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Magna Entertainment Corp. Announces Results for First Quarter
ARCADIA, CA, May 15, 2000 /CNW-PRN via COMTEX/ -- Magna Entertainment Corp.
(TSE: MIE.A, MEH: NASDAQ: MIEC) today reported its financial results for the
first quarter ended March 31, 2000.
First Quarter Ended (1)
Revenue $ 80.7 $ 39.9
Income Before Income Taxes $ 21.2 $ 16.2
Net Income $ 12.0 $ 9.3
Fully diluted earnings per share $ 0.15 $ 0.12
(1) All amounts are reported in millions of U.S. dollars,
except per share figures.
Revenue, which is net of purses, for the first quarter ended March 31, 2000 was
$80.7 million, income before income taxes was $21.2 million, net income was
$12.0 million and fully diluted earnings per share were $0.15.
The financial results for first quarter 2000 reflect the full quarter's
operations for all of the Company's racetracks, other than Great Lakes Downs.
The Company acquired Great Lakes Downs in Muskegon, Michigan during the quarter.
The purchase price was satisfied by the issuance of 267,416 shares of Class A
Subordinate Voting Stock of the Company. Great Lakes Downs is the newest
pari-mutuel gaming venue in Michigan, having commenced its first year of
operations in 1999. The financial results for the first quarter 1999 reflect
only the operations of the Santa Anita racetrack as it was purchased in late
During the first quarter of 2000, cash generated from operations was $7.6
million. Total investment activities used a net $3.4 million, including the
acquisition of Great Lakes Downs for $1.8 million and fixed asset additions of
$2.4 million. Also during the period, bank indebtedness and long-term debt
totaling $7.5 million was repaid.
``During the quarter, the Company completed an exciting ninety (90) days of live
racing, and tistration and spin-off of the Company as a public entity'', said
Jerry D. Campbell, the Company's President and Chief Executive Officer. ``Santa
Anita Park, despite unusually high rainfall in February, recently completed its
Winter race meet increasing handle, or total wagering, by four percent (4%) over
1999 for a new pari-mutuel track record of $1.04 billion.
``The Company offers approximately 330 days of live racing, although
disproportionate revenues occur in the first two quarters of the year at premier
racetracks in California and Florida. The Company's Florida operations are
positioned to achieve improved profitability in the future as a result of the
agreement with the owner of Hialeah Park to conduct its Spring meet at
Gulfstream Park and the reduction of state tax on wagers for Florida
Due to the concentration of live race dates during the first quarter, the
Company's EBITDA is seasonal. Historically, 80% of the EBITDA generated by its
racetracks occurs during the first quarter. The Company anticipates that this
trend will continue for the near future.
``For the remainder of the year, management will focus its attention on
continued best practices and synergies at the racetracks. The implementation
during the quarter of a disposition plan for its real estate holdings in North
America and Europe and improved operations will position the Company as one of
the leaders in the future expansion of the pari-mutuel industry through new
multi-media and Internet initiatives,'' stated Mr. Campbell.
The Company has entered into property sales agreements providing anticipated
proceeds of approximately $14 million in the second and third quarter. In
addition, during the quarter the Company completed the renegotiation of its
existing $10.0 million revolving operating line of credit and a new $63 million
term loan with Wells Fargo Bank. The credit facility is secured by one of the
Company's racetracks although the funds are available for corporate use.
In addition, all regulatory approvals were obtained from the U.S. and Canadian
securities commissions which permitted Magna International Inc. (``Magna'') to
proceed with its previously announced plans to transform the Company into a
public company traded on the Toronto Stock Exchange and NASDAQ. On March 10,
2000 Magna distributed approximately 20% of the Company's shares through a
special stock dividend of either the Company's Class A Subordinate Voting Stock
or Exchangeable Shares of MEC Holding (Canada) Inc., which are exchangeable into
Class A Subordinate Voting Stock, to Magna's shareholders. The dividend record
date was February 25, 2000.
The Company, one of the largest operators of premier horse racetracks in the
United States, acquires, develops and operates horse racetracks and related
pari-mutuel wagering operations. These racetracks, which include Santa Anita
Park and Golden Gate Fields in California, Gulfstream Park in Florida, Remington
Park in Oklahoma, Thistledown in Ohio and Great Lakes Downs in Michigan,
accounted for 23% of the amounts wagered on pari-mutuel racing in the United
States in 1999. As a complement to its horse racing business, the Company is
exploring the development of media sports wagering operations, including
telephone account, interactive television, and Internet-based wagering, as well
as certain leisure and retail-based real estate projects.
The Company will hold a conference call to discuss the first quarter results on
Tuesday, May 16, 2000 at 11:00 a.m. Toronto Time (E.D.T.). The number to use for
this call is 1-800-348-6433. Please call 10 minutes prior to the conference
call. The overseas number to call is 1-212-271-4737. The conference call will be
chaired by Jerry D. Campbell, President and Chief Executive Officer, and David
A. Mitchell, Executive Vice President and Chief Financial Officer. For further
information, please contact David A. Mitchell at (626) 574-6313.
This press release contains various ``forward-looking statements'' within the
meaning of the Private Securities Litigation Reform Act of 1995 (the ``Act'').
The Act provides certain ``safe harbor'' provisions for forward-looking
statements. All forward-looking statements made in this press release are made
pursuant to the Act. The reader is cautioned that these statements represent our
judgment concerning the future and are subject to risks and uncertainties that
could cause our actual operating results and financial condition to differ
materially. Forward-looking statements are typically identified by the use of
terms such as ``may,'' ``will,'' ``expect,'' ``anticipate,'' ``estimate,'' and
similar words, although some forward-looking statements are expressed
differently. Although we believe that the expectations reflected in such
forward-looking statements are reasonable we can give no assurance that such
expectations will prove to be correct. Important factors that could cause actual
results to differ materially from our expectations include, but are not limited
to: the impact of competition from operators of other racetracks and from other
forms of gaming (including from Internet and on-line wagering); a substantial
change in law or regulations affecting our gaming activities; a substantial
change in allocation of live racing days; our continued ability to effectively
compete for the country's top horses and trainers necessary to field
high-quality horse racing; our continued ability to complete expansion projects
designed to generate new revenues and attract new patrons; our ability to sell
some of our real estate when we need to or at a price we want; the impact of
inclement weather; and our ability to integrate recent racetrack acquisitions.