SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

For the fiscal year ended December 31, 2004

or

Commission file number 1-9444

(Exact name of Registrant as specified in its charter)

(Address of principal executive offices) (zip code)

Registrant's telephone number, including area code (419) 626-0830

Securities registered pursuant to Section 12(b) of the Act:

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). Yes X No__

The aggregate market value of Depositary Units held by non-affiliates of the Registrant based on the closing price of such units on June 25, 2004 of $31.11 per unit was approximately $1,612,040,000.

Number of Depositary Units representing limited partner interests outstanding as of February 28, 2005: 53,480,243

Part III of this Form 10-K incorporates by reference certain information from the registrant's definitive Proxy Statement for its Annual Meeting of Unitholders to be filed pursuant to Regulation 14A of the Securities Exchange Act prior to April 29, 2005.

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The Exhibit Index is located on page 41

Page 1 of 45 pages

ITEM 1. BUSINESS.

Cedar Fair, L.P. and its affiliated companies (the "Partnership") is a publicly traded Delaware limited partnership managed by Cedar Fair Management, Inc., an Ohio corporation whose shares are held by an Ohio trust (the "General Partner").

The Partnership owns and operates seven amusement parks: Cedar Point, located on Lake Erie between Cleveland and Toledo in Sandusky, Ohio; Knott's Berry Farm, located near Los Angeles in Buena Park, California; Dorney Park & Wildwater Kingdom ("Dorney Park"), located near Allentown in South Whitehall Township, Pennsylvania; Geauga Lake, located near Cleveland in Aurora, Ohio; Valleyfair, located near Minneapolis/St. Paul in Shakopee, Minnesota; Worlds of Fun in Kansas City, Missouri; and Michigan's Adventure near Muskegon, Michigan. The parks are family-oriented, with recreational facilities for people of all ages, and provide clean and attractive environments with exciting rides and entertainment. The Partnership also owns and operates separate-gated water parks near San Diego and in Palm Springs, California, and adjacent to Cedar Point, Knott's Berry Farm and Worlds of Fun, and the Castaway Bay Indoor Waterpark Resort in Sandusky, Ohio. All principal rides and attraction s at the parks are owned and operated by the Partnership and its affiliated companies.

In addition, the Partnership operates Camp Snoopy, a seven-acre indoor amusement park at the Mall of America in Bloomington, Minnesota, under a management contract that it has been notified will terminate at the end of March 2005.

The Partnership's six seasonal amusement parks are generally open during weekends beginning in April or May, and then daily from Memorial Day until Labor Day, after which they are open during weekends in September and, in some cases, October. The five water parks also operate seasonally, generally from Memorial Day to Labor Day, plus some additional weekends before and after this period. As a result, virtually all of the operating revenues of these parks are derived during an approximate 130-day operating season. Knott's Berry Farm is open daily on a year-round basis. Each park charges a basic daily admission price, which allows unlimited use of most rides and attractions, with the exception of RipCord, Screamin' Swing, go-kart tracks, miniature golf courses and rock climbing attractions at several of the parks.

The demographic groups that are most important to the parks are young people ages 12 through 24 and families. Families are believed to be attracted by a combination of rides and live entertainment and the clean, wholesome atmosphere. Young people are believed to be attracted by the action-packed rides. During their operating seasons, the parks conduct active television, radio, and newspaper advertising campaigns in their major market areas.

Cedar Point, which was first developed as a recreational area in 1870, is located on a peninsula in Sandusky, Ohio bordered by Lake Erie and Sandusky Bay, approximately 60 miles west of Cleveland and 100 miles southeast of Detroit. Cedar Point is believed to be the largest seasonal amusement park in the United States, measured by the number of rides and attractions and the hourly ride capacity, and has been named the Best Amusement Park in the World for seven consecutive years by Amusement Today's international survey. It serves a six-state region in the Midwestern United States, which includes nearly all of Ohio and Michigan, western Pennsylvania and New York, northern West Virginia and Indiana, and southwestern Ontario, Canada. The park's total market area includes approximately 26 million people, and the major areas of dominant influence in this market area, which are Cleveland, Detroit, Toledo, Akron, Columbus, Grand Rapids, Flint, and Lansing, include approximately 15 millio n people.

The main amusement areas of Cedar Point consist of over two miles of midways, with more than 65 rides and attractions, including "Top Thrill Dragster," one of the world's tallest and fastest roller coasters, standing 420 feet tall and reaching speeds up to 120 mph; "Millennium Force," the world's top-rated steel roller coaster; "Magnum XL-200," "Raptor," "Wicked Twister," "Mantis" and "Mean Streak," which are among the world's tallest steel, inverted, "double-impulse," stand-up and wooden roller coasters, respectively; nine additional roller coasters; "Power Tower," a 300-foot-tall thrill ride; four theaters featuring live entertainment shows performed by talented college students; "Snake River Falls," one of the world's tallest water flume rides; "Camp Snoopy," a family play-land themed around the popular "PEANUTS" comic strip characters; and "Snoopy's Summer Vacat ion," a family-oriented ice show featuring Snoopy and the other "PEANUTS" characters. In addition, the park offers more than 50 restaurants, fast food outlets and refreshment stands, more than 40 gift and novelty shops, and more than 60 game stands.

Located adjacent to the park is "Soak City" water park, a separate-gated attraction that features more than 20 water rides and attractions, including "Splash Zone," a multi-story interactive play area; "Zoom Flume," a large water slide raft ride; twelve additional water slides; two river rafting rides; two children's activity areas; and a giant wave pool, as well as food and merchandise shops. "Challenge Park," which includes extra-charge attractions "RipCord," a free-fall ride from a height of more than 15 stories, a 36-hole themed miniature golf course and two go-kart tracks, is also located adjacent to the park.

Cedar Point also owns and operates four hotel facilities. The park's largest hotel, the historic Hotel Breakers, has more than 600 guest rooms, including 230 in the 10-story Breakers Tower. Hotel Breakers has various dining and lounge facilities, a private beach, lake swimming, a conference/meeting center and two outdoor pools. Breakers Tower has 18 tower suites with spectacular views, an indoor pool, and a TGI Friday's restaurant. Located near the Causeway entrance to the park is Breakers Express, a 350-room, limited-service seasonal hotel. In addition to the Hotel Breakers and Breakers Express, Cedar Point offers the lakefront Sandcastle Suites Hotel, which features 187 suites, a private beach, lake swimming, a courtyard pool, tennis courts and the Breakwater Cafe, a contemporary waterfront restaurant. In November of 2004, the park's only year-round hotel, the Radisson Harbour Inn, was converted into an indoor water park resort, called Castaway Bay. The new resort, located at the Causeway entrance to the park, features a tropical Caribbean theme with 237 hotel rooms centered around a 38,000-square-foot indoor water park. Highlighting the attractions in the water park is a 100,000-gallon wave pool; a 35-foot-high, 520-foot-long water roller coaster; a multi-story interactive play area with a 1,000-gallon bucket that empties on guests every few minutes; and numerous other water activities. In addition, the resort offers a state-of-the-art arcade, various dining and merchandising facilities, and a T.G.I. Friday's restaurant.

Cedar Point also owns and operates the Cedar Point Marina, Castaway Bay Marina and Camper Village. Cedar Point Marina is one of the largest full-service marinas on the Great Lakes and provides dockage facilities for more than 650 boats, including floating docks and full guest amenities. Castaway Bay Marina is a full-service marina featuring 262 slips and full guest amenities. Camper Village includes campsites for more than 100 recreational vehicles and Lighthouse Point, an upscale camping area designed in a nautical New England style, which offers a total of 64 lakefront cottages, 40 cabins and 97 full-service recreation vehicle campsites.

The Partnership, through a wholly owned subsidiary, owns and operates the Cedar Point Causeway across Sandusky Bay. This Causeway is a major access route to Cedar Point. The Partnership also owns dormitory facilities located near the park that house up to 3,100 of the park's approximately 4,000 seasonal employees.

Knott's Berry Farm, located near Los Angeles in Buena Park, California, first opened in 1920 and was acquired by the Partnership late in 1997. The park is one of several year-round theme parks in Southern California and serves a total market area of approximately 20 million people centered in Orange County, and a large national and international tourism population.

Knott's Berry Farm is comprised of six distinctively themed areas, including "Ghost Town," "Wild Water Wilderness," "The Boardwalk," "Indian Trails," "Fiesta Village" and "Camp Snoopy." The park offers more than 40 rides and attractions, including "Silver Bullet," a 146-foot-tall inverted roller coaster, which opened in December 2004; "Xcelerator," a world-class roller coaster; "Supreme Scream," a 300-foot-tall thrill ride; "Ghost Rider," one of the tallest, longest and fastest wooden roller coasters in the West; four additional roller coasters; "Bigfoot Rapids," a white water raft ride; "Timber Mountain Log Ride," one of the first log flume rides in the United States; a nostalgic train ride; an antique Dentzel carousel; an old-fashioned ferris wheel; a 2,100-seat theatre; a children's activity area themed with the popular "PEANUTS" comic strip characters; live entertainment shows in 22 indoor and outdoor theatre venues; and "Independence Hall," an authentic replica of the Philadelphia original, complete with a 2,075 pound Liberty Bell. In addition, there are more than 30 restaurants, fast food outlets and refreshment stands, and a number of gift shops, novelty shops and game areas in the park, as well as Knott's California Marketplace, a dining and shopping area that is located just outside the park's gates and is accessible free of charge.

The park is also renowned for its seasonal events, including a special Christmas promotion, "Knott's Merry Farm," and a Halloween event called "Knott's Scary Farm," which has been held for more than 30 years and is widely acknowledged as one of the best in the industry.

Adjacent to the park is "Knott's Soak City-Orange County," a separate-gated seasonal water park that features 21 separate water rides and attractions, including 16 high-speed water slides, a wave pool, a lazy river, a children's activity area, food and merchandise shops, and a second-story sundeck available for public dining and catered events. Just south of San Diego in Chula Vista, California is another Cedar Fair water park, "Knott's Soak City-San Diego," which offers its guests more than 20 water rides and attractions, including 16 water slides, a wave pool and a children's activity area, as well as numerous food and merchandise shops. "Knott's Soak City-Palm Springs" is a 16-acre seasonal water park, located in Palm Springs, California, that offers more than 20 separate water rides and attractions, including 13 water slides, a giant wave pool, a lazy river inner tube ride and a children's activity area, as well as various food and merchandise shops.

Knott's Berry Farm also owns and operates the Knott's Berry Farm Hotel, a 320-room, full-service hotel located adjacent to the park, which features a pool, tennis courts and meeting/banquet facilities.

Dorney Park, located near Allentown in South Whitehall Township, Pennsylvania, was first developed as a summer resort area in 1884, and was acquired by the Partnership in 1992. Dorney Park is one of the largest amusement parks in the Northeast and serves a total market area of approximately 35 million people. The park's major markets include Philadelphia, New Jersey, New York City, Lancaster, Harrisburg, York, Scranton, Wilkes-Barre, Hazleton and the Lehigh Valley.

Dorney Park features more than 50 rides and attractions, including "Hydra - The Revenge," scheduled to open in 2005, which will be one of the world's tallest and fastest floorless roller coasters; "Talon," one of the tallest and fastest inverted roller coasters in the world; "Dominator," a 200-foot-tall thrill ride; "Steel Force," one of the tallest and fastest steel roller coasters in the world; five additional roller coasters; "White Water Landing," one of the world's tallest water flume rides; "Thunder Canyon," a white-water rafting ride; "Camp Snoopy," a family play-land themed around the popular "PEANUTS" comic strip characters; live musical shows featuring talented college students; and an antique Dentzel carousel carved in 1921. Included in the price of admission is "Wildwater Kingdom," one of the largest water parks in the United States, which features more than 20 water slides, including &qu ot;Patriot's Plunge," "Jumpin' Jack Splash," and "Aquablast," one of the longest elevated water slides in the world; a giant wave pool; and two children's activity areas. In addition, there are more than 30 restaurants, fast food outlets and refreshment stands, and a number of gift shops, novelty shops and game areas located throughout the park.

Geauga Lake, near Cleveland, Ohio, was first developed as a recreational area in 1887, and was acquired by the Partnership in April of 2004. This family-oriented theme park serves a total market area of approximately seven million people. The park's major markets include Cleveland/Akron, Youngstown and Pittsburgh.

Geauga Lake features more than 50 rides and attractions, including "X-Flight," a flying coaster that guides riders on a thrilling flying experience laying down; "Dominator," the world's longest floorless coaster; the "Big Dipper" and seven additional roller coasters; "KidWorks," which is an indoor/outdoor children's activity area; a 3D/4D movie theater; various live shows featuring talented college students; and extra-charge attractions that include "RipCord," go-karts and a trampoline jump. In addition, there are more than 30 restaurants, fast food outlets and refreshment stands, and a number of gift shops, novelty shops and game areas located throughout the park. Also included in the price of admission for 2005 will be a new 20-acre water park, "Wildwater Kingdom," scheduled to be constructed over a two-year period. The first phase will open in 2005 and will include a 60-foot-tall tornado slide, an activity pool, an action river and a new children's area with a multi-story interactive play structure. Hurricane Mountain, Ohio's tallest water slide complex, will also be moved to Wildwater Kingdom for the 2005 season from Geauga Lake's small existing water park. The second phase of Wildwater Kingdom is planned to be ready for the 2006 season and will feature the addition of a 38,000-square-foot wave pool, an adult pool with whirlpool spas and swim-up bar, and a number of additional water slides.

Located adjacent to the park are the 145-room Geauga Lake Hotel and the Geauga Lake Campgrounds, which features 300 developed campsites. Both the hotel and campgrounds are owned and operated by the Partnership.

Valleyfair, which opened in 1976 and was acquired by the Partnership's predecessor in 1978, is located near Minneapolis-St. Paul in Shakopee, Minnesota, and is the largest amusement park in Minnesota. Valleyfair's market area is centered in Minneapolis-St. Paul, which has a population of approximately two million, but the park also draws visitors from other areas in Minnesota and surrounding states with a combined population base of eight million people.

Valleyfair offers more than 50 rides and attractions, including "Rip Tide," a suspended spinning thrill ride, which is scheduled to open in 2005; "Steel Venom," a 185-foot-tall "double-impulse" coaster; "Power Tower," a 275-foot-tall thrill ride; "Wild Thing," one of the tallest and fastest steel roller coasters in the world; five additional roller coasters; a water park named "Whitewater Country," which includes "Hurricane Falls," a large water slide raft ride, and "Splash Station," a children's water park; "KidWorks," which is an indoor/outdoor children's activity area; a 430-seat indoor theatre for live show presentations; and "Challenge Park," an extra-charge attraction area that includes "RipCord," a free-fall ride from a height of more than 15 stories, a Can-Am-style go-kart track and a 36-hole themed miniature golf course. In addition, there are more than 20 restaurants, fast food ou tlets and refreshment stands, and a number of gift shops, novelty shops and game areas located throughout the park. Admission to "Whitewater Country" water park is included in admission to the amusement park.

Worlds of Fun, which opened in 1973, and Oceans of Fun, the adjacent water park that opened in 1982, were acquired by the Partnership in 1995. Located in Kansas City, Missouri, Worlds of Fun serves a total market area of approximately seven million people centered in Kansas City, but also including most of Missouri, as well as portions of Kansas and Nebraska.

Worlds of Fun is a traditional amusement park themed around Jules Verne's adventure book Around the World in Eighty Days. The park offers more than 40 rides and attractions, including "Boomerang," a 12-story-tall steel roller coaster; "MAMBA," one of the tallest and fastest roller coasters in the world; "Timber Wolf," a world-class wooden roller coaster; "Detonator," a 185-foot-tall thrill ride, which launches riders straight up its twin-tower structure; "Camp Snoopy," a family play-land featuring the popular "PEANUTS" comic strip characters; "RipCord," an extra-charge attraction that lifts riders to a height of more than 15 stories before dropping them back to earth in a free fall; "Monsoon," a water flume ride; "Fury of the Nile," a white-water rafting ride; a 4,000-seat outdoor amphitheater; and live musical shows. In addition, the park offers more than 25 restaurants, fast food outlets an d refreshment stands, and a number of gift shops, novelty shops and game areas.

Worlds of Fun Village, new in 2005, will offer overnight guest accommodations next to the park in 20 wood-side cottages, 22 log cabins and 80 deluxe RV sites. Also, included within the Village is a clubhouse with a swimming pool and arcade games.

Oceans of Fun, which requires a separate admission fee, is located adjacent to Worlds of Fun and features a wide variety of water attractions including "Paradise Falls," a large interactive play area geared toward the whole family; "Hurricane Falls," a large water slide raft ride; "The Typhoon," one of the world's longest dual water slides; a giant wave pool; and several children's activity areas, including "Crocodile Isle," as well as food and merchandise shops.

Michigan's Adventure, which was acquired by the Partnership in 2001, is the largest amusement park in Michigan. Located near Muskegon, Michigan, the park serves a total market area of approximately five million people, principally from central and western Michigan and eastern Indiana.

Michigan's Adventure offers guests more than 50 rides and attractions, including "Shivering Timbers," one of the world's highest-rated wooden roller coasters; the "Wolverine Wildcat" wooden coaster; four additional roller coasters; an eight-story-tall Ferris wheel; "Adventure Falls" water ride; "RipCord," an extra-charge attraction that lifts riders to a height of more than 15 stories before dropping them back to earth in a free fall; and "Wild Water Adventure," a water park featuring more than 20 water rides and attractions, including two wave action pools, a surf pool, a 612-foot-long water slide adventure, the "Mineshaft" inner tube ride and a lazy river. Admission to "Wild Water Adventure" water park is included in admission to the amusement park.

During the operating season, the Partnership carries significant receivables and inventories of food and merchandise, as well as payables and payroll-related accruals. Amounts are substantially reduced in non-operating periods. Seasonal working capital needs are met with a revolving credit facility, which is established at a level sufficient to accommodate the Partnership's peak borrowing requirements in April and May as the seasonal parks complete preparations for opening. Revolving credit borrowings are reduced daily with the Partnership's strong positive cash flow during the seasonal operating period.

The Partnership believes that annual park attendance is influenced to some extent by the investment in new attractions from year to year. Capital expenditures are planned on a seasonal basis with the majority of such capital expenditures made in the period from October through May, prior to the beginning of the peak operating season. Capital expenditures made in a calendar year may differ materially from amounts identified with a particular operating season because of timing considerations such as weather conditions, site preparation requirements and availability of ride components, which may result in accelerated or delayed expenditures around calendar yearend.

In general, the Partnership competes with all phases of the recreation industry within its primary market areas of Cleveland, Detroit, Los Angeles, San Diego, Philadelphia, New Jersey, Minneapolis-St. Paul, and Kansas City, including several other amusement/theme parks in the Partnership's market areas. The Partnership's business is subject to factors generally affecting the recreation and leisure market, such as economic conditions, changes in discretionary spending patterns and weather conditions.

In Cedar Point's major markets, its primary amusement park competitors are Geauga Lake near Cleveland and Paramount Kings Island in southern Ohio.

In Southern California, Knott's Berry Farm's primary amusement/theme park competitors are Disneyland and Disney's California Adventure, which are approximately 10 minutes away, Universal Studios, approximately 40 minutes away, and Six Flags Magic Mountain, approximately 75 minutes away. The San Diego Zoo and Sea World-San Diego are located approximately 90 minutes from Knott's. LEGOLAND, a children's park, is located approximately 70 minutes away in Carlsbad, California.

Dorney Park has a number of competitors, with Hershey Park in central Pennsylvania and Six Flags Great Adventure in New Jersey being the major competitors in its market area.

In Geauga Lake's major markets, its primary amusement park competitors are Cedar Point in Sandusky, Ohio and Kennywood in Pittsburgh, Pennsylvania. These parks are located approximately 90 miles and 120 miles, respectively, from the park.

In Worlds of Fun's major markets, its primary amusement park competitors are Six Flags Over Mid-America in eastern Missouri and Silver Dollar City in southern Missouri.

Adventureland, a theme park in Des Moines, Iowa, is located approximately 250 miles from Valleyfair and Worlds of Fun.

Michigan's Adventure competes in northern Indiana with Six Flags Great America, which is located approximately 250 miles away in Gurnee, Illinois, and with Cedar Point.

The principal competitive factors in the amusement park industry include the uniqueness and perceived quality of the rides and attractions in a particular park, its proximity to metropolitan areas, the atmosphere and cleanliness of the park, and the quality and variety of the food and entertainment available. The Partnership believes that its amusement parks feature a sufficient quality and variety of rides and attractions, restaurants, gift shops and family atmosphere to make them highly competitive with other parks.

All rides are run and inspected daily by both the Partnership's maintenance and ride operations personnel before being put into operation. The parks are also periodically inspected by the Partnership's insurance carrier and, at Cedar Point, Knott's Berry Farm, Dorney Park, Geauga Lake, Worlds of Fun and Michigan's Adventure, by state ride-safety inspectors.

The Partnership has approximately 1,300 full-time employees. During the operating season, Cedar Point, Dorney Park, Geauga Lake, Valleyfair, Worlds of Fun and Michigan's Adventure have approximately 4,000, 1,800, 1,450, 1,500, 2,000 and 1,100 seasonal employees, respectively, most of whom are high school and college students. Knott's Berry Farm hires approximately 2,860 seasonal employees for peak periods and 500 part-time employees who work year-round. Approximately 3,100 of Cedar Point's seasonal employees and 400 of Valleyfair's seasonal employees live in dormitories owned by the Partnership. The Partnership maintains training programs for all new employees and believes that its relations with its employees are good.

Copies of the Partnership's annual report on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K as filed or furnished with the Securities and Exchange Commission are available without charge upon written request to the Partnership's Investor Relations Office or through our web site (www.cedarfair.com).

ITEM 2. PROPERTIES.

Cedar Point and Soak City are located on approximately 365 acres owned by the Partnership on the Cedar Point peninsula in Sandusky, Ohio. The Partnership also owns approximately 100 acres of property on the mainland adjoining the approach to the Cedar Point Causeway. The Breakers Express hotel, the Castaway Bay Waterpark Resort and adjoining TGI Friday's restaurant, Castaway Bay Marina and two seasonal-employee housing complexes are located on this property.

The Partnership controls, through ownership or an easement, a six-mile public highway and owns approximately 38 acres of vacant land adjacent to this highway, which is a secondary access route to Cedar Point and serves about 250 private residences. The roadway is maintained by the Partnership pursuant to deed provisions. The Cedar Point Causeway, a four-lane roadway across Sandusky Bay, is the principal access road to Cedar Point and is owned by a subsidiary of the Partnership.

Knott's Berry Farm and Knott's Soak City are situated on approximately 160 acres and 13 acres, respectively, virtually all of which have been developed. Knott's Soak City-San Diego is located on 65 acres, of which 32 acres have been developed and 33 acres remain available for future expansion. Knott's Soak City-Palm Springs is located on 21 acres, of which 16 acres have been developed and 5 acres remain available for future expansion.

Dorney Park is situated on approximately 200 acres, of which 170 acres have been developed and 30 acres remain available for future expansion.

Geauga Lake is situated on approximately 670 acres, of which 395 acres have been developed, approximately 200 acres are restricted from use under environmental conditions, and 75 acres remain available for future expansion.

At Valleyfair, approximately 115 acres have been developed, and approximately 75 additional acres remain available for future expansion.

Worlds of Fun is located on approximately 350 acres, of which 253 acres have been developed and 97 acres remain available for future expansion.

Michigan's Adventure is situated on approximately 235 acres, of which 80 acres have been developed and 155 acres remain available for future expansion.

The Partnership, through its subsidiary Cedar Point of Michigan, Inc., also owns approximately 450 acres of land in southern Michigan.

All of the Partnership's property is owned in fee simple without encumbrance. The Partnership considers its properties to be well maintained, in good condition and adequate for its present uses and business requirements.

ITEM 3. LEGAL PROCEEDINGS.

The Partnership is involved in various claims and routine litigation incidental to its business. The Partnership believes that these claims and proceedings are unlikely to have a material adverse effect on the Partnership's financial statements.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

None.

Cedar Fair, L.P. Depositary Units representing limited partner interests are listed for trading on The New York Stock Exchange under the symbol "FUN" (CUSIP 150185 10 6). As of February 28, 2005, there were approximately 11,000 registered holders of Cedar Fair, L.P. Depositary Units, representing limited partner interests, including 4,800 participants in the Partnership's distribution reinvestment plan. The cash distributions declared and the high and low prices of the Partnership's units are shown in the table below:

We generate our revenues primarily from sales of (1) admission to our parks, (2) food, merchandise and games inside our parks, and (3) hotel rooms, food and other attractions outside our parks. Our principal costs and expenses, which include salaries and wages, advertising, maintenance, operating supplies, utilities and insurance, are relatively fixed and do not vary significantly with attendance. The fixed nature of these costs makes attendance a key factor in the profitability of each park. Results of operations include Geauga Lake since its acquisition in April of 2004.

The table below presents certain financial data expressed as a percent of total net revenues and selective statistical information for the periods indicated.

Management's Discussion and Analysis of Financial Condition and Results of Operations is based upon our consolidated financial statements, which were prepared in accordance with accounting principles generally accepted in the United States of America. These principles require us to make estimates and assumptions during the normal course of business that affect the reported amounts in the consolidated financial statements. Actual results could differ significantly from those estimates under different assumptions and conditions. The following discussion addresses our critical accounting policies, which are those that are most important to the portrayal of our financial condition and operating results and involve a higher degree of judgment and complexity (see Note 2 to our Consolidated Financial Statements of a complete discussion of our significant accounting policies).

Buildings, rides and equipment are depreciated over their estimated useful lives on a straight-line basis over each park's operating season. Expenditures made to maintain such assets in their original operating condition are expensed as incurred, and improvements and upgrades are capitalized. The composite method of depreciation is used for groups of assets obtained together in an acquisition of a business.

Reserves are recorded for the estimated amounts of guest and employee claims and expenses incurred each period that are not covered by insurance. These estimates are established based upon historical claims data and third-party estimates of settlement costs for incurred claims. These reserves are periodically reviewed for changes in these factors and adjustments are made as needed.

Revenues on multi-day admission tickets are recognized over the estimated number of visits expected for each type of ticket, and are adjusted at the end of each seasonal period. All other revenues are recognized on a daily basis based on actual guest spending at our facilities, or over the park operating season in the case of certain marina dockage revenues.

Net revenues in 2004 increased 6%, or $32.0 million, to $542.0 million. The increase in net revenues was the result of a 3% increase in combined attendance across our 12 properties (to 12.6 million from 12.2 million in 2003), a 3% increase in average in-park guest per capita spending (to $36.59 from $35.48 in 2003), and a 5% increase in out-of-park revenues. The increase in out-of-park revenues was primarily driven by improvement in occupancy levels at our resort hotels at Cedar Point. Excluding results from the acquisition of Geauga Lake, net revenues in 2004 would have increased 2%, or $7.5 million, on a 3% decrease in combined attendance, a 3% increase in average in-park guest per capita spending, and a 4% increase in out-of-park revenues.

In 2004, the addition of Geauga Lake, along with a strong year at Knott's Berry Farm, offset soft attendance numbers at some of our seasonal amusement parks resulting from inconsistent weather during the peak summer months and a moderate capital program. Good weather, together with favorable tourism and pricing trends in the Southern California market, contributed to Knott's strong performance. For the year, combined attendance at our seven amusement parks totaled 11.3 million guests, up 5% from 2003. Excluding the impact of Geauga Lake, combined attendance at our amusement parks would have decreased 1% to 10.6 million. At our five water parks, the comparisons entering 2004 were very difficult following record performances at several of the parks in 2003. For the full year, combined attendance at our five water parks totaled 1.4 million guests, down 11% from 2003, with the majority of that decrease coming at Oceans of Fun in Kansas City, where temperatures stayed well below average al l summer long. The 3% increase in our average in-park guest per capita spending level in 2004 was due to solid improvements in guest spending on admissions and foods, as well as a shift in the mix of attendance away from lower per capita parks, such as our water parks.

Excluding depreciation and all other non-cash charges, total operating costs and expenses in 2004 increased 10%, or $34.7 million, to $369.0 million from $334.3 million in 2003. This increase was largely due to the acquisition of Geauga Lake. Excluding operations at Geauga Lake, total cash operating costs and expenses for 2004 would have increased only 2%, or $6.2 million, from 2003. All operating costs as a percent of revenues remained relatively level between years.

Because we strongly emphasize generating cash flow for distributions to our unitholders, a meaningful measure of our operating results is adjusted EBITDA, which represents earnings before interest, taxes, depreciation, and other non-cash charges and credits. In 2004, adjusted EBITDA decreased 2%, or $2.7 million, to $173.0 million, due entirely to an adjusted EBITDA loss of $4.0 million generated at Geauga Lake during the period subsequent to its acquisition. Excluding the impact of Geauga Lake, adjusted EBITDA would have increased 1%, or $1.3 million, to $177.0 million in 2004, due primarily to increases in average in-park guest per capita spending and out-of-park revenues. The consolidated adjusted EBITDA margin in 2004 decreased to 31.9% from 34.4% in 2003, due almost entirely to the impact of the Geauga Lake operations. On a same park basis, the consolidated EBITDA margin decreased only slightly to 34.2%, due to soft attendance figures at our highest margin park, Cedar Point.

In 2003, we began accounting for unit options using the fair value method under SFAS No. 123, "Accounting for Stock Based Compensation." In 2004, we recorded a $4.5 million non-cash charge for unit options, compared to a charge of $5.9 million in 2003.

In 2002, we recorded a $7.6 million non-cash charge related to the change in fair value of two of our interest rate swap agreements that could not be designated as effective hedges under the applicable accounting rules. In 2004, we recognized a non-cash credit of $4.5 million for the change in fair value of these swap agreements during the year, which compared to a non-cash credit of $2.7 million in 2003. These amounts are aggregated with interest expense in the accompanying table.

After these non-cash items, and interest expense and provision for partnership taxes, both of which were up between years due to the Geauga Lake acquisition, net income for 2004 decreased $7.6 million to $78.3 million, or $1.47 per diluted limited partner unit, from $85.9 million, or $1.67 per unit, in 2003. Excluding the impact of Geauga Lake, net income for 2004 would have increased $5.8 million between years to $91.7 million, or $1.76 per unit.

Net revenues in 2003 increased 1.4%, or $7.1 million, to $510.0 million from $502.9 million in 2002. This increase reflects a 3% increase in average in-park guest per capita spending (to $35.48 from $34.50 in 2002), a 1% increase in out-of-park revenues and a 1% decrease in combined attendance across our 11 properties (to 12.2 million from 12.4 million in 2002). The increase in out-of-park revenues was from improvements in occupancy levels at our resort hotels at Cedar Point and Knott's Berry Farm.

In 2003, successful capital programs at Cedar Point and Valleyfair, along with a record year at Michigan's Adventure, partially offset attendance declines at Dorney Park and Worlds of Fun resulting from poor weather and the lack of a major new attraction, and an attendance decline at Knott's Berry Farm due to soft tourism trends and heavy competition. For the year, combined attendance at our six amusement parks totaled 10.7 million, down less than 2% from 2002's level. At Cedar Point, the addition of Top Thrill Dragster, the world's tallest and fastest roller coaster, contributed to the park's solid performance, while the introduction of the Steel Venom roller coaster at Valleyfair helped generate record revenues at that park. At our five water parks, improved attendance at our California properties, along with a record year at Worlds of Fun's water park, Oceans of Fun, led to a 3% increase in combined attendance to 1.55 million guests. The 3% increase in our overall in-park guest per capita spending level in 2003 was due to solid improvements in guest spending on admissions and merchandise, as well as a shift in the mix of attendance toward higher per capita parks, such as Cedar Point.

Cash operating costs and expenses, excluding depreciation and all other non-cash charges, increased less than 1% to $334.3 million in 2003 from $332.8 million in 2002, due to a continued focus at the individual park level to control operating costs during the year. All operating costs as a percent of revenues remained relatively level between years.

In 2003, adjusted EBITDA increased 3% to a record $175.7 million from $170.1 million in 2002, due primarily to increases in average in-park guest per capita spending and out-of-park revenues, as well as each park's ability to control operating costs. The consolidated adjusted EBITDA margin improved to 34.4% in 2003 from 33.8% in 2002, due to costs increasing at a slower rate than revenues.

Other non-cash costs in 2003 include a $5.9 million charge for unit options under SFAS No. 123. In 2002, we recognized a non-cash unit option charge of $4.0 million under our previous policy of accounting for unit options using the intrinsic value method prescribed by Accounting Principles Board (APB) No. 25, "Accounting for Stock Issued to Employees," as we "marked to market" our variable-priced options only. In addition, we recorded a provision of $3.2 million for the estimated portion of the net book value of certain fixed assets that might not be recoverable after they were removed from service in 2002.

After these non-cash items, and interest expense and provision for partnership taxes, both of which were comparable between years (except for the effect of interest rate swap accounting), net income for 2003 increased $14.5 million to $85.9 million, or $1.67 per diluted limited partner unit, from $71.4 million, or $1.39 per unit, in 2002.

We ended 2004 in sound financial condition in terms of both liquidity and cash flow. The negative working capital ratio (current liabilities divided by current assets) of 3.7 at December 31, 2004 is the result of our highly seasonal business and careful management of cash flow to reduce borrowings. Receivables and inventories are at normally low seasonal levels and credit facilities are in place to fund current liabilities, capital expenditures and pre-opening expenses as required.

Net cash from operating activities increased $13.2 million, or 10%, to $148.2 million in 2004. This increase was primarily due to normal fluctuations in current liabilities and accrued taxes, offset by a decrease in net income of $7.6 million. The acquisition of Geauga Lake, combined with the timing in payments of liabilities, contributed to the increase in current liabilities and accrued taxes.

Investing activities consist principally of acquisitions and capital investments we make in our amusement parks and resort properties. During 2004, net cash used for investing activities totaled $220.1 million, including $144.3 million for the acquisition of Geauga Lake and $75.9 million of capital expenditures, compared to $39.8 million in 2003. The $36.1 million increase between years in capital expenditures is the result of a moderate capital program for the 2004 season and the early timing of payments on several large capital projects for the 2005 season. We also invested $21 million in Castaway Bay, our year-round indoor water park resort in Sandusky, Ohio, which opened to the public in November 2004.

For the 2005 operating season, we are investing approximately $83 million in capital improvements at our 12 properties, including the addition of new world-class roller coasters at Knott's Berry Farm and Dorney Park, as well as the addition of a major new water park at Geauga Lake. We are optimistic that these investments, as well as other improvements at each of the parks, will generate a high level of public interest and acceptance. However, stable population trends in the parks' market areas and uncontrollable factors, such as weather, the economy, and competition for leisure time and spending, preclude us from anticipating significant long-term increases in attendance. Historically, we have been able to improve our revenues and profitability by continuing to make substantial investments in our parks and resort facilities. This has enabled us to maintain consistently high attendance levels, as well as generate increases in guest per capita spending and revenues from guest accommodat ions, while carefully controlling operating and administrative expenses.

Net cash provided by financing activities totaled $73.1 million in 2004, compared to net cash utilized of $95.1 million and $91.3 million in 2003 and 2002, respectively. In connection with our acquisition of Geauga Lake in April 2004, we issued $75.0 million of senior notes with terms of seven to eleven years at a fixed rate of 4.72%, and we completed an equity offering of 2.6 million limited partner units, which generated net proceeds of $73.3 million. In addition, net revolving credit borrowings totaled $37.7 million in 2004. Cash used in financing activities during the year reflects $20.0 million for scheduled term loan repayments, $92.2 million to pay cash distributions, and $0.7 million to repurchase the former General Partner's interest in the Partnership.

At December 31, 2004, we had $387 million of fixed-rate term debt, with staggered maturities ranging from 2005 to 2018, as well as a $180 million revolving credit facility, which is available through March 2007. Borrowings under the revolving credit facility totaled $75.4 million as of December 31, 2004. Of the total term debt, $20 million is scheduled to mature in 2005. Based on interest rates in effect at yearend for variable-rate debt, and after giving effect to interest rate swap agreements described below, cash interest payments for 2005 would total approximately $24-25 million, in line with interest paid in 2004. In addition, cash distributions in 2005, at the recently declared new annual rate of $1.84 per unit, would total approximately $98 million, 7% higher than the distributions paid in 2004.

Credit facilities and cash flow from operations are expected to be adequate to meet planned capital expenditures, as well as seasonal working capital needs and regular quarterly cash distributions for the foreseeable future.

The following table summarizes certain obligations at December 31, 2004 (in millions):

We have no significant off-balance sheet financing arrangements.

We are exposed to market risks from fluctuations in interest rates and, from time to time, currency exchange rates on imported rides and equipment. The objective of our financial risk management is to reduce the potential negative impact of interest rate and foreign currency exchange rate fluctuations to acceptable levels. We do not acquire market risk sensitive instruments for trading purposes.

We have converted $100 million of our term debt to variable rates averaging LIBOR plus 0.64% through the use of several swap agreements for a period of 5-14 more years. 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 December 31, 2004, and has been reflected on the balance sheet in "Intangibles and other assets" with a corresponding increase to "Term debt." At December 31, 2004, $285 million of our outstanding long-term debt represented fixed-rate debt and $175.4 million represented variable-rate debt.

After giving effect to our interest rate swap agreements, and assuming an average annual balance on our revolving credit borrowings, the cash flow impact of a hypothetical one percentage point change in the applicable interest rates on our variable-rate debt would be approximately $1.7 million as of December 31, 2004.

Substantial increases in costs and expenses could impact our operating results to the extent such increases could possibly not be passed along to our guests. In particular, increases in labor, supplies, taxes and utility expenses could have an impact on our operating results. The majority of our employees are seasonal and are paid hourly rates, which although not tied directly to federal and state minimum wage laws, do follow those wage trends. Historically, we have been able to pass along cost increases to guests through increases in admission, food, merchandise and other prices, and we believe that we will continue to have the ability to do so to a large extent in the future. We believe that the effects of inflation, if any, on our operating results and financial condition have been and will continue to be minor.

Some of the statements contained in this Annual Report, including the "Management's Discussion and Analysis of Financial Condition and Results of Operations" section, constitute forward-looking statements. These statements may involve risks and uncertainties that could cause actual results to differ materially from those described in such statements. Although we believe that the expectations reflected in such forward-looking statements are reasonable, we can give no assurance that such expectations will prove to have been correct. Important factors, including general economic conditions, competition for consumer spending, adverse weather conditions, unanticipated construction delays, the absence of historical operating experience for Geauga Lake, and other factors could affect attendance at our parks and cause actual results to differ materially from our expectations.

Reference is made to the information appearing under the subheading "Quantitative and Qualitative Disclosures About Market Risk" under the heading "Management's Discussion and Analysis of Financial Condition and Results of Operations" on page 17 of this Report.

Quarterly operating results for 2004 and 2003 are presented in the table below (in thousands, except per unit amounts):

To the Partners of Cedar Fair, L.P.: We have audited the accompanying consolidated balance sheet of Cedar Fair, L.P. and subsidiaries (the "Partnership") as of December 31, 2004, and the related consolidated statements of operations, partners' equity, and cash flows for the year then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, such 2004 consolidated financial statements present fairly, in all material respects, the financial position of Cedar Fair, L.P. and subsidiaries as of December 31, 2004, and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the effectiveness of the Partnership's internal control over financial reporting as of December 31, 2004, based on the criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 14, 2005 expressed an unqualified opinion on management's assessment of the effectiveness of the Company's internal control over financial reporting and an adverse opinion on the effectiveness of the Partnership's internal control over financial reporting because of a material weakness.

DELOITTE & TOUCHE LLP

Cleveland, Ohio

March 14, 2005

To the Partners of Cedar Fair, L.P.: In our opinion, the accompanying consolidated balance sheet and the related consolidated statements of operations, of cash flows and of partners' equity present fairly, in all material respects, the financial position of Cedar Fair, L.P. and subsidiaries at December 31, 2003, and the results of their operations and their cash flows for each of the two years ended December 31, 2003 in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An a udit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

As discussed in Note 2 to the financial statements, the Partnership changed the manner in which it accounts for equity-based compensation in accordance with SFAS No. 123, "Accounting for Stock-Based Compensation," as of January 1, 2003.

PricewaterhouseCoopers LLP

Cleveland, Ohio,

March 10, 2004.

(In thousands)

The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.

(In thousands, except per unit amounts)

The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.

(In thousands)

The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.

(In thousands, except per unit amounts)

The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.

Cedar Fair, L.P. (the "Partnership") is a Delaware limited partnership that commenced operations in 1983 when it acquired Cedar Point, Inc., and became a publicly traded partnership in 1987. The Partnership's general partner is Cedar Fair Management, Inc., an Ohio corporation whose shares are held by an Ohio trust (the "General Partner"). The General Partner owns a 0.001% interest in the Partnership's income, losses and cash distributions, except in defined circumstances, and has full control over all activities of the Partnership. At December 31, 2004, there were 53,480,243 outstanding limited partnership units registered on The New York Stock Exchange, net of 876,940 units held in treasury.

At a special meeting of limited partners held on June 8, 2004, unitholders approved a plan to allow unitholders to elect the board of directors of the General Partner. Under the approved plan, the Partnership's former general partner, Cedar Fair Management Company, was removed and replaced, and the unitholders elected the members of a staggered board of directors of a new general partner, Cedar Fair Management, Inc. In addition, the partnership agreement was amended to reduce the General Partner's interest in the Partnership from 0.1% to 0.001%, and the new General Partner was granted the authority to implement a unitholders' rights plan, which would allow the board of directors to resist a change or potential change in control of the Partnership if they deem that it is not in the best interest of all unitholders. The equity interest of the former general partner was redeemed by the Partnership for $0.7 million in cash and 89,172 Cedar Fair, L.P. units valued at $2.7 million.

The General Partner may, with the approval of a specified percentage of the limited partners, make additional capital contributions to the Partnership, but is only obligated to do so if the liabilities of the Partnership cannot otherwise be paid or there exists a negative balance in its capital account at the time of its withdrawal from the Partnership. The General Partner, in accordance with the terms of the Partnership Agreement, is required to make regular cash distributions on a quarterly basis of all the Partnership's available cash, as defined.

The following policies are used by the Partnership in its preparation of the accompanying consolidated financial statements.

Principles of Consolidation The consolidated financial statements include the accounts of the Partnership and its subsidiaries, all of which are wholly owned. All significant intercompany transactions and balances are eliminated in consolidation.

Segment Reporting Although the Partnership manages its parks with a high degree of autonomy, each park offers similar products and services to similar customers. Therefore, the Partnership operates within the single reportable segment of amusement/water parks with accompanying resort facilities.

Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during each period. Actual results could differ from those estimates.

Inventories The Partnership's inventories primarily consist of purchased products, such as merchandise and food, for sale to its customers. All inventories are valued at the lower of first-in, first-out (FIFO) cost or market.

Property and Equipment Property and equipment are recorded at cost. Expenditures made to maintain such assets in their original operating condition are expensed as incurred, and improvements and upgrades are capitalized. Depreciation is computed on a straight-line basis over the estimated useful lives of the assets. The composite method is used for the group of assets acquired as a whole in 1983, as well as for the groups of like assets of each subsequent business acquisition. The unit method is used for all individual assets purchased. Depreciation expense totaled $50.1 million in 2004, $44.3 million in 2003, and $41.2 million in 2002.

Under the composite depreciation method, assets with similar estimated lives are grouped together and the several pools of assets are depreciated on an aggregate basis. No gain or loss is recognized on normal retirements of composite assets. Instead, the acquisition cost of a retired asset reduces accumulated depreciation for the composite group. Abnormal retirements of composite assets could result in the recognition of a gain or loss. Management periodically reviews the composite groups to ensure that retirements have not extended the asset lives beyond their estimated remaining economic life.

Under the unit method of depreciation, individual assets are depreciated over their estimated useful lives, with gains and losses on all asset retirements recognized currently in income.

The weighted average useful lives combining both methods are approximately:

Impairment of Long-Lived Assets Effective January 1, 2002, the Partnership adopted Statement of Financial Accounting Standards (SFAS) No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets," which requires that long-lived assets be reviewed for impairment upon the occurrence of events or changes in circumstances that would indicate that the carrying value of the assets may not be recoverable. During the first quarter of 2002, the Partnership removed certain fixed assets from service at its parks, and recorded a provision of $3.2 million for the estimated portion of the net book value of these assets that may not be recoverable.

Goodwill Goodwill as of December 31, 2004 and 2003 totaled approximately $9.1 million. Effective January 1, 2002, the Partnership adopted SFAS No. 142, "Goodwill and Other Intangible Assets," which requires that goodwill no longer be amortized, but instead be tested regularly for impairment. An impairment charge would be recognized for the amount, if any, by which the carrying amount of goodwill exceeds its implied fair value. The fair value of a reporting unit and the related implied fair value of its respective goodwill are established through independent fair-market appraisals. This statement did not have a material impact on the consolidated operating results or financial position of the Partnership, as no impairment has been identified.

Self-Insurance Reserves Reserves are recorded for the estimated amounts of guest and employee claims and expenses incurred each period that are not covered by insurance. These estimates are established based upon historical claims data and third-party estimates of settlement costs for incurred claims. These reserves are periodically reviewed for changes in these factors and adjustments are made as needed.

Derivative Financial Instruments The Partnership accounts for the use of derivative financial instruments according to SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities," and related amendments. For derivative instruments that hedge the exposure of variability in short-term rates, designated as cash flow hedges, the effective portion of the change in fair value of the derivative instrument is reported as a component of "Other comprehensive income (loss)" and reclassified into earnings in the period during which the hedged transaction affects earnings. For derivative instruments that hedge the exposure to changes in the fair value of certain fixed-rate debt, designated as fair value hedges, the effective portion of the change in fair value of the derivative instrument is reported in "Other assets" or "Other liabilities" with a corresponding adjustment to the liability being hedged. For the ineffective portion of a derivative, the change in fair value, if any, is recognized currently in earnings together with the changes in fair value of derivatives not designated as hedges. Derivative financial instruments used in hedging transactions are assessed both at inception and quarterly thereafter to ensure they are effective in offsetting changes in either the fair value or cash flows of the related underlying exposures.

Revenue Recognition Revenues on multi-day admission tickets are recognized over the estimated number of visits expected for each type of ticket and are adjusted at the end of each seasonal period. All other revenues are recognized on a daily basis based on actual guest spending at our facilities, or over the park operating season in the case of certain marina dockage revenues.

Advertising Costs The Partnership expenses all costs associated with its advertising, promotion and marketing programs over each park's operating season, including certain costs incurred prior to the season that are amortized over the season. Advertising expense totaled $34.5 million in 2004, $30.8 million in 2003 and $29.9 million in 2002. Amounts incurred through yearend for the following year's advertising programs are included in prepaid expenses.

Income Taxes Because of its legal structure, the Partnership is not subject to corporate income taxes; rather the Partnership's tax attributes (except those of its corporate subsidiaries) are to be included in the individual tax returns of its partners. Neither the Partnership's financial reporting income, nor the cash distributions to unitholders, can be used as a substitute for the detailed tax calculations that the Partnership must perform annually for its partners. Net income from the Partnership is not treated as "passive income" for federal income tax purposes. As a result, partners subject to the passive activity loss rules are not permitted to offset income from the Partnership with passive losses from other sources.

The tax returns of the Partnership are subject to examination by state and federal tax authorities. If such examinations result in changes to taxable income, the tax liability of the partners could be changed accordingly. Only the tax returns of the Partnership's corporate subsidiaries have been examined through March 1999.

Federal and state tax legislation in 1997 provided a permanent income tax exemption to existing publicly traded partnerships, such as Cedar Fair, L.P., with new taxes levied on partnership gross income (net revenues less cost of food, merchandise and games) beginning in 1998. The Partnership recorded a tax provision for these federal and state partnership taxes of $18.7 million, $17.9 million, and $17.2 million in 2004, 2003 and 2002, respectively. The provision for income taxes for the Partnership's corporate subsidiaries has not been material in any period presented. The Partnership provides reserves for liabilities that may arise from tax exposures which result from specific positions taken in its tax returns or from tax planning strategies employed to minimize its tax liabilities. Management determines tax exposure items based on positions asserted by tax authorities, as well as management's own assessment of exposures from unasserted items. The calculation of the provision for ta xes involves significant estimates and assumptions and actual results could differ from those estimates.

Deferred taxes reflect the net tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and income tax purposes at the Partnership's corporate subsidiaries. The significant components of deferred tax assets and liabilities as of December 31, 2004 are as follows:

The net current and non-current components of deferred taxes recognized in the consolidated balance sheet are as follows:

The net current deferred tax asset amount is included in "Prepaids and other current assets" and the net non-current deferred tax asset amount is included in "Intangibles and other assets" in the accompanying 2004 consolidated balance sheet.

Unit-Based Compensation Prior to 2003, the Partnership accounted for all equity-based compensation awards, including unit options, using the intrinsic value method prescribed by Accounting Principles Board (APB) Opinion No. 25, "Accounting for Stock Issued to Employees," and related interpretations. Under APB Opinion No. 25, the Partnership's variable-priced options were "marked to market" over their vesting period whenever the exercise price was lower than the market price of limited partnership units. Approximately $4.0 million in non-cash compensation expense, with an offsetting credit to partners' equity, was recognized in 2002 under APB Opinion No. 25.

Effective January 1, 2003, the Partnership began to account for unit options under the fair value recognition provisions of SFAS No. 123, "Accounting for Stock-Based Compensation." The Partnership selected the modified prospective method of adoption described in SFAS No. 148, "Accounting for Stock-Based Compensation-Transition and Disclosure." Approximately $4.5 million and $5.9 million in non-cash compensation expense was recognized in 2004 and 2003, respectively, which is the same amount that would have been recognized had the provisions of SFAS No. 123 been applied from its original effective date. In accordance with the modified prospective method of adoption, results for prior years were not restated. Had the Partnership continued to account for options under APB Opinion No. 25, non-cash unit option expense would have been essentially unchanged in 2004 and approximately $13.3 million higher in 2003 compared to the amount recognized under SFAS No. 123.

Had compensation expense for the option plan been determined from inception using the provisions of SFAS No. 123, the effect on the Partnership's net income and earnings per unit in 2002 would have been as follows:

Earnings Per Unit For purposes of calculating the basic and diluted earnings per limited partner unit, no adjustments have been made to the reported amounts of net income. The unit amounts used are as follows:

Long-term debt at December 31, 2004 and 2003 consisted of the following:

Revolving Credit Loans In December 2003, the Partnership entered into a new credit agreement with seven banks under which it has available a $180 million revolving credit facility through March 2007. This credit facility was expanded to $230 million for part of 2004 in order to initially accommodate the acquisition of Geauga Lake. As of December 31, 2004, borrowings under the credit facility were $75.4 million at an effective rate of 3.1%. The maximum outstanding revolving credit balance during 2004 was $210.2 million under the expanded credit facility.

Borrowings under the agreement bear interest at LIBOR plus 0.875% per annum, with other rate options. The agreement also requires the Partnership to pay a commitment fee of 0.20% per annum on the unused portion of the credit facility. The Partnership, at its option, may make prepayments without penalty and reduce the loan commitments.

The Partnership's policy is to capitalize interest on major construction projects. Interest of $1.2 million, $0.6 million and $0.8 million was capitalized in 2004, 2003 and 2002, respectively.

Term Debt In April of 2004, the Partnership entered into a new note agreement for the issuance of $75 million in senior notes with maturities in 2011 - 2015 at an interest rate of 4.72%. The proceeds were used to repay revolving credit borrowings principally related to the acquisition of Geauga Lake.

At December 31, 2004, the scheduled annual maturities of term debt were as follows (in thousands):

The fair value of the aggregate future repayments on term debt at December 31, 2004, as required by SFAS No.107, would be approximately $402.7 million, based on borrowing rates currently available to the Partnership on long-term debt with similar terms and average maturities. The Partnership may make prepayments on any of these notes with defined premiums.

Covenants Under the terms of the debt agreements, the Partnership, among other restrictions, is required to maintain a specified level of partners' equity, and comply with certain cash flow and interest coverage ratios. The Partnership was in compliance with these covenants as of December 31, 2004.

The Partnership has only limited involvement with derivative financial instruments and does not use them for trading purposes. They are only used within the Partnership's overall risk management program to manage certain interest rate and foreign currency risks from time to time.

In 2003, the Partnership entered into interest rate swap agreements as a means of converting $100 million of new fixed-rate senior notes to variable rates averaging LIBOR plus 0.64% over their full terms. The fair market value of these swaps, which have been designated as fair value hedges on long-term debt, was a net asset of approximately $1.7 million at December 31, 2004. At December 31, 2004, the hedges were highly effective, and accordingly, the fair values have been reflected on the balance sheet in "Intangibles and other assets" with a corresponding increase to "Term debt."

Two of the Partnership's interest rate swap agreements, which were entered into in 2001, contained provisions that did not meet the definition of derivative instruments that can be designated as hedges under SFAS No. 133. Consequently, the Partnership recognized a $7.6 million charge in other expense in 2002 related to the change in fair value of these two swaps. In 2004 and 2003, the Partnership recorded a non-cash credit of $4.5 million and $2.7 million, respectively, for the change in fair value of the same swaps. The remaining $459,000 accrual is included in "Other accrued liabilities," and will reverse into income during the first quarter of 2005 as the contracts expire.

Special L.P. Interests In accordance with the Partnership Agreement, certain partners were allocated $5.3 million of 1987 and 1988 taxable income (without any related cash distributions) for which they received Special L.P. Interests. The Special L.P. Interests do not participate in cash distributions and have no voting rights. However, the holders of Special L.P. Interests will receive in the aggregate $5.3 million upon liquidation of the Partnership.

Unit Options In August 2000, the Partnership's unitholders approved the establishment of a new Equity Incentive Plan allowing the award of up to 4.8 million unit options and other forms of equity as an element of compensation to senior management and other key employees, including the grant of 2.3 million unit options, with a variable exercise price, in connection with the restructuring of the Partnership's general partner fee and executive compensation systems. As of December 31, 2004, the Partnership has 1,728,300 variable-price options and 712,250 fixed-price options outstanding under the plan. All options vest over a five-year period and have a maximum term of ten years. The variable-price options have an exercise price that declines by the value of cash distributions declared on the underlying limited partnership units.

A summary of option activity during 2004, 2003 and 2002 follows: