Six Flags Entertainment (FUN) 10-Q2023 Q3 Quarterly report

 

The accompanying unaudited condensed consolidated financial statements have been prepared from the financial records of Cedar Fair, L.P. (the "Partnership," "we," "us," or "our") without audit and reflect all adjustments (consisting of normal recurring adjustments) which are, in the opinion of management, necessary to fairly present the results of the interim periods covered in this report. Due to the seasonal nature of our amusement and water park operations, the results for any interim period may not be indicative of the results expected for the full fiscal year.

To assure that these highly seasonal operations will not result in misleading comparisons of current and subsequent interim periods, we have adopted the following accounting procedures: (a) revenues from multi-use products are recognized over the estimated number of uses expected for each type of product; and 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 associated with each product; (b) depreciation, certain advertising and certain seasonal operating costs are expensed over each park’s operating season, including some costs incurred prior to the season, which are deferred and amortized over the season; and (c) all other costs are expensed as incurred or ratably over the entire year. For those operating costs that are expensed over each park's operating season, we recognize expense over each park's planned operating days.

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 and to ensure our passholders received a full season of access, Knott's Berry Farm offered a day-for-day extension of the validity of its 2020 and 2021 season-long products into calendar year 2022 for every day the park was closed in 2021. The extension for the 2020 and 2021 season-long products at Knott's Berry Farm concluded and all related revenue was recognized by the end of the second quarter of 2022. Canada's Wonderland also extended the validity of its 2020 and 2021 season-long products into calendar year 2022, specifically through Labour Day, or September 5, 2022. All Canada's Wonderland 2020 and 2021 season-long product revenue was recognized by the end of the third quarter of 2022. 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.

Of the $162.7 million of current deferred revenue recorded as of January 1, 2023, 89% was related to season-long products. The remainder was related to deferred online transaction fees charged to customers, advanced resort reservations, advanced ticket sales, prepaid games cards, marina deposits and other deferred revenue. Approximately $131 million of the current deferred revenue balance as of January 1, 2023 was recognized during the nine months ended September 24, 2023.

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 includes sales to retailers, group sales and catering activities which are billed. Installment purchase plans vary in length from three 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 September 24, 2023, December 31, 2022 and September 25, 2022, we recorded a $18.3 million, $5.8 million and $19.7 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 extent revenue has not been recognized on the corresponding season-long products.

On June 27, 2022, the Partnership sold the land at California's Great America for a cash purchase price of $310 million, subject to customary prorations, which resulted in a $155.3 million gain recorded, net of transaction costs, within "Gain on sale of land" in

the unaudited condensed consolidated statement of operations and comprehensive income during the third quarter of 2022. Concurrently with the sale, we entered into a lease contract that allows us to operate the park during a six-year term, see below. As a result, we changed the estimated useful lives of the remaining property and equipment at California's Great America to an approximate 5.5-year period, or through December 31, 2027. We expect this to result in an approximate $8 million increase in annual depreciation expense over the 5.5-year period. We may dispose of the remaining property and equipment at California's Great America significantly before the end of their previously estimated useful lives if the assets are not sold to a third party or transferred for an alternate use. As a result, we tested the long-lived assets at California's Great America for impairment during the second quarter of 2022, which resulted in no impairment. The fair value of the long-lived assets was determined using a replacement cost approach. There were no other indicators of impairment during the first nine months of 2022.

Under the lease contract entered into in connection with selling the land at California's Great America, we can continue to operate the park during a six-year term, and we have an option to extend the term for an additional five years. The lease is subject to early termination by the buyer with at least two years' prior notice. Upon termination of the lease, we will close existing park operations and remove the rides and attractions from the land. The annual base rent under the lease initially was $12.2 million and will increase by 2.5% per year. Upon commencement of the lease, we recognized a right-of-use asset and lease liability equal to the annual base rent for the initial six-year term and estimated lease payments totaling $12.8 million to dismantle and remove rides and attractions upon termination of the lease. The discount rate used to determine the present value of the future lease payments was our incremental borrowing rate.

Changes in the carrying value of goodwill for the nine months ended September 24, 2023 and September 25, 2022 were:

As of September 24, 2023, December 31, 2022, and September 25, 2022, other intangible assets consisted of the following:

As of September 24, 2023, our total senior secured revolving credit facility capacity under the 2017 Credit Agreement, as amended, was $300 million with a Canadian sub-limit of $15 million. The senior secured revolving credit facility bears interest at Secured Overnight Financing Rate ("SOFR") plus 350 basis points ("bps") with a SOFR adjustment of 10 bps per annum and a floor of zero, requires the payment of a 62.5 bps commitment fee per annum on the unused portion of the revolving credit facility, in each case without any step-downs, and is collateralized by substantially all of the assets of the Partnership. The senior secured revolving credit facility matures on February 10, 2028, provided that the maturity date will be (x) January 30, 2025 if at least $200 million of the 2025 senior notes remain outstanding as of that date, or (y) January 14, 2027 if at least $200 million of the 2027 senior notes remain outstanding as of that date. Prior to an amendment entered into on February 10, 2023, borrowings under the senior secured revolving credit facility bore interest at LIBOR plus 350 bps or Canadian Dollar Offered Rate ("CDOR") plus 250 bps and matured in December 2023. The maximum outstanding revolving credit facility balance during the first nine months of 2023 was $246.0 million, and there were no outstanding borrowings under the revolving credit facility as of September 24, 2023. The 2017 Credit Agreement, as amended, also provides for the issuance of documentary and standby

letters of credit. After letters of credit of $19.9 million, we had $280.1 million of availability under our revolving credit facility as of September 24, 2023.

In April 2022, $75 million of the senior secured revolving credit facility capacity under the 2017 Credit Agreement matured, and the outstanding borrowings were repaid. While such $75 million of senior secured revolving credit facility capacity was available, borrowings under this portion of the revolver capacity bore interest at LIBOR plus 300 bps or CDOR plus 200 bps, and the unused portion of this revolving credit facility capacity required the payment of a 37.5 bps commitment fee per annum.

In 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. The 2027 senior notes may be redeemed, in whole or in part, at various prices depending on the date redeemed.

In June 2019, we issued $500 million of 5.250% senior unsecured notes due 2029 ("2029 senior notes"). The 2029 senior notes pay interest semi-annually in January and July, with the principal due in full on July 15, 2029. The 2029 senior notes may be redeemed, in whole or in part, at any time prior to July 15, 2024 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.

In October 2020, in response to the continuing effects of the COVID-19 pandemic, we issued $300 million of 6.500% senior unsecured notes due 2028 ("2028 senior notes"). The net proceeds from the offering of the 2028 senior notes were for general corporate and 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. The 2028 senior notes may be redeemed, in whole or in part, at various prices depending on the date redeemed.

As market conditions warrant, we may from time to time repurchase our outstanding debt securities in privately negotiated or open market transactions, by tender offer, exchange offer or otherwise.

Our credit agreement and fixed rate note agreements include Restricted Payment provisions, which could limit our ability to pay partnership distributions. Pursuant to the terms of the indenture governing the 2027 senior notes, which includes the most restrictive of these Restricted Payments provisions, if our pro forma Total-Indebtedness-to-Consolidated-Cash-Flow Ratio is greater than 5.25x, we can still make Restricted Payments of $100 million annually so long as no default or event of default has occurred and is continuing. If our pro forma Total-Indebtedness-to-Consolidated-Cash-Flow Ratio is less than or equal to 5.25x, we can make Restricted Payments up to our Restricted Payment pool. Our pro forma Total-Indebtedness-to-Consolidated-Cash-Flow Ratio was less than 5.25x as of September 24, 2023.

The carrying value of cash and cash equivalents, revolving credit loans, accounts receivable, 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 September 24, 2023, December 31, 2022 or September 25, 2022.

The total tax provision (benefit) for interim periods is determined by applying an estimated annual effective tax rate to the applicable quarterly income (loss). Our consolidated estimated annual effective tax rate differs from the statutory federal income tax rate primarily due to state, local and foreign income taxes, and certain partnership level income not being subject to federal tax.

During the second quarter of 2022, we received $77.1 million in tax refunds attributable to the net operating loss in tax year 2020 being carried back to prior years in the United States. We received $11.1 million in tax refunds attributable to the net operating loss of our Canadian corporate subsidiary being carried back to prior years in Canada during the first quarter of 2022.

Additional benefits from the Coronavirus Aid, Relief, and Economic Security Act included an $8.2 million deferral of the employer's share of Social Security taxes due in 50% increments in the fourth quarter of 2021 and the fourth quarter of 2022. As of September 25, 2022, the current portion of the deferral was recorded in "Accrued salaries, wages and benefits" within the unaudited condensed consolidated balance sheet.

Unrecognized tax benefits, including accrued interest and penalties, were not material in any period presented. We recognize interest and penalties related to unrecognized tax benefits as income tax expense.

The Inflation Reduction Act was signed into law on August 16, 2022 and created a new 15% corporate alternative minimum tax ("CAMT") based on adjusted financial statement income. The effective date of the provision was January 1, 2023. We will not be subject to CAMT as our reported earnings for each of the past three years did not exceed $1 billion.

On May 4, 2023, we announced that our Board of Directors authorized the Partnership to repurchase additional units for an aggregate amount of not more than $250 million. There were 0.3 million units repurchased under the May 2023 repurchase program during the three and nine months ended September 24, 2023 at an average price of $38.27 per limited partner unit for an aggregate amount of $12.0 million. Accordingly, there was a total of 1.7 million units repurchased under the August 2022 and May 2023 repurchase programs during the nine months ended September 24, 2023 at an average price of $42.97 per limited partner unit for an aggregate amount of $74.5 million. There was $238.0 million of remaining availability under the May 2023 repurchase program as of September 24, 2023.

Subject to applicable rules and regulations, we can repurchase units from time-to-time in the open market or by negotiated transactions. The amount and timing of repurchases are based on a variety of factors, including liquidity, capital needs of the business, market conditions, regulatory requirements, and other business considerations. No limit was placed on the duration of either repurchase program. The Partnership is not obligated to repurchase any minimum dollar amount or specific number of units, and can modify, suspend, or discontinue the program at any time.

Each of our properties is overseen by a general manager and operates autonomously. Management reviews operating results, evaluates performance and makes operating decisions, including allocating resources, on a property-by-property basis. 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, Senior Vice Presidents and the general managers of the parks. We operate within a single reportable segment of amusement/water parks with accompanying resort facilities.

Management believes that judgment and estimates related to the following critical accounting policies could materially affect our unaudited condensed consolidated financial statements:

The following table presents key financial information for the nine months ended September 24, 2023 and September 25, 2022:

For the nine months ended September 24, 2023, net revenues decreased $23.8 million, or 1.6%, compared with the nine months ended September 25, 2022. The decrease in net revenues reflected the impact of a 0.7 million-visit, or 3.3%, decrease in attendance partially offset by the impact of an 0.8% increase in in-park per capita spending to $61.73, and a 4.2%, or $7.3 million, increase in out-of-park revenues. The decrease in attendance was driven by less season pass attendance as a result of fewer season pass units outstanding. There were fewer season pass units outstanding due to less sales, particularly at our parks in California, as well as due to the impact of the prior period extension of 2020 and 2021 season-long products at Knott's Berry Farm through May 2022 and Canada's Wonderland through Labour Day 2022. Attendance was also negatively impacted by inclement weather, particularly during the first quarter of 2023. These negative impacts were somewhat offset by the continuing recovery of group sales attendance and the impact of additional operating days during the current period. The increase in in-park per capita spending was attributable to higher levels of guest spending on food and beverage. The increase in food and beverage spending was driven by increases in both the number of transactions per guest and average transaction value. The increase in food and beverage spending was somewhat offset by a decline in admissions spending driven by a reassessment of our pricing strategy at several parks and the recovery of lower priced attendance channels. The increase in out-of-park revenues was largely attributable to the reopening of Castaway Bay Resort and Sawmill Creek Resort at Cedar Point following temporary closures for renovations in the prior period, offset somewhat by a decrease in out-of-park revenues at Knott's Berry Farm due to inclement weather during the first quarter of 2023 and ongoing renovations at the Knott's Hotel. The decrease in net revenues included a $5.2 million unfavorable impact of foreign currency exchange rates at our Canadian park.

Operating costs and expenses for the nine months ended September 24, 2023 increased $6.4 million, or 0.6%, compared with the nine months ended September 25, 2022. The increase in operating costs and expenses was the result of a $14.9 million increase in selling, general and administrative ("SG&A") expenses partially offset by a $4.0 million decrease in cost of goods sold and a $4.5 million decrease in operating expenses. The increase in SG&A expenses was primarily attributable to higher advertising costs and higher transaction processing costs. Initial costs associated with the proposed merger with Six Flags were largely offset by prior period consulting costs. The decrease in operating expenses was primarily due to cost savings initiatives resulting in a reduction in seasonal labor hours, and to a lesser extent, less in-park entertainment costs. The decreases were somewhat offset by incremental land lease and property tax costs associated with the sale-leaseback of the land at California's

Great America, early season maintenance costs, and increased health benefit costs attributable to a planned increase in associate head count. Cost of goods sold as a percentage of food, merchandise and games revenue decreased approximately 1%. The increase in operating costs and expenses included a $3.1 million favorable impact of foreign currency exchange rates at our Canadian park.

Depreciation and amortization expense for the nine months ended September 24, 2023 increased $1.3 million compared with the nine months ended September 25, 2022 due to the reduction of the estimated useful lives of the long-lived assets at California's Great America following the sale-leaseback of the land at California's Great America offset by the full depreciation of certain assets. The loss on impairment / retirement of fixed assets in the current period included the retirement of a specific asset.

After a $155.3 million gain on the sale of the land at California's Great America during the prior third quarter and the items above, operating income for the nine months ended September 24, 2023 totaled $277.3 million compared with $470.5 million for the nine months ended September 25, 2022.

Interest expense for the nine months ended September 24, 2023 decreased $9.8 million as a result of the repayment of our senior secured term loan facility and the related termination of our interest rate swap agreements during the third quarter of 2022. The reduction in interest expense was partially offset by interest on additional borrowings on our revolving credit facility in the current period. Prior to the termination of our interest rate swaps, the net effect of our swaps resulted in a benefit to earnings of $25.6 million for the nine months ended September 25, 2022 representing the change in fair value of our swap portfolio. We realized a $5.3 million cash receipt, net of fees, upon termination of our interest rate swap agreements during the third quarter of 2022. In addition, we recognized a $1.8 million loss on early debt extinguishment during the third quarter of 2022 upon the full repayment of our senior secured term debt facility. During the current period, we recognized a $1.6 million net benefit to earnings for foreign currency gains and losses compared with a $24.2 million net charge to earnings in the prior period. Both amounts primarily represented the remeasurement of U.S. dollar denominated notes to the Canadian entity's functional currency.

During the nine months ended September 24, 2023, a provision for taxes of $40.2 million was recorded to account for PTP taxes and federal, state, local and foreign income taxes compared with $61.4 million for the nine months ended September 25, 2022. The decrease in provision for taxes was primarily attributable to lower pretax income from our taxable subsidiaries in the current period. The prior period included a provision for taxes recorded for the sale of the land at California's Great America.

After the items above, net income for the nine months ended September 24, 2023 totaled $134.5 million, or $2.61 per diluted limited partner unit, compared with $295.3 million, or $5.18 per diluted limited partner unit, for the nine months ended September 25, 2022. Net income margin decreased 10.9% primarily due to the $155.3 million gain on the sale of the land at California's Great America during the prior period.

The following table presents key financial information for the three months ended September 24, 2023 and September 25, 2022:

For the three months ended September 24, 2023, net revenues decreased $1.1 million, or 0.1%, compared with the three months ended September 25, 2022. The variance in net revenues reflected the impact of a 1.5% decrease in in-park per capita spending to $61.65 offset by the impact of a 0.1 million-visit, or 1.0%, increase in attendance and a 1.8%, or $1.7 million, increase in out-of-park revenues. The decrease in in-park per capita spending was primarily attributable to lower levels of guest spending on admissions. The decrease in admissions spending was driven by a reassessment of our pricing strategy at several parks and the recovery of lower priced attendance channels and was somewhat offset by an increase in food and beverage spending driven by an increase in average transaction value. The increase in attendance was driven by the continuing recovery of group sales attendance. The increase in out-of-park revenues was driven by higher revenue per occupied room, particularly at Cedar Point. The variance in net revenues included a $3.3 million unfavorable impact of foreign currency exchange rates at our Canadian park.

Operating costs and expenses for the three months ended September 24, 2023 decreased $17.2 million, or 3.6%, compared with the three months ended September 25, 2022. The decrease in operating costs and expenses was the result of a $22.0 million decrease in operating expenses and a $3.0 million decrease in cost of goods sold partially offset by a $7.7 million increase in SG&A expenses. The decrease in operating expenses was primarily due to cost savings initiatives resulting in a reduction in seasonal labor hours, and to a lesser extent, less in-park entertainment costs. The increase in SG&A expenses was attributable to higher advertising costs and initial costs associated with the proposed merger with Six Flags. Cost of goods sold as a percentage of food, merchandise and games revenue decreased approximately 2%. The increase in operating costs and expenses included a $1.3 million favorable impact of foreign currency exchange rates at our Canadian park.

Depreciation and amortization expense for the three months ended September 24, 2023 decreased $1.9 million compared with the three months ended September 25, 2022 due to the full depreciation of certain assets. The loss on impairment / retirement of fixed assets in the prior period included the retirement of a specific asset.

After a $155.3 million gain on the sale of the land at California's Great America during the prior third quarter and the items above, operating income for the three months ended September 24, 2023 totaled $306.6 million compared with $442.2 million for the three months ended September 25, 2022.

Interest expense for the three months ended September 24, 2023 decreased $0.9 million as a result of the repayment of our senior secured term loan facility and the related termination of our interest rate swap agreements during the third quarter of 2022. The reduction in interest expense was partially offset by interest on additional borrowings on our revolving credit facility in the current period. Prior to the termination of our interest rate swaps, the net effect of our swaps resulted in a benefit to earnings of $3.7 million for the three months ended September 25, 2022 representing the change in fair value of our swap portfolio. We realized a $5.3 million cash receipt, net of fees, upon termination of our interest rate swap agreements during the third quarter of 2022. In addition, we recognized a $1.8 million loss on early debt extinguishment during the third quarter of 2022 upon the full repayment of our senior secured term debt facility. During the current period, we recognized a $5.1 million net charge to earnings for foreign currency gains and losses compared with a $14.4 million net charge to earnings in the prior period. Both amounts primarily represented the remeasurement of U.S. dollar denominated notes to the Canadian entity's functional currency.

During the three months ended September 24, 2023, a provision for taxes of $50.7 million was recorded to account for PTP taxes and federal, state, local and foreign income taxes compared with $61.2 million for the three months ended September 25, 2022. The decrease in provision for taxes was primarily attributable to the prior period including a provision for taxes recorded for the sale of the land at California's Great America.

After the items above, net income for the three months ended September 24, 2023 totaled $215.5 million, or $4.21 per diluted limited partner unit, compared with $333.1 million, or $5.86 per diluted limited partner unit, for the three months ended September 25, 2022. Net income margin decreased 13.9% due to the $155.3 million gain on the sale of the land at California's Great America during the prior period.

For the five week period ended October 29, 2023, preliminary net revenues totaled approximately $226 million and decreased less than 1%, or $1 million, compared with the five week period ended October 30, 2022. Based on preliminary results for the five week period ended October 29, 2023, attendance totaled 3.3 million visits, up 2%, in-park per capita spending was $63.15, down 3%, and out-of-park revenues totaled $21 million, flat to the prior period.

For the ten month periods ended October 29, 2023 and October 30, 2022, preliminary concessionaire remittance totaled approximately $47 million and $50 million, respectively. For the five week periods ended October 29, 2023 and October 30, 2022, preliminary concessionaire remittance totaled approximately $5 million in each period.

The table below sets forth a reconciliation of Adjusted EBITDA to net income for the three and nine-month periods ended September 24, 2023 and September 25, 2022.

For the nine months ended September 24, 2023, Adjusted EBITDA decreased $25.3 million and Adjusted EBITDA margin decreased 1.3% compared with the nine months ended September 25, 2022. The decreases in Adjusted EBITDA and Adjusted EBITDA margin were due to a decrease in net revenues driven by a decline in attendance during the first six months of 2023.

For the three months ended September 24, 2023, Adjusted EBITDA increased $26.5 million and Adjusted EBITDA margin increased 3.2% compared with the three months ended September 25, 2022. The increases in Adjusted EBITDA and Adjusted EBITDA margin were due to a decrease in costs in the current period as a result of cost savings initiatives, particularly seasonal wages, cost of goods sold and other in-park operating costs.

We expect to invest between $210 million and $220 million in capital expenditures during 2023, which includes large-scale updates to major sections of our parks, new roller coasters and other rides and attractions, upgraded and expanded food and beverage facilities, the renovation of the Knott's Berry Farm Hotel and major events to celebrate two 50-year park anniversaries.

We paid a partnership distribution of $0.30 per limited partner unit on September 20, 2023. On November 2, 2023, we announced that our Board declared an additional partnership distribution of $0.30 per limited partner unit, which will be payable on December 20, 2023 to unitholders of record on December 6, 2023.

We anticipate cash interest payments of approximately $135 million during 2023 of which approximately 75% of the payments will have occurred in the second and fourth quarters. We anticipate cash payments for income taxes to range from $45 million to $50 million in 2023.

As of September 24, 2023, deferred revenue totaled $208.1 million, including non-current deferred revenue. This represented an increase of $20.4 million compared with total deferred revenue as of September 25, 2022. The increase in total deferred revenue was primarily attributable to higher season-long product sales for the subsequent operating season.

The 2017 Credit Agreement, as amended, includes a Senior Secured Leverage Ratio of 3.75x Total First Lien Senior Secured Debt-to-Consolidated EBITDA. This financial covenant is only required to be tested at the end of any fiscal quarter in which revolving credit facility borrowings are outstanding. We were in compliance with the applicable financial covenants under our credit agreement during the nine months ended September 24, 2023.

Our credit agreement and fixed rate note agreements include Restricted Payment provisions, which could limit our ability to pay partnership distributions. Pursuant to the terms of the indenture governing the 2027 senior notes, which includes the most restrictive of these Restricted Payments provisions, if our pro forma Total-Indebtedness-to-Consolidated-Cash-Flow Ratio is greater than 5.25x, we can still make Restricted Payments of $100 million annually so long as no default or event of default has occurred and is continuing. If our pro forma Total-Indebtedness-to-Consolidated-Cash-Flow Ratio is less than or equal to 5.25x, we can make Restricted Payments up to our Restricted Payment pool. Our pro forma Total-Indebtedness-to-Consolidated-Cash-Flow Ratio was less than 5.25x as of September 24, 2023.

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 any 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 its 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 in 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 a 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 be 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 depending on the 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.

The following tables provide summarized financial information for each of our co-issuers and guarantors of the 2027, 2028 and 2029 senior notes (the "Obligor Group"). We presented each entity that is a co-issuer of the registered senior notes separately. The subsidiaries that guarantee the registered 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. 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 $14.1 million and $14.3 million as of September 24, 2023 and December 31, 2022, respectively.