EXHIBIT 1
MAGNA ENTERTAINMENT CORP. 285 West Huntington Drive
Arcadia, CA 91007
Tel: (626) 574-7223
Fax: (626) 446-9565
PRESS RELEASE
MAGNA ENTERTAINMENT CORP.
ANNOUNCES 1999 FINANCIAL RESULTS
AND SPIN-OFF TIMING
March 6, 2000, Arcadia, California......Magna Entertainment Corp. (TSE: MIE.A,
MEH: NASDAQ: MIECV (MIEC after March 10, 2000)) today reported its financial
results for the fiscal year ended December 31, 1999.
Year Ended (1)
December 31,
1999
----
Revenue $ 98.8
Net Earnings Before Tax $ 2.8
Net Earnings $ 0
Fully diluted earnings per share $ 0
(1) All amounts are reported in millions of U.S. dollars, except per
share figures.
Revenue for the fiscal year ended December 31, 1999 was $98.8 million, net
earnings before tax were $2.8 million and there were no net earnings or earnings
per share.
The financial results for fiscal 1999 do not reflect the full year's operations
for all of the Company's race tracks, other than Santa Anita Park, as these race
tracks were acquired in the second half of the fiscal year substantially after
the conclusion of the acquired race tracks' live meets.
During fiscal 1999, cash generated from operations was $17.9 million. Total
investment activities during the fiscal year were $215.4 million, including
$208.3 million in business acquisitions and capital expenditures, principally
for the acquisition of Gulfstream Park, Golden Gate Fields, Thistledown and
Remington Park, and improvements at Santa Anita Park.
In addition, the Company confirmed that regulatory approvals have been obtained
from the U.S. and Canadian securities commissions which permit Magna
International Inc. to proceed with its previously announced plans to transform
the Company into a public company traded on the Toronto Stock Exchange and
NASDAQ by distributing approximately 20% of the Company's Class A Subordinate
Voting Stock to Magna's shareholders. The distribution will take place on March
10, 2000 by way of a special stock dividend. The dividend record date was
February 25, 2000.
The previously announced acquisition of Great Lakes Downs in Muskegon, Michigan
by a subsidiary of the Company was recently completed. 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.
- 2 -
The owners of Hialeah Park in Miami have entered into a one year lease agreement
with the Company to conduct its 2000 race meet at the Company's Florida
facilities, Gulfstream Park. The Company's management and employees will be
actively involved in operating the Spring racing at Gulfstream conducted by
Hialeh.
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, account
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 year end results on
Monday, March 6, 2000 at 10:30 a.m. E.S.T. The number to use for this call is
1-800-246-9120. Please call in 10 minutes prior. The number for overseas is 1-
415-908-6215. 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.
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MAGNA ENTERTAINMENT CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
- -----------------------------------------------------------------------------------------------------
[Unaudited]
[United States dollars in thousands,
except per share figures]
- -----------------------------------------------------------------------------------------------------
Twelve months ended Three months ended
December December December December
31, 31, 31, 31,
1999 1998 1999 1998
- -----------------------------------------------------------------------------------------------------
Revenue
Racetrack
Wagering 48,404 2,513 8,248 2,513
Non-wagering 31,022 1,439 12,224 1,439
Real estate 19,370 21,239 7,203 4,043
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98,796 25,191 27,675 7,995
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Costs and expenses
Racetrack
Operating costs 63,302 3,461 21,003 3,461
General and administrative 5,987 164 1,994 164
Real estate
Operating costs 18,071 25,348 6,874 4,380
General and administrative 1,833 2,004 534 1,026
Depreciation and amortization 7,924 2,762 3,248 1,025
Interest expense 1,666 2,106 407 929
Interest income (2,586) (31) (1,591) (7)
Other expenses 454 - 454 -
Gain on disposal of real estate property (628) - (628) -
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96,023 35,814 32,295 10,978
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Income (loss) before income taxes 2,773 (10,623) (4,620) (2,983)
Income tax provision (recovery) 2,835 (177) (1,558) (177)
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Net loss (62) (10,446) (3,062) (2,806)
Comprehensive income (loss):
Foreign currency translation adjustment (7,493) 2,865 (3,585) (966)
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Comprehensive loss (7,555) (7,581) (6,647) (3,772)
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Loss per share of Class A Subordinate Voting
Stock, Class B Stock or Exchangeable Share:
Basic and diluted $0.00 $(0.13) $(0.04) $(0.04)
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Average number of shares of Class A
Subordinate Voting Stock, Class B
Stock and Exchangeable Shares
[in thousands]:
Basic and diluted 78,686 78,535 79,144 78,535
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MAGNA ENTERTAINMENT CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
- -------------------------------------------------------------------------------------------------------------------
[Unaudited]
[United States dollars in thousands]
- -------------------------------------------------------------------------------------------------------------------
Twelve months ended Three months ended
December December December December
31, 31, 31, 31,
1999 1998 1999 1998
- -------------------------------------------------------------------------------------------------------------------
Cash provided from (used for):
OPERATING ACTIVITIES
Net income (loss) (62) (10,446) (3,062) (2,806)
Items not involving current cash flows
Depreciation and amortization 7,924 2,762 3,248 1,025
Deferred taxes (1,295) (177) (2,012) (177)
Gain on disposal of real estate property (628) - (628) -
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5,939 (7,861) (2,454) (1,958)
Changes in non-cash items related to operations
Residential development inventory (3,403) 2,093 555 (1,969)
Accounts receivable (8,607) (7,385) (11,719) (7,246)
Prepaid expenses and other 451 (208) 553 (110)
Accounts payable 6,722 9,832 18,314 8,979
Accrued salaries and wages (2,158) 194 (3,081) (41)
Refundable deposits 250 621 4 133
Other accrued liabilities 13,458 1,371 12,459 1,303
Income taxes payable 6,042 - 2,679 -
Deferred revenue (777) (4,066) (637) 1,123
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17,917 5,409 16,673 214
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INVESTMENT ACTIVITIES
Acquisition of businesses (160,812) (118,617) (73,233) (118,617)
Real estate property additions, net of change - (80,769) - (17,168)
in residential development inventory (47,522) (213) (13,811) (137)
Fixed asset additions (9,017) - (8,128) -
Increase in other assets (683) - (683) -
Proceeds on disposal of real estate property 2,636 - 2,636 -
Decrease in note receivable from Magna - 146,862
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(215,398) (199,599) 53,643 (135,922)
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FINANCING ACTIVITIES
Increase (decrease) in bank indebtedness (2,722) 6,313 (233) 9,035
Issues of long-term debt - 6,281 - 14
Repayment of long-term debt (3,278) (2,722) (80) -
Decrease in note payable to Magna - - (35,240) -
Net contribution by Magna 244,458 201,563 164 143,879
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238,458 211,435 (35,389) 152,928
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Effect of exchange rate changes on cash
and cash equivalents (68) 25 (59) (19)
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Net increase in cash and cash
equivalents during the period 40,909 17,270 34,868 17,201
Cash and cash equivalents, beginning of period 17,503 233 23,544 302
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Cash and cash equivalents, end of period 58,412 17,503 58,412 17,503
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MAGNA ENTERTAINMENT CORP.
CONSOLIDATED BALANCE SHEETS
- --------------------------------------------------------------------------------
[Unaudited]
[United States dollars in thousands]
- --------------------------------------------------------------------------------
December 31, December 31,
1999 1998
- --------------------------------------------------------------------------------
ASSETS
- --------------------------------------------------------------------------------
Current assets:
Cash and cash equivalents 58,412 17,503
Accounts receivable 25,887 8,979
Prepaid expenses and other 3,931 2,572
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88,230 29,054
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Real estate properties, net 544,899 326,690
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Fixed assets, net 19,890 8,221
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Other assets 100,967 -
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Deferred income taxes 6,367 177
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760,353 364,142
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LIABILITIES AND SHAREHOLDERS' EQUITY
- --------------------------------------------------------------------------------
Current liabilities:
Bank indebtedness 7,259 11,889
Accounts payable 35,940 15,409
Accrued salaries and wages 631 518
Refundable deposits 1,968 2,008
Other accrued liabilities 22,507 6,955
Income taxes payable 7,554 -
Long-term debt due within one year 19,119 3,655
Deferred revenue 4,282 3,098
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99,260 43,532
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Long-term debt 19,506 16,791
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Other long-term liabilities 1,317 1,317
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Deferred income taxes 93,183 -
- --------------------------------------------------------------------------------
Shareholders' equity:
Magna's net investment - 302,502
Class A Subordinated Voting Stock 11,500 -
Exchangeable Shares 110,000 -
Class B Stock 429,455 -
Deficit (2,431) -
Accumulated comprehensive loss (1,437) -
- --------------------------------------------------------------------------------
547,087 302,502
- --------------------------------------------------------------------------------
760,353 364,142
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MAGNA ENTERTAINMENT CORP.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
- --------------------------------------------------------------------------------------------------------------------------------
[Unaudited]
[United States dollars in thousands]
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Magna's net Class A Exchange- Class B Deficit Accumulated
investment Subordinate able Shares Stock Comprehensive
Voting Stock Loss
- --------------------------------------------------------------------------------------------------------------------------------
Magna's net investment at July 31, 1996 49,985
Net loss for the year (1,382)
Net contribution by Magna 46,498
Comprehensive loss (7,184)
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Magna's net investment at July 31, 1997 87,917
Net loss for the year (8,610)
Net contribution by Magna 80,919
Comprehensive loss (1,951)
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Magna's net investment at July 31, 1998 158,275
Net loss for the period (4,231)
Net contribution by Magna 143,634
Comprehensive income 4,824
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Magna's net investment at December 31, 1998 302,502
Activity for the three-months ended
March 31, 1999:
Net income 9,325
Net distribution to Magna (5,542)
Comprehensive loss (5,045)
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Magna's net investment at March 31, 1999, the
date at which the net investment was fixed 301,240
Activity for the seven-month period ended on
the date of the Reorganization, November 5,
1999:
Net loss (6,956)
Cash contribution by Magna 250,000
Comprehensive loss (1,011)
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Magna's net investment at November 5, 1999
prior to the Reorganization 543,273
Completion of the Reorganization as desired
in the principles of consolidation and
resulting allocation to capital stock
and net deferred income tax
liabilities of $3,818 (543,273) 539,455
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Magna's net investment at November 5, 1999 -
after completion of the Reorganization 539,455
Activity for the two-months ended
December 31, 1999:
Net loss (2,431)
Comprehensive loss (1,437)
Conversion of Class B Stock to
Exchangeable Shares 110,000 (110,000)
Issues of shares of Class A Subordinate
Voting Stock on acquisitions 11,500
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Balances at December 31, 1999: - 11,500 110,000 429,455 (2,431) (1,437)
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