in limited partnership units. The effect of these outstanding performance unit awards for which the performance condition had not been met has been excluded from the diluted earnings per unit calculation. The Partnership had settled all outstanding performance unit awards payable in cash or equity in 2017.
Deferred Units
| | | | | | | | | | | | | | |
(In thousands, except per unit amounts) | | Number of Units | | Weighted Average Grant Date Fair Value Per Unit |
Outstanding deferred units at December 31, 2020 | | 46 | | | $ | 52.07 | |
Granted | | 10 | | | $ | 50.06 | |
| | | | |
| | | | |
Outstanding deferred units at December 31, 2021 | | 56 | | | $ | 51.70 | |
|
| | | | | | | |
(In thousands, except per unit amounts) | | Number of Units | | Weighted Average Grant Date Fair Value Per Unit |
Outstanding deferred units at December 31, 2017 | | 44 |
| | $ | 55.41 |
|
Granted (1) | | 12 |
| | $ | 49.35 |
|
Forfeited | | — |
| | — |
|
Vested | | — |
| | — |
|
Outstanding deferred units at December 31, 2018 | | 56 |
| | $ | 54.21 |
|
(1) Includes 3 distribution-equivalent units
Deferred unit awards vest over a one-year period and the settlement of these units is deferred until the individual's service to the Partnership ends. The deferred units begin to accumulate distribution-equivalents upon vesting and are paid when the restriction ends. The effect of
outstanding deferred unit awards has been included in the diluted earnings per unit calculation for the year ended December 31, 2019, as a portion of the awards are expected to be settled in limited partnership units. As of December 31, 2018,2021, the market value of the deferred units was $2.6$2.8 million, was classified as current and was recorded within "Other
"Other accrued liabilities" within the consolidated balance sheet. As of December 31, 2018,2021, there was no unamortized expense related to unvested deferred unit awards as all units were fully vested.
Awards Payable in Equity
Performance Units
| | | | | | | | | | | | | | |
(In thousands, except per unit amounts) | | Number of Units | | Weighted Average Grant Date Fair Value Per Unit |
Unvested performance units at December 31, 2020 | | 81 | | | $ | 27.92 | |
Granted (1) | | 460 | | | $ | 46.86 | |
Forfeited | | (29) | | | $ | 47.26 | |
Vested (1) | | (82) | | | $ | 47.66 | |
Unvested performance units at December 31, 2021 | | 430 | | | $ | 43.13 | |
|
| | | | | | | |
(In thousands, except per unit amounts) | | Number of Units | | Weighted Average Grant Date Fair Value Per Unit |
Unvested performance units at December 31, 2017 | | 532 |
| | $ | 57.18 |
|
Granted (1) | | 122 |
| | $ | 52.56 |
|
Forfeited | | (58 | ) | | $ | 59.10 |
|
Vested | | (217 | ) | | $ | 54.63 |
|
Unvested performance units at December 31, 2018 | | 379 |
| | $ | 56.86 |
|
(1) Includes 18 forfeitable distribution-equivalentDue to the effects of the COVID-19 pandemic on 2020 results, the 2018-2020 three-year performance plan was below the payout threshold. Given that two full years of the program were completed, the 2018-2020 performance unit awards were modified to allow for a payout taking into account 2018-2019 results, management's performance relative to 2020 COVID-19 strategic goals and 2020 pre-COVID-19 forecast, resulting in 82,000 units both granted and vested during the year ended December 31, 2021.
Our annual performance unit awards based upon the 2019-2021 and 2020-2022 three-year performance periods are not anticipated to payout due to the effects of the COVID-19 pandemic. The number of performance units issuable under these annual performance unit awards are contingently based upon certain performance targets over aeach three-year vesting period. The annual performance awards and the related forfeitable distribution-equivalent units generally are paid out in the first quarter following the performance period in limited partnership units.
Of the unvested performance units outstanding as of December 31, 2021, 91,818 represented performance-based other units awarded in 2020 to incentivize optimal executive performance in light of the effects of the COVID-19 pandemic. The effectnumber of these typesunits issuable were contingently based upon the level of attainment of various performance objectives over a six-month period with the awards payable in limited partnership units following the one-year anniversary of the six-month performance period, which will occur in the first quarter of 2022. These unit awards do not earn distribution-equivalent units.
The remaining outstanding performance units as of December 31, 2021 represented 2021-2025 performance-based units awarded in 2021. These units were awarded instead of the traditional annual performance unit awards with three-year performance periods due to continued uncertainty related to the COVID-19 pandemic. The number of performance units issuable under the 2021-2025 performance-based unit awards are contingently based upon 3 separate financial performance targets which can vest over a three to five-year period. The performance targets become incrementally higher over the five-year period. The 2021-2025 performance-based unit awards and related forfeitable distribution-equivalent units will be paid out in limited partnership units upon the achievement of each target in the first quarter following the year the target was earned.
The effect of outstanding performance unit awards, for which the performance conditions havehad been met, have been included in the diluted earnings per unit calculation. The number of units vested in 2018 include 62,117 retention grant units. Vesting of the retention grant unit award followed a three-year performance period. Half of the retention grant unit award vested in December 2017 and the remaining half of the award vested in December 2018. The forfeitable distribution equivalentscalculation for the retention grant units are payable in cash at the same time. As ofyear ended December 31, 2018, $1.0 million of forfeitable distribution equivalents were accrued prior to payment in early January 2019, classified as current and recorded within "Other accrued liabilities" within the consolidated balance sheet.2019.
As of December 31, 2018,2021, unamortized compensation expense related to these unvested performance unit awards was $9.6$11.1 million, which is expected to be amortized over a weighted average period of 2.32.0 years. The fair value of the performance units is based on the unit price the day before the date of grant along with reinvested forfeitable distribution-equivalent units. The Partnership assessesgrant. We assess the probability of the performance targets being met and may reverse prior period expense or recognize additional expense accordingly.
Restricted Units
| | | | | | | | | | | | | | |
(In thousands, except per unit amounts) | | Number of Units | | Weighted Average Grant Date Fair Value Per Unit |
Unvested restricted units at December 31, 2020 | | 219 | | | $ | 54.77 | |
Granted | | 127 | | | $ | 47.39 | |
Forfeited | | (9) | | | $ | 48.40 | |
Vested | | (109) | | | $ | 57.82 | |
Unvested restricted units at December 31, 2021 | | 228 | | | $ | 49.44 | |
|
| | | | | | | |
(In thousands, except per unit amounts) | | Number of Units | | Weighted Average Grant Date Fair Value Per Unit |
Unvested restricted units at December 31, 2017 | | 252 |
| | $ | 59.75 |
|
Granted | | 130 |
| | $ | 53.62 |
|
Forfeited | | (5 | ) | | $ | 60.74 |
|
Vested | | (67 | ) | | $ | 56.59 |
|
Unvested restricted units at December 31, 2018 | | 310 |
| | $ | 57.85 |
|
The majority of theour annual restricted unitsunit awards vest evenly over aan approximate three-year period, and the restrictions on these units lapse upon vesting. In addition,period. However, as of the unvested restricted units at December 31, 2018, 32,1542021, 60,582 units outstanding vest following a two-yearan approximate three-year cliff vesting period, and 85,6458,833 units outstanding vest following a three-year cliffunder alternate vesting period.schedules, all of which approximate three years. Restrictions on our restricted unit
awards lapse upon vesting. During the vesting period for restricted unit awards, the units accumulate forfeitable distribution-equivalents, which, when the units are fully vested, are payable in cash. As of December 31, 2018,2021, the amount of forfeitable distribution equivalents accrued totaled $1.4$0.3 million; $0.5$0.2 million of which was classified as current and recorded within "Other accrued liabilities" within the consolidated balance sheet and $0.9$0.1 million of which was classified as non-current and recorded within "Other Liabilities".
As of December 31, 2018,2021, unamortized compensation expense, determined as the market value of the units on the day before the date of grant, related to unvested restricted unit awards was $10.9$5.5 million, which is expected to be amortized over a weighted average period of 2.11.8 years.
Unit Options
| | | | | | | | | | | | | | | | | | | | | | | | | | |
(In thousands, except per unit amounts) | | Unit Options | | Weighted Average Exercise Price | | Weighted Average Remaining Contractual Life | | Aggregate Intrinsic Value |
Options outstanding at December 31, 2020 | | 352 | | | $ | 34.50 | | | | | |
| | | | | | | | |
Exercised | | (234) | | | $ | 34.12 | | | | | |
| | | | | | | | |
Options outstanding at December 31, 2021 | | 118 | | | $ | 35.27 | | | | | |
Options exercisable, end of year | | 118 | | | $ | 35.27 | | | 0.9 years | | $ | 1,740 | |
|
| | | | | | | | | | | | | |
(In thousands, except per unit amounts) | | Unit Options | | Weighted Average Exercise Price | | Weighted Average Remaining Contractual Life | | Aggregate Intrinsic Value |
Options outstanding at December 31, 2017 | | 374 |
| | $ | 34.55 |
| | | | |
Exercised | | (6 | ) | | 36.95 |
| | | | |
Options outstanding at December 31, 2018 | | 368 |
| | $ | 34.51 |
| | | | |
Options exercisable, end of year | | 368 |
| | $ | 34.51 |
| | 3.8 years | | $ | 4,707 |
|
The Partnership's unitUnit options are issued with an exercise price no less than the market closing price of the Partnership's units on the day before the date of grant. Outstanding unit options vestvested over a three-year periodthree years and have a maximum term of ten years. As of December 31, 2018, the Partnership2021, we had 368,091117,638 fixed-price unit options outstanding under the 2008 Omnibus Incentive Plan. No options have been granted under the 2016 Omnibus Incentive Plan.
The range of exercise prices of unit options outstanding was $29.53 to $36.95 as of December 31, 2018.2021. The total intrinsic value of unit options exercised during the years ended December 31, 2018, 20172021, 2020 and 2016 were $0.22019 was $2.0 million, $0.7$0.0 million, and $2.8$0.1 million, respectively.
The Partnership hasWe have a policy of issuing limited partnership units from treasury to satisfy unit option exercises and expects itswe expect our treasury unit balance to be sufficient for 20192022 based on estimates of unit option exercises for that period.
(8)(11) Retirement Plans:
The Partnership hasWe have trusteed, noncontributory retirement plans for the majoritymost of itsour full-time employees. Contributions are discretionary and amounts accrued were approximately $4.2 million, $4.0$1.8 million and $4.2$4.7 million for the years ended December 31, 2018, 20172021 and 2016,2019, respectively. For the year ended December 31, 2020, we did not make any discretionary contributions due to the effects of the COVID-19 pandemic on our financial performance. Additionally, the Partnership haswe have a trusteed, contributory retirement plan for the majoritymost of itsour full-time employees. This plan permits employees to contribute specified percentages of their salary, matched up to a limit by the Partnership.limit. Matching contributions, net of forfeitures, approximated $2.6$4.7 million, $2.6$3.8 million and $2.4$3.1 million for the years ended December 31, 2018, 20172021, 2020 and 2016,2019, respectively.
In addition, approximately 240275 employees are covered by union-sponsored, multi-employer pension plans for which approximately $1.8$1.9 million, $1.8$2.0 million and $1.7$2.0 million were contributed for the years ended December 31, 2018, 20172021, 2020 and 2016,2019, respectively. The Partnership hasWe have no plans to withdraw from any of the multi-employer plans. The Partnership believes that the liability resulting from any such withdrawal, as defined by the Multi-employer Pension Plan Amendments Act of 1980, would not be material.
(9)(12) Income and Partnership Taxes:
Federal and state tax legislation in 1997 provided a permanent income tax exemption to existing publicly traded partnerships (PTP), such as Cedar Fair, L.P., with a PTP tax levied on partnership gross income (net revenues less cost of food, merchandise and games) beginning in 1998. In addition, income taxes are recognized for the amount of income taxes payable by the Partnership'sCedar Fair, L.P. and its corporate subsidiaries for the current year and for the impact of deferred tax assets and liabilities that represent future tax consequences of events that have been recognized differently in the financial statements than for tax purposes. As such, the Partnership's "Provision (benefit) for taxes" includes amounts for both the PTP tax and for federal, state, local and foreign income taxes on the Partnership's corporate subsidiaries.taxes.
The Partnership's 20182021 tax provision totaled $34.7$20.0 million, which consisted of an $11.6a $10.3 million provision for the PTP tax and a $23.1$9.7 million provision for income taxes. This comparescompared with the Partnership's 2017a 2020 tax provisionbenefit of $1.1$137.9 million, which consisted of an $11.1a $2.5 million provision for the PTP tax and a $10.0$140.4 million benefit for income taxes, and the 2016a 2019 tax provision of $71.4$42.8 million, which consisted of an $11.4a $12.1 million provision for the PTP tax and a $60.0$30.7 million provision for income taxes. The calculation of the tax provision (benefit) involves significant estimates and assumptions and actualassumptions. Actual results could differ from those estimates.
Significant components of (loss) income before taxes for the years ended December 31, 2018, 20172021, 2020 and 20162019 were as follows:
| | (In thousands) | | 2018 | | 2017 | | 2016 | (In thousands) | | 2021 | | 2020 | | 2019 |
Domestic | | $ | 185,749 |
| | $ | 171,382 |
| | $ | 223,626 |
| Domestic | | $ | (3,603) | | | $ | (675,746) | | | $ | 167,510 | |
Foreign | | (24,353 | ) | | 45,206 |
| | 25,480 |
| Foreign | | (24,880) | | | (52,412) | | | 47,644 | |
Total income before taxes | | $ | 161,396 |
| | $ | 216,588 |
| | $ | 249,106 |
| |
Total (loss) income before taxes | | Total (loss) income before taxes | | $ | (28,483) | | | $ | (728,158) | | | $ | 215,154 | |
|
The provision (benefit) for income taxes was comprised of the following for the years ended December 31, 2018, 20172021, 2020 and 2016:2019:
| | | | | | | | | | | | | | | | | | | | |
(In thousands) | | 2021 | | 2020 | | 2019 |
Current federal | | $ | (21,438) | | | $ | (61,726) | | | $ | 22,745 | |
Current state and local | | 1,395 | | | (3,747) | | | 6,261 | |
Current foreign | | 2,896 | | | (32,987) | | | 5,759 | |
Total current | | (17,147) | | | (98,460) | | | 34,765 | |
Deferred federal, state and local | | 17,870 | | | (43,220) | | | (5,953) | |
Deferred foreign | | 9,018 | | | 1,287 | | | 1,847 | |
Total deferred | | 26,888 | | | (41,933) | | | (4,106) | |
Total provision (benefit) for income taxes | | $ | 9,741 | | | $ | (140,393) | | | $ | 30,659 | |
|
| | | | | | | | | | | | |
(In thousands) | | 2018 | | 2017 | | 2016 |
Income taxes: | | | | | | |
Current federal | | $ | 2,682 |
| | $ | 18,640 |
| | $ | 40,440 |
|
Current state and local | | 4,901 |
| | 4,631 |
| | 5,729 |
|
Current foreign | | 4,301 |
| | 2,501 |
| | 3,188 |
|
Total current | | 11,884 |
| | 25,772 |
| | 49,357 |
|
Deferred federal, state and local | | 15,525 |
| | (41,133 | ) | | 5,766 |
|
Deferred foreign | | (4,266 | ) | | 5,363 |
| | 4,896 |
|
Total deferred | | 11,259 |
| | (35,770 | ) | | 10,662 |
|
Total provision (benefit) for income taxes | | $ | 23,143 |
| | $ | (9,998 | ) | | $ | 60,019 |
|
The provision (benefit) for income taxes for the Partnership's corporate subsidiaries differsdiffered from the amount computed by applying the U.S. federal statutory income tax rate of 21% to the Partnership's(loss) income before taxes in 2018 (35% in 2017 and 2016).
taxes. The sources and tax effects of the differences were as follows: | | (In thousands) | | 2018 | | 2017 | | 2016 | (In thousands) | | 2021 | | 2020 | | 2019 |
Income tax provision based on the U.S. federal statutory tax rate | | $ | 33,893 |
| | $ | 75,806 |
| | $ | 87,187 |
| Income tax provision based on the U.S. federal statutory tax rate | | $ | (5,981) | | | $ | (152,913) | | | $ | 45,182 | |
Partnership income not includible in corporate income | | (16,403 | ) | | (23,644 | ) | | (38,702 | ) | |
State and local taxes, net of federal income tax benefit | | 5,278 |
| | 4,878 |
| | 6,323 |
| |
Partnership loss (income) not subject to corporate income tax | | Partnership loss (income) not subject to corporate income tax | | 257 | | | 47,631 | | | (14,031) | |
State and local taxes, net | | State and local taxes, net | | 776 | | | (20,594) | | | 4,906 | |
Valuation allowance | | 2,321 |
| | (119 | ) | | (1,473 | ) | Valuation allowance | | 14,619 | | | 3,150 | | | 196 | |
Expired foreign tax credits | | Expired foreign tax credits | | 888 | | | 2,253 | | | — | |
Tax credits | | (1,300 | ) | | (1,063 | ) | | (1,066 | ) | Tax credits | | (901) | | | (426) | | | (1,026) | |
Change in U.S. tax law | | (8,730 | ) | | (54,171 | ) | | 7,366 |
| Change in U.S. tax law | | (1,326) | | | (17,983) | | | 111 | |
Foreign currency translation (gains) losses | | 7,949 |
| | (10,756 | ) | | — |
| |
Foreign currency translation losses (gains) | | Foreign currency translation losses (gains) | | 1,143 | | | (1,455) | | | (4,707) | |
Nondeductible expenses and other | | 135 |
| | (929 | ) | | 384 |
| Nondeductible expenses and other | | 266 | | | (56) | | | 28 | |
Total provision (benefit) for income taxes | | $ | 23,143 |
| | $ | (9,998 | ) | | $ | 60,019 |
| Total provision (benefit) for income taxes | | $ | 9,741 | | | $ | (140,393) | | | $ | 30,659 | |
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.
Significant components of deferred tax assets and liabilities as of December 31, 20182021 and December 31, 20172020 were as follows:
| | | | | | | | | | | | | | |
(In thousands) | | 2021 | | 2020 |
Deferred tax assets: | | | | |
Compensation | | $ | 11,835 | | | $ | 5,800 | |
Accrued expenses | | 5,051 | | | 5,408 | |
Foreign tax credits | | 8,392 | | | 8,765 | |
Tax attribute carryforwards | | 20,580 | | | 13,224 | |
Derivatives | | 5,021 | | | 9,771 | |
Foreign currency | | 2,523 | | | 5,318 | |
Deferred revenue | | 3,539 | | | 10,012 | |
| | | | |
Deferred tax assets | | 56,941 | | | 58,298 | |
Valuation allowance | | (24,374) | | | (9,755) | |
Net deferred tax assets | | 32,567 | | | 48,543 | |
Deferred tax liabilities: | | | | |
Property | | (78,062) | | | (68,256) | |
Intangibles | | (20,988) | | | (19,882) | |
Deferred tax liabilities | | (99,050) | | | (88,138) | |
Net deferred tax liability | | $ | (66,483) | | | $ | (39,595) | |
|
| | | | | | | | |
(In thousands) | | 2018 | | 2017 |
Deferred tax assets: | | | | |
Compensation | | $ | 5,899 |
| | $ | 9,022 |
|
Accrued expenses | | 3,932 |
| | 4,647 |
|
Foreign tax credits | | 8,758 |
| | 8,654 |
|
Tax attribute carryforwards | | 2,321 |
| | 2,016 |
|
Derivatives | | 1,478 |
| | 938 |
|
Foreign currency | | 8,965 |
| | 5,443 |
|
Deferred revenue | | 2,521 |
| | 2,653 |
|
Deferred tax assets | | 33,874 |
| | 33,373 |
|
Valuation allowance | | (6,410 | ) | | (4,088 | ) |
Net deferred tax assets | | 27,464 |
| | 29,285 |
|
Deferred tax liabilities: | | | | |
Property | | (94,847 | ) | | (91,730 | ) |
Intangibles | | (14,334 | ) | | (12,353 | ) |
Deferred tax liabilities | | (109,181 | ) | | (104,083 | ) |
Net deferred tax liability | | $ | (81,717 | ) | | $ | (74,798 | ) |
The Partnership recordsWe record a valuation allowance if, based on the weight of available evidence, it is more likely than not that some portion, or all, of a deferred tax asset will not be realized. The need for this allowance is based on several factors including the ten-year carryforward period allowedperiods for excess foreignnet operating losses and tax credits, prior experience to date of foreign tax credit limitations, and management's long termlong-term estimates of domestic and foreign source income.
As of December 31, 2018, the Partnership had2021, we recorded a $6.4$24.4 million valuation allowance which was a combination of three items. First, as of December 31, 2021, we had $20.6 million of tax attribute carryforwards consisting of $15.5 million for the tax effect of state net operating loss carryforwards, $2.5 million for the tax effect of business interest limitation carryforwards, $2.5 million for the tax effect of Canadian capital loss carryforwards and $0.1 million for the tax effect of Canadian net operating loss carryforwards. The unused state net operating loss carryforwards will expire from 2025 to 2040. We do not expect to fully realize all of these tax attribute carryforwards. As such, we recorded a $13.6 million valuation allowance relating to the tax effect of state net operating loss carryforwards as of December 31, 2021. This represented a $5.4 million increase in the valuation allowance from 2020 due to continuing losses in the corporate subsidiaries. Second, as of December 31, 2021, we recorded an $8.4 million valuation allowance related to an $8.8$8.4 million deferred tax asset for foreign tax credit carryforwards. During the fourth quarter of 2018, the Partnership recognizedThis represented a $2.3$6.8 million increase in the valuation allowance based on management's updated projection of futurefrom 2020 primarily due to overall foreign tax credit utilization. The valuation allowance had previously been reduced by $0.1 million for the year ended December 31, 2017.
Tax law changes resulted in a tax benefit of $8.7 million in 2018, a tax benefit of $54.2 million in 2017 and a tax provision of $7.4 million in 2016. First, during October 2017, the U.S. Department of Treasury extended the implementation date of the final regulations impacting the recognition of foreign currency gains and losses for the purpose of calculating U.S. taxable income. The regulations change the taxability of future recognized foreign currency gains and losses upon repatriation from a foreign subsidiary. Accordingly, during 2018, 2017 and 2016, the Partnership, using the Fresh Start Transition Method providedgenerated in the regulations, recomputed and recorded the future reported tax consequences of the change in tax law. The Partnership recognized an increase in provision for taxes and a reduction of deferred tax assets relatedcarryback period being unavailable to these changes of $1.2 million for the year ended December 31, 2018, $1.1 million for the year ended December 31, 2017 and $7.4 million for the year ended December 31, 2016. Second, on December 22, 2017, the Tax Cuts and Jobs Act (the "Act"), was signed into law. The Act included numerous tax law changes, including a reductionoffset foreign branch basket income in the federal corporate income tax rate from 35% to 21%. Since the Partnership's corporate subsidiaries have a March tax year end, the applicable tax rate for the tax year ended March 25, 2018 was a 31.8% blended rate that was based on the applicable statutory rates and the number of days in each period within the taxable year before and after the effective date of the change in tax rate. For tax years following March 2018, the applicable tax rate will be 21%. As a result of the reduction in the federal corporate income tax rate, the Partnership recognized an $8.6 million and $6.1 million current income tax benefit for the years ended December 31, 2018 and December 31, 2017, respectively. The $8.6 million current income tax benefit for 2018 was attributable to the higher blended rate applied to net losses in the first quarter of 2018. The change in tax rates also required the remeasurement of deferred tax balances that are expected to be realized following enactment using the applicable tax rates. As a result of the remeasurement of the net deferred tax liability, the Partnership realized a provisional $49.2 million deferred tax benefit for the year ended December 31, 2017. An additional $1.3 million deferred tax benefit was realized for the year ended December 31, 2018 reflecting the adjustment from our 2017 provisional amount under SAB 118 to the final impact of the Act recorded in the fourth quarter of 2018.
Asfuture. Lastly, as of December 31, 2018,2021, we recorded a $2.4 million valuation allowance relating to Canadian capital losses generated during 2020 that can only offset Canadian capital income. In total, the Partnership had $2.3valuation allowance increased $14.6 million of tax attribute carryforwards consisting entirelyfrom 2020 inclusive of the tax effect of state net operating losses, foreign tax credit carryforwards and Canadian capital losses.
On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act") was signed into law. The CARES Act resulted in various changes to the U.S. tax law, including, among other things, allowing net operating losses arising in tax years 2018 through 2020 to be carried back to the preceding five taxable years and removing the limitation that such losses only offset 80% of taxable income. As a result of these changes, we expect to recognize two benefits. First, we expect to carryback the 2020 losses incurred by our corporate subsidiaries, which will result in the refund of a portion of federal income taxes paid during the carryback period of approximately $79.7 million as of December 31, 2021 and $55.4 million as of December 31, 2020. Second, as of December 31, 2021 and December 31, 2020, the annual effective tax rate included a net benefit of $1.7 million and $18.1 million, respectively, from carrying back the projected 2020 losses of the corporate subsidiaries. This tax benefit represents an estimated incremental benefit of tax loss carryforwards. Unused statecarrybacks for periods when the federal income tax rate was greater than the current 21% rate. The overall benefit of the carryback of losses was decreased by $4.7 million and $16.1 million as of December 31, 2021 and December 31, 2020, respectively, for a projected valuation allowance on foreign tax credits originally utilized during the carryback period which would be released as a result of the loss carryback but which are not expected to be utilized.
As of December 31, 2021 and December 31, 2020, $79.7 million and $55.4 million in tax refunds, respectively, attributable to the net operating loss carryforwards will expire from 2019in the 2020 tax year being carried back to 2028. The Partnership expectsprior years in the United States, and an additional $9.5 million and $11.9 million in tax refunds, respectively, attributable to fully realizethe net operating loss of our Canadian corporate subsidiary being carried back to prior years in Canada, were recorded within "Current income tax receivable" in the consolidated balance sheet. We initially anticipated receiving these tax attribute carryforwards.refunds in the fourth quarter of 2021. As such, no valuation allowance has been recorded relating toof December 31, 2021, we anticipate receiving these tax attribute carryforwards.refunds during 2022. These amounts were offset by accrued tax payments within the same jurisdictions for tax year 2021.
During the year ended December 31, 2020, additional benefits from the CARES Act included an $8.2 million deferral of the employer's share of Social Security taxes and $3.7 million in tax benefits from the Employee Retention Credit program. We also received $0.5 million in tax benefits from the Employee Retention Credit program during the year ended December 31, 2021. The Partnership hasdeferral of the employer's share of Social Security taxes is payable in 50% increments in the fourth quarter of 2021 and the fourth quarter of 2022. The current portion of the deferral was included within "Accrued salaries, wages and benefits" and the 2020 non-current portion of the deferral was included within "Other Liabilities" within the consolidated balance sheets. The tax benefits from the Employee Retention Credit program were recorded as a reduction to wage expense within the consolidated statement of operations and comprehensive (loss) income as the benefits were offered to defray labor costs during the COVID-19 pandemic.
We also received $5.1 million and $5.0 million from the Canada Emergency Wage Subsidy ("CEWS") during the years ended December 31, 2021 and December 31, 2020, respectively. The CEWS provides cash payments to Canadian employers that experienced a decline in revenues related to the COVID-19 pandemic. We also recorded the CEWS payments as a reduction to wage expense within the consolidated statement of operations and comprehensive (loss) income as the payments were offered to defray labor costs during the COVID-19 pandemic.
We have recorded a deferred tax liability of $0.5$3.3 million and $3.2 million as of December 31, 20182021 and December 31, 2020, respectively, to account for foreign currency translation adjustments and a deferred tax liability of $3.2 million as of December 31, 2017 to account for the tax effect of derivatives and foreign currency translation adjustments included in other comprehensive income.
The Partnership'sOur unrecognized tax benefits, including accrued interest and penalties, were not material in any year presented. The Partnership recognizesWe recognize accrued interest and penalties related to unrecognized tax benefits as income tax expense.
The Partnership and its corporate subsidiaries
We are subject to taxation in the U.S., Canada and various state and local jurisdictions. TheOur tax returns of the Partnership are subject to examination by state and federal tax authorities. With few exceptions, the Partnership and its corporate subsidiarieswe are no longer subject to examination by the major taxing authorities for tax years before 2014.2017.
(10) Operating(13) Lease CommitmentsCommitments:
Our most significant lease commitments include office space for our corporate office in Charlotte, North Carolina and Contingencies:
Operating Lease Commitments
the land on which Schlitterbahn Waterpark Galveston is located. The Partnershipcorporate office space is leased through 2029. The Schlitterbahn Waterpark Galveston land lease has commitments underan initial term through 2024 with renewal options through 2049. We have also entered into various operating leases at its parks. Future minimumfor office equipment, vehicles, storage and revenue-generating assets. As a lessor, we lease payments under non-cancelable operating leases asa portion of December 31, 2018 were as follows:
|
| | | |
(In thousands) | Future Minimum Lease Payments |
Year: | |
2019 | $ | 7,563 |
|
2020 | 6,494 |
|
2021 | 5,742 |
|
2022 | 5,438 |
|
2023 | 5,366 |
|
Thereafter | 85,689 |
|
Total | $ | 116,292 |
|
The amounts above include the land lease at California's Great America which is renewable in 2039 and includes a right of first refusal clause. Lease expense, which includes short-term rentals for equipment and machinery, for the years ended December 31, 2018, 2017 and 2016 totaled $16.5 million, $14.8 million and $12.8 million, respectively.
During November 2018, the Partnership exercised its right of first refusal underparking lot to the Santa Clara Stadium Authority during Levi's Stadium events. The parking lot lease is effective through the life of the stadium, which we estimate to be approximately 25 years, from the opening of the stadium through 2039. The lease payments were prepaid, and the corresponding income is being recognized over the life of the stadium. The annual lease income recognized is immaterial.
Prior to the second quarter of 2019, our most significant lease commitment was for the land lease to purchaseon which California's Great America is located in the City of Santa Clara, which had an initial term through 2039 with renewal options through 2074. On June 28, 2019, we purchased the land at California's Great America from the lessor, the City of Santa Clara, for $150$150.3 million. The Partnership is in
Total lease cost and related supplemental information for the process of negotiatingyears ended December 31, 2021, 2020 and 2019 were as follows:
| | | | | | | | | | | | | | | | | | | | | | |
| | Years Ended December 31, | | |
(In thousands, except for lease term and discount rate) | | 2021 | | 2020 | | 2019 | | |
Operating lease expense | | $ | 2,711 | | | $ | 2,797 | | | $ | 5,623 | | | |
Variable lease expense | | 872 | | | 173 | | | 1,579 | | | |
Short-term lease expense | | 7,563 | | | 2,205 | | | 6,635 | | | |
Sublease income | | — | | | — | | | (244) | | | |
Total lease cost | | $ | 11,146 | | | $ | 5,175 | | | $ | 13,593 | | | |
| | | | | | | | |
Weighted-average remaining lease term | | 14.1 years | | 16.8 years | | 16.7 years | | |
Weighted-average discount rate | | 3.7 | % | | 4.1 | % | | 4.2 | % | | |
Operating cash flows for operating leases | | $ | 2,299 | | | $ | 2,679 | | | $ | 5,494 | | | |
Leased assets obtained in exchange for new operating lease liabilities (non-cash activity) | | $ | 4,914 | | | $ | 1,769 | | | $ | 5,512 | | | |
Future undiscounted cash flows under our operating leases and a purchase agreement to acquire the land, which will be subjectreconciliation to the approval of the Successor Agency to the Redevelopment Agency of the City of Santa Clara and the Oversight Board for Successor Agency to the City of Santa Clara Redevelopment Agency and certain other conditions. The Partnership also is evaluating different options to finance the purchase. If the Partnership acquires the land, following the purchase, the Partnership anticipates the remaining operating lease commitments would be immaterial to the consolidated financial statements.liabilities recognized as of December 31, 2021 are included below:
| | | | | | | | |
(In thousands) | | December 31, 2021 |
Undiscounted cash flows | | |
2022 | | $ | 2,467 | |
2023 | | 2,158 | |
2024 | | 1,742 | |
2025 | | 1,635 | |
2026 | | 1,393 | |
Thereafter | | 10,769 | |
Total | | $ | 20,164 | |
| | |
Present value of cash flows | | |
Current lease liability | | $ | 1,962 | |
Lease Liability | | 13,345 | |
Total | | $ | 15,307 | |
| | |
Difference between undiscounted cash flows and discounted cash flows | | $ | 4,857 | |
Contingencies
The Partnership is also a party to a number
(11)(14) Fair Value Measurements:
The FASB's Accounting Standards Codification (ASC) 820 - Fair Value Measurements and Disclosures emphasizes that fair value is a market-based measurement that should be determined based on assumptions (inputs) that market participants would use in pricing an asset or liability. Inputs may be observable or unobservable, and valuation techniques used to measure fair value should maximize the use of relevant observable inputs and minimize the use of unobservable inputs. Accordingly, FASB ASC 820 establishes a hierarchal disclosure framework that ranks the quality and reliability of information used to determine fair values. The hierarchy is associated with the level of pricing observability utilized in measuring fair value and defines three levels of inputs to the fair value measurement process. Quoted prices are the most reliable valuation inputs, whereas model values that include inputs based on unobservable data are the least reliable. Each fair value measurement must be assigned to a level corresponding to the lowest level input that is significant to the fair value measurement in its entirety.
The three broad levels of inputs defined by the fair value hierarchy are as follows:
Level 1 – inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.
Level 2 – inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.
Level 3 – inputs to the valuation methodology are unobservable and significant to the fair value measurement.
A financial instrument's categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The table below presents the balances of assets and liabilities measured at fair value as of December 31, 20182021 and December 31, 20172020 on a recurring basis, as well as the fair values of other financial instruments:instruments, including their locations within the consolidated balance sheets:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(In thousands) | | | | | December 31, 2021 | | December 31, 2020 |
| Consolidated Balance Sheet Location | Fair Value Hierarchy Level | | Carrying Value | Fair Value | | Carrying Value | Fair Value |
Financial assets (liabilities) measured on a recurring basis: | | | | | | |
Short-term investments | | Other current assets | Level 1 | | $ | 478 | | $ | 478 | | | $ | 280 | | $ | 280 | |
Interest rate swaps | | Derivative Liability | Level 2 | | $ | (20,086) | | $ | (20,086) | | | $ | (39,086) | | $ | (39,086) | |
Other financial assets (liabilities): | | | | | | |
Term debt | | Long-Term Debt (1) | Level 2 | | $ | (264,250) | | $ | (257,644) | | | $ | (264,250) | | $ | (253,680) | |
2024 senior notes | | Long-Term Debt (1) | Level 1 | | — | | — | | | $ | (450,000) | | $ | (451,125) | |
2025 senior notes | | Long-Term Debt (1) | Level 2 | | $ | (1,000,000) | | $ | (1,035,000) | | | $ | (1,000,000) | | $ | (1,043,750) | |
2027 senior notes | | Long-Term Debt (1) | Level 1 | | $ | (500,000) | | $ | (513,750) | | | $ | (500,000) | | $ | (507,500) | |
2028 senior notes | | Long-Term Debt (1) | Level 1 (2) | | $ | (300,000) | | $ | (319,125) | | | $ | (300,000) | | $ | (318,000) | |
2029 senior notes | | Long-Term Debt (1) | Level 1 | | $ | (500,000) | | $ | (513,750) | | | $ | (500,000) | | $ | (505,625) | |
|
| | | | | | | | | | | | | | | | | |
(In thousands) | | | | | December 31, 2018 | | December 31, 2017 |
| Consolidated Balance Sheet Location | Fair Value Hierarchy Level | | Carrying Value | Fair Value | | Carrying Value | Fair Value |
Financial assets (liabilities) measured on a recurring basis: | | | | | | |
Short-term investments | | Other current assets | Level 1 | | $ | 511 |
| $ | 511 |
| | $ | 736 |
| $ | 736 |
|
Interest rate swaps | | Derivative Liability | Level 2 | | $ | (6,705 | ) | $ | (6,705 | ) | | $ | (8,722 | ) | $ | (8,722 | ) |
Other financial assets (liabilities): | |
|
|
|
| |
|
|
|
|
April 2017 term debt | | Long-Term Debt (1) | Level 2 | | $ | (729,375 | ) | $ | (707,494 | ) | | $ | (735,000 | ) | $ | (742,350 | ) |
April 2017 notes | | Long-Term Debt (1) | Level 1 (2) | | $ | (500,000 | ) | $ | (475,000 | ) | | $ | (500,000 | ) | $ | (525,000 | ) |
June 2014 notes | | Long-Term Debt (1) | Level 1 | | $ | (450,000 | ) | $ | (441,000 | ) | | $ | (450,000 | ) | $ | (469,125 | ) |
(1)Carrying values of long-term debt balances are before reductions for debt issuance costs and original issue discount of $45.3 million and $60.0 million as of December 31, 2021 and December 31, 2020, respectively.
(2)The 2028 senior notes were based on Level 1 inputs as of December 31, 2021 and Level 2 inputs as of December 31, 2020.
| |
(1) | Carrying values of long-term debt balances are before reductions of debt issuance costs and original issue discount of $21.8 million and $24.5 million as of December 31, 2018 and December 31, 2017, respectively. |
| |
(2) | The April 2017 notes were based on Level 1 inputs as of December 31, 2018 and Level 2 inputs as of December 31, 2017. |
Fair values of the interest rate swap agreements are determined using significant inputs, including LIBOR forward curves, which are considered Level 2 observable market inputs.
As of December 31, 2017,Due to the Partnership measured the remaining land at Wildwater Kingdom, onenegative effects of the Partnership's separately gated outdoor waterCOVID-19 pandemic on our forecasted operating results, we tested our long-lived assets, goodwill, and indefinite-lived intangible assets for impairment during the first and third quarters of 2020. We concluded the estimated fair value of goodwill at the Schlitterbahn parks which ceased operations in 2016,reporting unit and the Schlitterbahn trade name, and the estimated fair value of goodwill at the Dorney Park reporting unit no longer exceeded their carrying values. During the first quarter of 2020, we also concluded the estimated fair value of the long-lived assets of the Schlitterbahn parks no longer exceeded their carrying values. Therefore, as of March 29, 2020 and September 27, 2020, these assets were measured at fair value less cost to sell based on Level 3 unobservable market input. In the fourth quarter of 2017, the Partnershipvalue. We recorded a $7.6$2.7 million, $73.6 million and $7.9 million impairment charge based on recent information from ongoing marketing activities. This amountto long-lived assets, goodwill and the trade name at the Schlitterbahn parks, respectively, and a $6.8 million impairment charge to goodwill at Dorney Park during the first quarter of 2020. We also recorded an $11.3 million and $2.2 million impairment charge to goodwill and the trade name at the Schlitterbahn parks, respectively, and a $2.3 million impairment charge to goodwill at Dorney Park during the third quarter of 2020. The long-lived asset impairment charge was recorded in "Loss on impairment / retirement of fixed assets, net"assets", and the goodwill and intangible asset impairment charges were recorded in "Loss on impairment of goodwill and other intangibles" within the consolidated statementstatements of operations and comprehensive income.loss.
The fair value determination for our long-lived assets, reporting units and indefinite-lived intangible assets included numerous assumptions based on Level 3 inputs. The fair value of our long-lived assets was determined using a real and personal property appraisal of which the principal assumptions included the principal market and market participants upon sale. The primary assumptions used to determine the fair value of our reporting units included growth rates in revenues and costs, estimates of future expected changes in operating margins and cash expenditures, the anticipated time frame to re-open our parks, the related anticipated demand upon re-opening our parks, terminal value growth rates, future estimates of capital expenditures, changes in future capital requirements, and a weighted-average cost of capital that reflected current market conditions. The fair value of our indefinite-lived intangible assets was determined using a relief-from-royalty method of which the principal assumptions included royalty rates, growth rates in revenues, estimates of future expected changes in operating margins, the anticipated time frame to re-open our parks, the related anticipated demand upon re-opening our parks, terminal value growth rates, and a discount rate based on a weighted-average cost of capital that reflected current market conditions.
The carrying value of cash and cash equivalents, accounts receivable, current portion of term debt, accounts payable, and accrued liabilities approximates fair value because of the short maturity of these instruments. There were no assets measured at fair value on a non-recurring basis as of December 31, 2018.
(12) Changes in Accumulated Other Comprehensive Income ("AOCI"):
The following tables reflect the changes in accumulated other comprehensive income (loss) related to limited partners' equity for the years ended2021 or December 31, 2018, December 31, 2017 and December 31, 2016:2020.
|
| | | | | | | | | | | | |
Changes in Accumulated Other Comprehensive Income by Component |
(In thousands) | | Losses on Cash Flow Hedges | | Foreign Currency Translation | | Total |
Balance as of December 31, 2015 | | $ | (19,300 | ) | | $ | 22,591 |
| | $ | 3,291 |
|
Other comprehensive income before reclassifications, net of tax $711 and $2,127 | | (3,960 | ) | | (3,700 | ) | | (7,660 | ) |
Amounts reclassified from accumulated other comprehensive income, net of tax ($1,361) | | 7,310 |
| | — |
| | 7,310 |
|
Balance as of December 31, 2016 | | $ | (15,950 | ) | | $ | 18,891 |
| | $ | 2,941 |
|
Other comprehensive income before reclassifications, net of tax ($4,330) | | — |
| | (14,849 | ) | | (14,849 | ) |
Amounts reclassified from accumulated other comprehensive income, net of tax ($1,484) | | 7,975 |
| | — |
| | 7,975 |
|
Balance as of December 31, 2017 | | $ | (7,975 | ) | | $ | 4,042 |
| | $ | (3,933 | ) |
Other comprehensive income before reclassifications, net of tax $3,862 | | — |
| | 17,240 |
| | 17,240 |
|
Amounts reclassified from accumulated other comprehensive income, net of tax ($1,094) | | 8,366 |
| | — |
| | 8,366 |
|
Reclassification of stranded tax effect | | (391 | ) | | — |
| | (391 | ) |
Balance as of December 31, 2018 | | $ | — |
| | $ | 21,282 |
| | $ | 21,282 |
|
|
| | | | | | | | | | | | | |
Reclassifications Out of Accumulated Other Comprehensive Income |
(In thousands) | Affected Income Statement Location | | Years Ended December 31, |
AOCI Component | | 2018 | | 2017 | | 2016 |
Interest rate contracts | Net effect of swaps | | $ | 9,460 |
| | $ | 9,459 |
| | $ | 8,671 |
|
Provision for taxes | Provision for taxes | | (1,094 | ) | | (1,484 | ) | | (1,361 | ) |
Losses on cash flow hedges | Net of tax | | $ | 8,366 |
| | $ | 7,975 |
| | $ | 7,310 |
|
(13) Consolidating Financial Information of Guarantors and Issuers of June 2014 Notes:
Cedar Fair, L.P., Canada's Wonderland Company ("Cedar Canada"), and Magnum Management Corporation ("Magnum") are the co-issuers of the Partnership's June 2014 Notes (see Note 5 to the Consolidated Financial Statements). The notes have been fully and unconditionally guaranteed, on a joint and several basis, by each 100% owned subsidiary of Cedar Fair (other than Cedar Canada and Magnum) that guarantees the Partnership's senior secured credit facilities. There are no non-guarantor subsidiaries.
The following consolidating schedules present condensed financial information for Cedar Fair, L.P., Cedar Canada, and Magnum, the co-issuers, and each 100% owned subsidiary of Cedar Fair (other than Cedar Canada and Magnum), the guarantors (on a combined basis), as of December 31, 2018 and December 31, 2017 and for the years ended December 31, 2018, December 31, 2017, and December 31, 2016. In lieu of providing separate audited financial statements for the guarantor subsidiaries, the accompanying condensed consolidating financial statements have been included.
CEDAR FAIR, L.P.
CONDENSED CONSOLIDATING BALANCE SHEET
DECEMBER 31, 2018
(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 | | $ | — |
| | $ | — |
| | $ | 73,326 |
| | $ | 32,715 |
| | $ | (692 | ) | | $ | 105,349 |
|
Receivables | | — |
| | 1,093 |
| | 34,497 |
| | 938,397 |
| | (922,469 | ) | | 51,518 |
|
Inventories | | — |
| | — |
| | 2,135 |
| | 28,618 |
| | — |
| | 30,753 |
|
Other current assets | | 179 |
| | 1,411 |
| | 5,462 |
| | 10,544 |
| | (5,007 | ) | | 12,589 |
|
| | 179 |
| | 2,504 |
| | 115,420 |
| | 1,010,274 |
| | (928,168 | ) | | 200,209 |
|
Property and Equipment, net | | — |
| | 802 |
| | 172,344 |
| | 1,426,292 |
| | — |
| | 1,599,438 |
|
Investment in Park | | 601,706 |
| | 1,182,345 |
| | 262,462 |
| | 218,575 |
| | (2,265,088 | ) | | — |
|
Goodwill | | 674 |
| | — |
| | 58,440 |
| | 119,605 |
| | — |
| | 178,719 |
|
Other Intangibles, net | | — |
| | — |
| | 13,030 |
| | 23,346 |
| | — |
| | 36,376 |
|
Deferred Tax Asset | | — |
| | 18,224 |
| | — |
| | — |
| | (18,224 | ) | | — |
|
Other Assets | | — |
| | — |
| | 36 |
| | 9,405 |
| | — |
| | 9,441 |
|
| | $ | 602,559 |
| | $ | 1,203,875 |
| | $ | 621,732 |
| | $ | 2,807,497 |
| | $ | (3,211,480 | ) | | $ | 2,024,183 |
|
LIABILITIES AND PARTNERS’ EQUITY | | | | | | | | | | | | |
Current Liabilities: | | | | | | | | | | | | |
Current maturities of long-term debt | | $ | — |
| | $ | 984 |
| | $ | — |
| | $ | 4,641 |
| | $ | — |
| | $ | 5,625 |
|
Accounts payable | | 565,472 |
| | 359,953 |
| | 2,430 |
| | 18,620 |
| | (923,161 | ) | | 23,314 |
|
Deferred revenue | | — |
| | — |
| | 8,460 |
| | 98,614 |
| | — |
| | 107,074 |
|
Accrued interest | | 1 |
| | 1 |
| | 2,054 |
| | 5,871 |
| | — |
| | 7,927 |
|
Accrued taxes | | 443 |
| | 6,668 |
| | — |
| | 27,487 |
| | (5,007 | ) | | 29,591 |
|
Accrued salaries, wages and benefits | | — |
| | 17,552 |
| | 1,234 |
| | — |
| | — |
| | 18,786 |
|
Self-insurance reserves | | — |
| | 10,214 |
| | 1,433 |
| | 12,374 |
| | — |
| | 24,021 |
|
Other accrued liabilities | | 3,318 |
| | 4,903 |
| | 136 |
| | 10,024 |
| | — |
| | 18,381 |
|
| | 569,234 |
| | 400,275 |
| | 15,747 |
| | 177,631 |
| | (928,168 | ) | | 234,719 |
|
Deferred Tax Liability | | — |
| | — |
| | 12,425 |
| | 87,516 |
| | (18,224 | ) | | 81,717 |
|
Derivative Liability | | 909 |
| | 5,796 |
| | — |
| | — |
| | — |
| | 6,705 |
|
Other Liabilities | | — |
| | 1,169 |
| | — |
| | 9,889 |
| | — |
| | 11,058 |
|
Long-Term Debt: | | | | | | | | | | | | |
Term debt | | — |
| | 126,525 |
| | — |
| | 592,982 |
| | — |
| | 719,507 |
|
Notes | | — |
| | — |
| | 446,241 |
| | 491,820 |
| | — |
| | 938,061 |
|
| | — |
| | 126,525 |
| | 446,241 |
| | 1,084,802 |
| | — |
| | 1,657,568 |
|
| | | | | | | | | | | | |
Equity | | 32,416 |
| | 670,110 |
| | 147,319 |
| | 1,447,659 |
| | (2,265,088 | ) | | 32,416 |
|
| | $ | 602,559 |
| | $ | 1,203,875 |
| | $ | 621,732 |
| | $ | 2,807,497 |
| | $ | (3,211,480 | ) | | $ | 2,024,183 |
|
CEDAR FAIR, L.P.
CONDENSED CONSOLIDATING BALANCE SHEET
DECEMBER 31, 2017
(In thousands)
|
| | | | | | | | | | | | | | | | | | | | | | | | |
| | Cedar Fair L.P. (Parent) | | Co-Issuer Subsidiary (Magnum) | | Co-Issuer Subsidiary (Cedar Canada) | | Guarantor Subsidiaries | | Eliminations | | Total |
ASSETS | | | | | | | | | | | | |
Current Assets: | | | | | | | | | | | | |
Cash and cash equivalents | | $ | — |
| | $ | — |
| | $ | 85,758 |
| | $ | 81,582 |
| | $ | (1,095 | ) | | $ | 166,245 |
|
Receivables | | — |
| | 1,184 |
| | 15,574 |
| | 857,205 |
| | (836,241 | ) | | 37,722 |
|
Inventories | | — |
| | — |
| | 1,891 |
| | 27,828 |
| | — |
| | 29,719 |
|
Other current assets | | 164 |
| | 28,297 |
| | 3,454 |
| | 10,983 |
| | (29,601 | ) | | 13,297 |
|
| | 164 |
| | 29,481 |
| | 106,677 |
| | 977,598 |
| | (866,937 | ) | | 246,983 |
|
Property and Equipment, net | | — |
| | 835 |
| | 181,673 |
| | 1,403,264 |
| | — |
| | 1,585,772 |
|
Investment in Park | | 588,684 |
| | 1,045,640 |
| | 238,132 |
| | 234,238 |
| | (2,106,694 | ) | | — |
|
Goodwill | | 674 |
| | — |
| | 63,551 |
| | 119,605 |
| | — |
| | 183,830 |
|
Other Intangibles, net | | — |
| | — |
| | 14,177 |
| | 23,887 |
| | — |
| | 38,064 |
|
Deferred Tax Asset | | — |
| | 20,956 |
| | — |
| | — |
| | (20,956 | ) | | — |
|
Other Assets | | — |
| | — |
| | 40 |
| | 9,470 |
| | — |
| | 9,510 |
|
| | $ | 589,522 |
| | $ | 1,096,912 |
| | $ | 604,250 |
| | $ | 2,768,062 |
| | $ | (2,994,587 | ) | | $ | 2,064,159 |
|
LIABILITIES AND PARTNERS’ EQUITY | | | | | | | | | | | | |
Current Liabilities: | | | | | | | | | | | | |
Accounts payable | | $ | 497,558 |
| | $ | 344,410 |
| | $ | 1,379 |
| | $ | 18,610 |
| | $ | (837,336 | ) | | $ | 24,621 |
|
Deferred revenue | | — |
| | — |
| | 6,237 |
| | 79,894 |
| | — |
| | 86,131 |
|
Accrued interest | | 27 |
| | 18 |
| | 2,055 |
| | 6,024 |
| | — |
| | 8,124 |
|
Accrued taxes | | 352 |
| | — |
| | — |
| | 73,224 |
| | (29,601 | ) | | 43,975 |
|
Accrued salaries, wages and benefits | | — |
| | 17,498 |
| | 1,242 |
| | — |
| | — |
| | 18,740 |
|
Self-insurance reserves | | — |
| | 10,947 |
| | 1,618 |
| | 12,542 |
| | — |
| | 25,107 |
|
Other accrued liabilities | | 3,406 |
| | 5,094 |
| | 157 |
| | 10,139 |
| | — |
| | 18,796 |
|
| | 501,343 |
| | 377,967 |
| | 12,688 |
| | 200,433 |
| | (866,937 | ) | | 225,494 |
|
Deferred Tax Liability | | — |
| | — |
| | 13,809 |
| | 81,945 |
| | (20,956 | ) | | 74,798 |
|
Derivative Liability | | 5,233 |
| | 3,489 |
| | — |
| | — |
| | — |
| | 8,722 |
|
Other Liabilities | | — |
| | 873 |
| | — |
| | 10,811 |
| | — |
| | 11,684 |
|
Long-Term Debt: | | | | | | | | | | | | |
Term debt | | — |
| | 127,437 |
| | — |
| | 596,351 |
| | — |
| | 723,788 |
|
Notes | | — |
| | — |
| | 445,156 |
| | 491,571 |
| | — |
| | 936,727 |
|
| | — |
| | 127,437 |
| | 445,156 |
| | 1,087,922 |
| | — |
| | 1,660,515 |
|
| | | | | | | | | | | | |
Equity | | 82,946 |
| | 587,146 |
| | 132,597 |
| | 1,386,951 |
| | (2,106,694 | ) | | 82,946 |
|
| | $ | 589,522 |
| | $ | 1,096,912 |
| | $ | 604,250 |
| | $ | 2,768,062 |
| | $ | (2,994,587 | ) | | $ | 2,064,159 |
|
CEDAR FAIR, L.P.
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME
For the Year Ended December 31, 2018
(In thousands)
|
| | | | | | | | | | | | | | | | | | | | | | | | |
| | Cedar Fair L.P. (Parent) | | Co-Issuer Subsidiary (Magnum) | | Co-Issuer Subsidiary (Cedar Canada) | | Guarantor Subsidiaries | | Eliminations | | Total |
| | | | | | | | | | | | |
Net revenues | | $ | 103,687 |
| | $ | 336,778 |
| | $ | 124,506 |
| | $ | 1,268,200 |
| | $ | (484,641 | ) | | $ | 1,348,530 |
|
Costs and expenses: | | | | | | | | | | | | |
Cost of food, merchandise and games revenues | | — |
| | — |
| | 10,841 |
| | 103,892 |
| | — |
| | 114,733 |
|
Operating expenses | | — |
| | 328,709 |
| | 47,551 |
| | 692,731 |
| | (484,641 | ) | | 584,350 |
|
Selling, general and administrative | | 2,301 |
| | 67,582 |
| | 10,586 |
| | 112,864 |
| | — |
| | 193,333 |
|
Depreciation and amortization | | — |
| | 33 |
| | 15,273 |
| | 140,223 |
| | — |
| | 155,529 |
|
Loss on impairment / retirement of fixed assets, net | | — |
| | — |
| | 221 |
| | 9,957 |
| | — |
| | 10,178 |
|
Gain on sale of investment | | — |
| | (112 | ) | | — |
| | — |
| | — |
| | (112 | ) |
| | 2,301 |
| | 396,212 |
| | 84,472 |
| | 1,059,667 |
| | (484,641 | ) | | 1,058,011 |
|
Operating income (loss) | | 101,386 |
| | (59,434 | ) | | 40,034 |
| | 208,533 |
| | — |
| | 290,519 |
|
Interest expense, net | | 23,339 |
| | 18,331 |
| | 23,988 |
| | 18,514 |
| | — |
| | 84,172 |
|
Net effect of swaps | | 1,228 |
| | 6,214 |
| | — |
| | — |
| | — |
| | 7,442 |
|
Loss on early debt extinguishment | | — |
| | 187 |
| | — |
| | 886 |
| | — |
| | 1,073 |
|
Loss on foreign currency | | — |
| | 51 |
| | 36,203 |
| | — |
| | — |
| | 36,254 |
|
Other (income) expense | | 250 |
| | (78,571 | ) | | 4,196 |
| | 74,307 |
| | — |
| | 182 |
|
(Income) loss from investment in affiliates | | (61,484 | ) | | (62,244 | ) | | (24,329 | ) | | 2,517 |
| | 145,540 |
| | — |
|
Income (loss) before taxes | | 138,053 |
| | 56,598 |
| | (24 | ) | | 112,309 |
| | (145,540 | ) | | 161,396 |
|
Provision (benefit) for taxes | | 11,400 |
| | (4,886 | ) | | 2,494 |
| | 25,735 |
| | — |
| | 34,743 |
|
Net income (loss) | | $ | 126,653 |
| | $ | 61,484 |
| | $ | (2,518 | ) | | $ | 86,574 |
| | $ | (145,540 | ) | | $ | 126,653 |
|
Other comprehensive income (loss), (net of tax): | | | | | | | | | | | | |
Cumulative foreign currency translation adjustment | | 17,240 |
| | — |
| | 17,240 |
| | — |
| | (17,240 | ) | | 17,240 |
|
Cash flow hedging derivative activity | | 8,366 |
| | 2,813 |
| | — |
| | — |
| | (2,813 | ) | | 8,366 |
|
Other comprehensive income (loss), (net of tax) | | 25,606 |
| | 2,813 |
| | 17,240 |
| | — |
| | (20,053 | ) | | 25,606 |
|
Total comprehensive income | | $ | 152,259 |
| | $ | 64,297 |
| | $ | 14,722 |
| | $ | 86,574 |
| | $ | (165,593 | ) | | $ | 152,259 |
|
CEDAR FAIR, L.P.
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME
For the Year Ended December 31, 2017
(In thousands)
|
| | | | | | | | | | | | | | | | | | | | | | | | |
| | Cedar Fair L.P. (Parent) | | Co-Issuer Subsidiary (Magnum) | | Co-Issuer Subsidiary (Cedar Canada) | | Guarantor Subsidiaries | | Eliminations | | Total |
| | | | | | | | | | | | |
Net revenues | | $ | 104,080 |
| | $ | 317,496 |
| | $ | 127,929 |
| | $ | 1,239,067 |
| | $ | (466,605 | ) | | $ | 1,321,967 |
|
Costs and expenses: | | | | | | | | | | | | |
Cost of food, merchandise and games revenues | | — |
| | — |
| | 11,483 |
| | 99,328 |
| | — |
| | 110,811 |
|
Operating expenses | | — |
| | 313,654 |
| | 44,990 |
| | 666,063 |
| | (466,605 | ) | | 558,102 |
|
Selling, general and administrative | | 3,007 |
| | 67,872 |
| | 10,497 |
| | 112,394 |
| | — |
| | 193,770 |
|
Depreciation and amortization | | — |
| | 33 |
| | 15,654 |
| | 137,535 |
| | — |
| | 153,222 |
|
Loss on impairment / retirement of fixed assets, net | | — |
| | — |
| | 656 |
| | 12,072 |
| | — |
| | 12,728 |
|
Gain on sale of investment | | — |
| | (1,877 | ) | | — |
| | — |
| | — |
| | (1,877 | ) |
| | 3,007 |
| | 379,682 |
| | 83,280 |
| | 1,027,392 |
| | (466,605 | ) | | 1,026,756 |
|
Operating income (loss) | | 101,073 |
| | (62,186 | ) | | 44,649 |
| | 211,675 |
| | — |
| | 295,211 |
|
Interest expense, net | | 23,739 |
| | 18,837 |
| | 24,839 |
| | 17,333 |
| | — |
| | 84,748 |
|
Net effect of swaps | | (150 | ) | | 105 |
| | — |
| | — |
| | — |
| | (45 | ) |
Loss on early debt extinguishment | | 11,773 |
| | 8,188 |
| | 205 |
| | 2,955 |
| | — |
| | 23,121 |
|
Gain on foreign currency | | — |
| | (25 | ) | | (29,061 | ) | | — |
| | — |
| | (29,086 | ) |
Other (income) expense | | 250 |
| | (73,581 | ) | | 3,460 |
| | 69,756 |
| | — |
| | (115 | ) |
Income from investment in affiliates | | (160,925 | ) | | (176,698 | ) | | (38,057 | ) | | (84,398 | ) | | 460,078 |
| | — |
|
Income before taxes | | 226,386 |
| | 160,988 |
| | 83,263 |
| | 206,029 |
| | (460,078 | ) | | 216,588 |
|
Provision (benefit) for taxes | | 10,910 |
| | 60 |
| | (1,134 | ) | | (8,724 | ) | | — |
| | 1,112 |
|
Net income | | $ | 215,476 |
| | $ | 160,928 |
| | $ | 84,397 |
| | $ | 214,753 |
| | $ | (460,078 | ) | | $ | 215,476 |
|
Other comprehensive income (loss), (net of tax): | | | | | | | | | | | | |
Cumulative foreign currency translation adjustment | | (14,849 | ) | | — |
| | (14,849 | ) | | — |
| | 14,849 |
| | (14,849 | ) |
Cash flow hedging derivative activity | | 7,975 |
| | 2,422 |
| | — |
| | — |
| | (2,422 | ) | | 7,975 |
|
Other comprehensive income (loss), (net of tax) | | (6,874 | ) | | 2,422 |
| | (14,849 | ) | | — |
| | 12,427 |
| | (6,874 | ) |
Total comprehensive income | | $ | 208,602 |
| | $ | 163,350 |
| | $ | 69,548 |
| | $ | 214,753 |
| | $ | (447,651 | ) | | $ | 208,602 |
|
CEDAR FAIR, L.P.
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME
For the Year Ended December 31, 2016
(In thousands)
|
| | | | | | | | | | | | | | | | | | | | | | | | |
| | Cedar Fair L.P. (Parent) | | Co-Issuer Subsidiary (Magnum) | | Co-Issuer Subsidiary (Cedar Canada) | | Guarantor Subsidiaries | | Eliminations | | Total |
| | | | | | | | | | | | |
Net revenues | | $ | 144,042 |
| | $ | 320,945 |
| | $ | 117,962 |
| | $ | 1,234,075 |
| | $ | (528,303 | ) | | $ | 1,288,721 |
|
Costs and expenses: | | | | | | | | | | | | |
Cost of food, merchandise and games revenues | | — |
| | — |
| | 9,868 |
| | 96,740 |
| | — |
| | 106,608 |
|
Operating expenses | | — |
| | 303,974 |
| | 42,820 |
| | 720,390 |
| | (528,303 | ) | | 538,881 |
|
Selling, general and administrative | | 3,029 |
| | 68,422 |
| | 10,151 |
| | 100,228 |
| | — |
| | 181,830 |
|
Depreciation and amortization | | — |
| | 35 |
| | 14,816 |
| | 117,025 |
| | — |
| | 131,876 |
|
Loss on impairment / retirement of fixed assets, net | | — |
| | — |
| | 159 |
| | 12,428 |
| | — |
| | 12,587 |
|
| | 3,029 |
| | 372,431 |
| | 77,814 |
| | 1,046,811 |
| | (528,303 | ) | | 971,782 |
|
Operating income (loss) | | 141,013 |
| | (51,486 | ) | | 40,148 |
| | 187,264 |
| | — |
| | 316,939 |
|
Interest expense, net | | 32,643 |
| | 24,114 |
| | 25,403 |
| | 1,526 |
| | — |
| | 83,686 |
|
Net effect of swaps | | (473 | ) | | (724 | ) | | — |
| | — |
| | — |
| | (1,197 | ) |
(Gain) loss on foreign currency | | — |
| | — |
| | (14,660 | ) | | 4 |
| | — |
| | (14,656 | ) |
Other (income) expense | | 250 |
| | (83,657 | ) | | 3,925 |
| | 79,482 |
| | — |
| | — |
|
Income from investment in affiliates | | (80,295 | ) | | (73,132 | ) | | (20,545 | ) | | (27,628 | ) | | 201,600 |
| | — |
|
Income before taxes | | 188,888 |
| | 81,913 |
| | 46,025 |
| | 133,880 |
| | (201,600 | ) | | 249,106 |
|
Provision for taxes | | 11,200 |
| | 1,621 |
| | 18,396 |
| | 40,201 |
| | — |
| | 71,418 |
|
Net income | | $ | 177,688 |
| | $ | 80,292 |
| | $ | 27,629 |
| | $ | 93,679 |
| | $ | (201,600 | ) | | $ | 177,688 |
|
Other comprehensive income (loss), (net of tax): | | | | | | | | | | | | |
Cumulative foreign currency translation adjustment | | (3,700 | ) | | — |
| | (3,700 | ) | | — |
| | 3,700 |
| | (3,700 | ) |
Cash flow hedging derivative activity | | 3,350 |
| | 1,060 |
| | — |
| | — |
| | (1,060 | ) | | 3,350 |
|
Other comprehensive income (loss), (net of tax) | | (350 | ) | | 1,060 |
| | (3,700 | ) | | — |
| | 2,640 |
| | (350 | ) |
Total comprehensive income | | $ | 177,338 |
| | $ | 81,352 |
| | $ | 23,929 |
| | $ | 93,679 |
| | $ | (198,960 | ) | | $ | 177,338 |
|
CEDAR FAIR, L.P.
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
For the Year Ended December 31, 2018
(In thousands)
|
| | | | | | | | | | | | | | | | | | | | | | | | |
| | Cedar Fair L.P. (Parent) | | Co-Issuer Subsidiary (Magnum) | | Co-Issuer Subsidiary (Cedar Canada) | | Guarantor Subsidiaries | | Eliminations | | Total |
| | | | | | | | | | | | |
NET CASH FROM OPERATING ACTIVITIES | | $ | 136,471 |
| | $ | 11,057 |
| | $ | 12,901 |
| | $ | 191,056 |
| | $ | (745 | ) | | $ | 350,740 |
|
CASH FLOWS FROM (FOR) INVESTING ACTIVITIES | | | | | | | | | | | | |
Intercompany receivables (payments) receipts | | — |
| | — |
| | — |
| | (67,861 | ) | | 67,861 |
| | — |
|
Purchase of identifiable intangible assets | | — |
| | — |
| | — |
| | (41 | ) | | — |
| | (41 | ) |
Sale of preferred equity investment | | — |
| | 112 |
| | — |
| | — |
| | — |
| | 112 |
|
Capital expenditures | | — |
| | — |
| | (19,976 | ) | | (169,799 | ) | | — |
| | (189,775 | ) |
Net cash from (for) investing activities | | — |
| | 112 |
| | (19,976 | ) | | (237,701 | ) | | 67,861 |
| | (189,704 | ) |
CASH FLOWS FOR FINANCING ACTIVITIES | | | | | | | | | | | | |
Intercompany payables (payments) receipts | | 67,876 |
| | (15 | ) | | — |
| | — |
| | (67,861 | ) | | — |
|
Distributions paid to partners | | (204,347 | ) | | — |
| | — |
| | — |
| | 1,148 |
| | (203,199 | ) |
Payment of debt issuance costs and original issue discount | | — |
| | (321 | ) | | — |
| | (2,222 | ) | | — |
| | (2,543 | ) |
Exercise of limited partnership unit options | | — |
| | 125 |
| | — |
| | — |
| | — |
| | 125 |
|
Tax effect of units involved in treasury unit transactions | | — |
| | (2,530 | ) | | — |
| | — |
| | — |
| | (2,530 | ) |
Payments related to tax withholding for equity compensation | | — |
| | (8,428 | ) | | — |
| | — |
| | — |
| | (8,428 | ) |
Net cash for financing activities | | (136,471 | ) | | (11,169 | ) | | — |
| | (2,222 | ) | | (66,713 | ) | | (216,575 | ) |
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS | | — |
| | — |
| | (5,357 | ) | | — |
| | — |
| | (5,357 | ) |
CASH AND CASH EQUIVALENTS | | | | | | | | | | | | |
Net decrease for the year | | — |
| | — |
| | (12,432 | ) | | (48,867 | ) | | 403 |
| | (60,896 | ) |
Balance, beginning of year | | — |
| | — |
| | 85,758 |
| | 81,582 |
| | (1,095 | ) | | 166,245 |
|
Balance, end of year | | $ | — |
| | $ | — |
| | $ | 73,326 |
| | $ | 32,715 |
| | $ | (692 | ) | | $ | 105,349 |
|
CEDAR FAIR, L.P.
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
For the Year Ended December 31, 2017
(In thousands)
|
| | | | | | | | | | | | | | | | | | | | | | | | |
| | Cedar Fair L.P. (Parent) | | Co-Issuer Subsidiary (Magnum) | | Co-Issuer Subsidiary (Cedar Canada) | | Guarantor Subsidiaries | | Eliminations | | Total |
| | | | | | | | | | | | |
NET CASH FROM (FOR) OPERATING ACTIVITIES | | $ | 93,378 |
| | $ | (10,710 | ) | | $ | 40,569 |
| | $ | 209,780 |
| | $ | (1,838 | ) | | $ | 331,179 |
|
CASH FLOWS FROM (FOR) INVESTING ACTIVITIES | | | | | | | | | | | | |
Intercompany receivables (payments) receipts | | — |
| | — |
| | — |
| | (278,051 | ) | | 278,051 |
| | — |
|
Proceeds from returns on investments | | 338,000 |
| | 15,500 |
| | — |
| | 146,500 |
| | (500,000 | ) | | — |
|
Purchase of identifiable intangible assets | | — |
| | — |
| | — |
| | (66 | ) | | — |
| | (66 | ) |
Proceeds from sale of preferred equity investment | | — |
| | 3,281 |
| | — |
| | — |
| | — |
| | 3,281 |
|
Capital expenditures | | — |
| | (25 | ) | | (10,160 | ) | | (177,899 | ) | | — |
| | (188,084 | ) |
Net cash from (for) investing activities | | 338,000 |
| | 18,756 |
| | (10,160 | ) | | (309,516 | ) | | (221,949 | ) | | (184,869 | ) |
CASH FLOWS FROM (FOR) FINANCING ACTIVITIES | | | | | | | | | | | | |
Intercompany payables (payments) receipts | | 69,160 |
| | 208,891 |
| | — |
| | — |
| | (278,051 | ) | | — |
|
Payments for returns of capital | | — |
| | — |
| | — |
| | (500,000 | ) | | 500,000 |
| | — |
|
Term debt borrowings | | — |
| | 131,000 |
| | — |
| | 619,000 |
| | — |
| | 750,000 |
|
Note borrowings | | — |
| | — |
| | — |
| | 500,000 |
| | — |
| | 500,000 |
|
Term debt payments | | — |
| | (126,619 | ) | | (13,854 | ) | | (477,377 | ) | | — |
| | (617,850 | ) |
Note payments, including amounts paid for early termination | | (304,014 | ) | | (211,444 | ) | | — |
| | — |
| | — |
| | (515,458 | ) |
Distributions paid to partners | | (196,524 | ) | | — |
| | — |
| | — |
| | 1,768 |
| | (194,756 | ) |
Payment of debt issuance costs | | — |
| | (1,326 | ) | | — |
| | (18,483 | ) | | — |
| | (19,809 | ) |
Exercise of limited partnership unit options | | — |
| | 65 |
| | — |
| | — |
| | — |
| | 65 |
|
Tax effect of units involved in treasury unit transactions | | — |
| | (4,440 | ) | | — |
| | — |
| | — |
| | (4,440 | ) |
Payments related to tax withholding for equity compensation | | — |
| | (4,173 | ) | | — |
| | — |
| | — |
| | (4,173 | ) |
Net cash from (for) financing activities | | (431,378 | ) | | (8,046 | ) | | (13,854 | ) | | 123,140 |
| | 223,717 |
| | (106,421 | ) |
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS | | — |
| | — |
| | 3,640 |
| | — |
| | — |
| | 3,640 |
|
CASH AND CASH EQUIVALENTS | | | | | | | | | | | | |
Net increase for the year | | — |
| | — |
| | 20,195 |
| | 23,404 |
| | (70 | ) | | 43,529 |
|
Balance, beginning of year | | — |
| | — |
| | 65,563 |
| | 58,178 |
| | (1,025 | ) | | 122,716 |
|
Balance, end of year | | $ | — |
| | $ | — |
| | $ | 85,758 |
| | $ | 81,582 |
| | $ | (1,095 | ) | | $ | 166,245 |
|
CEDAR FAIR, L.P.
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
For the Year Ended December 31, 2016
(In thousands)
|
| | | | | | | | | | | | | | | | | | | | | | | | |
| | Cedar Fair L.P. (Parent) | | Co-Issuer Subsidiary (Magnum) | | Co-Issuer Subsidiary (Cedar Canada) | | Guarantor Subsidiaries | | Eliminations | | Total |
| | | | | | | | | | | | |
NET CASH FROM (FOR) OPERATING ACTIVITIES | | $ | 118,833 |
| | $ | (28,315 | ) | | $ | 33,918 |
| | $ | 237,262 |
| | $ | (3,351 | ) | | $ | 358,347 |
|
CASH FLOWS FOR INVESTING ACTIVITIES | | | | | | | | | | | | |
Intercompany receivables (payments) receipts | | — |
| | — |
| | — |
| | (24,562 | ) | | 24,562 |
| | — |
|
Purchase of identifiable intangible assets | | — |
| | — |
| | (29 | ) | | (548 | ) | | — |
| | (577 | ) |
Capital expenditures | | — |
| | — |
| | (7,863 | ) | | (152,793 | ) | | — |
| | (160,656 | ) |
Net cash for investing activities | | — |
| | — |
| | (7,892 | ) | | (177,903 | ) | | 24,562 |
| | (161,233 | ) |
CASH FLOWS FROM (FOR) FINANCING ACTIVITIES | | | | | | | | | | | | |
Term debt payments | | — |
| | (1,237 | ) | | (138 | ) | | (4,625 | ) | | — |
| | (6,000 | ) |
Intercompany payables (payments) receipts | | (6,332 | ) | | 30,894 |
| | — |
| | — |
| | (24,562 | ) | | — |
|
Distributions paid to partners | | (189,508 | ) | | — |
| | — |
| | — |
| | 2,326 |
| | (187,182 | ) |
Tax effect of units involved in treasury unit transactions | | — |
| | (422 | ) | | — |
| | — |
| | — |
| | (422 | ) |
Payments related to tax withholding for equity compensation | | — |
| | (920 | ) | | — |
| | — |
| �� | — |
| | (920 | ) |
Net cash from (for) financing activities | | (195,840 | ) | | 28,315 |
| | (138 | ) | | (4,625 | ) | | (22,236 | ) | | (194,524 | ) |
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS | | — |
| | — |
| | 569 |
| | — |
| | — |
| | 569 |
|
CASH AND CASH EQUIVALENTS | | | | | | | | | | | | |
Net increase (decrease) for the year | | (77,007 | ) | | — |
| | 26,457 |
| | 54,734 |
| | (1,025 | ) | | 3,159 |
|
Balance, beginning of year | | 77,007 |
| | — |
| | 39,106 |
| | 3,444 |
| | — |
| | 119,557 |
|
Balance, end of year | | $ | — |
| | $ | — |
| | $ | 65,563 |
| | $ | 58,178 |
| | $ | (1,025 | ) | | $ | 122,716 |
|
(14) Consolidating Financial Information of Guarantors and Issuers of April 2017 Notes:
Cedar Fair, L.P., Canada's Wonderland Company ("Cedar Canada"), Magnum Management Corporation ("Magnum"), and Millennium Operations LLC ("Millennium") are the co-issuers of the Partnership's April 2017 Notes (see Note 5 to the Consolidated Financial Statements). The notes have been fully and unconditionally guaranteed, on a joint and several basis, by each 100% owned subsidiary of Cedar Fair (other than Cedar Canada, Magnum and Millennium) that guarantees the Partnership's senior secured credit facilities. There are no non-guarantor subsidiaries.
The following consolidating schedules present condensed financial information for Cedar Fair, L.P., Cedar Canada, Magnum, and Millennium, the co-issuers, and each 100% owned subsidiary of Cedar Fair (other than Cedar Canada, Magnum and Millennium), the guarantors (on a combined basis), as of December 31, 2018 and December 31, 2017 and for the years ended December 31, 2018, December 31, 2017, and December 31, 2016. In lieu of providing separate audited financial statements for the guarantor subsidiaries, the accompanying condensed consolidating financial statements have been included.
CEDAR FAIR, L.P.
CONDENSED CONSOLIDATING BALANCE SHEET
DECEMBER 31, 2018
(In thousands)
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Cedar Fair L.P. (Parent) | | Co-Issuer Subsidiary (Magnum) | | Co-Issuer Subsidiary (Cedar Canada) | | Co-Issuer Subsidiary (Millennium) | | Guarantor Subsidiaries | | Eliminations | | Total |
ASSETS | | | | | | | | | | | | | | |
Current Assets: | | | | | | | | | | | | | | |
Cash and cash equivalents | | $ | — |
| | $ | — |
| | $ | 73,326 |
| | $ | 30,663 |
| | $ | 2,052 |
| | $ | (692 | ) | | $ | 105,349 |
|
Receivables | | — |
| | 1,093 |
| | 34,497 |
| | 36,242 |
| | 902,155 |
| | (922,469 | ) | | 51,518 |
|
Inventories | | — |
| | — |
| | 2,135 |
| | 23,402 |
| | 5,216 |
| | — |
| | 30,753 |
|
Other current assets | | 179 |
| | 1,411 |
| | 5,462 |
| | 8,980 |
| | 1,564 |
| | (5,007 | ) | | 12,589 |
|
| | 179 |
| | 2,504 |
| | 115,420 |
| | 99,287 |
| | 910,987 |
| | (928,168 | ) | | 200,209 |
|
Property and Equipment, net | | — |
| | 802 |
| | 172,344 |
| | — |
| | 1,426,292 |
| | — |
| | 1,599,438 |
|
Investment in Park | | 601,706 |
| | 1,182,345 |
| | 262,462 |
| | 1,517,897 |
| | 218,574 |
| | (3,782,984 | ) | | — |
|
Goodwill | | 674 |
| | — |
| | 58,440 |
| | 8,388 |
| | 111,217 |
| | — |
| | 178,719 |
|
Other Intangibles, net | | — |
| | — |
| | 13,030 |
| | — |
| | 23,346 |
| | — |
| | 36,376 |
|
Deferred Tax Asset | | — |
| | 18,224 |
| | — |
| | — |
| | — |
| | (18,224 | ) | | — |
|
Other Assets | | — |
| | — |
| | 36 |
| | 417 |
| | 8,988 |
| | — |
| | 9,441 |
|
| | $ | 602,559 |
| | $ | 1,203,875 |
| | $ | 621,732 |
| | $ | 1,625,989 |
| | $ | 2,699,404 |
| | $ | (4,729,376 | ) | | $ | 2,024,183 |
|
LIABILITIES AND PARTNERS’ EQUITY | | | | | | | | | | | | | | |
Current Liabilities: | | | | | | | | | | | | | | |
Current maturities of long-term debt | | $ | — |
| | $ | 984 |
| | $ | — |
| | $ | 4,641 |
| | $ | — |
| | $ | — |
| | $ | 5,625 |
|
Accounts payable | | 565,472 |
| | 359,953 |
| | 2,430 |
| | 14,995 |
| | 3,625 |
| | (923,161 | ) | | 23,314 |
|
Deferred revenue | | — |
| | — |
| | 8,460 |
| | 74,062 |
| | 24,552 |
| | — |
| | 107,074 |
|
Accrued interest | | 1 |
| | 1 |
| | 2,054 |
| | 5,871 |
| | — |
| | — |
| | 7,927 |
|
Accrued taxes | | 443 |
| | 6,668 |
| | — |
| | 8,087 |
| | 19,400 |
| | (5,007 | ) | | 29,591 |
|
Accrued salaries, wages and benefits | | — |
| | 17,552 |
| | 1,234 |
| | — |
| | — |
| | — |
| | 18,786 |
|
Self-insurance reserves | | — |
| | 10,214 |
| | 1,433 |
| | 10,308 |
| | 2,066 |
| | — |
| | 24,021 |
|
Other accrued liabilities | | 3,318 |
| | 4,903 |
| | 136 |
| | 5,471 |
| | 4,553 |
| | — |
| | 18,381 |
|
| | 569,234 |
| | 400,275 |
| | 15,747 |
| | 123,435 |
| | 54,196 |
| | (928,168 | ) | | 234,719 |
|
Deferred Tax Liability | | — |
| | — |
| | 12,425 |
| | — |
| | 87,516 |
| | (18,224 | ) | | 81,717 |
|
Derivative Liability | | 909 |
| | 5,796 |
| | — |
| | — |
| | — |
| | — |
| | 6,705 |
|
Other Liabilities | | — |
| | 1,169 |
| | — |
| | 87 |
| | 9,802 |
| | — |
| | 11,058 |
|
Long-Term Debt: | | | | | | | | | | | | | | |
Term debt | | — |
| | 126,525 |
| | — |
| | 592,982 |
| | — |
| | — |
| | 719,507 |
|
Notes | | — |
| | — |
| | 446,241 |
| | 491,820 |
| | — |
| | — |
| | 938,061 |
|
| | — |
| | 126,525 |
| | 446,241 |
| | 1,084,802 |
| | — |
| | — |
| | 1,657,568 |
|
| | | | | | | | | | | | | | |
Equity | | 32,416 |
| | 670,110 |
| | 147,319 |
| | 417,665 |
| | 2,547,890 |
| | (3,782,984 | ) | | 32,416 |
|
| | $ | 602,559 |
| | $ | 1,203,875 |
| | $ | 621,732 |
| | $ | 1,625,989 |
| | $ | 2,699,404 |
| | $ | (4,729,376 | ) | | $ | 2,024,183 |
|
CEDAR FAIR, L.P.
CONDENSED CONSOLIDATING BALANCE SHEET
DECEMBER 31, 2017
(In thousands)
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Cedar Fair L.P. (Parent) | | Co-Issuer Subsidiary (Magnum) | | Co-Issuer Subsidiary (Cedar Canada) | | Co-Issuer Subsidiary (Millennium) | | Guarantor Subsidiaries | | Eliminations | | Total |
ASSETS | | | | | | | | | | | | | | |
Current Assets: | | | | | | | | | | | | | | |
Cash and cash equivalents | | $ | — |
| | $ | — |
| | $ | 85,758 |
| | $ | 80,430 |
| | $ | 1,152 |
| | $ | (1,095 | ) | | $ | 166,245 |
|
Receivables | | — |
| | 1,184 |
| | 15,574 |
| | 26,130 |
| | 831,075 |
| | (836,241 | ) | | 37,722 |
|
Inventories | | — |
| | — |
| | 1,891 |
| | 22,528 |
| | 5,300 |
| | — |
| | 29,719 |
|
Other current assets | | 164 |
| | 28,297 |
| | 3,454 |
| | 9,341 |
| | 1,642 |
| | (29,601 | ) | | 13,297 |
|
| | 164 |
| | 29,481 |
| | 106,677 |
| | 138,429 |
| | 839,169 |
| | (866,937 | ) | | 246,983 |
|
Property and Equipment, net | | — |
| | 835 |
| | 181,673 |
| | — |
| | 1,403,264 |
| | — |
| | 1,585,772 |
|
Investment in Park | | 588,684 |
| | 1,045,640 |
| | 238,132 |
| | 1,392,761 |
| | 234,237 |
| | (3,499,454 | ) | | — |
|
Goodwill | | 674 |
| | — |
| | 63,551 |
| | 8,387 |
| | 111,218 |
| | — |
| | 183,830 |
|
Other Intangibles, net | | — |
| | — |
| | 14,177 |
| | — |
| | 23,887 |
| | — |
| | 38,064 |
|
Deferred Tax Asset | | — |
| | 20,956 |
| | — |
| | — |
| | — |
| | (20,956 | ) | | — |
|
Other Assets | | — |
| | — |
| | 40 |
| | 402 |
| | 9,068 |
| | — |
| | 9,510 |
|
| | $ | 589,522 |
| | $ | 1,096,912 |
| | $ | 604,250 |
| | $ | 1,539,979 |
| | $ | 2,620,843 |
| | $ | (4,387,347 | ) | | $ | 2,064,159 |
|
LIABILITIES AND PARTNERS’ EQUITY | | | | | | | | | | | | | | |
Current Liabilities: | | | | | | | | | | | | | | |
Accounts payable | | $ | 497,558 |
| | $ | 344,410 |
| | $ | 1,379 |
| | $ | 13,572 |
| | $ | 5,038 |
| | $ | (837,336 | ) | | $ | 24,621 |
|
Deferred revenue | | — |
| | — |
| | 6,237 |
| | 59,307 |
| | 20,587 |
| | — |
| | 86,131 |
|
Accrued interest | | 27 |
| | 18 |
| | 2,055 |
| | 6,024 |
| | — |
| | — |
| | 8,124 |
|
Accrued taxes | | 352 |
| | — |
| | — |
| | 6,176 |
| | 67,048 |
| | (29,601 | ) | | 43,975 |
|
Accrued salaries, wages and benefits | | — |
| | 17,498 |
| | 1,242 |
| | — |
| | — |
| | — |
| | 18,740 |
|
Self-insurance reserves | | — |
| | 10,947 |
| | 1,618 |
| | 10,156 |
| | 2,386 |
| | — |
| | 25,107 |
|
Other accrued liabilities | | 3,406 |
| | 5,094 |
| | 157 |
| | 5,649 |
| | 4,490 |
| | — |
| | 18,796 |
|
| | 501,343 |
| | 377,967 |
| | 12,688 |
| | 100,884 |
| | 99,549 |
| | (866,937 | ) | | 225,494 |
|
Deferred Tax Liability | | — |
| | — |
| | 13,809 |
| | — |
| | 81,945 |
| | (20,956 | ) | | 74,798 |
|
Derivative Liability | | 5,233 |
| | 3,489 |
| | — |
| | — |
| | — |
| | — |
| | 8,722 |
|
Other Liabilities | | — |
| | 873 |
| | — |
| | 120 |
| | 10,691 |
| | — |
| | 11,684 |
|
Long-Term Debt: | | | | | | | | | | | | | | |
Term debt | | — |
| | 127,437 |
| | — |
| | 596,351 |
| | — |
| | — |
| | 723,788 |
|
Notes | | — |
| | — |
| | 445,156 |
| | 491,571 |
| | — |
| | — |
| | 936,727 |
|
| | — |
| | 127,437 |
| | 445,156 |
| | 1,087,922 |
| | — |
| | — |
| | 1,660,515 |
|
| | | | | | | | | | | | | | |
Equity | | 82,946 |
| | 587,146 |
| | 132,597 |
| | 351,053 |
| | 2,428,658 |
| | (3,499,454 | ) | | 82,946 |
|
| | $ | 589,522 |
| | $ | 1,096,912 |
| | $ | 604,250 |
| | $ | 1,539,979 |
| | $ | 2,620,843 |
| | $ | (4,387,347 | ) | | $ | 2,064,159 |
|
CEDAR FAIR, L.P.
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME
For the Year Ended December 31, 2018
(In thousands)
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Cedar Fair L.P. (Parent) | | Co-Issuer Subsidiary (Magnum) | | Co-Issuer Subsidiary (Cedar Canada) | | Co-Issuer Subsidiary (Millennium) | | Guarantor Subsidiaries | | Eliminations | | Total |
| | | | | | | | | | | | | | |
Net revenues | | $ | 103,687 |
| | $ | 336,778 |
| | $ | 124,506 |
| | $ | 995,350 |
| | $ | 382,569 |
| | $ | (594,360 | ) | | $ | 1,348,530 |
|
Costs and expenses: | | | | | | | | | | | | | | |
Cost of food, merchandise and games revenues | | — |
| | — |
| | 10,841 |
| | 85,698 |
| | 18,194 |
| | — |
| | 114,733 |
|
Operating expenses | | — |
| | 328,709 |
| | 47,551 |
| | 759,590 |
| | 42,860 |
| | (594,360 | ) | | 584,350 |
|
Selling, general and administrative | | 2,301 |
| | 67,582 |
| | 10,586 |
| | 93,734 |
| | 19,130 |
| | — |
| | 193,333 |
|
Depreciation and amortization | | — |
| | 33 |
| | 15,273 |
| | — |
| | 140,223 |
| | — |
| | 155,529 |
|
Loss on impairment / retirement of fixed assets, net | | — |
| | — |
| | 221 |
| | 2,260 |
| | 7,697 |
| | — |
| | 10,178 |
|
Gain on sale of investment | | — |
| | (112 | ) | | — |
| | — |
| | — |
| | — |
| | (112 | ) |
| | 2,301 |
| | 396,212 |
| | 84,472 |
| | 941,282 |
| | 228,104 |
| | (594,360 | ) | | 1,058,011 |
|
Operating income (loss) | | 101,386 |
| | (59,434 | ) | | 40,034 |
| | 54,068 |
| | 154,465 |
| | — |
| | 290,519 |
|
Interest expense, net | | 23,339 |
| | 18,331 |
| | 23,988 |
| | 51,643 |
| | (33,129 | ) | | — |
| | 84,172 |
|
Net effect of swaps | | 1,228 |
| | 6,214 |
| | — |
| | — |
| | — |
| | — |
| | 7,442 |
|
Loss on early debt extinguishment | | — |
| | 187 |
| | — |
| | 886 |
| | — |
| | — |
| | 1,073 |
|
Loss on foreign currency | | — |
| | 51 |
| | 36,203 |
| | — |
| | — |
| | — |
| | 36,254 |
|
Other (income) expense | | 250 |
| | (78,571 | ) | | 4,196 |
| | — |
| | 74,307 |
| | — |
| | 182 |
|
(Income) loss from investment in affiliates | | (61,484 | ) | | (62,244 | ) | | (24,329 | ) | | — |
| | 2,517 |
| | 145,540 |
| | — |
|
Income (loss) before taxes | | 138,053 |
| | 56,598 |
| | (24 | ) | | 1,539 |
| | 110,770 |
| | (145,540 | ) | | 161,396 |
|
Provision (benefit) for taxes | | 11,400 |
| | (4,886 | ) | | 2,494 |
| | 1,539 |
| | 24,196 |
| | — |
| | 34,743 |
|
Net income (loss) | | $ | 126,653 |
| | $ | 61,484 |
| | $ | (2,518 | ) | | $ | — |
| | $ | 86,574 |
| | $ | (145,540 | ) | | $ | 126,653 |
|
Other comprehensive income (loss), (net of tax): | | | | | | | | | | | | | | |
Cumulative foreign currency translation adjustment | | 17,240 |
| | — |
| | 17,240 |
| | — |
| | — |
| | (17,240 | ) | | 17,240 |
|
Cash flow hedging derivative activity | | 8,366 |
| | 2,813 |
| | — |
| | — |
| | — |
| | (2,813 | ) | | 8,366 |
|
Other comprehensive income (loss), (net of tax) | | 25,606 |
| | 2,813 |
| | 17,240 |
| | — |
| | — |
| | (20,053 | ) | | 25,606 |
|
Total comprehensive income | | $ | 152,259 |
| | $ | 64,297 |
| | $ | 14,722 |
| | $ | — |
| | $ | 86,574 |
| | $ | (165,593 | ) | | $ | 152,259 |
|
CEDAR FAIR, L.P.
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME
For the Year Ended December 31, 2017
(In thousands)
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Cedar Fair L.P. (Parent) | | Co-Issuer Subsidiary (Magnum) | | Co-Issuer Subsidiary (Cedar Canada) | | Co-Issuer Subsidiary (Millennium) | | Guarantor Subsidiaries | | Eliminations | | Total |
| | | | | | | | | | | | | | |
Net revenues | | $ | 104,080 |
| | $ | 317,496 |
| | $ | 127,929 |
| | $ | 960,108 |
| | $ | 395,745 |
| | $ | (583,391 | ) | | $ | 1,321,967 |
|
Costs and expenses: | | | | | | | | | | | | | | |
Cost of food, merchandise and games revenues | | — |
| | — |
| | 11,483 |
| | 80,942 |
| | 18,386 |
| | — |
| | 110,811 |
|
Operating expenses | | — |
| | 313,654 |
| | 44,990 |
| | 738,719 |
| | 44,130 |
| | (583,391 | ) | | 558,102 |
|
Selling, general and administrative | | 3,007 |
| | 67,872 |
| | 10,497 |
| | 92,527 |
| | 19,867 |
| | — |
| | 193,770 |
|
Depreciation and amortization | | — |
| | 33 |
| | 15,654 |
| | — |
| | 137,535 |
| | — |
| | 153,222 |
|
Loss on impairment / retirement of fixed assets, net | | — |
| | — |
| | 656 |
| | 3,102 |
| | 8,970 |
| | — |
| | 12,728 |
|
Gain on sale of investment | | — |
| | (1,877 | ) | | — |
| | — |
| | — |
| | — |
| | (1,877 | ) |
| | 3,007 |
| | 379,682 |
| | 83,280 |
| | 915,290 |
| | 228,888 |
| | (583,391 | ) | | 1,026,756 |
|
Operating income (loss) | | 101,073 |
| | (62,186 | ) | | 44,649 |
| | 44,818 |
| | 166,857 |
| | — |
| | 295,211 |
|
Interest expense, net | | 23,739 |
| | 18,837 |
| | 24,839 |
| | 39,768 |
| | (22,435 | ) | | — |
| | 84,748 |
|
Net effect of swaps | | (150 | ) | | 105 |
| | — |
| | — |
| | — |
| | — |
| | (45 | ) |
Loss on early debt extinguishment | | 11,773 |
| | 8,188 |
| | 205 |
| | 2,955 |
| | — |
| | — |
| | 23,121 |
|
Gain on foreign currency | | — |
| | (25 | ) | | (29,061 | ) | | — |
| | — |
| | — |
| | (29,086 | ) |
Other (income) expense | | 250 |
| | (73,581 | ) | | 3,460 |
| | — |
| | 69,756 |
| | — |
| | (115 | ) |
Income from investment in affiliates | | (160,925 | ) | | (176,698 | ) | | (38,057 | ) | | — |
| | (84,398 | ) | | 460,078 |
| | — |
|
Income before taxes | | 226,386 |
| | 160,988 |
| | 83,263 |
| | 2,095 |
| | 203,934 |
| | (460,078 | ) | | 216,588 |
|
Provision (benefit) for taxes | | 10,910 |
| | 60 |
| | (1,134 | ) | | 2,095 |
| | (10,819 | ) | | — |
| | 1,112 |
|
Net income | | $ | 215,476 |
| | $ | 160,928 |
| | $ | 84,397 |
| | $ | — |
| | $ | 214,753 |
| | $ | (460,078 | ) | | $ | 215,476 |
|
Other comprehensive income (loss), (net of tax): | | | | | | | | | | | | | | |
Cumulative foreign currency translation adjustment | | (14,849 | ) | | — |
| | (14,849 | ) | | — |
| | — |
| | 14,849 |
| | (14,849 | ) |
Cash flow hedging derivative activity | | 7,975 |
| | 2,422 |
| | — |
| | — |
| | — |
| | (2,422 | ) | | 7,975 |
|
Other comprehensive income (loss), (net of tax) | | (6,874 | ) | | 2,422 |
| | (14,849 | ) | | — |
| | — |
| | 12,427 |
| | (6,874 | ) |
Total comprehensive income | | $ | 208,602 |
| | $ | 163,350 |
| | $ | 69,548 |
| | $ | — |
| | $ | 214,753 |
| | $ | (447,651 | ) | | $ | 208,602 |
|
CEDAR FAIR, L.P.
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME
For the Year Ended December 31, 2016
(In thousands)
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Cedar Fair L.P. (Parent) | | Co-Issuer Subsidiary (Magnum) | | Co-Issuer Subsidiary (Cedar Canada) | | Co-Issuer Subsidiary (Millennium) | | Guarantor Subsidiaries | | Eliminations | | Total |
| | | | | | | | | | | | | | |
Net revenues | | $ | 144,042 |
| | $ | 320,945 |
| | $ | 117,962 |
| | $ | 962,363 |
| | $ | 378,556 |
| | $ | (635,147 | ) | | $ | 1,288,721 |
|
Costs and expenses: | | | | | | | | | | | | | | |
Cost of food, merchandise and games revenues | | — |
| | — |
| | 9,868 |
| | 78,984 |
| | 17,756 |
| | — |
| | 106,608 |
|
Operating expenses | | — |
| | 303,974 |
| | 42,820 |
| | 777,841 |
| | 49,393 |
| | (635,147 | ) | | 538,881 |
|
Selling, general and administrative | | 3,029 |
| | 68,422 |
| | 10,151 |
| | 85,170 |
| | 15,058 |
| | — |
| | 181,830 |
|
Depreciation and amortization | | — |
| | 35 |
| | 14,816 |
| | — |
| | 117,025 |
| | — |
| | 131,876 |
|
Loss on impairment / retirement of fixed assets, net | | — |
| | — |
| | 159 |
| | 2,686 |
| | 9,742 |
| | — |
| | 12,587 |
|
| | 3,029 |
| | 372,431 |
| | 77,814 |
| | 944,681 |
| | 208,974 |
| | (635,147 | ) | | 971,782 |
|
Operating income (loss) | | 141,013 |
| | (51,486 | ) | | 40,148 |
| | 17,682 |
| | 169,582 |
| | — |
| | 316,939 |
|
Interest expense, net | | 32,643 |
| | 24,114 |
| | 25,403 |
| | 15,695 |
| | (14,169 | ) | | — |
| | 83,686 |
|
Net effect of swaps | | (473 | ) | | (724 | ) | | — |
| | — |
| | — |
| | — |
| | (1,197 | ) |
(Gain) loss on foreign currency | | — |
| | — |
| | (14,660 | ) | | 4 |
| | — |
| | — |
| | (14,656 | ) |
Other (income) expense | | 250 |
| | (83,657 | ) | | 3,925 |
| | — |
| | 79,482 |
| | — |
| | — |
|
Income from investment in affiliates | | (80,295 | ) | | (73,132 | ) | | (20,545 | ) | | — |
| | (27,628 | ) | | 201,600 |
| | — |
|
Income before taxes | | 188,888 |
| | 81,913 |
| | 46,025 |
| | 1,983 |
| | 131,897 |
| | (201,600 | ) | | 249,106 |
|
Provision for taxes | | 11,200 |
| | 1,621 |
| | 18,396 |
| | 1,983 |
| | 38,218 |
| | — |
| | 71,418 |
|
Net income | | $ | 177,688 |
| | $ | 80,292 |
| | $ | 27,629 |
| | $ | — |
| | $ | 93,679 |
| | $ | (201,600 | ) | | $ | 177,688 |
|
Other comprehensive income (loss), (net of tax): | | | | | | | | | | | | | | |
Cumulative foreign currency translation adjustment | | (3,700 | ) | | — |
| | (3,700 | ) | | — |
| | — |
| | 3,700 |
| | (3,700 | ) |
Cash flow hedging derivative activity | | 3,350 |
| | 1,060 |
| | — |
| | — |
| | — |
| | (1,060 | ) | | 3,350 |
|
Other comprehensive income (loss), (net of tax) | | (350 | ) | | 1,060 |
| | (3,700 | ) | | — |
| | — |
| | 2,640 |
| | (350 | ) |
Total comprehensive income | | $ | 177,338 |
| | $ | 81,352 |
| | $ | 23,929 |
| | $ | — |
| | $ | 93,679 |
| | $ | (198,960 | ) | | $ | 177,338 |
|
CEDAR FAIR, L.P.
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
For the Year Ended December 31, 2018
(In thousands)
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Cedar Fair L.P. (Parent) | | Co-Issuer Subsidiary (Magnum) | | Co-Issuer Subsidiary (Cedar Canada) | | Co-Issuer Subsidiary (Millennium) | | Guarantor Subsidiaries | | Eliminations | | Total |
| | | | | | | | | | | | | | |
NET CASH FROM OPERATING ACTIVITIES | | $ | 136,471 |
| | $ | 11,057 |
| | $ | 12,901 |
| | $ | 78,559 |
| | $ | 112,497 |
| | $ | (745 | ) | | $ | 350,740 |
|
CASH FLOWS FROM (FOR) INVESTING ACTIVITIES | | | | | | | | | | | | | | |
Intercompany receivables (payments) receipts | | — |
| | — |
| | — |
| | — |
| | (67,861 | ) | | 67,861 |
| | — |
|
Purchase of identifiable intangible assets | | — |
| | — |
| | — |
| | (8 | ) | | (33 | ) | | — |
| | (41 | ) |
Sale of preferred equity investment | | — |
| | 112 |
| | — |
| | — |
| | — |
| | — |
| | 112 |
|
Capital expenditures | | — |
| | — |
| | (19,976 | ) | | (126,096 | ) | | (43,703 | ) | | — |
| | (189,775 | ) |
Net cash from (for) investing activities | | — |
| | 112 |
| | (19,976 | ) | | (126,104 | ) | | (111,597 | ) | | 67,861 |
| | (189,704 | ) |
CASH FLOWS FOR FINANCING ACTIVITIES | | | | | | | | | | | | | | |
Intercompany payables (payments) receipts | | 67,876 |
| | (15 | ) | | — |
| | — |
| | — |
| | (67,861 | ) | | — |
|
Distributions paid to partners | | (204,347 | ) | | — |
| | — |
| | — |
| | — |
| | 1,148 |
| | (203,199 | ) |
Payment of debt issuance costs and original issue discount | | — |
| | (321 | ) | | — |
| | (2,222 | ) | | — |
| | — |
| | (2,543 | ) |
Exercise of limited partnership unit options | | — |
| | 125 |
| | — |
| | — |
| | — |
| | — |
| | 125 |
|
Tax effect of units involved in treasury unit transactions | | — |
| | (2,530 | ) | | — |
| | — |
| | — |
| | — |
| | (2,530 | ) |
Payments related to tax withholding for equity compensation | | — |
| | (8,428 | ) | | — |
| | — |
| | — |
| | — |
| | (8,428 | ) |
Net cash for financing activities | | (136,471 | ) | | (11,169 | ) | | — |
| | (2,222 | ) | | — |
| | (66,713 | ) | | (216,575 | ) |
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS | | — |
| | — |
| | (5,357 | ) | | — |
| | — |
| | — |
| | (5,357 | ) |
CASH AND CASH EQUIVALENTS | | | | | | | | | | | | | | |
Net increase (decrease) for the year | | — |
| | — |
| | (12,432 | ) | | (49,767 | ) | | 900 |
| | 403 |
| | (60,896 | ) |
Balance, beginning of year | | — |
| | — |
| | 85,758 |
| | 80,430 |
| | 1,152 |
| | (1,095 | ) | | 166,245 |
|
Balance, end of year | | $ | — |
| | $ | — |
| | $ | 73,326 |
| | $ | 30,663 |
| | $ | 2,052 |
| | $ | (692 | ) | | $ | 105,349 |
|
CEDAR FAIR, L.P.
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
For the Year Ended December 31, 2017
(In thousands)
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Cedar Fair L.P. (Parent) | | Co-Issuer Subsidiary (Magnum) | | Co-Issuer Subsidiary (Cedar Canada) | | Co-Issuer Subsidiary (Millennium) | | Guarantor Subsidiaries | | Eliminations | | Total |
| | | | | | | | | | | | | | |
NET CASH FROM (FOR) OPERATING ACTIVITIES | | $ | 93,378 |
| | $ | (10,710 | ) | | $ | 40,569 |
| | $ | 48,979 |
| | $ | 160,801 |
| | $ | (1,838 | ) | | $ | 331,179 |
|
CASH FLOWS FROM (FOR) INVESTING ACTIVITIES | | | | | | | | | | | | | | |
Intercompany receivables (payments) receipts | | — |
| | — |
| | — |
| | — |
| | (278,051 | ) | | 278,051 |
| | — |
|
Proceeds from returns on investments | | 338,000 |
| | 15,500 |
| | — |
| | — |
| | 146,500 |
| | (500,000 | ) | | — |
|
Purchase of identifiable intangible assets | | — |
| | — |
| | — |
| | (66 | ) | | — |
| | — |
| | (66 | ) |
Proceeds from sale of preferred equity investment | | — |
| | 3,281 |
| | — |
| | — |
| | — |
| | — |
| | 3,281 |
|
Capital expenditures | | — |
| | (25 | ) | | (10,160 | ) | | (149,448 | ) | | (28,451 | ) | | — |
| | (188,084 | ) |
Net cash from (for) investing activities | | 338,000 |
| | 18,756 |
| | (10,160 | ) | | (149,514 | ) | | (160,002 | ) | | (221,949 | ) | | (184,869 | ) |
CASH FLOWS FROM (FOR) FINANCING ACTIVITIES | | | | | | | | | | | | | | |
Intercompany payables (payments) receipts | | 69,160 |
| | 208,891 |
| | — |
| | — |
| | — |
| | (278,051 | ) | | — |
|
Payments for returns of capital | | — |
| | — |
| | — |
| | (500,000 | ) | | — |
| | 500,000 |
| | — |
|
Term debt borrowings | | — |
| | 131,000 |
| | — |
| | 619,000 |
| | — |
| | — |
| | 750,000 |
|
Note borrowings | | — |
| | — |
| | — |
| | 500,000 |
| | — |
| | — |
| | 500,000 |
|
Term debt payments | | — |
| | (126,619 | ) | | (13,854 | ) | | (477,377 | ) | | — |
| | — |
| | (617,850 | ) |
Note payments, including amounts paid for early termination | | (304,014 | ) | | (211,444 | ) | | — |
| | — |
| | — |
| | — |
| | (515,458 | ) |
Distributions paid to partners | | (196,524 | ) | | — |
| | — |
| | — |
| | — |
| | 1,768 |
| | (194,756 | ) |
Payment of debt issuance costs | | — |
| | (1,326 | ) | | — |
| | (18,483 | ) | | — |
| | — |
| | (19,809 | ) |
Exercise of limited partnership unit options | | — |
| | 65 |
| | — |
| | — |
| | — |
| | — |
| | 65 |
|
Tax effect of units involved in treasury unit transactions | | — |
| | (4,440 | ) | | — |
| | — |
| | — |
| | — |
| | (4,440 | ) |
Payments related to tax withholding for equity compensation | | — |
| | (4,173 | ) | | — |
| | — |
| | — |
| | — |
| | (4,173 | ) |
Net cash from (for) financing activities | | (431,378 | ) | | (8,046 | ) | | (13,854 | ) | | 123,140 |
| | — |
| | 223,717 |
| | (106,421 | ) |
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS | | — |
| | — |
| | 3,640 |
| | — |
| | — |
| | — |
| | 3,640 |
|
CASH AND CASH EQUIVALENTS | | | | | | | | | | | | | | |
Net increase for the year | | — |
| | — |
| | 20,195 |
| | 22,605 |
| | 799 |
| | (70 | ) | | 43,529 |
|
Balance, beginning of year | | — |
| | — |
| | 65,563 |
| | 57,825 |
| | 353 |
| | (1,025 | ) | | 122,716 |
|
Balance, end of year | | $ | — |
| | $ | — |
| | $ | 85,758 |
| | $ | 80,430 |
| | $ | 1,152 |
| | $ | (1,095 | ) | | $ | 166,245 |
|
CEDAR FAIR, L.P.
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
For the Year Ended December 31, 2016
(In thousands)
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Cedar Fair L.P. (Parent) | | Co-Issuer Subsidiary (Magnum) | | Co-Issuer Subsidiary (Cedar Canada) | | Co-Issuer Subsidiary (Millennium) | | Guarantor Subsidiaries | | Eliminations | | Total |
| | | | | | | | | | | | | | |
NET CASH FROM (FOR) OPERATING ACTIVITIES | | $ | 118,833 |
| | $ | (28,315 | ) | | $ | 33,918 |
| | $ | 189,534 |
| | $ | 47,728 |
| | $ | (3,351 | ) | | $ | 358,347 |
|
CASH FLOWS FOR INVESTING ACTIVITIES | | | | | | | | | | | | | | |
Intercompany receivables (payments) receipts | | — |
| | — |
| | — |
| | — |
| | (24,562 | ) | | 24,562 |
| | — |
|
Purchase of identifiable intangible assets | | — |
| | — |
| | (29 | ) | | (74 | ) | | (474 | ) | | — |
| | (577 | ) |
Capital expenditures | | — |
| | — |
| | (7,863 | ) | | (129,815 | ) | | (22,978 | ) | | — |
| | (160,656 | ) |
Net cash for investing activities | | — |
| | — |
| | (7,892 | ) | | (129,889 | ) | | (48,014 | ) | | 24,562 |
| | (161,233 | ) |
CASH FLOWS FROM (FOR) FINANCING ACTIVITIES | | | | | | | | | | | | | | |
Intercompany payables (payments) receipts | | (6,332 | ) | | 30,894 |
| | — |
| | — |
| | — |
| | (24,562 | ) | | — |
|
Term debt payments | | — |
| | (1,237 | ) | | (138 | ) | | (4,625 | ) | | — |
| | — |
| | (6,000 | ) |
Distributions paid to partners | | (189,508 | ) | | — |
| | — |
| | — |
| | — |
| | 2,326 |
| | (187,182 | ) |
Tax effect of units involved in treasury unit transactions | | — |
| | (422 | ) | | — |
| | — |
| | — |
| | — |
| | (422 | ) |
Payments related to tax withholding for equity compensation | | — |
| | (920 | ) | | — |
| | — |
| | — |
| | — |
| | (920 | ) |
Net cash from (for) financing activities | | (195,840 | ) | | 28,315 |
| | (138 | ) | | (4,625 | ) | | — |
| | (22,236 | ) | | (194,524 | ) |
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS | | — |
| | — |
| | 569 |
| | — |
| | — |
| | — |
| | 569 |
|
CASH AND CASH EQUIVALENTS | | | | | | | | | | | | | | |
Net increase (decrease) for the year | | (77,007 | ) | | — |
| | 26,457 |
| | 55,020 |
| | (286 | ) | | (1,025 | ) | | 3,159 |
|
Balance, beginning of year | | 77,007 |
| | — |
| | 39,106 |
| | 2,805 |
| | 639 |
| | — |
| | 119,557 |
|
Balance, end of year | | $ | — |
| | $ | — |
| | $ | 65,563 |
| | $ | 57,825 |
| | $ | 353 |
| | $ | (1,025 | ) | | $ | 122,716 |
|
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE.
None.
ITEM 9A. CONTROLS AND PROCEDURES.
Disclosure Controls and Procedures
The Partnership maintainsWe maintain a system of controls and procedures designed to ensure that information required to be disclosed by the Partnershipus in itsour reports under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified by the Commission and that such information is accumulated and communicated to the Partnership's management, including the Chief Executive Officer and the Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. As of December 31, 2018, the Partnership's2021, management, with the participation of the Partnership'sour Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Partnership'sour disclosure controls and procedures. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Partnership'sour disclosure controls and procedures were effective as of December 31, 2018.2021.
Management's Report on Internal Control over Financial Reporting
The Partnership's managementManagement is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. The Partnership'sOur internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Management, with the participation of the Partnership'sour Chief Executive Officer and Chief Financial Officer, assessed the effectiveness of the Partnership'sour internal control over financial reporting as of December 31, 2018.2021. In making this assessment, it used the criteria described in "Internal Control - Integrated Framework" (2013) issued by the Committee of Sponsoring Organizations (COSO) of the Treadway Commission. As a result of its assessment, management concluded that, as of December 31, 2018, the Partnership's2021, our internal control over financial reporting was effective. Deloitte & Touche LLP, the independent registered public accounting firm that audited the financial statements included in this Form 10-K, has issued an attestation report on the Partnership'sour internal control over financial reporting.
Changes in Internal Control over Financial Reporting
There were no changes in the Partnership'sour internal control over financial reporting that occurred during the fourth quarter of 20182021 that have materially affected, or are reasonably likely to materially affect, the Partnership'sour internal control over financial reporting.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Unitholders and Board of Directors of
Cedar Fair, L.P.
Opinion on Internal Control over Financial Reporting
We have audited the internal control over financial reporting of Cedar Fair, L.P. and subsidiaries (the "Partnership") as of December 31, 2018, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Partnership maintained, in all material respects, effective internal control over financial reporting as of December 31, 2018, based on criteria established in Internal Control - Integrated Framework (2013) issued by COSO.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2018, of the Partnership and our report dated February 22, 2019, expressed an unqualified opinion on those financial statements.
Basis for Opinion
The Partnership's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Partnership's internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Partnership in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ DELOITTE & TOUCHE LLP
Cleveland, Ohio
February 22, 2019
ITEM 9B. OTHER INFORMATION.
None.
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS.
Not applicable.
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.
Cedar Fair Management, Inc., an Ohio corporation owned by an Ohio trust, is the General Partner of the Partnership and has full responsibility for the management of the Partnership. For additional information, attention is directed to Partnership (see Note 12 to the Consolidated Financial Statements.).
A. Identification of Directors:
The information required by this item is incorporated by reference to the material in our Proxy Statement to be used in connection with the annual meeting of limited partner unitholders to be held in June 2019May 2022 (the "Proxy Statement") under the captions "Proposal One. Election of Directors", "Board Committees", and, "Sectionif required, "Delinquent Section 16(a) Beneficial Ownership Reporting Compliance"Reports".
B. Identification of Executive Officers:
Information regarding executive officers of the Partnership is included in this Annual Report on Form 10-K under the caption "Supplemental Item. Information about our Executive Officers of Cedar Fair"Officers" in Item 1 of Part I and is incorporated herein by reference.
C. Code of Ethics and Certifications:
In accordance with Section 406 of the Sarbanes-Oxley Act of 2002 and Item 406 of Regulation S-K, the Partnership haswe have adopted a Code of Conduct and Ethics (the "Code"), which applies to all directors, officers and employees, of the Partnership, including the Chief Executive Officer, Chief Financial Officer and Chief Accounting Officer. A copy of the Code is available on the Internet at the Investor Relations section of our web sitewebsite (www.cedarfair.com).
The PartnershipWe submitted an unqualified Section 303A.12(a) Chief Executive Officer certification to the New York Stock Exchange on June 28, 2018,14, 2021, stating that the Partnership waswe were in compliance with the NYSE's Corporate Governance Listing Standards. The Chief Executive Officer and Chief Financial Officer certifications under Section 302 of the Sarbanes-Oxley Act are included as exhibits to this Form 10-K.
ITEM 11. EXECUTIVE COMPENSATION.
The information required by this item is incorporated by reference to the material in our Proxy Statement under the captions "Executive Compensation", "Compensation Committee Interlocks and Insider Participation", and "Compensation Committee Report".
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED UNITHOLDER MATTERS.
The information required by this item is incorporated by reference to the material in our Proxy Statement under the caption "Security Ownership of Certain Beneficial Owners and Management".
EQUITY COMPENSATION PLAN INFORMATION
The following table sets forth information concerning units authorized or available for issuance under our equity compensation plan (see Note 10) as of December 31, 2018:2021: | | | | | | | | | | | | | | | | | | | | |
Plan Category | |
Number of units to be issued upon exercise of outstanding options, warrants and rights (a) (1) | |
Weighted-average exercise price of outstanding options, warrants and rights (b) (2) | | Number of units remaining available for future issuance under equity compensation plans (excluding units reflected in column (a)) (c) |
Equity compensation plans approved by unitholders | | 1,198,765 | | | $ | 35.27 | | | 1,772,259 | |
Equity compensation plans not approved by unitholders | | — | | | — | | | — | |
Total | | 1,198,765 | | | $ | 35.27 | | | 1,772,259 | |
(1)The units in column (a) include performance awards and deferred unit awards at the maximum number of units issuable, as well as unit options outstanding.
(2)The weighted average price in column (b) represents the weighted average price of 117,638 unit options outstanding. Performance awards and deferred unit awards are excluded from column (b).
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Plan Category | |
Number of units to be issued upon exercise of outstanding options, warrants and rights (a) (1) | |
Weighted-average exercise price of outstanding options, warrants and rights (b) (2) | | Number of units remaining available for future issuance under equity compensation plans (excluding units reflected in column (a)) (c) |
Equity compensation plans approved by unitholders | | 1,134,773 |
| | $ | 34.51 |
| | 2,461,732 |
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Equity compensation plans not approved by unitholders | | — |
| | — |
| | — |
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Total | | 1,134,773 |
| | $ | 34.51 |
| | 2,461,732 |
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(1) | The units in column (a) include performance awards and deferred unit awards at the maximum number of units issuable, as well as unit options outstanding. |
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(2) | The weighted average price in column (b) represents the weighted average price of 368,091 unit options outstanding. Performance awards and deferred unit awards are excluded from column (b). |
Attention is directed to Note 7 to the Consolidated Financial Statements for additional information regarding the Partnership's equity incentive plans.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.
The information required by this item is incorporated by reference to the material in our Proxy Statement under the captions "Certain Relationships and Related Transactions", "Board Independence", and "Board Committees".
ITEM 14. PRINCIPAL ACCOUNTINGACCOUNTANT FEES AND SERVICES.
The information required by this item is incorporated by reference to the material in our Proxy Statement under the caption "Independent Registered Public Accounting Firm Services and Fees".
PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
A. 1. Financial Statements
The following consolidated financial statements of the Registrant, the notes thereto and the related Report of Independent Registered Public Accounting Firm are filed under Item 8 of this Report:
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(i) | | Page |
(i) | Report of Independent Registered Public Accounting Firm | |
(ii) | Consolidated Balance Sheets - December 31, 20182021 and 20172020 | |
(iii) | Consolidated Statements of Operations and Comprehensive (Loss) Income - Years ended December 31, 2018, 2017,2021, 2020, and 20162019 | |
(iv) | Consolidated Statements of Cash Flows - Years ended December 31, 2018, 2017,2021, 2020, and 20162019 | |
(v) | Consolidated Statements of Partners' Equity (Deficit) - Years ended December 31, 2018, 2017,2021, 2020, and 20162019 | |
(vi) | Notes to Consolidated Financial Statements - December 31, 2018, 2017,2021, 2020, and 20162019 | |
A. 2. Financial Statement Schedules
All schedules are omitted as the information is not required or is otherwise furnished.
A. 3. Exhibits
The exhibits listed below are incorporated herein by reference to prior SEC filings by the Registrant or are included as exhibits in this Form 10-K.
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Exhibit Number | Description |
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| Cedar Fair, L.P. CertificateAsset Purchase Agreement by and among Millennium Operations LLC, Waterpark Management, Inc., Golden Seal Investments, Inc., Bad-Schloss, Inc., Liberty Partnership, Ltd., Henry Condo 1, Ltd., Henry-Walnut, Ltd., SVV I, LLC, KC Waterpark Management, LLC, Galveston Island Water Park, LP, Galveston Waterpark Management, Inc., Schlitterbahn Seller Rep, LLC, and Gary Henry and Jana Faber, dated as of Limited Partnership.June 12, 2019. Incorporated herein by reference to Exhibit 3.62.1 to the Registration Statement onRegistrant's Form S-410-Q (File No. 333-172773)001-09444) filed on March 11, 2011.August 7, 2019. |
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| Sixth Amended and Restated Agreement of Limited Partnership of Cedar Fair, L.P., as amended by that First Amendment, to Sixth Amended and Restated Agreement of Limited Partnership of Cedar Fair, L.P., dated June 1, 2017.2017, that Second Amendment, dated August 2, 2019, and that Third Amendment, dated April 1, 2020. Incorporated herein by reference to Exhibit 3.1 to the Registrant's Form 10-Q (File No. 001-09444) filed May 2, 2018.6, 2020. |
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| Indenture, dated as of April 13, 2017, by and among Cedar Fair, L.P., Canada’s Wonderland Company, Magnum Management Corporation and Millennium Operations LLC, as issuers, the guarantors named therein and The Bank of New York Mellon Corporation, as trustee (including Form of 5.375% Senior Note due 2027). Incorporated herein by reference to Exhibit 4.1 to the Registrant’s Form 8-K (File No. 001-09444) filed on April 13, 2017. |
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| Registration Rights Agreement, dated April 13, 2017, by and among Cedar Fair, L.P., Canada’s Wonderland Company, Magnum Management Corporation and Millennium Operations LLC, as issuers, the guarantors named therein and J.P. Morgan Securities LLC, on behalf of itself and as representative of the initial purchasers named therein. Incorporated herein by reference to Exhibit 4.3 to the Registrant’s Form 8-K (File No. 001-09444) filed on April 13, 2017. |
| Indenture, dated as of June 27, 2019, by and among Cedar Fair, L.P., Canada’s Wonderland Company, Magnum Management Corporation and Millennium Operations LLC, as issuers, the guarantors named therein and The Bank of New York Mellon, as trustee (including Form of 5.250% Senior Note due 2029). Incorporated herein by reference to Exhibit 4.1 to the Registrant's Form 8-K (File No. 001-09444) filed on June 27, 2019. |
| Registration Rights Agreement, dated June 27, 2019, by and among Cedar Fair, L.P., Canada’s Wonderland Company, Magnum Management Corporation and Millennium Operations LLC, as issuers, the guarantors named therein and J.P. Morgan Securities LLC, on behalf of itself and as representative of the initial purchasers named therein. Incorporated herein by reference to Exhibit 4.3 to the Registrant's Form 8-K (File No. 001-09444) filed on June 27, 2019. |
| Indenture, dated as of April 27, 2020, by and among Cedar Fair, L.P., Canada’s Wonderland Company, Magnum Management Corporation and Millennium Operations LLC, as issuers, the guarantors named therein, The Bank of New York Mellon, as trustee and notes US collateral agent and BNY Trust Company of Canada, as notes Canadian collateral agent (including Form of 5.500% Senior Note due 2025). Incorporated herein by reference to Exhibit 4.1 to the Registrant's Form 8-K (Form No. 001-09444) filed on April 29, 2020. |
| Indenture, dated as of October 7, 2020, by and among Cedar Fair, L.P., Canada’s Wonderland Company, Magnum Management Corporation and Millennium Operations LLC, as issuers, the guarantors named therein and The Bank of New York Mellon, as trustee (including Form 6.500% Senior Note due 2028). Incorporated herein by reference to Exhibit 4.1 to the Registrant's Form 8-K (File No. 001-09444) filed on October 7, 2020. |
| Registration Rights Agreement, dated October 7, 2020, by and among Cedar Fair, L.P., Canada’s Wonderland Company, Magnum Management Corporation and Millennium Operations LLC, as issuers, the guarantors named therein and J.P. Morgan Securities LLC, on behalf of itself and as representative of the initial purchasers named therein. Incorporated herein by reference to Exhibit 4.3 to the Registrant's Form 8-K (File No. 001-09444) filed on October 7, 2020. |
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Exhibit Number | Description |
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Exhibit Number | Description |
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| Restatement Agreement, dated April 13, 2017, among Cedar Fair, L.P., Magnum Management Corporation, Canada’s Wonderland Company and Millennium Operations LLC, as borrowers, the several lenders from time to time party thereto, JPMorgan Chase Bank, N.A. as administrative agent and collateral agent and the other parties thereto. Incorporated herein by reference to Exhibit 10.1 to the Registrant's Form 8-K (File No. 001-09444) filed on April 13, 2017. |
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| Amendment No. 1, dated March 14, 2018, to Restatement Agreement, dated April 13, 2017, among Cedar Fair, L.P., Magnum Management Corporation, Canada’s Wonderland Company and Millennium Operations LLC, as borrowers, the several lenders from time to time party thereto, JPMorgan Chase Bank, N.A., as administrative agent and collateral agent and the other parties thereto. Incorporated herein by reference to Exhibit 10.1 to the Registrant's Form 8-K (File No. 001-09444) filed on March 14, 2018. |
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| Amendment No. 2, dated April 27, 2020, to the Amended and Restated Credit Agreement, dated April 13, 2017, among Cedar Fair, L.P., Magnum, Cedar Canada and Millennium, as borrowers, the lenders party thereto from time to time, JPMorgan Chase Bank, N.A., as administrative agent and collateral agent and the other parties thereto. Incorporated herein by reference to Exhibit 10.1 to the Registrant's Form 8-K (File No. 001-09444) filed on April 29, 2020. |
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Exhibit Number | Description |
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| Amendment No. 3, dated as of September 28, 2020, to the Amended and Restated Credit Agreement, dated as of April 13, 2017, among Cedar Fair, Magnum, Cedar Canada and Millennium, as borrowers, the lenders party thereto from time to time, JPMorgan Chase Bank, N.A., as administrative agent and collateral agent and the other parties thereto. Incorporated herein by reference to Exhibit 10.1 to the Registrant's Form 8-K (File No. 001-09444) filed on September 30, 2020. |
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| Amendment No. 4, dated as of December 15, 2021, to the Amended and Restated Credit Agreement, dated as of April 13, 2017, among Cedar Fair, Magnum, Cedar Canada and Millennium, as borrowers, the lenders party thereto from time to time, JPMorgan Chase Bank, N.A., as administrative agent and collateral agent and the other parties thereto. |
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101 |
| The following materials from the Partnership's Annual Report on Form 10-K for the year ended December 31, 20182021 formatted in Extensible Business Reporting Language (XBRL):Inline XBRL: (i) the Consolidated Statements of Operations and Comprehensive (Loss) Income, (ii) the Consolidated Balance Sheets, (iii) the Consolidated Statements of Cash Flows, (iv) the Consolidated Statements of Partners' Equity (Deficit), and (v) related notes.notes, tagged as blocks of text and including detailed tags. |
104 | | The cover page from the Partnership's Annual Report on Form 10-K for the year ended December 31, 2021, formatted in Inline XBRL (included as Exhibit 101). |
(+) Management contract or compensatory plan or arrangement.
ITEM 16.FORM 10-K SUMMARY.
None.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
CEDAR FAIR, L.P.
(Registrant)
DATED: February 22, 2019 18, 2022
By: Cedar Fair Management, Inc.
General Partner
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/S/ Richard A. Zimmerman |
Richard A. Zimmerman |
President and Chief Executive Officer |
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
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| Signature | | Title | Date |
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/S/ | Richard A. Zimmerman | | President and Chief Executive Officer | February 18, 2022 |
| Richard A. Zimmerman | | Director | |
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/S/ | Signature | | Title | Date |
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/S/ | Richard A. Zimmerman | | President and Chief Executive Officer | February 22, 2019 |
| Richard A. Zimmerman | | | |
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/S/ | Brian C. Witherow | | Executive Vice President and Chief Financial Officer | February 22, 201918, 2022 |
| Brian C. Witherow | | (Principal Financial Officer) | |
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/S/ | David R. Hoffman | | Senior Vice President and Chief Accounting Officer | February 22, 201918, 2022 |
| David R. Hoffman | | (Principal Accounting Officer) | |
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/S/ | Daniel J. Hanrahan | | Chairman of the Board of Directors | February 18, 2022 |
| Daniel J. Hanrahan | | | |
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/S/ | Louis Carr | | Director | February 18, 2022 |
| Louis Carr | | | |
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/S/ | Gina D. France | | Director | February 18, 2022 |
| Gina D. France | | | |
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/S/ | D. Scott Olivet | | Director | February 18, 2022 |
| D. Scott Olivet | | | |
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/S/ | Matthew A. Ouimet | | Executive ChairmanDirector | February 22, 201918, 2022 |
| Matthew A. Ouimet | | Director | |
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/S/ | Debra Smithart-OglesbyCarlos A. Ruisanchez | | Lead Independent Director | February 22, 201918, 2022 |
| Debra Smithart-OglesbyCarlos A. Ruisanchez | | | |
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/S/ | Eric L. Affeldt | | Director | February 22, 2019 |
| Eric L. Affeldt | | | |
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/S/ | Gina D. France | | Director | February 22, 2019 |
| Gina D. France | | | |
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/S/ | Daniel J. Hanrahan | | Director | February 22, 2019 |
| Daniel J. Hanrahan | | | |
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/S/ | Tom Klein | | Director | February 22, 2019 |
| Tom Klein | | | |
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/S/ | D. Scott Olivet | | Director | February 22, 2019 |
| D. Scott Olivet | | | |
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/S/ | John M. Scott III | | Director | February 22, 2019 |
| John M. Scott III | | | |
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/S/ | Lauri M. Shanahan | | Director | February 22, 201918, 2022 |
| Lauri M. Shanahan | | | |
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/S/ | Debra Smithart-Oglesby | | Director | February 18, 2022 |
| Debra Smithart-Oglesby | | | |