Cedar Fair, L.P. reports 2004 results and outlook for 2005

Is anyone able to dechipher what this is all about:

"The Partnership also reported that during its review and assessment of internal controls, as required under Sarbanes-Oxley Section 404, an internal control deficiency was identified relating to its accounting for income taxes at its corporate subsidiaries..."

The thing that really shocks me is this line:

"Has not maintained effective internal control over financial reporting"

That's a pretty serious problem, is it not?!

It basically means that they have not yet fully met the new, more rigorous standards of the Sarbanes-Oxley act.

The phrase you highlighted is standard phrasing in all Annual Reports for companies who are not compliant that is put in by the Auditors, clearing themselves of responsibility, if there are actual internal problems.

Here is a link to more information on the Sarbanes-Oxley Act.*** This post was edited by redman822 3/16/2005 11:19:24 AM ***

" “In spite of our modest capital program and inconsistent weather throughout the summer months at our seasonal parks, we were still able to entertain a record number of guests in 2004."

See, Six Flags isn't the only theme park company that blames their problems on the weather....

^That may be true but CF is still seeing an increase in their total revenue & profits while SFI reported yet another disappointing season as far as revenue earnings are concerned.

Cedar Fair must be doing something right & that happens to be continual cap ex to provide new attractions to draw in the crowds & providing guest service & relations to their customers once they're through the gates which is something SF has been really slacking off at lately.

Fun said:

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Is anyone able to dechipher what this is all about:

"The Partnership also reported that during its review and assessment of internal controls, as required under Sarbanes-Oxley Section 404, an internal control deficiency was identified relating to its accounting for income taxes at its corporate subsidiaries..."

The thing that really shocks me is this line:

"Has not maintained effective internal control over financial reporting"

That's a pretty serious problem, is it not?!

---

Hey, it worked for Enron, right?

CF should just straitforward invest in new record-breaking rides. It is a pattern that has worked for them before. And if they do that, it will bring world peace, happiness and prosperity to everyone. I think, at least.

That would be stupid and irresponsible, seeing as how most of their parks can't support the construction of $25 million rides.

CP can construct $25 million dollar rides; they have twice, and they have yielded enormous divedends, in both cash and advertising capabilities. None of the other CF parks could though. That would be suicide.

(Edit: Sorry Jeff. I didn't see that you said most parks, not all parks. My bad.)*** This post was edited by rolo 3/16/2005 10:46:20 PM ***

And how do you suppose they paid for those rides? Yep, the hotels.

True, but the Hotel Breakers has been around longer than the park, and I don't know the statistics, but I am willing to bet that it makes more money than all of the other CP-owned resorts put togather.

Dick Kinzel certainly seems to think so...

Not only did he mention the early success of Castaway Bay several times, but he made the comment that "most of future revenue growth will come from the resort side." They recently promoted Wayne Olcott to a new position of VP of accommodations for the whole chain, showing the value they place on the "resort side" of the business.

I still have to wonder if CF's next major acquisition won't be a park(s) at all, but rather in lodging. Personally, I think Great Wolf would be a great match for them. It wouldn't be a cheap acquisition certainly, but they're still small enough that I think CF could handle it. Overall, I think the ROI and potential for future (year-round) revenue opportunity would be a lot greater with a Great Wolf buy-out than it would be with Paramount Parks! (Not that CF has actually stated they have an interest in Paramount Parks...)

Again, just a thought...

If Paramount were willing to sell one, maybe two, parks....then I could see CF stepping in to snap up some good (profitable!) bargains...kinda like they got SFWoGLOhio for cheap from SF. Buying the entire Paramount chain, while it probably would work out very well for CF, just seems contrary to the business model they've been following so successfully for so long...that of "slow but steady growth".

Right now, the real ROI is in waterparks, then on-site lodging, then big flashy new flats, THEN coasters...notice which one came in last...;)

rolo: Yes, Breakers has been around for a hundred years, but there are fewer than a hundred rooms left from the original structure (and that's assuming you call the Bon Aire wing "original"). The vast majority of rooms have been built since Sandcastle Suites in 1990, expanded in 1992. Breakers East came in 1995. Breakers Tower opened in 1999. Radisson (now Castaway Bay) was built in 1989 but not acquired by the park until 1996.

So don't tell me that building big rides are the key to the company's success. Cedar Point isn't the whole company, I doubt even half, and even for CP the rides have been only a component of the overall package. Attendance has been essentially flat for decades, and growth has been totally in the realm of in-park spending and resorts.

^ I recall reading somewhere that 50% of the profits came from Cedar Point and KBF, and the other 50% came from WOF, VF, MIA, and DP. Fitting I suppose since both CP and KBF have the largest attendance, KBF is year round, and both CP and KBF have hotels on site. This was prior to the purchase of GL.......of course they have a hotel.

Is it fair to say that BIG RIDES at CP are needed to keep attendance level? In other words, would they experience a huge attendance drop off if they went 2-5 years without adding a MAJOR coaster?

Interesting that attendance levels have been flat. I was not aware of that. I guess I wrongly assumed that the rides lead to huge increases in bodies through the gate.

Seems like now, they just want rides to get bodies in the hotel rooms where than can get to the real money.

By "flat," I mean over the past several decades it hasn't changed all that much. People don't seem to realize that the year Corkscrew opened, 1976, that they did 3 close to million guests. That's not far off from where they are now.