Six Flags Entertainment Corp (FUN) 2009 Q3 法說會逐字稿

Ladies and gentlemen, thank you for standing by.

Welcome to the Cedar Fair Third Quarter Earnings Conference Call on the third of November, 2009.

(Operator Instructions).

I will now hand the conference over to Stacy Frole, please go ahead, madam.

Thank you, Kev.

Good morning and welcome to our Third Quarter Earnings Conference Call.

I'm Stacy Frole, Cedar Fair's Director of Investor Relations.

Earlier today we issued our third quarter 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 morning are Dick Kinzel, our Chairman, President and Chief Executive Officer, and Peter Crage, our Vice President of Finance and Chief Financial Officer.

Before we begin, I need to caution you that comments made during this call will include forward looking statements within in 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 SCC for a 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 company call access page.

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

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

Now let me turn the call over to Dick Kinzel.

Good morning and thank you for joining us on the call today.

As you can see from our third quarter earnings, 2009 has been a challenging year for us.

While we anticipated pressure from the worst economy in decades, and rising unemployment rates in many of our regions, we did not anticipate dealing with consistently poor weather.

I typically don't like to use weather as an excuse for attendance shortfalls, however, this has clearly been a very unusual year weather-wise across many of the regions in which we operate.

While our performance is slightly better than many industry peers, it is certainly disappointing.

Through the end of the third quarter, our parks had entertained 18.8 million visitors, down 6% from the same time last year.

During this same period, average in-park guest per capita spending was down 1%, or $0.55 to $39.73 and out-of-park revenues were down $7.5 million.

The result is an overall decrease of $66.5 million in net revenues through the first nine months of the year.

A sharp decline in group sales business, and particularly for our northern and southern parks, and a decrease in seasons pass sales, were the key factors behind our attendance shortfall.

Both of these ticket channels have been hit hard by the economy.

But we responded.

Cash operating costs and expenses through the third quarter were down $28.6 million, offsetting 40% of the decline in revenues.

Peter will provide more detailed information behind the third quarter results shortly, but before he does, I'd like to take a moment and discuss our performance through this past weekend, which completed the 2009 operating season for the majority of our parks.

The same challenges we faced during the first nine months of the year continued to negatively impact results in October.

In particularly, unreasonably cool temperatures and rain over the past four weekends have softened the positive impact we had expected to get from the very popular Halloween events we have in place at our parks.

Through this past weekend, our parks have entertained 20.6 million guests.

This represents a 7%, or 1.5 million visit, decrease from this time last year on a same park basis, excluding the impact of Star Trek The Experience, which closed in the September of 2008.

Through this same period, average in-park guest per capita spending remained down less than 1% from last year, while out-of-park revenues were down $8 million, due almost entirely to declines in occupancy rates at our hotel properties.

Based on these preliminary October results, combined revenues for the first ten months of the year, on a same park basis, we're down $70.7 million or 7% from a year ago.

While we faced many challenges this year, I'm very proud of the job our management team has done in running the parks and maintaining their focus on controlling operating costs.

The cost savings initiatives implemented have help to substantially offset the attendance and revenue shortfalls.

Through the third quarter, cash operating costs were down 5% or $28.6 million from last year.

Adjusted EBITDA for the first nine months of the year was down $37.9 million from a year ago and on a trailing twelve month basis, adjusted EBITDA totaled $318 million.

However, with the soft results from October just concluded, it's unlikely we'll be able to achieve that level of EBITDA for the full year of 2009.

With that in mind, and taking into consideration the tightening of the maximum consolidated leverage ratio within the credit agreement at December the 31st, we expect that we'll suspend distributions beginning in 2010.

If, as we expected, the distribution is suspended, the cash flow that would otherwise be paid to unit holders will be re-directed to retire term debt.

We believe this debt reduction will allow unit holders to realize return on their investment through de-leveraging and provide us with greater financial and operating flexibility.

Over the past year, we have accomplished initiatives that have reduced debt by approximately $110 million and addressed our capital structure.

This has been done through the reduction of our annual distribution rate in March, sale of 87 acres of surplus land in Toronto in August, regular amortization payments, and an extension of $900 million of our term debt.

We are pleased with the success of these initiatives, especially considering the state of the credit markets.

I must say this has been one of the most challenging years of my career and the decisions we've had to make have not been easy.

While maintaining a focus on the operating performance of the business in a difficult operating environment, we also considered several other alternatives to address the constraints of our current capital structure.

I concluded that, in the current market environment, these are not executable on terms that will be beneficial to unit holders over the long term.

Our actions, although successful, have not been enough to offset the decreases in operating performance we have experience in 2009.

We will be reviewing alternatives to improve operating performance and enable unit holders to realize value consistent with our financial performance, including potential changes to capital structure, corporate structure, the company's debt, and other strategic options.

We will pursue those alternatives that we believe are in the best interest of the company and the unit holders.

At this point I would like to turn the call over to Peter to discuss our financial results in more detail.

Thanks very much, Dick.

As Dick said, 2009 has been a very challenging year for us.

And most measures the worst economy in 70 years and poor weather throughout most of the year, have combined to affect results at most of our parks.

For the nine month period ended September 27th, 2009, net revenues decreased to nearly 8% to $810.5 million from $877 million in 2008.

The sources of revenues are as follows-- $467.9 million of admissions revenues, $283.1 million food, merchandise and games revenues, and $59.5 million of accommodations and other non-park revenues.

On a same park basis, excluding the results of Star Trek The Experience which closed in September of 2008, net revenues declined $57 million between years, on 25 additional operating days in 2009.

This revenue shortfall is largely the results of an attendance decline of 1.2 million visits between years.

Through the first nine months of 2009, our parks entertained 18.8 million guests, compared to 20 million guests in 2008.

Over this same period, average in-park guest per capita spending was $39.73 and out-of-park revenues totaled $86.4 million.

This compares with average in-park guest per capita spending of $40.28 and out-of-park revenues of $94 million through the first nine months of 2008.

The decrease in attendance can be directly attributed to a sharp decline in group sales business and a decrease in season pass visits.

The decline in group sales business is the direct result of the poor economy and spending cuts at many businesses, schools and organizations we have historically counted on as repeat customers.

Through the end of the third quarter, we had lost more than 900,000 group sales visits company-wide.

The decline in season pass visits is the result of a decrease in total 2009 pass sales.

Through the end of the quarter, total season pass visits were off more than 350,000 from this time a year ago.

While we've entered fewer guests this year, the parks have done a good job of maintaining in-park per capita spending levels in light of the economy.

Through the first nine months of the year, average in-park per capita spending was actually up slightly in our southern and western regions, but these gains were offset by a decline in the northern region.

Excluding the effects of Star Trek, the decrease in per capita spending for the nine month period would have only been $0.31 or less than 1%.

The $7.5 million or 8% decrease in out-of-park revenues, which represents the sale of hotel rooms, food and merchandise and other activities, located outside of the park gates, was primarily due to declines in occupancy rates at most of our hotel properties.

Operating costs and expenses, excluding depreciation, amortization and other non-cash costs, for the fiscal nine months, decreased 5% or $28.6 million to $513.8 million on 25 more operating days in the period.

This decrease is the direct result of the successful implementation of numerous cost savings initiatives across our parks as a proactive step to offset the impact of the negative attendance trends.

The closing of Star Trek also contributed approximately $7.1 million of the cost savings.

Consolidated cash operating costs for the nine month period are broken down as follows-- $74.4 million in cost of food, merchandise and games revenues, $335.7 million of operating expenses, and $103.7 million of selling, general and administrative expenses.

Those of you who regularly follow our results know we believe adjusted EBITDA, earning before interest taxes depreciation, and other non-cash items provides meaningful insight into our operating results since we use it for budgeting and measuring park level performance.

Because it's important to us, we make it a point of sharing it with investors.

Through the first nine months of 2009, adjusted EBITDA decreased $37.9 million to $296.7 million from $334.6 million for the same period a year ago.

Also impacting the nine month operating results is the sale of the excess land adjacent to our park in Canada in the third quarter.

IN late August, we completed the sale of 87 acres of surplus land at Canada's Wonderland as part of our ongoing efforts to reduce debt.

Net proceeds from this sale totaled $53.8 million and resulted in the recognition of a $23.1 million gain during the period.

After this gain, depreciation and amortization of $113.6 million, and all other non-cash items, operating profit for the period decreased $7.9 million to $205.4 million, compared with $213.3 million in 2008.

For the period, interest expense decreased $7.9 million to $91 million, primarily attributable to lower rates on our variable rate debt along with lower average term debt borrowings during the period.

Since the beginning of 2009, we've retired $101.2 million of term debt.

Somewhat offsetting these savings was a 200 basis point increase in interest costs on the $900 million of term debt borrowings that were extended by two years in August.

Although we did increase interest costs on the extended portion, we were pleased to obtain more flexibility to the credit agreement through the amendment process and to have been able to reduce some nearer term refinancing risk by extending $900 million of term debt by two years.

Our nine month results also reflect a $3.1 million charge for the change in fair value of two cross-currency swaps we have in place that hedge our exposure on US dollar denominated debt we hold at our wholly owned Canadian subsidiary.

Those swaps became ineffective as defined by the accounting rules in the third quarter, as a result of paying down the underlying Canadian term debt with net proceeds from the Canadian land sale.

As such (inaudible) changes in fair value of these swaps are now required to be reported within the P&L in accordance with the relevant accounting rules.

After interest expense, the net change in the fair value of swaps and a $48.3 million provision for taxes, net income for the nine months totaled $61.7 million or $1.10 per limited, diluted limited partner unit.

This compares with net income of $62.5 million or $1.12 per unit for the same period a year ago.

Looking at the third quarter for a moment-- the fiscal three months ended September 27th, 2009, consisted of a 13 week period and included a total of 1,255 operating days, compared with 13 weeks or 1,191 operating days in 2008, excluding the operations of Star Trek.

The 64 additional operating days in the current year quarter is primarily the results of a shift in our operating calendars to correspond with the late timing of Labor Day this year.

For the quarter, net revenues decreased 4% or $20.4 million to $519.9 million.

This is the result of a 3% or a 324,000 visit decrease in attendance, a 7% or $3.6 million decrease in out-of-park revenues and a decrease of less than 1% in average in-park guest per capita spending.

As I previously mentioned, the decline in attendance was primarily due to shortfalls in our group sales business and season pass sales.

A decrease in the third quarter out-of-park revenues, again, reflects a decline in occupancy at our hotel properties.

Cash operating costs for the quarter totaled $255.3 million.

This represented a decrease of $2.5 million or 1% from a year ago in spite of 64 additional operating days.

Again, this is reflective of the successful results of cost control efforts across the parks in response to reduced attendance.

For the quarter, adjusted EBITDA decreased 6% to $264.6 million from $282.5 million a year ago.

The $17.9 million decrease is directly attributable to the decline in their quarter revenues partially offset by our cost control efforts during the period.

Operating income for the quarter totaled $221 million, up $5.7 million from the third quarter of 2008.

The increase is due to the $23.1 million gain on the sale of the Canadian land, offset by the revenue shortfall.

Interest expense for the third quarter decreased slightly from $31.8 million in 2008 to $31.2 million in 2009.

This decrease is principally due to lower average term debt borrowings in the current year, offset by the 200 basis point increase in interest costs on the $900 million of extended term debt borrowings.

After interest expense, the $3.1 million net change in the fair value of swaps and a $77.6 million provision for taxes, net income for the quarter totaled $107.6 million or $1.92 per diluted limited partner unit.

This compares with net income of $91.5 million or $1.65 per unit in the third quarter of 2008.

Finally, I'll review the balance sheet.

At the end of the third quarter, our receivables and inventories were at normal seasonal levels and we have the necessary revolving credit facilities in place to fund current liabilities, capital expenditures and operating expenses as required.

Partners equity totaled $150.2 million and our total cash-on-hand was $56.2 million.

As of the end of the quarter, total debt outstanding was $1.6 billion of variable rate debt, $16.5 million of which is classified as current.

There were no outstanding borrowings on our revolving credit facilities.

Of our outstanding variable rate long term debt, $1.3 billion has been converted to fixed rate debt through the use of several interest rate swap agreements.

As a result, our cost of debt is approximately 7% at the current time.

Based on current trailing twelve month results, our preliminary view of October performance and a tightening at December 31st of the maximum consolidated leverage ratio, we expect that we will suspend distributions beginning in 2010.

If, as we expect, the distribution is suspended, the cash flow that would otherwise be paid to unit holders will be redirected to retire term debt.

We believe this debt reduction will allow unit holders to realize a return on their investment through de-leveraging and provide us with greater financial and operating flexibility.

While our results through October are disappointing when compared with our record 2008 results, we are still on track to report strong EBITDA and continued strong margins in light of the current economic environment.

All of our parks continue to produce steady, positive operating cash flows and our cash position, together with existing lines of credit, provides sufficient flexibility to manage working capital and support growth through our capital expenditure program going forward.

At this point, I would like to turn the call back to Dick for some comments on the 2010 operating season.

As we look forward, it's likely that many of the challenges we faced in 2009 will be present in 2010.

However, with the strong capital program in place, we believe we are well positioned to face these challenges.

Looking forward to 2010, our capital expenditures program will total approximately $90 million and will be highlighted by the addition of two signature roller coasters.

These two new, world-class coasters will be themed around Dale Earnhardt and NASCAR and will be similar in style and features to both Diamondback at King's Island and Behemoth at Canada's Wonderland.

Roller coasters have proved very successful in these parks over the past two years.

The first of these coasters, The Intimidator, will be introduced at Carowinds in 2010.

The introduction of Intimidator will coincide with the opening of the NASCAR Hall of Fame in Charlotte next year and we're confident will become the signature coaster that park needs to ascend to the next level of profitability.

The second of our new coasters will be The Intimidator 305 at King's Dominion.

At 305 feet tall, The Intimidator 305 will be the perfect fit for that park's solid collection of thrill rides.

It should give King's Dominion the marketing push it needs to compete in what is arguably one of our most competitive markets.

Our 2010 capital program will include more than just big steel as we also will be focused on family attractions next year.

Cedar Point, our flagship park, will introduce a new $10 million flume ride that should be a strong marketing draw for the entire family.

We will also be upgrading and re-theming the children's areas at five of our parks while three other parks will be introducing a night time light show and display that proved very popular with guest at Cedar Point this past year.

We have found that attractions like this are not capital intensive, but resonate well with our guests bringing a new layer of entertainment to our parks.

In 2010, we'll also be investing in upgrades to our accommodations and general park appearance.

I believe we have an excellent overall entertainment package lined up for our parks for the 2010 season.

The fundamentals of our business have not changed.

Our parks are a family tradition and we believe they will continue to be for many generations to come.

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

Kevin, I'll open the floor for questions.

Thank you, sir.

(Operator Instructions).

The first question comes from Scott Hamann from Keybanc Capital Markets.

Please go ahead.

Good morning everyone and Stacy congratulations and welcome back.

Thank you.

Dick, just a first question here, when you talk to the board, what's the board's thinking in what the criteria might be to reinstate the distribution?

What types of things would you be looking for over time?

Scott, at this time it's really premature to make any predictions about the future distribution policy.

We continue to evaluate strategic alternatives for improving the business and creating value for the unit holders.

The distribution policy is just one of the facets we will consider consistent with our focus on total return for the unit holders.

Okay, and when you talk about those strategic alternatives, is there anything that you're considering that's different than what you've laid out before in terms of excess land sales in the couple of the parks that you're currently marketing?

No, I think the financial community is pretty well up to date on what our thought process is and what we're trying to accomplish.

Okay, and Peter is there any potential for an additional or a write-down on any of this good will associated with the Paramount acquisition?

Potential, yes.

I guess it depends on what happens in the economy and the business performance of those parks.

I will tell you that based on what we have up to this point, you don't see any impairment in the third quarter.

So, the fourth quarter, we'll do our testing in the fourth and of course we'll do it next year as well.

It's tough to say at this point what the future holds.

Okay, and then finally just-- after tax impact of this land sale, do you have a good number for that?

Yeah, I think we'll have a tax liability of about $7 million or $8 million next year that's due in early part of 2010.

So, net came in in the high 40s.

Okay, thanks a lot.

Scott, if I could just add, we certainly realize that our problem is on the balance sheet and our emphasis going forward certainly is going to try to get that debt reduced.

Yeah, no, I understand.

I'm just wondering if there's a certain debt level or other metric that you might be looking to achieve and then say we'll take a look at reinstating that distribution.

I think it's just too early to say at this time, Scott.

Okay, thank you.

You're welcome.

Thank you.

The next question comes from Joe [Store] from CLT Capital.

Please go ahead.

Hey, good morning.

Can you help, I guess, help me understand a few things.

One, you're taking your CapEx as indicated up to roughly $90 million next year.

It's a little higher than you're average in general.

And just generally, given sort of the environment, especially over the last summer, again with sort of attendance being blind, how do you think about your capital allocation policy versus the various flexibility that you have in your cost structuring, and how should we think about, again, sort of, the prospects for the business, the underlying business going into 2010 relative, again, to your tight capital structure?

Joe, this is Dick.

Our capital is pretty well dictated a couple of years ahead of time.

The two coasters that we're putting in next year actually were ordered two years ago.

So consequently, we had to stick with those.

And the reason that the capital is about-- normally we try to stay between $80 million and $90 million and we were within that range.

Unfortunately, last year, about this time last year, when the banks were having their problems, we sort of anticipated it was going to be a soft year, so we really postponed the $10 million flume that we're putting at Cedar Point this year.

We asked our ride manufacturer to put that off for a year, so consequently that took us a little bit over what we wanted to do this year in capital.

But looking forward, hopefully the economy is going to start turning around in the first quarter of next year, but again, the major emphasis was that we really had those rides order and we really could not get out of them.

But, hindsight, I think they're going to be great rides and I think next year could be a very promising year for us.

And again, and I appreciate that.

But relative, obviously, to attendance, year-to-year obviously attendance can clearly fluctuate for a number of reasons, primarily being weather and then working back through in terms of the cyclical factors.

But, again, with attendance being tough to get, build up some level-safe strong conviction for it being X or Y, how do you think about your cost structure?

And, again, some of the flexibility that you have such that if attendance were to come in lower than expectation into 2010, given an unknown sort of global macro situation, what you can tweak?

Well, Joe, this is Peter.

Our comment on attendance clearly pointed to the cyclical issues, the economic issues.

Sure.

Group sales was a significant portion of that, almost $1 million.

So, assuming the economy comes back, that would be great.

But if it doesn't, we also, in our comments, pointed out that we were able to cut almost $30 million in costs.

I think the question you're asking, and I hope I answer it the right way, is if we continue to see this next year, this group sales business off, what can we do in terms of tweaking our cost?

I think we've shown it this year and I think we would continue down that path in 2010.

In that $30 million, can you categorize the particular buckets at which that came from?

There was a pretty substantial component in salaries and wages.

Dick, I don't know if you want to comment on the individual components, lay offs and various other areas?

Yeah, we had, unfortunately, I'm not really pleased to say it, but we had to reduce some staffing.

Basically the majority of the staffing was a second look at the Paramount acquisition.

In '06, we went back there and re-streamlined the staffing levels there.

Operating supplies and expenses were cut considerably.

Some of those may come back a little bit next year because what we were trying to do, quite frankly, from June on was to try to preserve the distribution.

We did everything in our power to preserve this distribution.

And we knew that it was going to be a challenge when we opened the parks and we took effects right way.

Pete, do you have the numbers?

Sure, sure.

In the salaries and wages side, we cut over $10 million, both including a big portion of that is seasonal, making adjustments to park level seasonal labor.

Operating expense and supplies of $5 million.

We continue to try to create efficiencies in the utilities line for a couple of million dollars.

So those are just some examples of the things we've been able to do this year to cut those costs.

And we don't really look for-- the individuals that we had to release on the lay offs, we don't expect those to be hired back.

We expect to operate thinner next year.

Okay, great.

And I apologize, I don't mean to sort of hog the scene here, but one final question.

Can you please remind me the max leverage test that you have this year and what it adjusts to in 2010 and any other sort of relevance or covenants that you have to manage towards?

Right, the maximum consolidated leverage, that which governs distributions, is at 5.25, it adjusts down to 4.7 at the fourth quarter of this year and then adjusts down to it's lowest level at 4.50 and stays there at the end of 2010.

Thanks very much.

Thank you.

The next question comes from Joe Lackey from Wells Fargo.

Please go ahead.

Thank you.

Can you remind us if there's any restriction on when the distribution can return?

Under the credit agreement, is there any restriction, does it have to be halted for a certain period of time, or can it return once you return to compliance?

The strict definition in the credit agreement allows for the distribution to return once you meet the minimum requirements.

Okay.

Dick, you had some comments in your opening remarks, right before you said, talking about the distribution regarding adjusted EBITDA, I missed that.

Can you repeat what you said, that you didn't expect it to be, what was it, $318 million?

Is that-- comparing it to the trailing twelve months.

Right.

Mainly because of the weaker than expected October that we had.

It's going to be very difficult, I believe, for us to maintain the $318 million.

However, saying that, the level of drop on that would be, not considerably, I hate to guess.

We hate to guess.

We don't think we can maintain the $318 million, but it's only a months operation.

It's a month operation and we still have two months at Knott's Berry Farm, which is not the highest, is not their busiest time of the year, but it's difficult, Joe, to make a guess as to what that would be.

We just, there's downward pressure on the $318 million.

Do you expect to be EBITDA positive in Q4?

We don't know.

We need to get through the fourth quarter and we need to look at the numbers.

We still, as you know, we still have two months of Knott's Berry Farm operations.

I guess the question is, you viewed the debt covenant, do you think that is in play, potentially, the 525 at the end of Q4?

We do not believe, at this point in time, that we will trip any other covenants.

Okay, okay.

Clearly, weather is not just an excuse for you guys, clearly impacted operations year-to-date and in the third quarter.

Is there anything you can do to quantify, potentially, the impact of that, there in operating days or some other metric?

You know, Joe, we don't like to use weather as an excuse, but it was, I just know, though, October really hit us hard.

But, we can slice it and dice it.

Weather played a part in it, but in all honesty, the recession really hurt us hard.

As Pete pointed out in some of those numbers, our group business was down and that was basically a result in the east and in the mid-west with companies that had lay offs and companies that historically have brought their employees to the park either for a day outing or for a day outing and a lunch, those were basically eliminated this year.

That's what really contributed to the downfall this year.

Weather certainly played a part in it, but if we would have had, I think, a normal economy, even with this bad weather, I think we would have been, I think we could have made the distribution, but that, having the worst recession in 70 years and the breakdown of the credit markets and the bad weather combined, it was almost a perfect storm.

We just couldn't make it.

But the bottom line is it was really the economy that got us.

We certainly can substantiate the weather, the bad days on Saturdays throughout the system, but the bottom line is the economy really what had an effect on us.

So the economy trumped weather, I guess.

Yes, by all means.

Given the recent transactions we've seen, the Busch parks as an example, is there any additional interest in either Valleyfair, Worlds of Fun, can you give us an update there?

No, there's been no action on that, but I can tell you now that what we were trying to do with those parks, we have a lot of confidence in those parks.

What we were trying to do was to save the distribution and we felt one way of saving that distribution was to sell some assets.

Now that the distribution is cut, we'll have to take another hard look at it.

What we didn't want to happen happened.

Now we have to refocus our attentions as to the EBITDA that we can get of those parks and how successful those parks are.

The way I'm leaning right now is with the distribution cut, of certainly my recommendation to the board was that we keep our assets, we try to build up the EBITDA, retire the debt and hopefully within two or three years our debit to EBITDA ratio will be down to where it was prior to the PPI acquisition.

And we'll be able to grow the park either through acquiring other properties, again using units, or cash, and increasing the, just growing the company, internally and through external, through acquisitions, of growing it through building hotels or how we ran the company prior to the PPI acquisition.

Okay, okay.

And then just finally, a couple of updates here on some timetables.

First, can you give me a timetable of what you're kind of planning on for recapitalization, as far as redoing the credit agreements, term credit agreement and revolver?

We, Joe, this is Peter.

We're going to be looking at that very closely in the first part of 2010.

Our revolver goes current on August the 30th of 2010.

Although we don't have much in the way of borrowings on that late in 2010, we'll be looking at doing something there during next year.

The remaining portion, the non-extended portion of our term debt, matures in February and August of 2012.

So at the same time, we'll be looking at perhaps putting a package together that might close in the late part of 2010, early part of 2011.

Okay.

But that's my best guess at this point.

As you know, the credit markets continue to flex and we're not immune to them.

And then last question, on-- update on Santa Clara.

There's been some news there.

Can you give us an update on your position with that particular park and maybe a timetable as far as down the road?

We still continue to negotiate with the '49ers and also with the city of Santa Clara.

We really have, it's a two edged sword there.

We have to negotiate, not only with the '49ers, but also with the parking rights with the city of Santa Clara as to who controls that parking lot.

So, those negotiations are ongoing and the City of Santa Clara is coming in here next week to continue those.

So, it's been a long process, but we continue to negotiate and hopefully something can be resolved by the time it has to go to the ballot early next year.

Okay, so that's early next year it goes to ballot?

June of next year.

Okay, thank you.

You're welcome.

You're welcome.

Thank you.

The next question comes from Ross Habberman, from Habberman Fund.

Please go ahead.

Good morning, gentlemen.

How are you?

Good, yourself?

Could you talk about, I guess it's in the quarter, putting aside the weather, were there any other sort of, I guess the reduction in group demand, any other less recurring items that surprised you, either on the revenue or the cost side?

No, not really, Ross.

The year went pretty well the way we thought we would, with the decrease in attendance, but per capita spending certainly was a surprise.

This is the first time in my years with the parks that, across the board, merchandise, games and foods were all down consistently at all of the parks.

But there were no, really no surprises.

The factors that we pointed out, we think really are what contributed to the disappointing year.

If we continue to see this high unemployment rate, 10% plus, say through the spring or into next summer, how would that reflect on your expectations for calendar 2010?

Ross, we're in the process now of doing our budgets.

Our general managers are working on it, our marketing people are working on it.

So, I really don't have any projections for 2010 at this time.

Yeah, Ross, this is Peter.

As Dick pointed out, we just got done with October.

Right.

We need to take a step back and fully evaluate what happened in October as well.

We also need to-- as you know, the parks are open and we're making cost cuts real time here.

So, in November and December, we need to take a step back and evaluate what did we do, did it work, did it not?

Can we sustain that cut?

And then take a view, as you pointed out, of what next year will look like.

And that will all come together in the December, January time frame before we finalize budgets and bring them to the board in February and March.

So, difficult to say right now.

We need to really do a deep dive on what worked and what didn't work and then consider that for next year.

I just have one final question about what you did this past summer, considering the softness you saw, during the season, as you saw, group sales were not unfolding like you had hoped, did you change price at all on any of the products at all, either entry fees or is price pretty stable and demand was, demand was demand and it really wouldn't matter whether you tinkered with the prices 5% or 10% here or there?

Ross, from July the 4th on, we offered numerous discounts, four packs, all kinds of promotions going forward in all of our properties.

Where we have hotels, at both Cedar Point and Knott's Berry Farm, we offered deep discounted packages.

Again, we were reacting to the economy and in some instances it helped.

Our hotels were down, but from industry-wide, they weren't down as much as a lot of businesses.

So, we did discount.

Our occupancy we did get back up there, but we sacrificed a little of the ADR.

But, in answer to your question, yes, we started, from the Fourth of July on, we started actively discounting and promoting the parks very, very strongly, in the out-of-park revenues.

One technical question, on the hotel occupancy, what's your run-on average in terms of occupancy during the summer season?

Normally we're at 90% to 95% at Cedar Point, the four hotels that we have here.

This year that dropped down to low 80s.

And that's the first time that's really a decline like that.

Even with the discounts we were putting in there.

But you're still making money at that low 80 occupancy, correct?

Oh, absolutely, yes.

Those hotels do very well for us.

The one thing we did notice this year, for the first time, it's never happened, and again, I'll use Cedar Point as an example because this is the resort area we had, our in-market attendance, Detroit, Toledo and Cleveland, were actually, even with the reduction, the lower gas prices this year of almost $1.00 a gallon, our close-in markets, I believe with the discounts and everything, were actually up over last year in our, out of a 150 mile radius, attendance was down this year which was really surprising because of the gas.

But again, I think it was people reacting and not going anywhere.

So the discounts did draw people from Detroit, Toledo and Cleveland.

Where we lost them was basically the group event business and seasons pass business.

And finally, in terms of paying down debt for calendar 2010, what's your expectation, could it be $56 million or more, based on cash flow?

Obviously we need to take a look at where we think it will come out next year.

But, before the announcement today, that it's likely that we expect the distribution to be cut next year.

We had expected to pay down, through amortization, and the re-direction of the $0.92 we cut earlier this year, about $68 million to $78 million.

This would be an additional $50 million to $55 million, so it would be entirely possible to pay down roughly $100 million again next year.

$100 million in 2010.

Perhaps more if we have a better season.

Okay, guys.

The best of luck.

Let's hope you do.

Thanks very much, Ross.

Thank you.

(Operator Instructions).

There are to be no further questions, please continue with any other points you wish to raise.

Thank you.

At this point in time, if there are no further questions, I'd like to thank everyone for joining us on the call today.

Should you have any follow up questions, please feel free to contact me at 419-627-2227.

We look forward to speaking with you again in early February to discuss our fourth quarter and full-year results.

This concludes the Cedar Fair Third Quarter Earnings Conference Call.

Thank you for participating.

You may now disconnect.