Six Flags Entertainment Corp (FUN) 2004 Q4 法說會逐字稿

Good afternoon, ladies and gentlemen, and welcome to your Cedar Fair Fourth Quarter Earnings conference call.

At this time, all participants have been placed on a listen only mode and the floor will be open for questions following the presentation.

It is now my pleasure to turn the floor over to our host, Mr. Brian Witherow.

Sir, the floor is yours.

Thank you.

Good afternoon and welcome to our year end earnings conference call.

I’m Brian Witherow, Cedar Fair’s Corporate Treasurer.

Earlier today we issued our fourth quarter and year end earnings release.

A copy of that release can be obtained on our corporate website at www.cedarfair.com or by contacting our investor relations offices at 419-627-2233.

On the call this afternoon are Dick Kinzel, our Chairman, President and COO, and Bruce Jackson, our VP of Finance and CFO.

Before we begin, I need to caution you that comments made during this call will include forward-looking statements within the meaning of the federal securities laws.

These statements may involve risks and uncertainties that could cause actual results to differ materially from those described in such statements.

You may refer to filings by the Company with the SEC for more detailed discussion of these risks.

In addition, in accordance with Regulation G, Non-GAAP financial measures used on the conference call today are required to be reconciled to the most directly comparable GAAP measures.

During today’s call, we will make reference to adjusted EBITDA as defined in our earnings release.

The required reconciliation of adjusted EBITDA is in the earnings release and is also available to investors on our website via the conference call access page.

In compliance with SEC Regulation FD, this web cast is being made available to the media and the general public as well as analysts and investors.

Because the web cast is open to all constituents and prior notification has been widely and unselectively disseminated, all content of the call will be considered fully disclosed.

Now let me turn the call over to Dick Kinzel.

Thanks, Brian.

And thank you for joining us on the call today.

During our last conference call we mentioned that based on results through October, we expected to achieve full year revenues in the $530 to $550 million range and adjusted EBITDA of between $165 and $175 million.

I’m pleased to say that our full year results were right in line with both of these ranges after a solid fourth quarter performance across the Company.

Much of our success in the quarter can be directly attributed to strong performances by Knott’s Berry Farm and our new indoor water park, Castaway Bay, which opened in early November as well as solid October weekend results at several of our seasonal parks.

With favorable October weather and the increasing popularity of our fall promotions, combined attendance at our parks was up 4% in the fourth quarter.

The key factors that affected our 2004 season were first, improving competitive conditions helped produce solid operating results at Knott’s Berry Farm.

Second, the Geauga Lake acquisition, while strategically very important, had a negative impact on earnings.

And third, inclement weather throughout the peak summer months combined with moderate capital gains, negatively impacted attendance and revenue figures at most of our seasonal parks.

For the year, our Flagship Park, Cedar Point, performed reasonably well in spite of the weather and the fact that the park was following up on the inaugural year of the Top Thrill Dragster roller coaster.

For the full season, attendance at Cedar Point decreased 4% to 3.2 million guests, while in-park guest per capita spending increased 2% and occupancy trends at the park’s hotels remained strong.

For the year, out-of-park revenues at Cedar Point were up 6% between years with almost half of that increase coming from the park’s resorts hotels.

As I mentioned, our only year-round park, Knott’s Berry Farm, performed well as improving competitive conditions in the southern California market combined with good weather helped produce solid operating results.

For the full year, attendance at Knott’s finished up 2% to 3.5 million guests, while in-park guest per capita spending was up 5%.

In 2004, both Dorney Park and Worlds of Fun overcame poor weather conditions during key points of the season to produce steady operating results by year end.

At Dorney Park, attendance was slightly more than 1.4 million guests, up almost 2% from last year.

At Worlds of Fun, full year attendance totaled approximately 900,000 which was in line with 2003, while in-park guest spending increased 3.5%.

At two of our smaller amusement parks, the lack of a major new attraction and poor weather combined to negatively impact attendance in 2004.

Both Valleyfair and Michigan’s Adventures enjoyed good weather in 2003, but this season the parks were not so fortunate and were unable to match those attendance levels.

For the year, attendance at Valleyfair was down 7% to 1 million guests while in-park guest per capita spending was up 1%.

At Michigan’s Adventure, attendance decreased 2% to approximately 470,000 guests, but in-park guest per spending increased 3%.

Our newest park, Geauga Lake, finished the year well below our expectations due to a combination of poor weather, a late start to early season advertising and promotional programs, and the elimination of the animal life attractions.

For the full year, attendance at that park totaled approximately 700,000 guests, well below the prior year and our original estimates.

However, we did see solid growth in guest per capita spending, up more than 10% from 2003.

We’re confident with the strong capital investment program and a full year of advertising and promotions in place, that park will rebound nicely in 2005.

At our 5 water parks we’re following record performances at several locations in 2003, making the 2004 comparisons very difficult.

The comparisons were made even more difficult by the inclement weather in the Midwest, which negatively impacted attendance at our 2 largest water parks.

For the full year, combined attendance at our 5 water parks totaled 1.4 million guests, down 11% from last year, with the majority of that decrease coming at Oceans of Fun in Kansas City where temperatures stayed well below average all summer long.

Helping to minimize the decrease in attendance was an 8% increase in average in-park guest spending at our water parks.

We’re very pleased with the success we had in driving growth in guest spending levels in 2004.

In addition to the solid improvement in in-park spending at our water parks, average in-park guest per capita spending at our amusement parks increased 2% between years.

Across all 11 properties, average in-park guest per capita spending was up 3% between years.

Before I turn the call over to Bruce for a more detailed review of our fourth quarter and full year results, I ’d like to comment on several management changes within the Company that were recently announced.

The first of these changes is the promotion of Jack Falfas to the newly created position of Chief Operating Officer.

Jack and I have worked together since 1976 and he has served as the General Manager of Knott’s Berry Farm and West Coast Operations since we acquired that park back in 1997.

In his new position, Jack will be ultimately responsible for operations at all 12 of our properties and each of the park’s general managers will report directly to him.

This will allow me to step back from the detail of the day to day operations and focus more of my time on larger and long term corporate issues.

I’m confident that Jack will do an excellent job in his new role.

Assuming Jack’s responsibilities as Vice President and General Manager of West Coast Operations will be Gregg Picon.

Gregg has been with Cedar Fair since we acquired Knott’s Berry Farm and he’s been associated with Knott’s for more than 20 years.

He’s worked closely with Jack Falfas over the past 7 years and has spent the last 4 years as General Manager of our Knott’s Soak City Water Park in Palm Springs, California.

I’m confident Greg is ready to take on his new role within the Company.

We also announced the promotion of Wayne Olcott to the newly created position of Corporate Vice President of Accommodations.

Wayne joined Cedar Fair back in 1999 and has served as Vice President of Accommodations at our flagship park, Cedar Point, since then.

In his new position, he will have had the additional responsibility of overseeing resort accommodations at our other parks.

With more of our parks adding overnight accommodations facilities on the resort side of our business continuing to grow, we felt it was important to establish consistent leadership across the properties.

Wayne has done an excellent job overseeing the development of Cedar Point’s resort facilities and I’m confident that he will bring the same level of enthusiasm and success to our other parks.

We also recently announced the upcoming retirement of two senior executives.

Dan Keller, who has served as General Manager of Cedar Point since 2000 retired at the end of last week and Dick Collingwood, our Corporate Vice President of Administration, will be retiring effective September 5, 2005.

Both Dan and Dick have been with Cedar Fair for more than 30 years and their service and dedication to the Company over that time has been invaluable.

I wish them well in their retirement.

Although it is never easy losing experience such as this, I believe the Company has a deep pool of talent that is eager and ready to step up and assume new responsibilities.

Taking Dan Keller’s position as Vice President and General Manager of Cedar Point is John Hildebrandt, a 31 year veteran of the Company who spent the last season as General Manager of Dorney Park.

Prior to that, John was the Vice President of Marketing at Cedar Point for many years making him an ideal person to fill this position.

Assuming John’s role as General Manager of Dorney Park is Greg Scheid.

Greg has been with Cedar Fair for almost 15 years and has spent the past 4 years in charge of merchandise and games at Cedar Point.

I’m confident he’s ready to take on this new challenge.

We’re currently in the process of reviewing transition plans for Dick Collingwood’s retirement which won’t occur until after Labor Day and we will make a formal announcement as to those plans later in the year.

Now Bruce will give you a quick review of the financial highlights.

Thank you, Dick.

Before I review the details behind our fourth quarter and full year results, I’d like to comment on our review of internal controls as required under Sarbanes-Oxley Section 404.

For more than a year now, we have been devoting significant time and resources toward reviewing, documenting, and assessing internal controls over financial reporting at our properties.

With the decentralized management structure of our parks, this process was a very time consuming and difficult one.

However, after much effort, I’m pleased to say the results at the park level were very good and strong controls are in place and operating effectively, as they should be.

Unfortunately, near the very end of the review process, our outside auditors concluded that we were not properly monitoring and disclosing the deferred tax attributes of our corporate subsidiaries.

This situation was the result of complex tax and accounting rules and not misconduct by anyone within the Company.

Although the amounts involved were not material to our financial statements, we are told that his control deficiency constitutes a material weakness as defined by the Public Company Accounting Oversight Board of our internal control over financial reporting.

It’s important to note that this deficiency did not result in adjustments to our financial statements and involved only non-cash items related to deferred taxes which do not affect our revenues, cash flows or pre-tax earnings in any period.

Nevertheless, we performed a complete analysis of the tax attributes of our corporate subsidiaries as of December 31, 2004 and will include additional tax disclosure within our financial statements as required under FAS number 109.

Now to the details behind our operating results.

As Dick mentioned, we are pleased with our strong fourth quarter performance and the fact that we were able to finish the year on a positive note at most of our parks.

For the quarter, consolidated revenues increased $7.1 million or 12% to $68.2 million due to the addition of our newest park, Geauga Lake, and strong performances at our two largest parks, Cedar Point and Knott’s Berry Farm.

Both Cedar Point and Knott’s generated solid operating results in the period driven primarily by good weather and the growing success of their late season promotions.

For the period, combined attendance at our 12 parks increased 4% between years while guest per capita spending increased 5%.

Over the same period, combined out-of-park revenues were up 18% from a year ago driven primarily by strong increases in resort revenues at Cedar Point.

Excluding results from Geauga Lake, revenues in the quarter were still up 9% on a 1% increase in attendance, a 5% increase in guest per capita spending and an 18% increase in out-of-park revenues.

For the full year, consolidated revenues increased 6% to $542 million.

This included $277 million of admissions revenues, up 7% from last year, $211 million of food, merchandise and games revenues, up 5%, and $54 million of accommodations and other non-park revenues up 8%.

The overall increase in net revenues for the year was achieved through a 3% increase in attendance, a 3% increase in average in-park guest spending, and a 5% increase in out-of-park revenues.

Excluding results from Geauga Lake, net revenues for the year increased 2% or $7.5 million on a 3% increase in average in-park guest per capita spending, 4% increase in out of park revenues, and a 3% decrease in combined attendance.

For the entire year, combined attendance at our 12 properties increased 3% to 12.6 million guests from 12.2 million last year.

At our 7 amusement parks, combined attendance increased 5% to 11.3 million guests and attendance at our 5 water parks totaled 1.4 million, down 11% between years.

As Dick mentioned, growth in in-park guest spending levels continued to be steady in 2004.

The 3% increase between years was due to increased admission prices, improvement in guest spending on food, and a shift in the overall mix of attendance away from lower per capita parks such as our water parks.

For the year, average in-park guest per capital spending across our 12 properties increased more than $1 to $36.59 from $35.48 a year ago.

Total operating costs and expenses in 2004 before depreciation and other non-cash charges increased 10% to $369 million from $334.3 million a year ago.

Excluding operations at Geauga Lake, total cash operating costs and expenses for the period increased only 2% or $6.2 million due in part to the opening of Castaway Bay in late 2004.

Each of our other properties did an excellent job of keeping operating costs in line this season and all major costs as a percentage of revenues remained in line with historic levels.

After significantly higher depreciation due to the acquisition and a non-cash charge for unit options of $4.5 million compared to a similar charge of $5.9 million in 2003, operating income for the year decreased $7.3 million to $117.8 million.

Excluding Geauga Lake’s operating loss of $9.6 million, operating income in 2004 actually increased by $2.3 million or 2% to $127.4 million.

We believe that a meaningful measure of our operating results, which we use in budgeting and monitoring our park level performance, is adjusted EBITDA, or earnings before interest, taxes, depreciation and other non-cash charges and credits, such as for option accounting.

For the year, adjusted EBITDA decreased 1.5% or $2.7 million due entirely to an adjusted EBITDA loss of $4 million generated by Geauga Lake.

On a same park basis, adjusted EBITDA actually increased $1.3 million to $177 million, something we’re pleased with given the poor weather we faced in 2004 and a relatively moderate capital program.

In 2004, we recognized a non cash credit to income of $4.5 million for the change in fair value of two interest rate swap agreements during the year which compares to a credit of $2.7 million in 2003.

This amount represents purely a timing issue and $459,000 originally expensed back in 2002 will reverse into income in the first quarter of 2005 as the swaps have now expired.

After the non cash credit and after interest expense and a provision for partnership taxes, both of which were up between years due to the impact of Geauga Lake, net income for the year totaled $78.3 million or $1.47 per diluted limited partner unit compared to $85.9 million or $1.67 per unit a year ago.

Excluding results from Geauga Lake, net income for the year would have actually increased $5.8 million over the prior year to $91.7 million or $1.76 per unit.

Based on these results and the modest capital investments made for the 2004 season, our full year cash flow was sufficient to fund another increase in the cash distribution to a $1.84 annual rate, up a penny per quarter from last year.

Turning to our balance sheet for a moment, at year end our receivables and inventories were at normally low seasonal levels and we have the necessary credit facilities in place to fund current liabilities, capital expenditures, and pre-opening expenses as required.

At the end of the year, total debt outstanding was $460.4 million, including $385 million of fixed rate term debt, $20 million of which is classified as current and $75.4 million of borrowings under our bank revolver.

We’ve converted $100 million of the fixed rate term debt to very favorable variable rates through the use of several interest rate swap agreements.

The fair market value of these swaps, which have been designated as fair value hedges on long-term debt, was a net asset of $1.7 million at the end of the year.

Under the applicable accounting rules, this amount has been reflected on our balance sheet in intangibles and other assets with a corresponding increase in term debt.

At the end of the year, partners’ equity totaled $370 million and our total cash on hand was $3.4 million, both amounts in line with normal seasonal levels.

At this point, I’ll turn the call back to Dick for some comments on the upcoming season.

As we look to the upcoming season, we see several challenges ahead of us.

At Geauga Lake we have the task of overcoming a disappointing year in terms of attendance and profitability in 2004.

However, with a full year of experience under our belts, a strong management team, and existing new marketing and capital programs in place, I’m confident that we can turn things around in that park beginning in 2005.

In California, the 2005 season has started off very slowly due to heavy rainfall during the first 2 months of the year.

Through the end of February, we’ve estimated that we’ve lost approximately 100,000 visits and more than $3 million in revenues due to the record rainfall.

However, with slightly more than 90% of the parks annual attendance to come and exciting new coaster like Silver Bullet in place, we’re hopeful that we can recoup some of this early season shortfall by year end and have another outstanding year.

In 2005 we also continue to face uncertain economic conditions in several of our key regional markets.

However, over the past 2 years, we’ve proven that with the right mix of capital investments and marketing plans in place, our parks could grow the bottom-line in spite of these challenges.

Entering 2005 we believe we have the right mix of programs in place.

For the 2005 season we are investing a total of $83 million across our 12 properties compared with a CapEx program of approximately $30 million in 2004.

Not included in either of these figures is the $21 million investment in Castaway Bay, our year-round water park resort in Sandusky, Ohio which opened to the public this past November.

In its first 4 months of operation, Castaway Bay has performed very well and has exceeded our early expectations.

At Knott’s Berry Farm and our 3 California water parks, CapEx for the 2005 season totaled approximately $23 million and is highlighted by the addition of a new inverted roller coaster called Silver Bullet.

This new world-class coaster which opened to the public back in December has received rave reviews in its first few months of operation and should be a strong attendance draw for Knott’s in 2005.

We’re also introducing an outstanding new coaster at Dorney Park for the 2005 season.

The new coaster which will be called Hydra The Revenge, will be the park’s 8th roller coaster and 3rd world class coaster that we’ve introduced at that park since 1997.

We’re confident that Hydra will continue to build upon the momentum we’ve established at Dorney Park over the past several years and with normal weather conditions, the new ride with the help of park generates strong operating results this summer.

In total, we will be investing approximately $16 million at Dorney for the 2005 season.

At Cedar Point, CapEx in 2005 is focused back on the hard ride side of the park with the addition of a new high capacity thrill ride called maxAir.

This new ride will be a perfect complement to Cedar Point’s existing collection of world-class thrill rides and it will be the park’s 68th ride, more than any other park in the world.

In addition, in an effort to improve in-park guest per capita spending levels at the park, Cedar Point’s largest game area is receiving a major renovation that will include the replacement of several older games and a major upgrade to its marquees and lighting package.

In total, we’re investing $10 million at Cedar Point in 2005.

As I mentioned earlier, we have an exciting capital program in place at Geauga Lake for the upcoming season.

In total, the park is investing $18 million for 2005, highlighted by the addition of a new water park to be called Wild Water Kingdom which will be located on the former Sea World side of the park.

In total, Wild Water Kingdom will cost $24 million and will be constructed over a 2-year period.

When complete, it will cover 20 acres, making it one of the largest water parks in the country.

In addition, Geauga Lake is introducing a new catering facility and picnic pavilion that will nearly double the number of groups the park can handle and a Peanuts-themed live entertainment show and gift shop featuring Snoopy, Charlie Brown and the other Peanuts characters.

At Worlds of Fun, our 2005 CapEx program will total $7 million and will include the addition of a new multi-story interactive play area in Camp Snoopy as well as the introduction of Worlds of Fun Village, our first overnight accommodation at the park.

Worlds of Fun Village is a first rate cabin and camping complex modeled after the extremely popular Lighthouse Point here at Cedar Point and will be in easy walking distance of both Worlds of Fun and Oceans of Fun.

In 2005, capital expenditures at Valleyfair will total $4 million and will feature the introduction of a new mid-sized thrill ride which has proven very popular with guests at both Knott’s Berry Farm and Dorney Park in recent years.

At Michigan’s Adventure, we will be investing roughly $3 million highlighted by the addition of a giant tunnel water slide in the water park section of the park.

We’re confident that both of these new attractions will be received well by the park guests.

Although it is still too early to accurately forecast 2005’s full year performance, we are confident that each of these investments, along with new strategic marketing plans, will position our parks for a successful year in 2005.

Looking at some early season indicators, year-to-date bookings on group outings and seasons pass sales at several of our parks are lagging slightly behind 2004, although it is still too early to read too much into these numbers.

On a positive note, early reservations at our resort hotels look strong, particularly at Cedar Point, where Castaway Bay continues to perform very well.

With a strong capital investment program, a year under our belt at Geauga Lake, and the excitement surrounding Castaway Bay, we believe that we are well-positioned for 2005.

For the full year, we expect to generate revenue growth of 6 to 8% over last year’s $542 million level.

This can be achieved through small improvements in attendance and in-park guest per capita spending, as well as continued increases in guest accommodation revenues at our resort properties, including Castaway Bay.

Based on these revenue expectations and continued disciplined expense control, we hope to generate full year adjusted EBITDA in a $185 to $195 million range.

At that level, we should be positioned to achieve our goal of continued growth and cash distributions to our unit holders in 2005.

At this point, I’ll conclude our prepared remarks and allow for any questions that you might have.

Thank you.

The floor is now open for questions.

If you’d like to ask a question, please press star followed by one on your touchtone phone at this time.

If at any point your question has been answered, you may remove yourself from the queue by pressing the pound key and we do ask that while posing your question, to please pick up your handset to provide optimum sound quality.

Once again, to ask a question that’s star followed by one on your touchtone phone.

Thank you.

Your first question is coming from Kit Spring from Stifel Nicolaus.

Hi guys, great quarter.

First on -- just a couple of strategic questions.

Viacom recently mentioned on its conference call that they were considering divesting its theme park operations.

I just wanted your comments as to which of those parks you find attractive.

Secondly, what do you think the impact of higher gas prices might be this summer if oil continues to be expensive?

I think it looks like the price of a barrel of oil right now is about 30% higher than it was last summer, not necessarily a direct link with gasoline prices, but probably pretty close.

And then just a housekeeping item -- do you have an estimate of what your cash taxes were for the year?

And maybe your cash flow from operations, investing and that’s it.

While they’re looking the tax question up for you, Kit, I’ll -- our philosophy on expansion is basically the same as it’s always been.

If something comes along, why, we take a look at it.

And if it’s going to help the distribution in the near or short-term future, why we certainly will entertain any type of acquisition.

As far as gas prices go, we did some surveys in-park last year.

Now this is a year later, but at that time, gas prices did not seem to have an impact on people coming to the park.

We are fortunate that all of our parks are within easy driving distance of major population areas and so hopefully it won’t have an effect.

But we just don’t know going into this year.

But I can tell you last year, our surveys indicated that gas wasn’t one of the reasons why people did not come.

As you know, we were disappointed in our attendance last year and we conducted some telephone surveys of some people who were not here to find out why they were not here.

And gas was not one of the reasons listed, so hopefully that will stay true this year.

Bruce, do you want to answer the tax question?

Yeah, Kit, on cash -- income taxes were about $8.8 million in calendar 2004.

And on the cash flow statement about $148 million of cash flow was generated from operating activities.

It’s a little complicated with the Geauga Lake acquisition, but about 76 million of CapEx plus the acquisition $144 million would be -- the investing activities total $220.

And then for financing activities, principally related to the distribution of the $92 million of total -- sources for the borrowings -- for the acquisition totaled -- netted out to $73 million, for financing activities.

Thanks, guys.

Thank you.

Your next question is coming from Chuck Cerankosky from Key McDonald.

Good afternoon, everyone.

I have a question about the tax rate, too.

Bruce, could you give us a little more detail on why the tax rate went up in ‘04 as it relates to Geauga Lake and what might be some guidance for ‘05 on the tax rate?

It’s not the rate that went up, Chuck.

It’s just the amount of revenues on which the PTB tax has to be paid.

So as revenues go up, the tax provision roughly works out to, I think, around 4% of revenues.

That takes into account the state tax, as well as the federal PTB tax.

The rate hasn’t changed.

Okay.

All right, gotcha.

What’s a reasonable number to use for shares outstanding in 2005?

At year end, we were at 53.5 million.

And I don’t think there will be any huge change.

Of course, it depends on option exercises and things like that, but that should be a pretty good number, 53.5 million.

Okay, or perhaps a little more than that?

Maybe a little more.

Okay.

In looking at your Geauga Lake assumptions, what role will changes in advertising play?

What will we see this spring as you get to reacquaint guests with the park and the changes you’ve already announced there in terms of ticket pricing?

Besides ticket pricing we’re going to go with a program of All New Geauga Lake.

We’re going to emphasize service, quality and programs like that, that we have at our other properties.

And then also, the key mark will be, the All New Geauga Lake -- Two Parks for the Price of One.

Basically, taking a page off the marketing programs that we use at Dorney Park.

Okay.

The biggest change will be that the programs will be ready to go at the early part of the season which last year, as you know was quite a challenge when the acquisition wasn’t even completed until the second week in April.

So you’re basically going to reduce the admission.

What’s your feeling on how likely attendance increases will be up -- to drive total revenue up?

That’s really the toughest thing to estimate because the attendance was so far below expectations last year.

It’s just a question of how strong the water park will pull the attendance back up to where it was before.

But we certainly have lots of upside at Geauga Lake, regardless of what assumption you make.

It couldn’t be much worse than last year.

With that big water park going in there and a whole new advertising program, we’ve got a lot of people that are feeling pretty optimistic about Geauga Lake this year.

As you know, Chuck, why we’ve reduced the price since we acquired that property $10.00 per person, plus we’re putting in the water park and we’ve put in a lot of maintenance dollars into that park.

We’re very optimistic about it and we think that it’s going to turn around for us.

Okay.

The Castaway profit, was it profitable in the fourth quarter?

Sure was.

Good deal.

Which it had never been before because, as you know, it gets pretty quiet in the north coast in the fourth quarter.

But it had a very nice November and December.

That’s fully loaded with all the costs of the hotel as well as the water park?

Right.

Okay.

Now in looking at ‘05, you’ve given us some guidance on the attendance increase and where you think EBITDA will be.

What line items, with regard to operating expenses, do you think will be the most available for leverage?

You know, the way the fixed costs of the parks work based on attendance increases, an awful lot of that should drop to the bottom-line.

There really aren’t any strong, strong cost pressures that I can think of right off the top of my head.

When we went through the budget process, we were pretty rigid about cost increases being under significant control.

And so I would be surprised if there were significant cost increases in 2005.

So if the attendance comes in as expected, all 3 line items should show some leverage?

Of the operating line items you report?

Yeah, I would think so.

All right, thank you.

Thank you.

And as a reminder to everyone, if you would like to ask a question, please press star followed by one on your touchtone phone.

Your next question is coming from Robert Routh of Jefferies.

Yeah, good afternoon, guys.

Just 2 quick questions.

First, you mentioned that if things go as planned, according to your budget for ‘05, that you hope to continue to increase the dividend or the distribution that you’ve made.

Obviously, you just did increase the distribution 2 weeks ago or 3 weeks ago.

I’m wondering if you’re hinting that you hope to increase it again within calendar 2005 or whether or not what we’ve already seen is kind of what you’re looking at.

And second, a few years back you kind of mentioned how the radius that most of your parks were pulling from had increased from what it was previously.

You were getting a lot more broader coverage for some of your parks.

I’m wondering if you could comment a little bit on what you’re seeing on that front.

Are you continuing to see growth in terms of the radius of attendees or has that kind of leveled off over the last 12 months?

Robert, why don’t I handle the marketing?

I take it you’re talking about the increase in the marketing radius?

No.

In the attendance radius.

The people from different states coming to parks that are farther and farther away.

Yeah, particularly Cedar Point, I think.

We did try -- 2 years ago we initiated a marketing program called Cedar Point Nation where we went into Chicago, Baltimore, Philadelphia and Washington, D.C.

We tried that for 2 years and quite frankly it really didn’t work out for us.

We found that the cost of going into those markets was more expensive than the people we were pulling out of there.

And so we pulled back a little bit on that.

But particularly at Cedar Point, we do draw from -- particularly, our major markets are Ohio, Michigan, and Indiana.

And our other parks, why those are really regional parks and they draw within usually a 150 mile radius.

The big park that we tried to get a more distant market program, of course, is Cedar Point.

We do that more now by direct mail and couponing, as opposed to television and radio.

And that’s particularly because of the hotel rooms we’ve got here and the camp sites and such.

With respect to your first question, the distribution increase that was just declared for the payment in May was up a penny a quarter and typically what we do is look at the end of the season at the September Board meeting and see if there’s enough clarity to the numbers to increase the distribution.

Some years -- many years, we have increased the distribution in the fall and when we haven’t, we’ve always taken another look at it after the end of the year in the March Board meeting to see if the final numbers were any more clear on increasing the distribution.

So if we have a very strong year, we’ll be looking in September again at the issue.

Great.

And just one follow-up.

You mentioned that you’re building a new water park now at Geauga Lake and it seemed as though the water park side of the business continues to grow, in terms of Management’s focus in importance.

I’m wondering if you could just kind of on a -- from a big picture point of view, given companies like Wolf Resorts, which is water parks and lodging and what you’re doing -- where you see the water park versus the amusement park businesses going over the next 5 to 10 years and kind of where you want to position yourselves strategically in that arena?

Dick Kinzel;

Robert, as you can see, our attendance the last few years has -- you know, went up and down in very small percentages.

We feel that the biggest growth in our company is going to come probably from the accommodation side.

We’re very fortunate, at all of our properties; we have real estate available to expand the Castaway Bay concept if we decide to do that.

And certainly with the success we’re seeing here in Sandusky, that certainly is an option for us and it is a profitable venture.

It’s a very quick profitable venture that -- what we would have to do is -- there’s only one other property -- 2 other properties -- where we have hotels.

Of course, Geauga Lake would not be conducive to convert to an indoor water park because of the type of hotel there.

In California, of course, with that weather, we wouldn’t consider doing an indoor water park there.

So it would be much more expensive on the second time around.

We’d have to build the hotels along with the indoor water park.

But if it continues the way it is in Sandusky, we certainly are going to entertain doing more of those at our other properties.

Great.

Thank you very much.

Robert, before you -- if I could just back up a little bit on your answer on increasing our attendance from the surrounding markets, I think the bottom-line on that is, all the surveys that we do, from where our people come -- at all of our parks, for the past 5 years, all the regions have pretty much stayed the same.

In other words, in Valleyfair, we know most of our people come from Minneapolis and in Kansas City, why, they come from Missouri and Kansas City.

Those numbers have not really changed significantly in any one of the parks over probably the last 4 or 5 years.

So we really are regional parks and I think things like Castaway Bay will be the way that we’re going to increase dramatically the bottom-line at those parks.

And I think a good barometer of that is going to be the way that Worlds of Fun Village operates this year in Kansas City with the cabins and the trailers.

And if that’s successful, we certainly are going to expand that concept to perhaps include a hotel.

Okay, great.

Thank you very much.

Thank you.

And as a final reminder to everyone, if you’d like to ask a question, please press star followed by one on your touchtone phone.

Thank you.

We have a follow-up question coming from Chuck Cerankosky from Key McDonald.

Dick, when you’re looking at the sort of re-launch of Geauga Lake for the ’05 season, how might it be marketed with Cedar Point?

Chuck, we’re doing some cross-marketing -- cross-promotions with it.

We’re going to have bounce back coupons at the park.

On the seasons passes, you can buy an up-charge to go to both Cedar Point and Geauga Lake.

And pretty much we’re going to cross-market them that way.

Is there anything else, Bruce, that you can think of?

I think those are the principal ways, but as time goes on, we’ll learn more about how to develop the marketing overlap and synergies.

Dick, is that your biggest concern about making the projected revenues this year is, how much or how well Geauga Lake recovers?

Chuck, it is.

It’s certainly one of the major concerns.

We only did 700,000 people there last year and I’m confident we can get more than that, but certainly that was a big disappointment.

Of course, when you come off of a big blow like that, you’re always very pessimistic.

You want to be optimistic, but you wonder what the devil went wrong or if it can come back.

But I’m optimistic that it can come back with the new marketing programs and also with the water park.

Why, I certainly -- that’s certainly my biggest concern is Geauga Lake.

All right, thank you.

Thank you.

Your next question is a follow-up question coming from Kit Spring of Stifel Nicolaus.

Just for modeling purposes, are there any meaningful expenses for Geauga Lake in the first quarter?

And I assume they did not occur last year, because it didn’t close until the second quarter -- am I right about that?

Yes, I think that would be fair to assume $2 to $2.5 million, I think, of operating expenses in the first quarter.

Thanks.

That would be against nothing last year.

Great.

Thank you.

Thank you.

Your next question is a follow up question coming from Chuck Cerankosky of Key McDonald.

I forgot to ask one item.

On the rainy weather impact to revenues for Knott’s in the first quarter, you said $3 million?

Right.

Thank you.

Thank you.

Gentlemen, there appear to be no further questions.

At this point, if there are no further questions, I want to thank everyone for joining us today.

If you do have any follow up questions, feel free to contact the Company directly, or myself at 419-627-2173.

With that, we look forward to speaking with you again in early May to discuss first quarter results.

Thank you.

Ladies and gentlemen, this does conclude today’s teleconference.

You may disconnect your lines at this time and have a wonderful day.