UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


WASHINGTON,
D.C. 20549





FORM
10-Q





x
            QUARTERLY
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934





For
the quarterly period ended September 27, 2009




OR





o
            TRANSITION
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934





For the transition
period from 
to




Commission
file number 333-108661









UNIVERSAL CITY DEVELOPMENT PARTNERS,
LTD.


UCDP FINANCE, INC.


(Exact
name of registrants as specified in their charters)





FLORIDA
            
            59-3128514FLORIDA
            
            42-1581381(State
      or other jurisdiction of
              incorporation
      or organization)
            
            (I.R.S.
      Employer
              Identification
      No.)1000
      UNIVERSAL STUDIOS PLAZA
              ORLANDO,
      FL
            
            32819-7610(Address
      of principal executive offices)
            
            (Zip
      Code)




(407)
363-8000


(Registrants’
telephone number, including area code)





Indicate by check mark whether the
Registrants (1) have filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the Registrant was required
to file such reports), and (2) have been subject to such filing
requirements for the past 90 days.   YesxNoo




Indicate by check mark whether the
registrant has submitted electronically and posted on its corporate Web site, if
any, every Interactive Data File required to be submitted and posted pursuant to
Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12
months (or for such shorter period that the registrant was required to submit
and post such files).   YesoNoo




Indicate
by checkmark whether the registrant is a large accelerated filer, an accelerated
filer, a non-accelerated filer, or a smaller reporting company. See definitions
of “large accelerated filer,” “accelerated filer” and “smaller reporting
company” in Rule 12b-2 of the Exchange Act.





Large
      accelerated filer
            
            o
            
            
            
            
            Accelerated
      filer
            
            oNon-accelerated
      filer (Do
      not check if a smaller reporting company)
            
            x
            
            
            
            
            Smaller
      reporting company
            
            o





Indicate by checkmark whether the
registrant is a shell company (as defined in Rule 12b-2 of the Exchange
Act).   YesoNox




Indicate the number of shares
outstanding of each of the issuer’s classes of common stock, as of the latest
practical date. As ofOctober 20, 2009,there were 100 shares of common stock
of UCDP Finance, Inc., outstanding. Not
applicable to Universal City Development Partners,
Ltd.























TABLE
OF CONTENTS





PAGEPART
      I. FINANCIAL INFORMATIONITEM 1.
      Financial Statements
            3ITEM 2.
      Management’s Discussion and Analysis of Financial Condition and Results of
      Operations
            16ITEM 3.
      Quantitative and Qualitative Disclosure About Market Risk
            23ITEM 4.
      Controls and Procedures
            25PART
      II. OTHER INFORMATIONITEM 1.
      Legal Proceedings
            26ITEM 1A.
      Risk Factors
            26ITEM 2.
      Unregistered Sales of Equity Securities and Use of
Proceeds
            26ITEM 3.
      Defaults upon Senior Securities
            26ITEM 4.
      Submission of Matters to a Vote of Security Holders
            26ITEM 5.
      Other Information
            26ITEM 6.
      Exhibits
            26SIGNATURES
            27





UCDP Finance, Inc. is a wholly owned subsidiary of Universal City Development Partners, Ltd., and
was formed for the sole purpose of acting
as a co-issuer of the Registrants’ 113/4% senior notes due 2010. UCDP Finance, Inc. does not and will not conduct any operations
or hold any assets of any kind and will not have any future revenues.
UCDP Finance, Inc.metthe conditions set forth in General
Instructions H(1)(a) and (b) of Form 10-Q andistherefore filing this form with the
reduced disclosure format.













2







PART
I — FINANCIAL INFORMATION





ITEM1.
            Financial
      Statements





Universal City
Development Partners, Ltd. and
Subsidiaries


Condensed ConsolidatedBalance Sheets


(Unaudited)





September
      27,
            
            
            December 31,2009
            
            
            2008(In
      thousands)ASSETSCurrent
      assets:Cash
      and cash equivalents
            
            $
            81,538
            
            
            $
            87,798Accounts
      receivable, net
            
            
            25,607
            
            
            
            27,521Receivables
      from related parties
            
            
            2,154
            
            
            
            7,489Inventories,
      net
            
            
            43,402
            
            
            
            42,565Prepaid
      expenses and other assets
            
            
            14,477
            
            
            
            8,899Deferred
      finance costs, net
            
            
            4,779
            
            
            
            -Assets
      held for sale
            
            
            17,637
            
            
            
            17,637Total
      current assets
            
            
            189,594
            
            
            
            191,909Property
      and equipment, at cost:Land
      and land improvements
            
            
            478,418
            
            
            
            475,021Buildings
      and building improvements
            
            
            1,405,507
            
            
            
            1,381,492Equipment,
      fixtures and furniture
            
            
            1,147,633
            
            
            
            1,112,537Construction
      in process
            
            
            183,854
            
            
            
            157,117Total
      property and equipment, at cost:
            
            
            3,215,412
            
            
            
            3,126,167Less
      accumulated depreciation
            
            
            (1,497,903
            )
            
            
            (1,426,192
            )Property
      and equipment, net
            
            
            1,717,509
            
            
            
            1,699,975Other
      assets:Investments
      in unconsolidated entities
            
            
            11,000
            
            
            
            11,939Intangible
      assets, net
            
            
            51,593
            
            
            
            52,955Deferred
      finance costs, net
            
            
            -
            
            
            
            11,948Other
      assets
            
            
            7,761
            
            
            
            6,551Total
      other assets
            
            
            70,354
            
            
            
            83,393Total
      assets
            
            $
            1,977,457
            
            
            $
            1,975,277













Continued
on next page.














3









Universal
City Development Partners, Ltd. and Subsidiaries


Condensed Consolidated Balance
Sheets(Continued)


(Unaudited)








September
      27,
            
            
            December 31,2009
            
            
            2008(In
      thousands)LIABILITIES
      AND PARTNERS’ EQUITYCurrent
      liabilities:Accounts
      payable and accrued liabilities
            
            $
            141,089
            
            
            $
            126,148Unearned
      revenue
            
            
            51,633
            
            
            
            45,508Due
      to related parties
            
            
            11,484
            
            
            
            11,696Interest
      rate swap liability, at fair value
            
            
            1,495
            
            
            
            9,176Current
      portion of capital lease and financing obligations
            
            
            4,321
            
            
            
            5,822Current
      portion of long-term borrowings
            
            
            1,008,584
            
            
            
            -Total
      current liabilities
            
            
            1,218,606
            
            
            
            198,350Long-term liabilities:Long-term
      borrowings
            
            
            -
            
            
            
            1,007,960Deferred
      special fee payable to affiliates
            
            
            94,204
            
            
            
            91,967Capital
      lease and financing obligations, net of current portion
            
            
            25,405
            
            
            
            27,929Other
            
            
            7,139
            
            
            
            6,725Total
      long-term liabilities
            
            
            126,748
            
            
            
            1,134,581Equity:Partners'
      equity:Vivendi
      Universal Entertainment
            
            
            313,251
            
            
            
            319,770Blackstone
            
            
            313,251
            
            
            
            319,770Accumulated
      other comprehensive loss
            
            
            (512
            )
            
            
            (3,976
            )Total
      Partners’ equity
            
            
            625,990
            
            
            
            635,564Noncontrolling
      interest in UCRP
            
            
            6,113
            
            
            
            6,782Total
      equity
            
            
            632,103
            
            
            
            642,346Total
      liabilities and equity
            
            $
            1,977,457
            
            
            $
            1,975,277










See
accompanying notes.














4










Universal City
Development Partners, Ltd. and
Subsidiaries


Condensed
Consolidated Statements of
Operations


(Unaudited)








Three
      Months Ended
              
              
              Nine
      Months EndedSeptember
      27, 2009
              
              
              September
      28, 2008
              
              
              September
      27, 2009
              
              
              September
      28, 2008(In
      thousands)Operating
      revenues:Theme
      park passes
              
              $
              120,056
              
              
              $
              132,412
              
              
              $
              311,072
              
              
              $
              348,846Theme
      park food and beverage
              
              
              27,311
              
              
              
              32,677
              
              
              
              72,357
              
              
              
              88,165Theme
      park merchandise
              
              
              23,860
              
              
              
              29,351
              
              
              
              63,664
              
              
              
              79,499Other
      theme park related
              
              
              23,322
              
              
              
              26,459
              
              
              
              63,841
              
              
              
              80,242Other
              
              
              30,026
              
              
              
              41,418
              
              
              
              93,172
              
              
              
              114,738Total
      operating revenues
              
              
              224,575
              
              
              
              262,317
              
              
              
              604,106
              
              
              
              711,490Costs
      and operating expenses:Theme
      park operations
              
              
              43,523
              
              
              
              47,215
              
              
              
              127,244
              
              
              
              135,266Theme
      park selling, general and administrative
              
              
              28,620
              
              
              
              37,669
              
              
              
              92,865
              
              
              
              122,370Theme
      park cost of products sold
              
              
              25,349
              
              
              
              32,152
              
              
              
              70,017
              
              
              
              88,526Special
      fee payable to Vivendi Universal Entertainment and consultant
      fee
              
              
              14,665
              
              
              
              16,663
              
              
              
              38,568
              
              
              
              45,107Depreciation
      and amortization
              
              
              26,186
              
              
              
              26,458
              
              
              
              79,015
              
              
              
              83,861Other
              
              
              25,209
              
              
              
              30,551
              
              
              
              77,209
              
              
              
              95,773Total
      costs and operating expenses
              
              
              163,552
              
              
              
              190,708
              
              
              
              484,918
              
              
              
              570,903Operating
      income
              
              
              61,023
              
              
              
              71,609
              
              
              
              119,188
              
              
              
              140,587Other
      expense (income):Interest
      expense
              
              
              26,043
              
              
              
              26,096
              
              
              
              77,239
              
              
              
              75,797Interest
      income
              
              
              (69
              )
              
              
              (920
              )
              
              
              (158
              )
              
              
              (2,520
              )Net
      change in fair value of interest rate swaps and amortization of
      accumulated other comprehensive loss
              
              
              (2,006
              )
              
              
              -
              
              
              
              (4,217
              )
              
              
              -Income
      from investments in unconsolidated entities
              
              
              (272
              )
              
              
              (745
              )
              
              
              (1,601
              )
              
              
              (2,816
              )Total
      other expense, net
              
              
              23,696
              
              
              
              24,431
              
              
              
              71,263
              
              
              
              70,461Net
      income
              
              
              37,327
              
              
              
              47,178
              
              
              
              47,925
              
              
              
              70,126Less:
      net income attributable to the noncontrolling interest in
    UCRP
              
              
              197
              
              
              
              268
              
              
              
              1,409
              
              
              
              1,882Net
      income attributable to the Partners
              
              $
              37,130
              
              
              $
              46,910
              
              
              $
              46,516
              
              
              $
              68,244









See
accompanying notes.














5







Universal City
Development Partners, Ltd. and
Subsidiaries


Condensed ConsolidatedStatement of Comprehensive Income and
Changes in Partners’ Equity


(Unaudited)





UCDP's
      PartnersVivendi
      Universal Entertainment
                
                
                Blackstone
                
                
                Accumulated
      Comprehensive Income (Loss)
                
                
                Noncontrolling
      Interest in UCRP
                
                
                Total
      Equity
                
                
                Comprehensive
      Income(In
      thousands)Balance
      at December 31, 2008
                
                $
                319,770
                
                
                $
                319,770
                
                
                $
                (3,976
                )
                
                $
                6,782
                
                
                $
                642,346Distributions
      to noncontrolling interest in UCRP
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                (2,078
                )
                
                
                (2,078
                )
                
                $
                -Amortization
      of accumulated other comprehensive loss from interest rate swaps
      previously designated as hedges
                
                
                -
                
                
                
                -
                
                
                
                3,464
                
                
                
                -
                
                
                
                3,464
                
                
                
                3,464Distributions
      to Partners
                
                
                (29,777
                )
                
                
                (29,777
                )
                
                
                -
                
                
                
                -
                
                
                
                (59,554
                )
                
                
                -Net
      income
                
                
                23,258
                
                
                
                23,258
                
                
                
                -
                
                
                
                1,409
                
                
                
                47,925
                
                
                
                47,925Balance
      as of September 27, 2009
                
                $
                313,251
                
                
                $
                313,251
                
                
                $
                (512
                )
                
                $
                6,113
                
                
                $
                632,103
                
                
                $
                51,389








See
accompanying notes.














6





Universal City
Development Partners, Ltd. and
Subsidiaries


Condensed
Consolidated Statements of Cash
Flows


(Unaudited)





Nine
      Months EndedSeptember
      27, 2009
            
            
            September
      28, 2008(In
      thousands)Cash
      flows from operating activitiesNet
      cash and cash equivalents provided by operating activities
            
            $
            161,910
            
            
            $
            197,754Cash
      flows from investing activitiesProperty
      and equipment acquisitions
            
            
            (102,770
            )
            
            
            (98,037
            )Proceeds
      relating to capital reimbursements
            
            
            2,054
            
            
            
            2,136Net
      cash and cash equivalents used in investing activities
            
            
            (100,716
            )
            
            
            (95,901
            )Cash
      flows from financing activitiesPartner
      distribution for tax liability
            
            
            (33,368
            )
            
            
            (11,610
            )Partner
      distributions
            
            
            (26,186
            )
            
            
            (25,526
            )Distributions
      of noncontrolling interest in UCRP
            
            
            (2,078
            )
            
            
            (2,582
            )Partner
      contributions
            
            
            -
            
            
            
            28,676Payments
      on long-term borrowings, capital lease and financing
      obligations
            
            
            (5,822
            )
            
            
            (375
            )Payments
      for financing costs
            
            
            -
            
            
            
            (4,295
            )Net
      cash and cash equivalents used in financing activities
            
            
            (67,454
            )
            
            
            (15,712
            )Net
      (decrease) increase in cash and cash equivalents
            
            
            (6,260
            )
            
            
            86,141Cash
      and cash equivalents at beginning of period
            
            
            87,798
            
            
            
            127,874Cash
      and cash equivalents at end of period
            
            $
            81,538
            
            
            $
            214,015Supplemental
      disclosures of noncash information(Decrease)/increase
      of property and equipment in accrued liabilities
            
            $
            (5,529
            )
            
            $
            597(Decrease)/increase
      in interest rate swap liability
            
            $
            (7,681
            )
            
            $
            32Disposal
      of fully depreciated assets
            
            $
            5,942
            
            
            $
            13,539













See
accompanying notes.
















7







Universal City
Development Partners, Ltd. and
Subsidiaries


Notes toCondensed ConsolidatedFinancial
Statements


September
27, 2009


(Unaudited)




1.
General




Basis
of Presentation




The accompanying unaudited condensed consolidated financial statements included herein
have been prepared pursuant to the rules and regulations of the Securities and
Exchange Commission. Certain information and footnote disclosures which are
normally included in financial statements prepared in accordance with U.S.
generally accepted accounting principles have been omitted pursuant to those
rules and regulations. The unaudited condensed consolidated financial statements reflect all normal
recurring adjustments which are, in the opinion of the management, necessary to
present fairly the financial position and the results of operations for the
interim periods. The results for the interim periods are not necessarily
indicative of the results that can be expected for a full year. The accompanying
unaudited condensed
consolidated financial
statements should be read in conjunction with the audited consolidated financial statements for the year ended
December 31, 2008 and the notes thereto, filed with the Securities and
Exchange Commission under cover of Form 10-K.




The accompanying unaudited condensed consolidated financial statements include the
consolidated amounts of Universal City Development Partners, Ltd. ( “UCDP”); Universal City Travel
Partners d/b/a Universal Parks & Resorts Vacations (“UPRV”); UCDP
Finance, Inc. ("UCDP Finance");Universal Orlando Online Merchandise
Store ("UOMS");and
Universal City Restaurant Partners, Ltd. (“UCRP”) (collectively, the “Company”).
All significant intercompany balances and transactions have been eliminated upon
consolidation.




Through
Universal City Florida Holding Co. I (“Holding I”) and Universal City Florida
Holding Co. II (“Holding II”, collectively with Holding I, “Holdings”), the
Company’s ultimate owners, each having a 50% interest, are Universal City
Property Management II LLC (“Universal CPM”) and Blackstone Capital Partners
(“Blackstone”) (collectively, the “Partners”). Universal CPM is a wholly owned
subsidiary of Vivendi Universal Entertainment LLLP (“VUE”), an affiliate of
Universal Studios, Inc. (“USI”), which is an indirect subsidiary of NBC
Universal, Inc. (“NBC Universal”).




Period
End




The three
months ended September 27, 2009 and September 28, 2008 each contained 91 days.
The nine months ended September 27, 2009 contained 270 days, while the nine
months ended September 28, 2008 contained 272 days.




Seasonality




Based on the seasonality of attendance,
the results for the three andninemonths endedSeptember 27, 2009 andSeptember 28, 2008 are not necessarily indicative
of results for the full year.




Reclassifications




The
noncontrolling interest in UCRP (formerly known as minority interest) has been
reclassified to conform to current accounting guidance. See discussion below
under the caption “Recent
Accounting Pronouncements”.







Inventories




The major
components of inventories are as follows (in thousands):












September
      27,
            
            
            December
      31,2009
            
            
            2008Merchandise
            
            $
            12,469
            
            
            $
            12,421Food
      and beverage
            
            
            3,343
            
            
            
            3,962Operating
      supplies and maintenance parts
            
            
            29,279
            
            
            
            28,156Less:
      reserves
            
            
            (1,689
            )
            
            
            (1,974
            )Total
            
            $
            43,402
            
            
            $
            42,565







8










Intangible
Assets




Intangible
assets primarily consist of the rights to use certain characters and trademarks.
Intangible assets are recorded at net present value and amortized on a
straight-line basis over periods ranging from 10 to 20 years, which
have a weighted-average amortizable life of 11 years. Intangible assets
totaled $51,593,000 and $52,955,000, respectively, as of September 27, 2009 and
December 31, 2008. This included $16,058,000 and $14,696,000 in accumulated
amortization, respectively, as of September 27, 2009 and December 31, 2008.
Amortization expense amounted to $405,000 and $519,000, respectively, during the
three months ended September 27, 2009 and September 28, 2008, and $1,362,000 and
$1,633,000, respectively, during the nine months ended September 27, 2009 and
September 28, 2008. Amortization of existing intangible assets will be
approximately $1,768,000 for 2009 and $5,255,000 for each of the following five
years.




Change
in Estimate




Due to
the construction and renovation of new rides and attractions, portions of
existing rides and attractions will be disposed of prior to their original
estimated useful life. As a result, depreciation of the existing rides and
attractions will be accelerated to reflect their remaining useful life. For the
three months ended September 27, 2009 and September 28, 2008, and the nine
months ended September 27, 2009 and September 28, 2008, the Company incurred
additional depreciation expense of $956,000, $334,000, $2,809,000 and $2,537,000
respectively, relating to accelerating the life of various ride and show
assets.









Financial
Instruments




The
carrying amounts reported in the consolidated balance sheets for cash and cash
equivalents, accounts receivable, accounts payable and accrued liabilities
approximate fair value because of the immediate or short-term maturity of these
financial instruments.











The
estimated fair values of other financial instruments subject to fair value
disclosures, determined based on quotes from major financial institutions in the
case of long-term borrowings and LIBOR yield curves as discussed in note 3 in
the case of interest rate swaps, and the related carrying amounts are as follows
(in thousands):







September
      27, 2009
            
            
            December
      31, 2008Carrying Value
            
            
            Fair Value
            
            
            Carrying Value
            
            
            Fair ValueLong-term
      borrowings including current portions
            
            $
            1,008,584
            
            
            $
            998,820
            
            
            $
            1,007,960
            
            
            $
            760,240Interest
      rate swap liabilities
            
            
            1,495
            
            
            
            1,495
            
            
            
            9,176
            
            
            
            9,176Total
            
            $
            1,010,079
            
            
            $
            1,000,315
            
            
            $
            1,017,136
            
            
            $
            769,416














Recent
Accounting Pronouncements




In April 2008, the Financial Accounting
Standards Board ("FASB") issued FASB Staff Position No. FAS 142-3, "Determination
of the Useful
Life of Intangible Assets”, which was primarily codified into
Topic 350 "Intangibles –
Goodwill and Other" in theAccounting Standards
Codification ("ASC").This guidanceamends the factors that should be
considered in developing renewal or extension assumptions used to determine the
useful life of a recognized intangible assetand requires enhanced related
disclosures.This
guidancemust be applied
prospectively to all intangible assets acquired as of and subsequent to fiscal
years beginning after December 15, 2008.This guidancebecame effective for the Company on
January 1, 2009. Although future transactions involving intangible assets
may be impacted by this guidance,itdid not impact the Company’sfinancial statements as
the Company did not acquire any intangible assets during theninemonths endedSeptember 27, 2009.





In March 2008, the FASB issuedStatements of Financial
Accounting Standards ("SFAS")No. 161, “Disclosures about
Derivative Instruments and Hedging Activities—an amendment of FASB Statement
No.133”, which was primarily codified into
Topic 815 "Derivatives and
Hedging" in the
ASC.This guidanceexpands the disclosure requirements
for derivative instruments and hedging activities.Specifically,thisguidancerequires entities to provide enhanced
disclosures addressing the following: how and why an entity uses derivative
instruments; how derivative instruments and related hedged items are accounted
for; and how derivative
instruments and related hedged items affect an entity’s financial position,
financial performance, and cash flows.This guidanceis effective for fiscal years
beginning after November 15, 2008.This guidancebecame effective for the Company on
January 1, 2009. The Company’s adoption of the standard did not have a
material impact on its financial position, results of operations or cash
flows as it is primarily
disclosure related.




In December 2007, the FASB issued
SFAS No. 160, “Noncontrolling
Interests in Consolidated Financial Statements—An Amendment of ARB
No.51”, which was primarily codified into
Topic 810 "Consolidations" in the ASC.This guidanceestablishednew accounting and reporting standards
for the noncontrolling interest in a subsidiary and for the deconsolidation of a
subsidiary.This
guidanceis effective for
fiscal years beginning on or after December 15, 2008.As such, the new accounting
guidance became
effective for the Company on
January 1, 2009. Thisaccounting standardimpacts the presentation of
noncontrolling interests in certain of the Company’s investments in consolidated entities. Specifically,itimpacted the Company’s financial
statements by reclassifying the noncontrolling interest in UCRP (formerly known
as minority interest) from the liability section into the equity section of
the Condensed
Consolidated Balance
Sheets. As a result, the net income attributable to the noncontrolling interest
in UCRP is no longer excluded from the determination of net income (or loss) on
the Condensed
Consolidated Statements of
Operations. The determination of the income attributable to noncontrolling
interest in UCRP continues to be calculated based on the underlying ownership
percentage. The adoption
resulted in the reclassification of $6,782,000 of noncontrolling interest in
UCRP from minority interest to Partners’ equity on the December 31, 2008
Condensed Consolidated Balance Sheetand the presentation of net income of
$197,000, $268,000, $1,409,000 and $1,882,000 attributable to the noncontrolling
interest in UCRP in the Condensed Combined Statements of Operations for the
three months endedSeptember 27, 2009 andSeptember 28, 2008 andtheninemonths endedSeptember 27, 2009 andSeptember 28, 2008, respectively. The application ofthis guidanceis reflected in the re-issued
historical consolidated financial statements of UCDP included in the Current
Report on Form 8-K filed by UCDP and UCDP Finance onJune 29, 2009.







9












In December 2007, the FASB issued SFAS
No. 141(R), “Business
Combinations", which was primarily codified into
Topic 805 "Business
Combinations" in the
ASC.Thisstandardmodifies certain aspects of how the
acquiring entity recognizes and measures the identifiable assets, the
liabilities assumed and the goodwill acquired in a business combination.This guidanceis effective for fiscal years
beginning after December 15, 2008. Although this guidancewill impact the Company’s
accounting for business combinations completed on or after January 1, 2009,itdid not impact the Company’sfinancial statements as
the Company did not enter into any business combinations during theninemonths endedSeptember 27, 2009.




In May 2009, the FASB issued SFAS No.
165, “Subsequent
Events”, which was primarily codified into
Topic 855 "Subsequent
Events" in the ASC.This guidanceestablishes principles and
requirements for subsequent events.Specifically, itsets forth guidance pertaining to the
period after the balance sheet date during which management should consider
events or transactions for potential recognition or disclosure, circumstances
under which an event or transaction would be recognized after the balance sheet
date and the required disclosures that should be made about events or
transactions that occurred after the balance sheet date.This guidanceis effective for interim or annual
financial periods ending after June 15, 2009, and as such,became effective for the Company onJune 28, 2009. The Company’s adoption of the
standard resulted in additional disclosures surrounding the Company’s subsequent
events (see note 9 below).




In April 2009, the FASB issued FASB
Staff Position No. FAS 107-1 and APB 28-1, “Interim Disclosures
about Fair Value of Financial Instruments”, which was primarily codified into
Topic 825 "Financial
Instruments" in the
ASC.This standardextends the disclosure requirementsconcerning the fair value
of financial instrumentsto interim financial statements of publicly traded companies.This guidanceis effective for interim or annual
financial periods ending after June 15, 2009, and as such,became effective for the Company onJune 28, 2009. The Company’s adoption of the
standard resulted in additional disclosures surrounding the interim fair values
of the Company’s financial instruments, under the caption “Financial
Instruments” above.





In June 2009, the FASB issued SFAS No.
167 “Amendments to FASB
Interpretation No. 46(R)”, which has not yet been codified in
the ASC.This guidanceis a revision topre-existing guidance pertaining to
the consolidation and disclosures of variable interest entities.
Specifically,itchanges how a reporting entity
determines when an entity that is insufficiently capitalized or is not
controlled through voting (or similar rights) should be consolidated. The
determination of whether a reporting entity is required to consolidate another
entity is based on, among other things, the other entity’s purpose and design
and the reporting entity’s ability to direct the activities of the other entity
that most significantly impact the other entity’s economic
performance.This
guidancewill require a
reporting entity to provide additional disclosures about its involvement with
variable interest entities and any significant changes in risk exposure due to
that involvement. A reporting entity will be required to disclose how its
involvement with a variable interest entity affects the reporting entity’s
financial statements.This
guidancewill be effective
at the start of a reporting entity’s first fiscal year beginning after November
15, 2009. Early application is not permitted. The Company is currently
evaluating the impacton
its financial statements,
if any,uponadoption.





In June
2009, the FASB issued SFAS No. 168, "The FASB Accounting Standards
Codification and the Hierarchy of Generally Accepted Accounting
Principles", which was primarily codified into Topic 105 "Generally Accepted Accounting
Standards" in the ASC. This standard will become the single source of
authoritative nongovernmental U.S. generally accepted accounting principles
("GAAP"), superseding existing FASB, American Institute of Certified Public
Accountants ("AICPA"), Emerging Issues Task Force ("EITF"), and related
accounting literature. This standard reorganizes the thousands of GAAP
pronouncements into roughly 90 accounting topics and displays them using a
consistent structure. Also included is relevant Securities and Exchange
Commission guidance organized using the same topical structure in separate
sections. This guidance will be effective for financial statements issued for
reporting periods that end after September 15, 2009. Beginning in the third
quarter of 2009, this guidance impacts the Company's financial statements
and related disclosures as all references to authoritative accounting literature
reflect the newly adopted codification.




Liquidity





As of
September 27, 2009, the Company had indebtedness totaling $499,584,000 under its
Senior Notes due in April 2010 (the "April 2010 notes"). Additionally,
$509,000,000 of debt under the term loan component of the senior secured credit
agreement would become due on April 1, 2010 unless the April 2010 notes (as
defined in note 2) and Holdings' Senior Notes due in May 2010 ("the May 2010
notes") are refinanced or repaid prior to such date. The Company will be
required to refinance this debt prior to the stated maturity date. Balances
relating to the April 2010 notes and the term loan component of the senior
secured credit agreement are classified as current liabilities in the
accompanying Condensed Consolidated Balance Sheets as of September 27, 2009 as
they either mature within a year or the maturity date could accelerate to within
a year. Accordingly, the Company and Holdings intend to refinance the April 2010
notes, the May 2010 notes and the term loan component under the Company's senior
secured credit agreement. However, no assurances can be made regarding their
ability to satisfy their liquidity and working capital requirements (see note 9). The Company’s
liquidity could also be negatively impacted by its arrangement with the
Consultant as more fully described in note 8.





10







2.
Long-Term Borrowings




Indebtedness
consisted of the following (in thousands, except percentages):







As
      of September 27,
            
            
            As
      of December 31,Interest Rate
            
            
            Maturity
      Date
            
            
            2009
            
            
            2008Senior
      secured credit facility
            
            LIBOR
      + 300 bps (1)
            
            
            
            (2)
            
            
            $
            509,000
            
            
            $
            509,000UCDP
      fixed rate senior notes (“April 2010 notes”)
            
            
            11.75%
            
            
            April 1, 2010
            
            
            
            500,000
            
            
            
            500,000Gross
      principal payable
            
            
            
            
            
            
            
            
            
            
            1,009,000
            
            
            
            1,009,000Unamortized
      discounts
            
            
            
            
            
            
            
            
            
            
            (416
            )
            
            
            (1,040
            )Total
      debt
            
            
            
            
            
            
            
            
            
            $
            1,008,584
            
            
            $
            1,007,960






(1)The LIBOR interest rate on theterm loan under thesenior secured
      creditfacilities issubject to a3.00%floor.(2)The maturity date of
      theterm loan under
      thesenior secured
      creditfacilitiesis June 9,
      2011;however, it is
      repayable in full at April 1, 2010, if the April 2010 notes and the
      May 2010 notes are not refinanced or repaid in full prior to such
      date.








As of
September 27, 2009 and December 31, 2008, the Company had $100,000,000
available under its revolving credit facilities.





3.
Interest Rate Swaps




The
Company is exposed to market risks relating to fluctuations in interest rates.
The Company may mitigate this risk by paying down additional outstanding
balances on its variable rate loans, refinancing with fixed rate permanent debt
or obtaining cash flow hedge instruments. The Company utilizes interest rate
swap agreements as a risk management tool to manage a portion of its interest
rate exposures. The principal objective of the swap agreements is to minimize
the risks and costs associated with financial activities. The Company does not
use financial instruments for trading purposes. The Company specifically
designates interest rate swap hedges of outstanding debt instruments and
recognizes interest differentials in the period they occur.




The Company followsASC Topic 815 "Derivatives and
Hedging"to account for its interest rate
swaps.Thesestandardsestablishaccounting and reporting standards for
derivative instruments, including certain derivative instruments embedded in
other contracts (collectively referred to as derivatives), and for hedging
activities.The Company
recognizesall derivatives
as either assets or liabilities in the balance sheet and measure those assets at
fair value. The fair values are the estimated amounts that the Company would pay
or receive upon termination of the swap agreements at the reporting date, taking
into account current interest rates and the current creditworthiness of the
counterparties. Changes in the underlying market value of swap arrangements that
qualify as cash flow hedging activitiesare recognized as other comprehensive
income (loss) in the accompanying consolidated statements of comprehensive income and
changes in partners’ equity. Changes in the underlying market value of swap
arrangements that do not qualify as hedging activitiesare recognized as a change in the fair
value of interest rate swaps in the accompanying consolidated statements of operations. Additionally,
the accumulated other comprehensive income (loss) related to interest rate swaps
that become ineffective is amortized on a straight-line basis, over the
remaining life of the interest rate swap, through the change in the fair
value of interest rate swaps in the accompanying consolidated statements of operations. In the fourth
quarter of 2008, the Company’s interest rate swap agreements became
ineffectiveas they no
longer accomplished the predetermined goals of the hedging process as documented
contemporaneously by the Company when entering into the hedging
transaction. Accordingly, the accounting treatment
for these interest rate swaps is different during the three andninemonths endedSeptember 27, 2009 as compared to the three andninemonths endedSeptember 28, 2008. The following table summarizes
the notional values and fair values of our derivative financial instruments as
ofSeptember
27, 2009 (in thousands,
except percentages):









Notional
      value
            
            Expiration
      date
            
            Fair
      value
            
            
            Interest
      rate
            
            Accounting
      Treatment
            
            Terms$
            200,000
            
            November
      20, 2009
            
            $
            (1,279
            )
            
            
            4.77
            %
            Statement
      of operations
            
            Fixed125,000
            
            October
      15, 2009
            
            
            (216
            )
            
            
            4.41
            %
            Statement
      of operations
            
            Fixed$
            325,000
            
            
            
            $
            (1,495
            )









11







The
following table summarizes the changes in fair value of the Company's interest
rate swaps (in thousands):




Three
      Months Ended
            
            
            Nine
      Months EndedSeptember
      27, 2009
            
            
            September
      28, 2008
            
            
            September
      27, 2009
            
            
            September
      28, 2008Recorded in
      statement of operations
            
            
            Recorded
      in other comprehensive income
            
            
            Recorded in
      statement of operations
            
            
            Recorded
      in other comprehensive income
            
            
            Recorded in
      statement of operations
            
            
            Recorded
      in other comprehensive income
            
            
            Recorded in
      statement of operations
            
            
            Recorded
      in other comprehensive (loss) incomeSwap
      #7 (1)
            
            $
            1,165
            
            
            $
            -
            
            
            $
            -
            
            
            $
            503
            
            
            $
            2,802
            
            
            $
            -
            
            
            $
            -
            
            
            $
            (79
            )Swap
      #8 (1)
            
            
            1,980
            
            
            
            -
            
            
            
            -
            
            
            
            613
            
            
            
            4,879
            
            
            
            -
            
            
            
            -
            
            
            
            47Amortization
      of accumulated other comprehensive loss (1)
            
            
            (1,139
            )
            
            
            1,139
            
            
            
            -
            
            
            
            -
            
            
            
            (3,464
            )
            
            
            3,464
            
            
            
            -
            
            
            
            -Total
            
            $
            2,006
            
            
            $
            1,139
            
            
            $
            -
            
            
            $
            1,116
            
            
            $
            4,217
            
            
            $
            3,464
            
            
            $
            -
            
            
            $
            (32
            )




(1) Swaps
#7 and #8 became ineffective in the fourth quarter of 2008.






The
Company is exposed to credit loss in the event of nonperformance by the other
party to its derivative financial instruments. The Company limits this exposure
by entering into agreements directly with a number of major financial
institutions that meet its credit standards and that are expected to satisfy
their obligations under these contracts. The Company views derivative financial
instruments as a risk management tool in the prudent operation of its
business.







The
Company utilizes  ASC Topic 820 "Fair Value Measurements and
Disclosures" in relation to its accounting for assets and liabilities
carried at fair value. This standard, among other things, defines fair value,
establishes a consistent framework for measuring fair value and expands
disclosure for each major asset and liability category measured at fair
value on either a recurring or nonrecurring basis. The standard also clarifies
that fair value is an exit price, representing the amount that would be
received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants. As such, fair value is
a market-based measurement that should be determined based on assumptions
that market participants would use in pricing an asset or liability. As a
basis for considering such assumptions, this guidance establishes a three-tier
fair value hierarchy, which prioritizes the inputs used in measuring fair
value as follows:




Level 1. Observable inputs such as quoted
prices in active markets for identical assets or liabilities;


Level 2. Inputs, other than
quoted prices included within Level 1, that are observable either directly or
indirectly; and


Level 3. Unobservable inputs
in which there is little or no market data, which require the reporting
entity to develop its own assumptions.




The
Company’s derivative financial instruments as of September 27, 2009 are valued
using inputs that fall within Level 2 of the three-tier hierarchy. Furthermore,
as of September 27, 2009 and December 31, 2008, respectively, the Company did
not have assets or liabilities valued using inputs that fall within Level 1 or
Level 3 of the three-tier hierarchy. Information to determine the fair values of
the interest rate swap agreements is provided to the Company by the
counterparty. The Company believes the LIBOR yield curves are the primary
significant input used by the counterparty to determine the fair value
information. LIBOR yield curves are considered Level 2 observable market inputs.
Additionally, in making the fair value determination, the Company monitors the
credit and nonperformance risk associated with its derivative counterparties and
believes they are not material to the interest rate swap agreements and do not
require a credit adjustment at September 27, 2009 or December 31,
2008.







12












4.
Accounts Payable and Accrued Liabilities


The
following presents major components of accounts payable and accrued liabilities
(in thousands) as of:




September
      27, 2009
              
              
              December
      31, 2008Accounts
      payable
              
              $
              8,476
              
              
              $
              10,920Capital
      expenditures
              
              
              31,188
              
              
              
              36,717Marketing
      and advertising
              
              
              7,069
              
              
              
              4,832Interest
              
              
              35,603
              
              
              
              19,897Compensation
      and benefits
              
              
              22,837
              
              
              
              27,301Operating
      accruals
              
              
              11,880
              
              
              
              15,043Consulting
      fees
              
              
              4,940
              
              
              
              4,443Property
      and sales tax
              
              
              14,168
              
              
              
              1,972Other
              
              
              4,928
              
              
              
              5,023Total
              
              $
              141,089
              
              
              $
              126,148




5.
Capital leases and financing obligations




Intangible assets and equipment,
fixtures and furniture included approximately $42,267,000 and $42,788,000, related to
financing obligations and capital leases as ofSeptember 27, 2009 and December 31, 2008,
respectively. This included $1,282,000 and $761,000 in accumulated
depreciation and amortization as ofSeptember 27, 2009 and December 31, 2008,
respectively. AtSeptember
27, 2009, future minimum
payments due under financing obligations and capital leases totaled
approximately $29,726,000 (net of $11,490,000 in interest). Future minimum
payments include $18,000, $4,328,000, $4,023,000, $3,725,000, $3,609,000, and $14,023,000, due in 2009, 2010, 2011, 2012,
2013, and years subsequent to 2013, respectively.







6.
Comprehensive income




Comprehensive
income is as follows (in thousands):







Three
      Months Ended
            
            
            Nine
      Months EndedSeptember
      27, 2009
            
            
            September
      28, 2008
            
            
            September
      27, 2009
            
            
            September
      28, 2008Net
      Income
            
            $
            37,327
            
            
            $
            47,178
            
            
            $
            47,925
            
            
            $
            70,126Amortization
      of accumulated other comprehensive loss from interest rate swaps
      previously designated as hedges
            
            
            1,139
            
            
            
            -
            
            
            
            3,464
            
            
            
            -Change
      in fair value of interest rate swaps designated as hedges
            
            
            -
            
            
            
            1,116
            
            
            
            -
            
            
            
            (32
            )Comprehensive
      income
            
            
            38,466
            
            
            
            48,294
            
            
            
            51,389
            
            
            
            70,094Less:
      comprehensive income attributable to the noncontrolling interest in
      UCRP
            
            
            197
            
            
            
            268
            
            
            
            1,409
            
            
            
            1,882Comprehensive
      income attributable to the Partners
            
            $
            38,269
            
            
            $
            48,026
            
            
            $
            49,980
            
            
            $
            68,212



















13







7.
Related Party Transactions




Under the terms of UCDP’s partnership
agreement, a special fee is payable to Vivendi Universal Entertainment through
Universal CPM equal to 5% of certain revenue, as defined, generated by Universal
Studios Florida and Universal’s Islands of Adventure. During the three months
endedSeptember
27, 2009 andSeptember 28, 2008, the Company paid fees to
Vivendi Universal Entertainment of $9,130,000 and $10,325,000, respectively, while during theninemonths endedSeptember 27, 2009 andSeptember 28, 2008, the Company paid fees of
$24,800,000 and $28,063,000, respectively, to Vivendi
Universal Entertainment. In addition, atSeptember 27, 2009 and December 31, 2008,
respectively, the amount due to related parties included $9,807,000 and $8,861,000 related to the
current portion of special fees payable to Vivendi Universal
Entertainment. AtSeptember 27, 2009 and December 31, 2008, the
Company had long-term deferred special fees payable toHoldingsof approximately $94,204,000 and $91,967,000,
respectively.




Subsequent
to the Company’s refinancings in December 2004, the most restrictive quarterly
covenant for payment of the special fee is a debt to EBITDA ratio (as defined in
the April 2010 notes) of 5.0 to 1.0 or less related to the current special fees
and 3.75 to 1.0 or less related to the deferred special fees (as defined in the
senior secured credit agreement). As these ratios were met as of September 27,
2009, payments of $9,807,000 in special fees will be made during the fourth
quarter of 2009.









8.
Commitments and Contingencies




Settlement
of Assessment Disputes




In June
2009, the Company settled all of the property tax assessment disputes described
below for an amount that is not material to its financial statements. The
following description of these disputes is provided solely for historical
background information.




2008
Assessments




On
December 5, 2008, UCDP filed complaints in state circuit court challenging the
2008 assessments by the Orange County Property Appraiser (the “Property
Appraiser”) of certain real and tangible personal property owned by UCDP. On
February 2, 2009, the Property Appraiser answered the complaints and also moved
to dismiss the discriminatory assessment counts asserted by UCDP. On February
16, 2009, the Orange County Tax Collector (the “Tax Collector”) similarly
answered the complaints and moved to dismiss the discriminatory assessment
counts asserted by UCDP. UCDP paid the full assessments with respect to the 2008
real and personal property on November 26, 2008.





2007
Assessments





On
September 18, 2007, UCDP filed petitions to the Orange County Value
Adjustment Board (“VAB”) seeking review and adjustment of the 2007 assessments
by the Property Appraiser of certain real and tangible personal property owned
by UCDP. The Special Magistrates recommended that UCDP’s petitions be denied as
to the Universal Studios Florida (“USF”) and Universal’s Islands of Adventure
(“UIOA”) tangible personal property and real property and recommended that the
assessment as to UCDP’s parking garages be reduced. The VAB approved and adopted
the Special Magistrates’ recommendations on February 26, 2008. On
April 24, 2008, UCDP filed complaints challenging these assessments in
state circuit court. On June 4, 2008, the Tax Collector answered the
complaints. On June 16, 2008, the Property Appraiser answered the
complaints. Both the Property Appraiser and the Tax Collector also moved to
dismiss UCDP’s discriminatory assessment claims. On November 12, 2008, the court
consolidated UCDP’s complaint involving the 2007 assessments of the parking
garages with a similar complaint that UCDP filed involving the 2006 assessments.
On February 11, 2009, the court granted the defendants’ motions to dismiss the
discriminatory assessment count in UCDP’s complaint involving the parking
garages, and it granted UCDP leave to amend that count. On March 16, 2009, UCDP
filed its amended complaint, and both the Property Appraiser and the Tax
Collector subsequently answered UCDP’s amended complaint. In addition, in late
2008, the Property Appraiser and Tax Collector filed a Joint Motion for Summary
Judgment as to Count I of UCDP’s complaint involving its tangible personal
property. On March 26, 2009, the court denied that Joint Motion. UCDP paid the
full assessment with respect to the 2007 real and personal property on
November 30, 2007.





14








2006
Assessments





In the
second quarter of 2007, UCDP received and recorded a refund of approximately
$1.0 million (the “2006 Refund”) with respect to an adjustment of the 2006
assessments by the Property Appraiser reducing the assessed property values of
certain real and tangible personal property owned by UCDP.





Meanwhile,
on April 17, 2007, the Property Appraiser filed a complaint in state
circuit court challenging the reduced 2006 tangible personal property
assessments. On May 16, 2007, UCDP filed two complaints challenging the
Property Appraiser’s 2006 assessments for (i) real property at USF and
UIOA, and for (ii) UCDP’s parking garages. The Property Appraiser and the
Tax Collector answered UCDP’s complaints and also moved to dismiss UCDP’s
discriminatory assessment claims. On November 12, 2008, the court consolidated
UCDP’s complaint involving the 2006 assessments of the parking garages with a
similar complaint that UCDP filed involving the 2007 assessments. On February
11, 2009, the court granted the defendants’ motions to dismiss the
discriminatory assessment count in UCDP’s complaint involving the parking
garages, and it granted UCDP leave to amend that count. On March 16, 2009, UCDP
filed its amended complaint, and both the Property Appraiser and the Tax
Collector subsequently answered UCDP’s amended complaint.





Back
Assessments





On
December 21, 2006, the Property Appraiser concluded an audit of UCDP’s
2003, 2004 and 2005 tangible personal property returns, asserting that UCDP
underreported its tangible personal property in each of those years. The
Property Appraiser issued back assessments resulting in back taxes, interest and
penalties being charged by the Tax Collector. On February 19, 2007, UCDP
filed a complaint in state circuit court challenging the legality of the back
assessments and seeking other relief. On April 25, 2007, the Court
dismissed the portions of UCDP’s complaint pertaining to the back assessments on
UIOA, and it also dismissed UCDP’s due process claim. On May 14, 2007,
UCDP re-filed the complaint (“UCDP’s Re-filed Back Assessment Complaint”) as to
UIOA. On February 15, 2008, the court denied the Property Appraiser’s
motion to dismiss UCDP’s Re-filed Back Assessment Complaint. The Property
Appraiser and Tax Collector appealed the denial of the dismissal of UCDP’s
Re-filed Back Assessment Complaint. UCDP opposed the appeal, and on July 3,
2008, the Court denied the appeal.





Other





The
Company is threatened with or involved in various other legal actions and claims
incidental to the conduct of its business. Management does not expect these
legal actions and claims to have a material impact to the Company’s results of
operations, financial position or cash flows.





Consultant
Agreement





The
Company has an agreement (the “Consultant Agreement”) with Steven Spielberg (the
“Consultant”) under which it pays a fee for consulting services and exclusivity
equal to a percentage of the Company’s gross revenues from the attractions and
certain other facilities owned or operated, in whole or in part, by the Company.
Under the terms of the Consultant Agreement, the Consultant is also entitled to
a fee based on a percentage of gross revenues of comparable projects, which are
gated motion picture and television themed attractions owned or operated, in
whole or in part, by the Company, or any of its partners or any of their
affiliates, other than in Universal City, California. At present, the only theme
park that is a comparable project is Universal Studios Japan in Osaka, Japan. It
is possible that comparable projects will be created in the future that would
fall under the Consultant Agreement. For instance, Vivendi Universal
Entertainment has entered into licensing arrangements for Universal theme parks
in Singapore and Dubai. The Consultant may also be entitled to participate in
certain sales of equity by the Company’s Partners and to participate in certain
real estate development activities of the Company’s partners or their
affiliates. Although the Consultant Agreement has no expiration date, starting
in June 2010, the Consultant has the right, upon 90 days notice, to
terminate the periodic payments under the Consultant Agreement and receive
instead one cash payment equal to the fair market value of the Consultant’s
interest in the revenue streams in the Orlando parks and any comparable projects
that have been open at that time for at least one year, which fair market value
could be significant. If the Consultant exercises the option and the parties
cannot agree on the fair market value of the buyout option, the fair market
value will be determined by a binding appraisal procedure. The Company
represented under the agreement that the Consultant’s interest in each of the
Company’s parks and in any comparable projects will have priority over the
interests of all financiers, lenders and others who may have an interest in that
park or project. The Company’s obligations under the agreement are guaranteed by
Universal Studios, Inc., as successor to MCA Inc., and Universal Studios, Inc.’s
obligations under that guarantee have in turn been assumed by Vivendi Universal
Entertainment. Vivendi Universal Entertainment has indemnified the Company
against any liability under the Consultant Agreement related to any comparable
project that is not owned or controlled by the Company. Under the terms of
Holdings’ May 2010 notes, the April 2010 notes and the senior secured credit
agreement, a lien to secure the Company’s obligations under the Consultant
Agreement would be a permitted lien. This event would adversely impact the
Company’s liquidity.









9.
Subsequent Event





UCDP
currently is pursuing alternatives to address the maturity of the April 2010
notes and the Holdings May 2010 notes.  The alternatives may include
additional term loan borrowings by UCDP under UCDP's existing senior secured
credit agreement, reductions in the amount of its revolving borrowing
availability thereunder and the offering by UCDP of new senior and/or senior
subordinated notes for cash, with the intention of any such transactions being
to refinance the April 2010 notes and the Holdings May 2010 notes.  The
proceeds of any such refinancing would be expected to be used by UCDP to
purchase, redeem or otherwise retire all of its April 2010 and to pay dividends
and deferred special fees to UCDP's direct parent companies in a sufficient
amount so that they can purchase, redeem or otherwise retire all of the May 2010
notes and to pay fees and expenses related to the refinancing.  The timing,
structure and completion of any transaction will depend on market conditions.
There can be no assurance of the timing of any refinacing transaction or
that it will be successfully completed.




On
October 18, 2009, UCDP amended the Consultant Agreement (the “2009 Amendment”).
Under the existing Consultant Agreement, starting in June 2010, the Consultant
had the right, upon 90 days notice, to terminate UCDP's obligation to make
periodic payments thereunder and receive instead one cash payment equal to the
fair market value of the Consultant’s interest in the revenue streams in the
Orlando parks and any comparable projects that were open at that time for at
least one year (the “Put Payment”). Under the terms of the 2009 Amendment, the
earliest exercise date for the Put Payment is June 2017. If the Put Payment is
exercised, the Consultant is precluded from competing or consulting with another
theme park for a period of five years and allows UCDP the right to use ideas
generated during the term of the Consultant Agreement without further payment.
In addition, the 2009 Amendment establishes a formula-based method to determine
the amount of the Put Payment and modified terms related to comparable projects
so that in addition to the existing comparable park, the four contemplated are
vested immediately for purposes of the quarterly consulting fee payments but
each such contemplated comparable park must still be open for at least one year
at the time the Put Payment is exercised in order for such project to be
included in the Put Payment. The 2009 Amendment also provides the Consultant a
second-priority lien over UCDP's real and tangible personal property to secure
UCDP's periodic and one-time payment obligations and caps UCDP's ability to
incur secured borrowings to an amount equal to the greater of $975 million and
3.75x UCDP’s EBITDA. In connection with the 2009 Amendment, NBCU will guarantee
its obligations under the Consultant Agreement and UCDP amended its partnership
agreement to increase the special fee paid thereunder through 2017 from 5.0% to
5.25%. The effectiveness of the 2009 Amendment, the related guarantee and the
amendment to UCDP's partnership agreement are each subject to certain
conditions, including consent of the requisite lenders under UCDP's existing
senior secured credit facilities.
   Subsequent
events were evaluated through October 20, 2009 for the balance sheet
date as of September 27, 2009 and for the periods ending September 27,
2009.  October 20, 2009 is also the issuance date of the financial
statements.











15







Item
2. Management’s Discussion and Analysis of Financial Condition and Results of
Operations









Overview
Related to Financial Results





On a
year-to-date basis through September 27, 2009, we experienced a decrease of 14%
in our paid attendance and a corresponding decrease in EBITDA (as defined) of
$27.0 million when compared to the same period of 2008. We believe these
decreases were primarily driven by the downturn in the global economy.
Additionally, due to the timing of UCDP's fiscal calendar, the nine months ended
September 27, 2009 had two less days than the nine months ended September 28,
2008. Total theme park spending on a per guest basis through the first nine
months of 2009 was consistent with the first nine months of 2008, but the
reduced volume contributed to a $107.4 million shortfall in revenue, or 15%,
when compared to the same period of 2008. Our ability to reduce operating costs,
which decreased by $86.0 million in the first nine months of 2009 compared to
the same period in 2008, helped partially offset the revenue shortfall. As a
result, net income decreased by $22.2 million compared to the first nine months
of 2008. We finished the third quarter of 2009 with $181.5 million in available
cash and cash equivalents, including $100.0 million of availability under our
revolving credit. We owed $1,008.6 million on our indebtedness at September 27,
2009, all of which was current. Additionally, cash paid for capital expenditures
during the nine months ended September 27, 2009 totaled $102.8 million as we
opened the Hollywood Rip Ride RockitSM
coaster in summer 2009 and continued progress on The Wizarding World of Harry
PotterTM.






Seasonality




Theme
park attendance follows a seasonal pattern which coincides closely with holiday
and school schedules. The year begins with the end of the peak Christmas and New
Year’s holiday period. When children return to school, attendance levels
subside. During the March to April timeframe, spring break and Easter vacation
periods drive seasonally high attendance. Since the peak spring break period
fluctuates from year to year between the end of the first quarter and the
beginning of the second quarter, historical quarterly financial information
might not be comparable. May is a traditionally slow attendance period. June
marks the beginning of the summer attendance peak when local schools are out for
the summer. This peak attendance period continues throughout the month of June,
as schools outside of Florida finish their terms. The peak summer period
includes the entire month of July and the first few weeks in August, when the
local schools begin to go back into session. Attendance levels continue to
decline through Labor Day, when schools outside of Florida begin. Excluding
special events such as “Rock the Universe” in September and “Halloween Horror
Nights” in October, the period from September through November is seasonally
slow, with an attendance spike around Thanksgiving week. Attendance falls again
after Thanksgiving weekend, and does not pick up until the third week of
December, when the peak Christmas and New Year’s holiday period begins. The
Atlantic Ocean hurricane season begins in June and ends in November of each
year. Historically, hurricanes have had little impact on Orlando theme parks.
Since opening in 1990, our parks have been closed only five days due to the
inclement weather caused by hurricanes, four of which occurred during the 2004
and 2005 hurricane seasons.






Based on
the seasonality of our attendance, the results for the three and nine months
ended September 27, 2009 and September 28, 2008 are not necessarily indicative
of results for the full year.




Critical
Accounting Policies and Estimates




In the ordinary course of business, we
make a number of estimates and assumptions relating to the reporting of results
of operations and financial condition in the preparation of our condensed consolidated financial statements in conformity with
U.S. generally accepted accounting principles. Results could differ
significantly from those estimates under different assumptions and conditions.
We believe that the application of these accounting policies, which are
important to our financial position and results of operations, requires
significant judgments and estimates on the part of management. For a summary of
all of our accounting policies, including our critical accounting policies,
see Note 2 in our audited consolidated financial statements for the year ended
December 31, 2008 filed with the Securities and Exchange Commission under
cover of Form 10-K. Besides what is disclosed within this document, there have
been no material developments with respect to the critical accounting policies
discussed in detail in our
Form 10-K within Item7. Management’s
Discussion and Analysis of Financial Condition and Results of
Operations.




Litigation




From time to time,weareinvolved inlegal proceedings and, as required,weaccruethe low end of the estimated range of
probable costs for the resolution of these claims.Theseestimatesaredeveloped in consultation with outside
counsel andarebased upon an analysis of
potential results, assuming a combination of litigation and settlement
strategies. It is possible, however, that future results of operations for any
particular quarterly or annual period could be materially affected by changes in
our assumptions or the effectiveness of our strategies related to these
proceedings. See
"Note
8" in "Part 1,
Item1. Financial
Statements" in this document for more detailed
information on litigation exposure.







Period
end




The three
months ended September 27, 2009 and September 28, 2008 each contained 91 days.
The nine months ended September 27, 2009 contained 270 days, while the nine
months ended September 28, 2008 contained 272 days.









Recent
accounting pronouncements




See
“Note 1. General” in
“Part I – Item 1. Financial
Statements” for a detailed description of recent accounting
pronouncements.





16





Results
of Operations:




Three Months EndedSeptember 27, 2009 Compared to Three Months
EndedSeptember
28, 2008 (in
thousands except per capita amounts and percentages):






Three
      Months Ended
            
            
            %
      ChangeSeptember
      27, 2009
            
            
            September
      28, 2008
            
            
            Favorable/
              (unfavorable)Operational
      Data:Paid
      theme park admissions
            
            
            2,710
            
            
            
            3,048
            
            
            
            (11.1
            )%Turnstile
      theme park admissions
            
            
            2,958
            
            
            
            3,262
            
            
            
            (9.3
            )%Theme
      park pass revenue per paid admission
            
            $
            44.30
            
            
            $
            43.44
            
            
            
            2.0
            %Theme
      park food, beverage and merchandise revenue per turnstile
      admission
            
            
            17.30
            
            
            
            19.02
            
            
            
            (9.0
            )%Other
      theme park related revenue per turnstile admission
            
            
            7.88
            
            
            
            8.11
            
            
            
            (2.8
            )%Statement
      of operations data:Operating
      revenues:Theme
      park pass revenue
            
            $
            120,056
            
            
            $
            132,412
            
            
            
            (9.3
            )%Theme
      park food and beverage
            
            
            27,311
            
            
            
            32,677
            
            
            
            (16.4
            )%Theme
      park merchandise
            
            
            23,860
            
            
            
            29,351
            
            
            
            (18.7
            )%Other
      theme park related
            
            
            23,322
            
            
            
            26,459
            
            
            
            (11.9
            )%Other
            
            
            30,026
            
            
            
            41,418
            
            
            
            (27.5
            )%Total
      operating revenues
            
            
            224,575
            
            
            
            262,317
            
            
            
            (14.4
            )%Costs
      and operating expenses:Theme
      park operations
            
            
            43,523
            
            
            
            47,215
            
            
            
            7.8
            %Theme
      park selling, general and administrative
            
            
            28,620
            
            
            
            37,669
            
            
            
            24.0
            %Theme
      park cost of products sold
            
            
            25,349
            
            
            
            32,152
            
            
            
            21.2
            %Special
      fee payable to Vivendi Universal Entertainment and consultant
      fee
            
            
            14,665
            
            
            
            16,663
            
            
            
            12.0
            %Depreciation
      and amortization
            
            
            26,186
            
            
            
            26,458
            
            
            
            1.0
            %Other
            
            
            25,209
            
            
            
            30,551
            
            
            
            17.5
            %Total
      costs and operating expenses
            
            
            163,552
            
            
            
            190,708
            
            
            
            14.2
            %Operating
      income
            
            
            61,023
            
            
            
            71,609
            
            
            
            (14.8
            )%Non-operating
      expense, net
            
            
            23,696
            
            
            
            24,431
            
            
            
            3.0
            %Net
      income
            
            
            37,327
            
            
            
            47,178
            
            
            
            (20.9
            )%Less:
      net income attributable to the noncontrolling interest in
    UCRP
            
            
            197
            
            
            
            268
            
            
            
            26.5
            %Net
      income attributable to the Partners
            
            $
            37,130
            
            
            $
            46,910
            
            
            
            (20.8
            )%







Paid
Theme Park Admissions decreased 11% during the third quarter of 2009 compared to
the third quarter of 2008, which we believe was primarily due to the downturn in
the global economy. Also during the third quarter of 2009, our domestic market
experienced high-single digit percentage attendance declines compared to the
prior year, while our international market experienced mid-teen digit percentage
attendance declines. This lower volume, when coupled with a 2% drop in total per
capita spending, resulted in a $37.7 million, or 14%, decrease in our total
Operating Revenue versus the same period of 2008. Theme Park Pass Revenue Per
Paid Admission increased 2% as a result of selective price changes to maximize
yield. Theme Park Food, Beverage and Merchandise Revenue Per Turnstile Admission
decreased 9% primarily due to lower guest spending. Other Theme Park Related
Revenue Per Turnstile Admission decreased 3% as demand for our Universal Express
Plus product was negatively impacted by the lower volume. As compared to the
third quarter of 2008, our Other Revenue category was unfavorable by $11.4
million, or 28%, primarily due to $5.9 million in lower rental income from the
three on-site hotels as well as $3.3 million in reduced sales at our travel
company. Both of these items were adversely impacted by the reduced attendance
levels.




Theme
Park Operations was favorable by $3.7 million largely due to decreased
maintenance, entertainment and operational costs resulting from our reduced
attendance levels and management’s cost savings initiatives. Theme Park Selling,
General and Administrative was favorable by $9.0 million, or 24%, due to
reductions in marketing spend and management’s cost savings initiatives
impacting departments throughout the Company. When compared to the third quarter
of 2008, Theme Park Cost of Products Sold decreased 21% during the third quarter
of 2009, which correlates to the decrease in Theme Park Food and Beverage
Revenue and Theme Park Merchandise Revenue of 16% and 19%, respectively.
Similarly, Special Fee Payable to Vivendi Universal Entertainment and Consultant
Fee decreased 12%, which corresponds to the decrease in Total Operating Revenue
of 14%. Other costs and operating expenses was favorable by $5.3 million
principally due to reduced operating costs of $2.3 million and $1.6 million at
our travel company and CityWalk, respectively. These reduced operating costs
correlate to the lower revenues resulting from the unfavorable attendance trends
as discussed previously. Non-operating Expenses was slightly favorable due to
changes in the fair value of our interest rate swaps, which were offset
partially by reduced interest income and lower income from our investments in
unconsolidated joint ventures.




17







NineMonths EndedSeptember 27, 2009 Compared toNineMonths EndedSeptember 28, 2008 (in thousands except
per capita amounts and percentages):






Nine
      Months Ended
            
            
            %
      ChangeSeptember
      27, 2009
            
            
            September
      28, 2008
            
            
            Favorable/
              (unfavorable)Operational
      Data:Paid
      theme park admissions
            
            
            7,046
            
            
            
            8,228
            
            
            
            (14.4
            )%Turnstile
      theme park admissions
            
            
            7,705
            
            
            
            8,838
            
            
            
            (12.8
            )%Theme
      park pass revenue per paid admission
            
            $
            44.15
            
            
            $
            42.40
            
            
            
            4.1
            %Theme
      park food, beverage and merchandise revenue per turnstile
      admission
            
            
            17.65
            
            
            
            18.97
            
            
            
            (7.0
            )%Other
      theme park related revenue per turnstile admission
            
            
            8.29
            
            
            
            9.08
            
            
            
            (8.7
            )%Statement
      of operations data:Operating
      revenues:Theme
      park pass revenue
            
            $
            311,072
            
            
            $
            348,846
            
            
            
            (10.8
            )%Theme
      park food and beverage
            
            
            72,357
            
            
            
            88,165
            
            
            
            (17.9
            )%Theme
      park merchandise
            
            
            63,664
            
            
            
            79,499
            
            
            
            (19.9
            )%Other
      theme park related
            
            
            63,841
            
            
            
            80,242
            
            
            
            (20.4
            )%Other
            
            
            93,172
            
            
            
            114,738
            
            
            
            (18.8
            )%Total
      operating revenues
            
            
            604,106
            
            
            
            711,490
            
            
            
            (15.1
            )%Costs
      and operating expenses:Theme
      park operations
            
            
            127,244
            
            
            
            135,266
            
            
            
            5.9
            %Theme
      park selling, general and administrative
            
            
            92,865
            
            
            
            122,370
            
            
            
            24.1
            %Theme
      park cost of products sold
            
            
            70,017
            
            
            
            88,526
            
            
            
            20.9
            %Special
      fee payable to Vivendi Universal Entertainment and consultant
      fee
            
            
            38,568
            
            
            
            45,107
            
            
            
            14.5
            %Depreciation
      and amortization
            
            
            79,015
            
            
            
            83,861
            
            
            
            5.8
            %Other
            
            
            77,209
            
            
            
            95,773
            
            
            
            19.4
            %Total
      costs and operating expenses
            
            
            484,918
            
            
            
            570,903
            
            
            
            15.1
            %Operating
      income
            
            
            119,188
            
            
            
            140,587
            
            
            
            (15.2
            )%Non-operating
      expense, net
            
            
            71,263
            
            
            
            70,461
            
            
            
            (1.1
            )%Net
      income
            
            
            47,925
            
            
            
            70,126
            
            
            
            (31.7
            )%Less:
      net income attributable to the noncontrolling interest in
    UCRP
            
            
            1,409
            
            
            
            1,882
            
            
            
            25.1
            %Net
      income attributable to the Partners
            
            $
            46,516
            
            
            $
            68,244
            
            
            
            (31.8
            )%









Paid
Theme Park Admissions decreased 14% during the first nine months of 2009
compared to the same period of 2008. As discussed previously, we believe this
was driven by the downturn in the global economy and, to a lesser extent, the
two extra days in 2008 compared to 2009. On a year-to-date basis  in 2009,
both our domestic and international markets experienced mid-teen percentage
attendance declines relative to the comparable period of the prior year.
Accordingly, our total Operating Revenue decreased $107.4 million, or 15%.
Overall total per capita spending in the first nine months of 2009 was
consistent with the first nine months of 2008. Theme Park Pass Revenue Per Paid
Admission increased 4% as a result of selective price changes to maximize yield.
Theme Park Food, Beverage, and Merchandise Revenue Per Turnstile Admission
decreased 7% primarily due to lower guest spending. Other Theme Park Related
Revenue Per Turnstile Admission decreased 9%, principally due to a decrease in
corporate special events revenue of $9.5 million and $3.3 million in reduced
guest spending on our Universal Express Plus product, which typically decreases
in periods of lower attendance. As compared to the first nine months of 2008,
our Other Revenue category was unfavorable $21.6 million, or 19%, as reduced
volume resulted in $7.4 million in lower revenue from our travel company, $7.3
million in lower revenue from our CityWalk operations, and $6.1 million in
reduced rental income from the three on-site hotels.




Theme
Park Operations was favorable by $8.0 million largely due to decreased
maintenance, entertainment and operational costs resulting from our reduced
attendance levels and management’s cost savings initiatives. Theme Park Selling,
General and Administrative was favorable by $29.5 million, or 24%, due to
reductions in marketing spend and management’s cost savings initiatives
impacting departments throughout the Company. When compared to the first nine
months of 2008, Theme Park Cost of Products Sold decreased 21% during the same
period of 2009, which correlates to the decrease in Theme Park Food and Beverage
Revenue and Theme Park Merchandise Revenue of 18% and 20%, respectively.
Similarly, Special Fee Payable to Vivendi Universal Entertainment and Consultant
Fee decreased 15%, which corresponds to the decrease in Total Operating Revenue
of 15%. Compared to the first nine months of 2008, Other Costs and Operating
Expenses was favorable $18.6 million, or 19%, due to reduced operating costs of
$4.2 million relating to the lower number of corporate special events, in
addition to reduced operating costs at our travel company and CityWalk of $5.7
million and $4.8 million, respectively. These reduced operating costs correlate
to the lower revenues from each of these areas as discussed previously.
Non-operating Expenses was unfavorable by $0.8 million compared to 2008 as
higher interest expense resulting from the amendment of our senior secured
credit agreement in July 2008 combined with reduced interest income and lower
income from our investments in unconsolidated joint ventures. These items were
partially offset by favorable changes in the fair value of our interest rate
swaps.






18







EBITDA




Earnings
before interest expense, income taxes, depreciation and amortization or, EBITDA,
is defined as net income excluding: (i) interest expense, net of interest
income; and (ii) depreciation and amortization. Our management assesses
operational performance using EBITDA (as defined) because it is used by some
investors as a measure of our ability to service debt. In addition, it is the
primary basis in the UCDP senior secured credit agreement to determine our
quarterly compliance with our funded debt ratio and the interest coverage ratio,
which is computed based on the trailing four quarters. We believe the UCDP
senior secured credit agreement is a material agreement as it represents a
critical component of our capital structure and an important source of our
liquidity. Our failure to comply with the financial maintenance covenants in the
UCDP senior secured credit agreement would result in an event of default
occurring under the agreement which would give our lenders the right to
accelerate all of the indebtedness then outstanding under that agreement. EBITDA
(as defined) represents earnings before interest, taxes and depreciation and
amortization and certain other adjustments permitted by the definition of EBITDA
in the senior securedcredit agreement. EBITDA
(as defined) is not prepared in accordance with United States generally accepted
accounting principles and should not be considered as an alternative for net
income, net cash provided by operating activities and otherconsolidatedincome or cash flow
statement data prepared in accordance with United States generally accepted
accounting principles or as a measure of profitability or liquidity. EBITDA (as
defined), because it is before debt service, capital expenditures, and working
capital needs, does not represent cash that is available for other purposes at
our discretion. Our presentation of EBITDA (as defined) may not be comparable to
similarly titled measures reported by other companies. The following is a
reconciliation of net cash provided by operating activities to EBITDA (in
thousands):







Three
      Months Ended
            
            
            Nine
      Months EndedSeptember
      27, 2009
            
            
            September
      28, 2008
            
            
            September
      27, 2009
            
            
            September
      28, 2008Net
      cash and cash equivalents provided by operating activities
            
            $
            88,653
            
            
            $
            97,325
            
            
            $
            161,910
            
            
            $
            197,754Adjustments:Interest
      expense
            
            
            26,043
            
            
            
            26,096
            
            
            
            77,239
            
            
            
            75,797Interest
      income
            
            
            (69
            )
            
            
            (920
            )
            
            
            (158
            )
            
            
            (2,520
            )Amortization
      of deferred finance costs
            
            
            (2,390
            )
            
            
            (1,966
            )
            
            
            (7,169
            )
            
            
            (4,549
            )Distributions
      from investments in unconsolidated entities
            
            
            (1,225
            )
            
            
            (772
            )
            
            
            (2,540
            )
            
            
            (2,504
            )Income
      from investments in unconsolidated entities
            
            
            272
            
            
            
            745
            
            
            
            1,601
            
            
            
            2,816Deferred
      special fee and interest payable to affiliates
            
            
            (759
            )
            
            
            (1,409
            )
            
            
            (2,237
            )
            
            
            (3,773
            )Accretion
      of bond discount
            
            
            (209
            )
            
            
            (209
            )
            
            
            (624
            )
            
            
            (625
            )Interest
      on financing obligations
            
            
            (539
            )
            
            
            (596
            )
            
            
            (1,797
            )
            
            
            (1,773
            )Income
      attributable to the noncontrolling interest in UCRP
            
            
            (197
            )
            
            
            (268
            )
            
            
            (1,409
            )
            
            
            (1,882
            )Change
      in working capital
            
            
            (22,296
            )
            
            
            (19,482
            )
            
            
            (26,421
            )
            
            
            (33,359
            )EBITDA
            
            $
            87,284
            
            
            $
            98,544
            
            
            $
            198,395
            
            
            $
            225,382












The
following is a reconciliation of netincomeattributable to the
Partners to EBITDA (in thousands):


Three
      Months Ended
            
            
            Nine
      Months EndedSeptember
      27, 2009
            
            
            September
      28, 2008
            
            
            September
      27, 2009
            
            
            September
      28, 2008Net
      income attributable to the Partners
            
            $
            37,130
            
            
            $
            46,910
            
            
            $
            46,516
            
            
            $
            68,244Adjustments:Interest
      expense
            
            
            26,043
            
            
            
            26,096
            
            
            
            77,239
            
            
            
            75,797Net
      change in fair value of interest rate swaps and amortization of
      accumulated other comprehensive loss
            
            
            (2,006
            )
            
            
            -
            
            
            
            (4,217
            )
            
            
            -Depreciation
      and amortization
            
            
            26,186
            
            
            
            26,458
            
            
            
            79,015
            
            
            
            83,861Interest
      income
            
            
            (69
            )
            
            
            (920
            )
            
            
            (158
            )
            
            
            (2,520
            )EBITDA
            
            $
            87,284
            
            
            $
            98,544
            
            
            $
            198,395
            
            
            $
            225,382










19








Liquidity
and Capital Resources




Cash
flows









The
following table summarizes key aspects of our cash flows (in
thousands):







Nine
      Months EndedSeptember
      27, 2009
            
            
            September
      28, 2008Net
      cash and cash equivalents provided by operating activities
            
            $
            161,910
            
            
            $
            197,754Net
      cash and cash equivalents used in investing activities
            
            
            100,716
            
            
            
            95,901Cash
      paid for capital expenditures
            
            
            102,770
            
            
            
            98,037Net
      cash and cash equivalents used in financing activities
            
            
            67,454
            
            
            
            15,712








During theninemonths endedSeptember 27, 2009 andSeptember 28, 2008, net cash provided by operating
activities was $161.9 million and $197.8 million, respectively. This decrease in cash
flow from operations of $35.8million was largely due to the
reduction in working capital of $6.9million and the decrease in net income
of $22.2million, as discussed
previously.The reduction
in our working capital was chiefly driven by $7.8 million in reduced cash
receipts from our guests as compared to 2008.




Net cash
used in investing activities for the nine months ended September 27, 2009 and
September 28, 2008, totaled $100.7 million and $95.9 million, respectively. For
both years, the amount consisted primarily of capital expenditures. We make
annual investments both to provide ongoing capital support for our existing park
attractions and infrastructure, and also to fund the development of new park
attractions and infrastructure. We believe these investments are critical in
maintaining our position of having technologically advanced theme parks and to
effectively compete with our competitors. These costs can vary from one year to
the next, depending on the timing of the construction cycles.





We estimate our capital
expenditures, excluding
capitalized interest,to be approximately $120.0million during 2009. Our capital
expenditures in excess of the amount permitted by the capital covenant in our
senior secured credit agreement will be funded through partner equity
contributions made in 2008. A large portion of this cost relates to the design
and construction of theHollywood Rip Ride RockitSM
coaster, which opened in summer
2009,andTheWizarding World of Harry
PotterSM
themed area which we anticipate
openingin spring
2010. We estimate our
total anticipated capital investment in The Simpsons RideTM, which opened in May 2008, andthetwoattractionsdiscussed abovewill range from $275.0 million to
$310.0 million. This includes all capital expenditures to build these
attractions except capitalized interest. This also takes into account the net
present value of all license fee payments made during the initial terms of the
applicable licenses, while excluding license payments made during renewal
periods or merchandise royalties.




During theninemonths endedSeptember 27, 2009 andSeptember 28, 2008, net cash used for financing
activities was $67.5million and $15.7million, respectively.The current year amount is comprised
principally of $33.4 million in distributions made to the Partners for their
respective tax liabilities resulting from our net income in 2008, $26.2 million
in distributions made to Holdings primarily to fund its interest payments, and
$5.8 million in payments on our capital lease and financing obligations. The
prior year amount consists primarily of $25.5 million in distributions to
Holdings to fund its interest payments, $11.6 million in distributions to the
Partners for their respective tax liabilities resulting from our net income in
2007, and $4.7 million in payments on our capital lease and financing
obligations. The total of these items was offset partially by $28.7 million in
contributions from the Partners in order to partially fund our capital
expenditures and satisfy the capital covenant in our senior secured credit
agreement.







20







Financial
position




The
following table summarizes key aspects in our financial position and liquidity
(in thousands):


As
      ofSeptember
      27, 2009
            
            
            December
      31, 2008Cash
      and cash equivalents
            
            $
            81,538
            
            
            $
            87,798Unused
      portion of revolving credit facilities
            
            
            100,000
            
            
            
            100,000Current
      portion of long-term borrowings, capital lease and financing
      obligations
            
            
            1,012,905
            
            
            
            5,822Total
      long-term obligations (1)
            
            
            119,609
            
            
            
            1,127,856




(1)
            Long-term obligations include long-term borrowings (excluding
      current portions), long-term capital lease and financing obligations, and
      long-term deferred special fees.





At
September 27, 2009, our total debt was $1,008.6 million, which included $499.6
million outstanding under the bonds due in April 2010 ($500.0 million, net of a
remaining discount of $0.4 million) and $509.0 million outstanding under the
term loan component of our senior secured credit agreement. At September
27, 2009, we also had $181.5million in cash and cash
equivalents and unused revolving credit, consisting of $81.5million in cash and cash
equivalents and $100.0 million available under our revolving credit facilities.
Our senior secured credit agreement and bonds contain certain customary
limitations. We believe we were in compliance with all financial covenants as of
September 27, 2009.The April 2010 notesare due in 2010, while our
senior secured credit agreement calls for quarterly principal installments of
0.25% with the remainder due on June 6, 2011. During 2006, we made a
voluntary prepayment in the amount of $30.0 million, effectively prepaying all
of the principal amounts that would have been due up until the maturity date. As
a result of the amendment in July 2008, the term loan component under our senior
secured credit agreement is repayable in full on April 1, 2010, if the April
2010 notes andHoldings’May 2010 notes are not
refinanced or repaid in full prior to such date. It is highly unlikely that we
will be able to generate enough cash to pay these balances in full prior to the
specified due dates which would then necessitate refinancing these balances.
Furthermore, our access to capital markets and our ability to issue various
securities to raise capital could be affected by further reductions in our bond
ratings, which were downgraded in the first quarter of 2009.Specifically, the
downgrades in our bond rating could result in increased interest rates or other
incremental borrowing costs when we attempt to refinance our debt.





As a
result of our financial position discussed above, we currently are pursuing
alternatives to address the maturity of the April 2010 notes and the Holdings
May 2010 notes.  The alternatives may include additional term loan
borrowings under our existing senior secured credit agreement, reductions in the
amount of our revolving borrowing availability thereunder and the offering by
UCDP of new senior and/or senior subordinated notes for cash, with the intention
of any such transactions being to refinance the April 2010 notes and the
Holdings May 2010 notes.  The proceeds of any such refinancing would be
expected to be used by UCDP to purchase, redeem or otherwise retire all of its
April 2010 and to pay dividends and deferred special fees to UCDP's direct
parent companies in a sufficient amount so that they can purchase, redeem or
otherwise retire all of the May 2010 notes and to pay fees and expenses related
to the refinancing.  The timing, structure and completion of any
refinancing transaction will depend on market conditions. There can be no
assurance of the timing of any refinacing transaction or that it will be
successfully completed.





Additionally,
we have an agreement (the “Consultant Agreement”) with Steven Spielberg (the
“Consultant”) under which we pay a fee for consulting services and exclusivity
equal to a percentage of our gross revenues from the attractions and certain
other facilities owned or operated, in whole or in part, by us. Under the terms
of the Consultant Agreement, the Consultant is also entitled to a fee based on a
percentage of gross revenues of comparable projects, which are gated motion
picture and television themed attractions owned or operated, in whole or in
part, by us, or any of our partners or any of their affiliates, other than in
Universal City, California. At present, the only theme park that is a comparable
project is Universal Studios Japan in Osaka, Japan. It is possible that
comparable projects will be created in the future that would fall under the
Consultant Agreement. For instance, Vivendi Universal Entertainment has entered
into licensing arrangements for Universal theme parks in Singapore and Dubai.
The Consultant may also be entitled to participate in certain sales of equity by
our partners and to participate in certain real estate development activities of
our partners or their affiliates. Although the Consultant Agreement has no
expiration date, starting in June 2010, the Consultant has the right, upon
90 days notice, to terminate the periodic payments under the Consultant
Agreement and receive instead one cash payment equal to the fair market value of
the Consultant’s interest in the revenue streams in the Orlando parks and any
comparable projects that have been open at that time for at least one year,
which fair market value could be significant. If the Consultant exercises the
option and the parties cannot agree on the fair market value of the buyout
option, the fair market value will be determined by a binding appraisal
procedure. We represented under the agreement that the Consultant’s interest in
each of our parks and in any comparable projects will have priority over the
interests of all financiers, lenders and others who may have an interest in that
park or project. Our obligations under the agreement are guaranteed by Universal
Studios, Inc., as successor to MCA Inc., and Universal Studios, Inc.’s
obligations under that guarantee have in turn been assumed by Vivendi Universal
Entertainment. Vivendi Universal Entertainment has indemnified us against any
liability under the Consultant Agreement related to any comparable project that
is not owned or controlled by us. Under the terms of Holdings' May 2010 notes,
the April 2010 notes and the senior secured credit agreement, a lien to secure
our obligations under the Consultant Agreement would be a permitted lien. This
event would adversely impact our liquidity.





On
October 18, 2009, we amended our Consultant Agreement (the “2009 Amendment”).
Under the existing Consultant Agreement, starting in June 2010, the Consultant
had the right, upon 90 days notice, to terminate our obligation to make periodic
payments thereunder and receive instead one cash payment equal to the fair
market value of the Consultant’s interest in the revenue streams in the Orlando
parks and any comparable projects that were open at that time for at least one
year (the “Put Payment”). Under the terms of the 2009 Amendment, the earliest
exercise date for the Put Payment is June 2017. If the Put Payment is exercised,
the Consultant is precluded from competing or consulting with another theme park
for a period of five years and allows us the right to use ideas generated during
the term of the Consultant Agreement without further payment. In addition, the
2009 Amendment establishes a formula-based method to determine the amount of the
Put Payment and modified terms related to comparable projects so that in
addition to the existing comparable park, the four contemplated are vested
immediately for purposes of the quarterly consulting fee payments but each such
contemplated comparable park must still be open for at least one year at the
time the Put Payment is exercised in order for such project to be included in
the Put Payment. The 2009 Amendment also provides the Consultant a
second-priority lien over UCDP's real and tangible personal property to secure
our periodic and one-time payment obligations and caps our ability to incur
secured borrowings to an amount equal to the greater of $975 million and 3.75x
UCDP’s EBITDA. In connection with the 2009 Amendment, NBCU will guarantee our
obligations under the Consultant Agreement and we amended our partnership
agreement to increase the special fee paid thereunder through 2017 from 5.0% to
5.25%. The effectiveness of the 2009 Amendment, the related guarantee and the
amendment to our partnership agreement are each subject to certain conditions,
including consent of the requisite lenders under our existing senior secured
credit facilities.









21










We
believe that funds generated from operations and our available borrowing
capacity will be adequate to fund our debt service requirements, capital
expenditures and working capital requirements up to, but not including, April 1,
2010, which is the early maturity date on the term loan component of our senior
secured credit agreement. Although we believe that our current financial
position and financing options will provide flexibility in financing activities
and permit us to respond to changing conditions, we cannot assure you that our
business will generate sufficient cash flow from operations or that future
borrowings will be available to us under the revolving credit facilities in an
amount sufficient to enable us to pay our indebtedness or to fund our other
liquidity needs. Our ability to continue to fund these items and continue to
reduce debt could be adversely affected by the occurrence of unfavorable events.
For more information, seeItem 1A. RiskFactors – Risks Related to Our
Indebtednessin our Annual Report on
Form 10-K for the fiscal year ended December 31, 2008.




Special
fees




Under UCDP’s partnership agreement, a
“special fee” is payable to Vivendi Universal Entertainment through Universal
CPM. The special fee is calculated at 5% of certain gross operating revenues, as
defined in the UCDP partnership agreement, generated from each of Universal
Studios Florida and Universal’s Islands of Adventure. Subsequent to our
refinancings in December 2004, the most restrictive quarterly covenant for
payment of the special fee is a debt to EBITDA ratio (as defined in the April
2010 notes) of 5.0 to 1.0 or less related to the current special fees and 3.75
to 1.0 or less related to the deferred special fees (as defined in the senior
secured credit agreement). These ratios were met asat each quarter end throughout the
period from December 31, 2008 toJune28, 2009. Accordingly, during the three andninemonths endedSeptember 27, 2009, we paid fees of $9.1million and $24.8million, respectively, to Vivendi
Universal Entertainment. As these ratios were also met as ofSeptember 27, 2009, a payment of $9.8million in special fees will be made
during thefourthquarter of 2009. AtSeptember 27, 2009 and December 31, 2008,
respectively, our consolidated balance sheet included $9.8million and $8.9 million classified as
current liabilities related to the current portion of the special fees payable
to Vivendi Universal Entertainment. Additionally, atSeptember 27, 2009 and December 31, 2008, our
consolidated balance sheet included $94.2million and $92.0 million,
respectively, in long-term deferred special fees payable toHoldings.




CAUTIONARY
NOTE REGARDING FORWARD-LOOKING STATEMENTS




Certain
statements appearing in this report are “forward-looking statements.”
Forward-looking statements include statements concerning our plans, objectives,
goals, strategies, future events, future revenue or performance, capital
expenditures, financing needs, plans or intentions relating to acquisitions,
business trends and other information that is not historical information. When
used in this report, the words “estimates,” “expects,” “anticipates,”
“projects,” “plans,” “intends,” “believes,” “forecasts” or future conditional
verbs, such as “will,” “should,” “could,” or “may” and variations of such words
or similar expressions, are intended to identify forward-looking statements. All
forward looking statements, including, without limitation, management’s
examination of historical operating trends and data, are based upon our current
expectations and various assumptions. Our expectations, beliefs and projections
are expressed in good faith and we believe there is a reasonable basis for them.
However, there can be no assurance that management’s expectations, beliefs and
projections will be achieved. Because these forward-looking statements are
subject to numerous risks and uncertainties, our actual results may differ
materially from those expressed in or implied by such forward-looking
statements. Some of the risks and uncertainties that may cause such differences
include, but are not limited to, risks and uncertainties relating to the global
recession and its duration, severity and impact on overall consumer activity;
the dependence of our business on air travel; the risks inherent in deriving
substantially all of our revenues from one location; our dependence on Vivendi
Universal Entertainment and its affiliates; risks related to unfavorable
outcomes of our legal proceedings; the loss of key distribution channels for
pass sales; competition within the Orlando theme park market; publicity
associated with accidents occurring at theme parks; the loss of material
intellectual property rights used in our business; the seasonality of our
business; the substantial indebtedness of us and our subsidiaries; and the
difficulty we may face in refinancing our indebtedness due to the turmoil and
lack of liquidity in the credit markets and the Consultant’s right to exercise
his put option starting in June 2010. There may also be other factors that may
cause our actual results to differ materially from those expressed in or implied
by any forward-looking statements contained in this report. All forward looking
statements attributable to us or persons acting on our behalf apply only as of
the date of this report and are expressly qualified in their entirety by the
cautionary statements included in this report. We undertake no obligation to
update or revise forward looking statements which may be made to reflect events
or circumstances that arise after the date made or to reflect the occurrence of
unanticipated events, except as required by law.







22















Item3.
            Quantitative
      and Qualitative Disclosures About Market
Risk





The
following is a schedule of our fixed and variable rate debt maturities and
principal payments for each of the next five years, and thereafter (in
thousands, except for percentages):





2009
              
              
              2010
              
              
              2011
              
              
              2012
              
              
              2013
              
              
              Total
              
              
              Fair
      valueDebt:Fixed
      rate debt
              
              $
              —
              
              
              $
              500,000
              
              
              $
              —
              
              
              $
              —
              
              
              $
              —
              
              
              $
              500,000
              
              
              $
              500,000Average
      rate
              
              
              n/a
              
              
              
              11.75
              %
              
              
              n/a
              
              
              
              n/a
              
              
              
              n/aVariable
      rate debt
              
              $
              —
              
              
              $
              509,000
              
              
              $
              -
              
              
              $
              —
              
              
              $
              —
              
              
              $
              509,000
              
              
              $
              498,820Average
      interest rate (1)
              
              
              n/a
              
              
              
              7.04
              %
              
              
              n/a
              
              
              
              n/a
              
              
              
              n/aTotal
      gross debt
              
              $
              —
              
              
              $
              1,009,000
              
              
              $
              -
              
              
              $
              —
              
              
              $
              —
              
              
              $
              1,009,000
              
              
              $
              998,820
  (1)
Includes impact of interest rate swaps.


23












The
following table is a schedule of our interest rate swap agreements including
notional amounts, weighted average interest rates by expected maturity dates and
fair value (in thousands):





2009
              
              
              2010
              
              
              2011
              
              
              2012
              
              
              2013
              
              
              Total
              
              
              Fair
      valueInterest
      Rate Swap:Variable
      to Fixed
              
              $
              325,000
              
              
              $
              -
              
              
              $
              -
              
              
              $
              -
              
              
              $
              -
              
              
              $
              325,000
              
              
              $
              (1,495
              )Average
      pay rate
              
              
              4.63
              %
              
              
              n/a
              
              
              
              n/a
              
              
              
              n/a
              
              
              
              n/a
              
              
              
              n/a
              
              
              
              n/aAverage
      receive rate
              
              
              0.62
              %
              
              
              n/a
              
              
              
              n/a
              
              
              
              n/a
              
              
              
              n/a
              
              
              
              n/a
              
              
              
              n/aFixed
      to Variable
              
              
              n/a
              
              
              
              n/a
              
              
              
              n/a
              
              
              
              n/a
              
              
              
              n/a
              
              
              
              n/a
              
              
              
              n/aAverage
      pay rate
              
              
              n/a
              
              
              
              n/a
              
              
              
              n/a
              
              
              
              n/a
              
              
              
              n/a
              
              
              
              n/a
              
              
              
              n/aAverage
      receive rate
              
              
              n/a
              
              
              
              n/a
              
              
              
              n/a
              
              
              
              n/a
              
              
              
              n/a
              
              
              
              n/a
              
              
              
              n/aTotal
      notional amounts
              
              $
              325,000
              
              
              $
              -
              
              
              $
              -
              
              
              $
              -
              
              
              $
              -
              
              
              $
              325,000
              
              
              $
              (1,495
              )




We are exposed to market risks relating
to fluctuations in interest rates. We may mitigate this risk by paying down
additional outstanding balances on our variable rate loans, refinancing with
fixed rate permanent debt or obtaining cash flow hedge instruments. As a result,
we have $184.0 million of unhedged variable rate debt as ofSeptember 27, 2009. Based on these variable-rate
obligations, each 1% increase or decrease in the level of interest rates would,
respectively, increase or decrease our annual interest expense and related cash
payments by approximately $1.8 million. The sensitivity analysis described
above, contains certain simplifying assumptions, (for example, it assumes a
constant level of variable-rate debt for all maturities and an immediate,
across-the-board increase or decrease in the level of interest rates with no
other subsequent changes for the remainder of the period). Therefore, although
it gives an indication of our exposure to changes in interest rates, it is not
intended to predict future results and our actual results will likely vary. We
are exposed to credit loss in the event of nonperformance by the other party to
the derivative financial instruments. We limit this exposure by entering into
agreements directly with a number of major financial institutions that meet our
credit standards and that are expected to satisfy their obligations under the
contracts. For more information about our interest rate swaps see Note 6 to the consolidated financial statements of our annual
report on Form 10-K for the fiscal year ended December 31,
2008.

























24

















Item4.
            Controls
      and Procedures







Universal
City Development
Partners, Ltd.




The management of Universal City
Development Partners Ltd.
( “UCDP”) carried out an
evaluation, with the participation of UCDP’s Principal Executive Officer and
Principal Financial Officer, of the effectiveness of UCDP’s disclosure controls and procedures as
of the end of the period covered by this report. Based upon that
evaluation, UCDP’s
Principal Executive Officer and
Principal Financial Officer concluded that UCDP’s disclosure controls and procedures were
effective to ensure that information required to be disclosed by UCDP in the reports that it files or submits
under the Securities Exchange Act of 1934 is recorded, processed, summarized and
reported within the time periods specified in the rules, regulations and forms
promulgated by the Securities and Exchange Commission.




There was no change in UCDP’s internal control over financial
reporting during the quarter endedSeptember 27, 2009 that has materially affected, or
is reasonably likely to materially affect, UCDP’s internal control over financial
reporting.




UCDP Finance,
Inc.




The management of UCDP Finance, Inc. (“Finance”) carried out
an evaluation, with the participation of Finance’s Principal Executive Officer
and Principal Financial Officer, of the effectiveness of Finance’s disclosure
controls and procedures as of the end of the period covered by this report.
Based upon that evaluation, Finance’s Principal Executive Officer and Principal
Financial Officer concluded that Finance’s disclosure controls and procedures
were effective to ensure that information required to be disclosed by Finance in
the reports that it files or submits under the Securities Exchange Act of 1934
is recorded, processed, summarized and reported within the time periods
specified in the rules, regulations and forms promulgated by the Securities and
Exchange Commission.




There was
no change in Finance’s internal control over financial reporting during the
quarter ended September 27, 2009 that has materially affected, or is reasonably
likely to materially affect, Finance’s internal control over financial
reporting.







25







PART
II — OTHER INFORMATION





Item1.
            Legal
      Proceedings







See Note 8 in PartI —
Item1. Financial
Statements in this
document for a detailed description of current legal
proceedings.





Item1A.
            Risk
      Factors





The following risks described in our Annual Report on Form 10-K for
the year ended December 31, 2008, are hereby being updated as a result of the
October 18, 2009 amendment to the Consulting Agreement as described in note 9 to
our consolidated financial statements contained in “Item1. Financial
Statements”.  References in
this “Risk Factors” section to the Consultant Agreement refer to the Consultant
Agreement as amended. As described in note 9 to our consolidated financial
statements contained in “Item1. Financial
Statements”, the
effectiveness of the amendment to the Consulting Agreement is subject to the
satisfaction of certain conditions.  In the event that these
conditions are not satisfied and the amendment to the Consulting Agreement does
not become effective, we refer to you the risks originally described in our
Annual Report on Form 10-K for the year ended December 31, 2008.  The
following risks are in addition to the other risks described in our Annual
Report on Form 10-K for the year ended December 31, 2008, as updated in our
quarterly report on Form 10-Q for the quarter ended March 29,
2009.
  Our ability to refinance our debt
obligations could be adversely impacted by the Consultant’s right, starting in
June2017, to terminate
the periodic payments under the Consultant Agreement and receive instead one
payment equal to the fair market value of the Consultant’s interest in the
Orlando parks and any comparable projects or, under certain circumstances, an
alternative one-time payment.
  We have
an agreement (the “Consultant Agreement”) with a Consultant (as defined in note
8 to our consolidated financial statements contained in “Item1. Financial
Statements”)
under which we pay a fee for consulting services and exclusivity equal to a
percentage of our gross revenues from the attractions and certain other
facilities owned or operated, in whole or in part, by us. The Consultant
Agreement also provides that the Consultant is entitled to a fee based on a
percentage of gross revenues of comparable projects, which are gated motion
picture and television themed attractions owned or operated, in whole or in
part, by us, or any of our partners or any of their affiliates, other than in
Universal City, California. At present, the only operating theme park that is a
comparable project is Universal Studios Japan in Osaka, Japan, which is not
owned by us. The amount of fees paid by Universal Studios Japan to the
Consultant have historically been between 70% and 80% of the fees paid to the
Consultant by us.  Fees with respect to Universal Studios Japan are
paid by an affiliate of Vivendi Universal Entertainment and are not paid by
UCDP. In addition to the existing comparable park, there are four contemplated
comparable parks which are vested immediately for purposes of the consulting fee
payments and it is possible that other comparable projects will be created in
the future that would fall under the Consultant Agreement. In fiscal years 2008,
2007 and 2006, the fees paid by us to the Consultant under the Consultant
Agreement were approximately $19.6 million, $19.6 million and $18.1 million,
respectively. The Consultant will have a lien on certain of our assets to secure
his interests under the Consultant Agreement.  Under the terms of the
May 2010 notes, the April 2010 notes and our senior secured credit agreement,
the lien securing our obligations under the Consultant Agreement is a permitted
lien. The existence of this permitted lien is likely to make refinancing more
difficult.
  The
Consultant Agreement does not have an expiration date, but starting in
June 2017, the Consultant has the right upon 90 days’ notice to terminate
the periodic payments under the Consultant Agreement and receive instead one
cash payment equal to the fair market value of the Consultant’s interest in the
ongoing revenue streams or, under certain circumstances, an alternative one-time
payment, in each case with respect to the Orlando parks and any comparable
projects that have been opened at that time for at least one year, which amounts
could be significant. The amount of such cash payment would be determined in a
manner that includes fees paid with respect to Universal Studios Japan and any
other comparable parks that may open.  Because this could increase the
size of such cash payment even if a portion of such cash payment is not our
responsibility in the first instance, it could make the financing of any such
payment more difficult. In addition, the Consultant Agreement limits the amount
of secured debt we may incur to the greater of $975.0 million and 3.75 times our
EBITDA (as defined in our senior secured debt
documents).  Accordingly, we may not be able to refinance our existing
debt on a secured basis or the payment to the Consultant.  This could
make any financing in the future more difficult. We cannot predict whether the
Consultant will exercise his payment option or the timing of any such
decision.  Due to uncertainties in the amount and timing of such cash
payment and our ability to make such a cash payment and the limits on our
ability to incur additional senior secured debt, our ability to refinance our
senior secured credit agreement and April 2010 notes (or Holdings’ ability to
refinance the May 2010 notes), and our ability to incur future indebtedness is
likely to be adversely impacted by this right of the Consultant (for more
information about the Consultant Agreement, see notes 8 and 9 to our
consolidated financial statements contained in “Item1. Financial
Statements”).
  Our
debt agreements and the Consultant Agreement contain restrictions that limit our
flexibility in operating the business.
  Our
senior secured credit agreement and the indenture under which our April 2010
notes are issued (see note 5 to our consolidated financial statements contained
in “Item 8. Financial
Statements and Supplementary Data”in our annual report on Form 10-K for
the year ended December 31, 2008) contain a number of significant covenants
that, among other things, restrict our ability to:
 •
                incur
      additional indebtedness;
 
 •
                create
      liens on our assets;
 
 •
                issue
      dividends;
 
 •
                engage
      in mergers or acquisitions; and
 
 •
                make
      investments.
  These
restrictive covenants may not allow us the flexibility we need to operate the
business in an effective and efficient manner and may prevent us from taking
advantage of strategic opportunities that would benefit our business or
addressing the effects of the global recession and liquidity crisis in the
financial markets.
  In
addition, we are required under our senior secured credit agreement to satisfy
specified financial ratios and tests. Our ability to comply with those financial
ratios and tests may be affected by events beyond our control, including the
current recessionary economic environment, and we may not be able to meet those
ratios and tests. A breach of any of those covenants could result in a default
under our senior secured credit agreement and the lenders could elect to declare
all amounts borrowed under our senior secured credit agreement, together with
accrued interest, to be immediately due and payable and could proceed against
the collateral securing that indebtedness. Substantially all of our assets are
pledged as collateral pursuant to the terms of our senior secured credit
agreement. If any of our indebtedness were to be accelerated, our consolidated
assets may not be sufficient to repay in full that indebtedness. In addition, as
described above, the terms of the Consultant Agreement limit our ability to
incur existing or subsequent senior secured debt.  In light of the
current global economic recession and liquidity crisis in the financial markets,
we would have difficulty finding alternative financing.
  Our
substantial indebtedness could adversely affect our financial condition and
prevent us from fulfilling our obligations under the April 2010 notes. In
addition, we are highly leveraged and have substantial debt service
obligations.
  As of
December 31, 2008, the April 2010 notes were effectively subordinated to $509.0
million of secured indebtedness under our amended and restated senior secured
credit facilities and $239.8 million of payables and other liabilities. An
additional $100.0 million is available for future borrowings under the revolving
portion of the amended and restated senior secured credit facilities and, in
addition, we may borrow up to $200.0 million of uncommitted incremental term
loans from time to time, all of which would be secured and effectively senior to
our noteholders. Furthermore, the Consultant will have a lien on certain of our
assets to secure his interests under the Consultant Agreement.  As a
result of the foregoing, we are highly leveraged. This level of indebtedness
could have important consequences to you, including the following:
 •
                it
      may limit our ability to borrow money for working capital, capital
      expenditures, acquisitions, debt service requirements and general
      corporate or other purposes;
 
 •
                it
      may limit our flexibility in planning for, or reacting to, changes in our
      business and future business
opportunities;
 
 •
                we
      will be more highly leveraged than some of our competitors, which may
      place us at a competitive
disadvantage;
 
 •
                it
      may make us more vulnerable than less leveraged companies to a downturn in
      our business or the economy;
 
 •
                the
      debt service requirements of our indebtedness could make it more difficult
      to generate cash;
 
 •
                a
      substantial portion of our cash flow from operations will be dedicated to
      the repayment of our indebtedness, including indebtedness we may incur in
      the future, and will not be available for other purposes;
    and
 
 •
                there
      would be a material adverse effect on our business and financial condition
      if we were unable to service our indebtedness or obtain additional
      financing, as needed.
  Our
substantial debt could have other important consequences to you. For example,
our failure to comply with the restrictive covenants in the indenture governing
the April 2010 notes, which limit our ability to incur debt and sell assets,
could result in an event of default that, if not cured or waived, could harm our
business or prospects and could result in our bankruptcy.
  Despite
our substantial indebtedness, we may still incur significantly more debt.
Moreover, we may incur a significant amount of additional secured indebtedness.
This could exacerbate the risks described above.
  The terms
of the indenture governing the April 2010 notes and the senior secured credit
agreement permit us to incur significant additional indebtedness in the future.
As of December 31, 2008, we had $100.0 million available for additional
borrowing under the revolving credit portion of the senior secured credit
facilities. In addition, we may borrow up to $200.0 million of uncommitted
incremental term loans from time to time. All of those borrowings are
effectively senior to the April 2010 notes. Furthermore, the Consultant will
have a lien on certain of our assets to secure his interests under the
Consulting Agreement and the April 2010 notes are effectively subordinated to
his interests to the extent of the value of those assets.  If new debt
is added to our current debt levels, this will increase the risks described
above. Our substantial indebtedness could adversely affect our financial
condition and prevent us from fulfilling our obligations under the April 2010
notes.
  If
we are unable to adequately protect the right to use the intellectual property
of the themed elements of our rides and attractions, we may be required to
re-theme certain rides and attractions, which will be expensive and time
consuming. In addition, if there is an uncured event of default under certain of
our intellectual property agreements and such agreements are terminated, we may
suffer negative consequences such as acceleration of payments due
thereunder.
  The use
of themed elements in our rides and attractions is dependent upon our obtaining
and maintaining intellectual property licenses granting us the rights to use
those elements. Failure to protect our existing intellectual property rights may
result in the loss of those rights or require us to make significant additional
payments to third parties for infringing their intellectual property rights. The
loss of the right to use a particular themed element means that we would be
unable to operate the rides or attractions that utilize the relevant element.
This may require us to re-theme those rides or attractions which may involve
taking the relevant ride or attraction out of service and may require
significant capital expenditures. Any of those actions could negatively impact
our results of operations, name recognition and growth prospects. In addition,
if there was an event of default that we failed to cure under one of our
intellectual property agreements and such agreement was terminated, we may
become subject to accelerated payments. For example, the WB Agreement is
terminable, subject to applicable cure periods, if we fail to maintain quality
standards, fail to invest minimum required capital, fail to use the properties
in accordance with the license, or upon other customary events of default. In
addition, if we sell Universal’s Islands of Adventure, or if 50% of UCDP is not
owned by Vivendi Universal Entertainment or its affiliates, the agreement is
terminable unless the buyer of Universal’s Islands of Adventure or of the
interests in UCDP meets certain financial and reputation tests. In addition,
Universal’s Islands of Adventure must either continue to be managed by NBCU or
continue to be operated under a license from NBCU that enables NBCU to maintain
the quality and reputation of Universal’s Islands of Adventure (the “NBCU
License Agreement”). Our partnership agreement has been amended to provide that
NBCU will execute the NBCU License Agreement with us, on the same financial
terms as set forth in our existing partnership agreement and the Universal
License Agreement, if, following such sale or change in control, we will no
longer be managed by NBCU. In the event that, following such sale or change in
control, in accordance with the WB Agreement, the name of the Universal’s
Islands of Adventure theme park no longer contains the word “Universal” or
“Universal’s”, then The Wizarding World of Harry PotterTM,
Jurassic Park®,
Seuss LandingTM and
Marvel Super Hero Island® and
other themed areas of Universal’s Islands of Adventure need to be operated under
the NBCU License Agreement, or the name of the theme park and resort must
include the name of another major recognized theme park operator, major
established motion picture and television studio or another name approved by WB.
In the event of termination by WB due to our default, a sale of Universal’s
Islands of Adventure or a change of control of UCDP for which the foregoing
requirements are not satisfied, payments due with respect to the remaining term
of the agreement will be accelerated and due immediately. In addition, we
license various elements based on The SimpsonsTM,
including certain characters under the Fox Agreement from Twentieth Century Fox
Licensing & Merchandising (“Fox”). The Fox Agreement would be
terminable in the event of our breach, or in certain cases following a change of
control to which Fox did not consent. If Fox were to terminate the Fox
Agreement, payments due with respect to the remaining term of the Fox Agreement
will continue to be due and payable as and when they would have become due and
payable, except that if the breach is a result of a change of control, then 50%
of such remaining payments allocated to us shall be due and payable as and when
they would have become due and payable. See “Item 1. Business—Intellectual
property” in our annual report on Form 10-K for the year ended December
31, 2008.
  Risks related to our reliance on
Vivendi Universal Entertainment and its affiliates, including our use of the
“Universal” name and certain intellectual property.
  Our
continued use of the “Universal” name and our future access to new intellectual
property from the Universal License Parties is dependent on there not being a
change of control as defined under the Universal License Agreement. In addition,
a change of control could have other negative consequences for us, including
potential termination of the WB Agreement, acceleration of payments due under
certain of our license agreements and the loss of significant benefits we enjoy
from our relationship with certain of our affiliates. Accordingly, a change of
control under our license agreements could impair our name recognition and
growth prospects and negatively impact our results of operations.
  We
license the right to use the “Universal” name and a substantial number of
intellectual properties as street entertainment characters and as themed
elements in rides and attractions from the Universal License Parties. See “Item 1. Business—Intellectual
property” in our annual report on Form 10-K for the year ended December
31, 2008. Our right to use the “Universal” name in connection with Universal
Orlando continues indefinitely at no cost to us until the latest of (i) 30
months after the occurrence of certain change of control events (as described in
UCDP’s partnership agreement), (ii) 30 months after any termination of the
WB Agreement prior to its scheduled expiration, or (iii) the expiration of
the WB Agreement in accordance with its terms. Under the Universal License
Agreement, a change of control is described as when (a) Universal CPM is no
longer a wholly owned subsidiary of USI, Vivendi Universal Entertainment, or any
of their respective affiliates, or (b) the Universal License Parties do not
own any interest in us. A change of control under our license agreements, such
as Blackstone or a third party unaffiliated with the Universal License Parties
acquiring all of the partnership interests in us, would not necessarily
constitute a change of control under the indentures governing the April 2010
notes and the May 2010 notes. If we are unable to use the “Universal” name, and
if we are unable to partner with another similar, recognizable brand, the name
recognition of our theme parks could be impaired.
  Our right
to use the creative and proprietary elements controlled by the Universal License
Parties continues at no cost to us, subject to third party contractual
limitations, until the later of the expiration or termination of the WB
Agreement in accordance with its terms or, if sooner, the date that neither we
nor a permitted successor or assign is a party to the WB Agreement, or the date
such intellectual property rights would otherwise cease to be licensed to us.
The Universal License Parties are required to continue to license those
intellectual properties that are currently licensed to us for as long as we or
our permitted successor or assign remains a party to the WB Agreement and such
WB Agreement remains in effect, and we continue to operate our theme parks at a
substantially similar standard, even if the Universal License Parties no longer
have an ownership interest in us. However, in a situation where Blackstone or a
third party unaffiliated with the Universal License Parties acquires all of the
partnership interests in us, the Universal License Parties are not required to
grant us a license to any new intellectual property rights that they may acquire
in the future that may be or become useful or necessary for the operation of our
theme parks. Our inability to acquire proprietary and creative elements for
possible new attractions could impair the growth prospects of our theme parks.
The Universal License Parties could also claim that our theme parks were not
being operated to a sufficiently high standard after Blackstone or a third party
unaffiliated with the Universal License Parties acquired all of the partnership
interests in us, and revoke the license completely. If this were to occur, we
may be unable to operate our theme parks for an extended period of time, and may
not be able to continue operating our theme parks at all. In addition, the WB
Agreement is terminable if the Universal License Parties fail to remain involved
either as a 50% owner or through certain license arrangements, unless WB
consents to the assignment or the entity to which Universal’s Islands of
Adventure or our partnership interests are transferred meets other tests
designed to ensure the financial capability of the buyer and to maintain the
reputation of our theme parks. In the event of termination by WB due to our
default or a sale of Universal’s Islands of Adventure or a change of control of
us for which the foregoing requirements are not satisfied, payments due with
respect to the remaining term of the WB Agreement will be accelerated and due
immediately.
  We also
rely on Vivendi Universal Entertainment and its affiliates for management
oversight, advisory and other services. In its capacity as our manager, Vivendi
Universal Entertainment provides creative services in relation to development of
our rides and attractions. Most of our insurance is arranged by GE through
global programs for its businesses via licensed insurers issuing enforceable
policies. We have numerous other arrangements with affiliates of Vivendi
Universal Entertainment and, indirectly, NBC Universal and GE, which provide us
with significant benefits that may be reduced or lost completely if Blackstone
or a third party unaffiliated with Vivendi Universal Entertainment gains control
of us pursuant to the right of first refusal or otherwise. For a better
understanding of these arrangements, see “Item 13. Certain Relationships and
Related Transactions, and Director Independence” in our annual report on
Form 10-K for the year ended December 31, 2008. Although Vivendi Universal
Entertainment is required by the terms of the partners’ agreement to provide us
with the same level of services for a transitional twelve-month period if
Blackstone were to acquire all of our partnership interests in us pursuant to
the right of first refusal, there can be no guarantee that Vivendi Universal
Entertainment and Blackstone will reach agreement regarding the provision of
such services beyond this twelve-month period or that Blackstone will thereafter
find a third party with the experience and expertise to provide comparable
services to those provided by Vivendi Universal Entertainment and its
affiliates. In addition, the costs of the services currently provided by Vivendi
Universal Entertainment may be significantly more expensive if they were
purchased from a third party.
  A change
of control in us could impair our continued use of the “Universal” name and our
future access to new intellectual property rights, terminate or accelerate
payments under the WB Agreement and reduce or increase the cost of the benefits
we enjoy from our relationships with certain affiliates, thus negatively
impacting our name recognition, our growth prospects and our results of
operations. In addition, we face risks related to a change of control under
certain of our business agreements.
  
 The
following risk is in addition to the other risks described above and in our
Annual Report on Form 10-K for the year ended December 31, 2008, as updated in
our quarterly report on Form 10-Q for the quarter ended March 29,
2009.
 
 The use of, and ability to create
derivative works from, copyrighted material is important in our
business.  If an author claims a right to terminate a copyright for a
work from which we have created derivative works for use in our business, our
ability to create new derivative works from any such work in the future could be
compromised or the costs we incur to preserve our rights to continue to create
derivative works from any such work could increase.
 
 Copyright
is the right to prevent others from copying protected expression in a work of
authorship. Under the U.S. Copyright Act, the owner of a copyright enjoys a
number of rights, including the right to prepare derivative works based upon the
copyrighted work.  Bona fide individual authors and their heirs have a
statutory right to terminate their earlier assignments and licenses in certain
copyrighted works by sending notice within a statutorily-defined window of
time.  The timing requirements with respect to such notice period mean
that notice is required years in advance of the statutory termination
date.  For example, we license our rights to the Incredible Hulk
(“Hulk”) from Marvel and we are aware that the estate of Jack Kirby (the “Kirby
Estate”) has claimed a right to terminate rights that allegedly were granted by
Jack Kirby to Marvel Entertainment, Inc. or its predecessor ("Marvel") for the
Hulk.  If the Kirby Estate is successful in its claim of termination,
such termination would only be effective after
2018.


Item2.
            Unregistered
      Sales of Equity Securities and Use of
Proceeds







Not
applicable.





Item3.
            Defaults
      upon Senior Securities







Not
applicable.





Item4.
            Submission
      of Matters to a Vote of Security
Holders







None.





Item5.
            Other
      Information





None.




Item6.
            Exhibits.







a)
Exhibits


31.1
            
            Certification of Principal
      Executive Officer of Universal City Development Partners, Ltd.
      Pursuant to Rule 13a-14(a) or Rule 15d-14(a).31.2
            
            Certification of Principal
      Financial Officer of Universal City Development Partners, Ltd.
      Pursuant to Rule 13a-14(a) or Rule 15d-14(a).31.3
            
            Certification of Principal
      Executive Officer of UCDP Finance, Inc. Pursuant to Rule
      13a-14(a) or Rule 15d-14(a).31.4
            
            Certification of Principal
      Financial Officer of UCDP Finance, Inc. Pursuant to Rule
      13a-14(a) or Rule 15d-14(a).32.1
            
            Certification of Principal
      Executive Officer of Universal City Development Partners, Ltd.
      Pursuant to 18 U.S.C. Section 1350.32.2
            
            Certification of Principal
      Financial Officer of Universal City Development Partners, Ltd.
      Pursuant to 18 U.S.C. Section 1350.32.3
            
            Certification of Principal
      Executive Officer of UCDP Finance, Inc. Pursuant to 18
      U.S.C. Section 1350.32.4
            
            Certification of Principal
      Financial Officer of UCDP Finance, Inc. Pursuant to 18
      U.S.C. Section 1350.





26








SIGNATURES




Pursuant
to the requirements of the Securities Exchange Act of 1934, the Registrants have
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.





UNIVERSAL
      CITY DEVELOPMENT
      PARTNERS, LTD.Date:
      October 20, 2009
            
            
            
            By:
            
            /s/
      Tracey L. StockwellName:
            
            Tracey
      L. StockwellTitle:
            
            Principal
      Financial OfficerUCDP
      FINANCE,
      INC.Date:
      October 20, 2009
            
            
            
            By:
            
            /s/
      Tracey L. StockwellName:
            
            Tracey
      L. StockwellTitle:
            
            Principal
      Financial Officer
























27