May 10, 2000
Results of Operations:
Net revenues for the first quarter of 2000 decreased to $20.5 million from $23.2 million in 1999, principally due
to decreased early-season attendance at Knott's Berry Farm compared to last year's first quarter, which benefited
significantly from the very successful debut of the GhostRider roller coaster and an earlier Easter season. However,
April attendance at Knott's Berry Farm improved significantly and the park is now nearly on pace with 1999's record
level. The Partnership's four seasonal parks were not in operation during the quarter.
Operating results for the first quarter include normal off-season operating, maintenance and administrative expenses
at the Partnership's four seasonal parks and daily operations at Knott's Berry Farm, which is open year-round.
Operating expenses increased in the first quarter of 2000 due in part to the renovation of the Knott's Radisson
Resort Hotel and the acquisition of the White Water Canyon water park late in 1999. The operating loss for the
quarter was $21.7 million compared with $17.5 million in 1999, and net loss for the quarter was $26.6 million,
or $.51 per limited partner unit, compared with a net loss of $21.8 million, or $.41 per unit, in 1999.
Included in costs and expenses are approximately $1,711,000 of incentive fees payable to the general partner relating
to the 2000 first quarter distribution, which exceeds the minimum distribution as defined in the partnership agreement
by 18.25 cents per unit, or $9,459,000 in the aggregate. This compares to $1,536,000 of incentive fees in the 1999
first quarter.
Financial Condition:
The Partnership has available through April 2002 a $200 million revolving credit facility and an additional $90
million revolving credit facility available through November 2000. Borrowings under these credit facilities were
$234.35 million as of March 26, 2000. Current assets and liabilities are at normal seasonal levels at March 26,
2000, and the negative working capital ratio of 3.3 is the result of the Partnership's highly seasonal business
and careful management of cash flow. Seasonal cash flow and available credit facilities are expected to be adequate
to fund seasonal working capital needs, planned capital expenditures and regular quarterly distributions to partners
through the end of 2000. The Partnership expects to arrange appropriate revolving credit facilities sufficient
to fund its cash requirements beyond the current year.
Year 2000 Compliance:
The Partnership implemented all changes it believed to be needed for its computer-dependent rides and equipment
and its internal information systems, and did not experience any significant malfunctions or errors in its operating
or business systems when the year changed from 1999 to 2000. Based on operations since January 1, 2000, the Partnership
does not expect any significant impact to its ongoing business as a result of the Year 2000 issue. However, as
daily operations at the Partnership's seasonal parks have just begun in April and May of 2000, it is still possible
that the full impact of the date change has not been fully recognized. The Partnership believes that any future
problems, not yet recognized, are likely to be minor and correctable.
In addition, the Partnership's parks could be negatively impacted if its major utility or financial service providers
are adversely affected by the Year 2000 issue. The Partnership currently is not aware of any significant Year 2000
problems that have arisen for its principal suppliers of essential utilities or financial services.
The Partnership expended less than $1 million in Year 2000 readiness efforts from 1997 to 1999. These efforts included
replacing some outdated, noncompliant hardware and reprogramming or replacing some noncompliant software.