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Tickers in this Article: FUN, CCL, RCL, SIX, WOLF
Cedar Fair Entertainment (NYSE:FUN), the amusement park operator known for its super roller coasters, reported a net loss for its second-quarter earnings. Revenues were up, however, and some key metrics suggest that operational results are improved. More importantly, there are promising signs for the direction of Cedar Fair's business.

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A Quick History of the Loss
Cedar Fair posted a net income loss of $4.2 million, or 8 cents per diluted share, for the quarter. Last year's same quarter saw the company post net income of $7.4 million, or 13 cents per diluted share. Without the additional $9 million merger and financing charge this quarter, the company would have posted a gain of $4.8 million. These charges are from the failed buyout attempt by Apollo Global Management which investors resisted earlier this year.

Part of the costs also stem from Cedar Fair's $500 million debt refinancing. The company still carries $1.5 billion of variable rate debt.

Operational Pluses Uncovered
Revenue increased to $275.6 million this quarter, compared to $264.1 million last year's second quarter. The company has always maintained that earnings before interest, taxes, depreciation and amortization (EBITDA) is the key measure for its operations. For Q2, year over year, this figure is roughly flat. For the six months, EBITDA decreased to $26.5 million, down by $5.6 million. If the merger termination fee total charges of $12.8 million are subtracted, however, EBITDA would have risen to $39.3 million, an increase of 20% over 2009's figures for the first six months of the year.

Although per-ticket spending was down slightly, park attendance in the first six months rose by 477,000 to 7.1 million, a 7% increase. In-season passes and aggressive marketing are paying off. Group ticket sales have also increased slightly in 2010. Preliminary attendance and revenue figures for July show further increases.

The Leisure Picture
Amusement parks, cruise line operators, and other leisure companies are still looking at an uncertain economic picture. A report on Carnival Cruise Line (NYSE:CCL) recently emphasized that there is recovery of consumer demand which will favor pricing, yet there's also the problem of rising fuel prices. Another market observers emphasized Carnival's and Royal Caribbean Cruises (NYSE:RCL) "earnings resiliency".

On the amusement park front, Six Flags Entertainment (NYSE:SIX) has gone through bankruptcy restructuring, which resulted in more sustainable levels of debt. Indoor water park owner Great Wolf Resorts (Nasdaq:WOLF) just reported a losing quarter due to real estate charges. The company had flat revenue and said the consumer is still "cautious" on spending. So while there are some encouraging signs in the leisure industry, the improvements are not yet firm.

Cedar Fair's Prospects
One of the most beneficial things for Cedar Fair for the long term may turn out to be the stockholders' near-revolt at the Apollo buyout attempt. Business is returning, so much so that it's giving the company a chance to lead its industry as the economy inches toward recovery. The key for Cedar Fair will be to handle its debt, which it now has a better chance to do, while keeping its operational momentum up. Investors need to monitor this for awhile. That said, Wall Street has never really understood the uniqueness of this pure play company very well, which gives investors a wonderful chance to capture value and growth in a stock at a low price. (For more stock analysis, see Movie Theater Finance.)

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