1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
FORM 10-Q/A
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1999
-----------------------------------------------
OR
[ ] 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: 0-1590
--------------------------------------------------
THE WESTWOOD GROUP, INC.
- --------------------------------------------------------------------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 04-1983910
- --------------------------------------------------------------------------------
(STATE OR OTHER JURISDICTION OF (IRS EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
190 V.F.W. PARKWAY, REVERE, MASSACHUSETTS 02151
- --------------------------------------------------------------------------------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
781-284-2600
- --------------------------------------------------------------------------------
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
NOT APPLICABLE
- --------------------------------------------------------------------------------
(FORMER NAME, FORMER ADDRESS AND FORMER FISCAL YEAR, IF CHANGED SINCE LAST
REPORT)
INDICATE BY CHECK MARK WHETHER THE REGISTRANT (L) HAS 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) HAS BEEN SUBJECT TO SUCH FILING
REQUIREMENTS FOR THE PAST 90 DAYS.
YES _X_ NO ___
AS OF SEPTEMBER 30, 1999 351,210 SHARES OF THE REGISTRANT'S COMMON STOCK, PAR
VALUE $.01 PER SHARE AND 912,015 SHARES OF THE REGISTRANT'S CLASS B COMMON
STOCK, PAR VALUE $.01 PER SHARE, WERE OUTSTANDING.
PAGE 1 OF 16
2
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
THE WESTWOOD GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
ASSETS
ASSETS
September 30, December 31,
(Unaudited) 1999 1998
-----------------------------------
Current assets:
Cash and cash equivalents 181,672 188,462
Restricted cash 752,253 170,052
Accounts receivable 3,955 23,496
Prepaid expenses and other current assets 258,754 168,964
Notes receivable from officers 1,521,160 151,377
---------------------------------
Total current assets 2,717,794 702,351
---------------------------------
Property, plant and equipment:
Land 348,066 348,066
Building and building improvements 18,594,307 18,466,838
Machinery and equipment 4,518,816 4,498,547
---------------------------------
23,461,189 23,313,451
Less accumulated depreciation and amortization (17,859,628) (17,458,993)
---------------------------------
Net property, plant and equipment 5,601,561 5,854,458
---------------------------------
Other assets:
Intangibles, net 139,904 220,824
Investments -- 5,849,814
Notes receivable from officers 2,033,183 742,016
---------------------------------
Total other assets 2,173,087 6,812,654
---------------------------------
Total assets 10,492,442 13,369,463
=================================
The accompanying notes are an integral part of these consolidated condensed
financial statements.
The balances as of December 31, 1998 have been derived from the audited
financial statements of the company.
PAGE 2 OF 16
3
THE WESTWOOD GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
LIABILITIES September 30, December 31,
(Unaudited) 1999 1998
-----------------------------------
CURRENT LIABILITIES:
Discontinued Operations 704,420 704,420
Curr. mat. of long-term debt 272,026 350,663
Accounts payable and other accrued liabilities 2,609,860 2,395,518
Outstanding parimutuel tickets 589,269 622,447
Debt Obligations in default 10,000 10,000
--------------------------------
Total current liabilities 4,185,575 4,083,048
Long-term debt, less curr. mat. 4,461,480 5,550,847
Other long-term liabilities 2,769,051 3,270,114
--------------------------------
Total liabilities 11,416,106 12,904,009
--------------------------------
STOCKHOLDERS' EQUITY:
Common stock, $.01 par value; authorized
3,000,000 shares, 1,944,409 shares issued 19,444 19,444
Class B Common stock, $.01 par value; authorized
1,000,000 shares; 912,615 shares issued 9,126 9,126
Additional paid-in capital 13,379,275 13,379,275
Accumulated deficit (6,117,323) (4,728,205)
Other comprehensive loss (249,404) (249,404)
Cost of 1,593,199 common and 600 Class B
common shares in treasury (7,964,782) (7,964,782)
--------------------------------
Total stockholders' equity (deficit) (923,664) 465,454
--------------------------------
Total liabilities & equity (deficit) 10,492,442 13,369,463
================================
The accompanying notes are an integral part of these consolidated condensed
financial statements.
The balances as of December 31, 1998 have been derived from the audited
financial statements of the company.
PAGE 3 OF 16
4
THE WESTWOOD GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(Unaudited)
For the Three Months Ended
September September
(Unaudited) 1999 1998
- -------------------------------------------------------------------------------------------------------------------------
OPERATING REVENUES:
Pari-mutuel commissions 3,717,952 3,899,013
Concessions/and Other 846,869 1,050,357
------------------------------------------
Total operating revenue 4,564,821 4,949,370
------------------------------------------
Operating expenses:
Wages, taxes and benefits 1,473,630 1,886,374
Purses 976,248 1,038,146
Cost of food and beverage 125,236 142,693
Administrative and general 1,407,540 1,327,735
Depreciation and amortization 129,235 166,625
------------------------------------------
Total operating expenses 4,111,889 4,561,573
------------------------------------------
Income from operations 452,932 387,797
------------------------------------------
Other income (expense):
Interest expense, net (205,106) (68,358)
Equity income (loss) in investments 204,600 101,000
Other income, net loss on sale of investment (1,966,108) 3,362
------------------------------------------
Total other income (expense) (1,964,714) 36,006
------------------------------------------
Income (loss) from operations before
provision for income taxes (1,511,782) 423,801
--
Provision for income tax 240,200 --
------------------------------------------
Net income (loss) from continuing operations (1,751,982) 423,801
==========================================
Basic and diluted per share data:
Net income (loss) $ (1.39) $ 0.34
Basic and diluted weighted average
common shares outstanding 1,263,225 1,263,225
==========================================
The accompanying notes are an integral part of these consolidated condensed
financial statements.
PAGE 4 OF 16
5
THE WESTWOOD GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(Unaudited)
For The
Nine Months Ended
September 30,
(Unaudited) 1999 1998
- --------------------------------------------------------------------------------------------------
OPERATING REVENUES:
Pari-mutuel commissions 11,143,665 12,093,119
Concessions/and Other 2,414,401 2,733,486
--------------------------------
Total operating revenue 13,558,066 14,826,605
--------------------------------
Operating expenses:
Wages, taxes and benefits 4,763,213 5,292,326
Purses 3,192,798 3,634,365
Cost of food and beverage 350,186 407,810
Administrative 3,654,538 3,942,703
Depreciation and amortization 481,556 469,706
--------------------------------
Total operating expenses 12,442,291 13,746,910
--------------------------------
Income from operations 1,115,775 1,079,695
--------------------------------
Other income (expense):
Interest expense, net (404,685) (286,417)
Equity income (loss) in investments 157,000 316,500
Other income, net 1,900 102,800
Loss on sale of investment (1,966,108) -0-
--------------------------------
Total other income (expense) (2,211,893) 132,883
--------------------------------
Income (loss) from operations before
provision for income taxes (1,096,118) 1,212,578
Less Provision for income tax 293,000 26,000
--------------------------------
Income (loss) from continuing operations (1,389,118) 1,186,578
--------------------------------
Gain (Loss) from operations of discontinued
harness racing subsidiary -- 576,200
--------------------------------
Net income (loss) (1,389,118) 1,762,778
================================
Basic and diluted per share data:
Income (loss) from continuing operations $ (1.10) $ 0.94
Gain from discontinued operations net $ 0.00 $ 0.46
Net income (loss) $ (1.10) $ 1.40
Basic and diluted weighted average
common shares outstanding 1,263,225 1,263,225
================================
The accompanying notes are an integral part of these consolidated condensed
financial statements.
PAGE 5 OF 16
6
THE WESTWOOD GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
For The
Nine Months Ended
September 30,
1999 1998
---------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income (1,389,118) 1,762,778
Adjustments to reconcile net income to
net cash provided by operating activities:
- -------------------------------------------
Depreciation and amortization 481,556 469,706
Equity in (income) loss from investments (157,000) (316,500)
Gain from discontinued operations -- (576,200)
Loss on sale of investment in subsidiary 1,966,108 --
Interest Expense on Note Payable to subsidiary 84,594 -0-
Changes in operating assets and liabilities:
- --------------------------------------------
Restricted cash (582,201) (403,302)
Accounts receivable 19,541 324,346
Prepaid expenses and other current assets (89,790) (182,575)
Notes receivable from officers 42,158 79,307
Accounts payable and other accrued liabilities 497,345 (686,750)
Outstanding parimutuel tickets (33,178) 73,047
Other long-term liabilities (501,063) (301,587)
------------------------------
Total adjustments 1,728,070 (1,520,508)
------------------------------
Net cash provided by operating activities 338,952 242,270
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant and equipment (147,738) (572,039)
------------------------------
Net cash used in investing activities (147,738) (572,039)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term debt -- 5,006,109
Principal payments of debt (198,004) (4,757,133)
Issuance of common stock -- 24,000
------------------------------
Net cash used in financing activities (198,004) 272,976
NET DECREASE IN CASH AND CASH EQUIVALENTS (6,790) (56,793)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 188,462 374,292
------------------------------
CASH AND CASH EQUIVALENTS, END OF PERIOD 181,672 317,499
==============================
The accompanying notes are an integral part of these consolidated condensed
financial statements
PAGE 6 OF 16
7
THE WESTWOOD GROUP, INC. AND SUBSIDIARIES
SEPTEMBER 30, 1999
(Unaudited)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
INTERIM RESULTS
In the opinion of management, the accompanying unaudited consolidated
condensed financial statements contain all adjustments (consisting of normal
recurring accruals and deferrals) necessary to present fairly the Company's
consolidated financial position as of September 30, 1999, and the results of its
operations and its cash flows for the nine month periods ended September 30,
1999 and 1998. See the Company's Annual Report and Back Bay Restaurant's Annual
Report on Forms 10-K, included as exhibits to report, for a summary of the
significant accounting policies applied in the preparation of the accompanying
consolidated condensed financial statements.
PRINCIPLES OF CONSOLIDATION
The accompanying consolidated condensed financial statements as of
September 30, 1999 and December 31, 1998 and for the nine month periods ended
September 30, 1999 and 1998 include the accounts of the Company, and its
wholly-owned subsidiaries. All material inter-company accounts and transactions
have been eliminated in consolidation. The Company's investment in The Back Bay
Restaurant Group, which was sold pursuant to a stock repurchase agreement, is
accounted for by the equity method for the above mentioned periods.
PAGE 7 OF 16
8
THE WESTWOOD GROUP, INC. AND SUBSIDIARIES
SEPTEMBER 30, 1999
(Unaudited)
RECLASSIFICATIONS
Certain reclassifications were made to the 1998 financial statements
amounts to conform with the 1999 presentation.
FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 1998
The consolidated balance sheet at December 31, 1998 is presented for
comparative purposes and was taken from the audited consolidated financial
statements for the year ended December 31, 1998.
INTANGIBLES, NET
Intangible assets consist of goodwill, trade names and trademarks, and
deferred financing costs which are being amortized over the lesser of forty
years or their useful lives
DEBT
Long-term obligations which are in default have been classified as
current liabilities (see Note 3).
INCOME PER COMMON SHARE
The Company follows Statement of Financial Accounting Standards (SFAS)
No. 128, Earnings per Share, issued by the Financial Accounting Standards Board.
Under SFAS No. 128, the basic and diluted net income per share of common stock
is computed by dividing the net income by the weighted average number of common
shares outstanding during the period, including potentially dilutive stock
options. The Company's stock options did not have a dilutive effect in 1999 and
1998 since the option prices per share were deemed to be equal to or higher than
the estimated average per share market price of the Company's common stock.
PAGE 8 OF 16
9
THE WESTWOOD GROUP, INC. AND SUBSIDIARIES
SEPTEMBER 30, 1999
(Unaudited)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
INCOME PER COMMON SHARE (continued)
The amount of potentially dilutive common shares issuable under the
Company's stock options, if any, are determined based on the treasury stock
method.
DISCONTINUED OPERATIONS
In 1996 litigation ensued between Foxboro Realty Associates, LLC, ET
AL. ("FRA") and the Company, its subsidiary Foxboro Park, Inc., ET AL., over
Foxboro's right to occupy Foxboro Raceway. The Court issued an execution
pursuant to which Foxboro was evicted from the racetrack on July 31, 1997 (see
Legal Proceedings at Item 1). As a result, the Company discontinued its harness
racing operations.
The remaining liabilities of the Company's discontinued operations at
September 30, 1999, are comprised of the following:
September 30, 1999
------------------
Creditors Trust Agreement Promissory $ 174,451
Obligations and other liabilities:
Trade Payables 53,598
Outstanding pari-mutuel tickets 476,371
----------------
$ 704,420
================
In February 1998 the Company executed an Assignment for the Benefit of
Creditors ("AFBC") for Foxboro Park, Inc., Foxboro Harness, Inc. and Foxboro
Thoroughbred, Inc. (collectively, the "Foxboro Entities"). The AFBC was executed
to provide a mechanism for the liquidation of its assets and the distribution of
proceeds to its creditors. Provided that 70% in amount and 50% in number of the
Foxboro Entities creditors become Assenting Creditors, the Company will
subordinate its claims except for those claims relating to certain contingent
litigation matters. Creditors must file a written assent with the Assignee in
order to become an Assenting Creditor. Assenting Creditors agree that the
submission of an assent to this AFBC will operate as a release of any claims,
that could be asserted by an Assenting Creditor seeking to avoid the corporate
separateness of the Company or any affiliate of the Company and the Foxboro
Entities.
Additionally Assenting Creditors agree not to institute or continue a
suit against the Foxboro Entities or any other proceeding at law or in equity or
otherwise on account of any debt due and owing to the Assenting Creditor from
the Foxboro Entities, nor will the Assenting Creditor transfer its claim without
the written approval of the Assignee. Each Assenting Creditor accepts in lieu of
its claim against the Foxboro Entities the rights acquired in the AFBC.
PAGE 9 OF 16
10
THE WESTWOOD GROUP, INC. AND SUBSIDIARIES
SEPTEMBER 30, 1999
(Unaudited)
3. DEBT
Long-term debt consisted of the following
September 30, December 31,
1999 1998
- ---------------------------------------------------------------------------------------------------------------
9.5% Century Bank and Trust Company ("Century Bank") term,
loan requiring 84 monthly payments of principal and interest of
$58,319 beginning August 1, 1998 collateralized by a mortgage
and security interest in all real estate and personal property
located at Wonderland Greyhound Park 4,723,771 4,904,828
Debt obligation in default 14 1/4% subordinated note due
August 1997 10,000 10,000
6.0% BBRG Term Note, payable in equal quarterly payments of
principal and interest beginning in 1999, collateralized by
certain tangible personal property and licenses 970,000
7.5% Promissory Note, payable in 60 monthly payments of
principal and interest of $2,003, commencing April, 1995 9,735 26,682
----------------------------
4,743,506 5,911,510
Less:
Current maturities 272,026 350,663
Debt obligations in default 10,000 10,000
----------------------------
Long Term Portion 4,461,480 5,550,847
PAGE 10 OF 16
11
THE WESTWOOD GROUP, INC. AND SUBSIDIARIES
SEPTEMBER 30, 1999
(Unaudited)
3. DEBT (CONT.)
In May 1994, the Company entered into an agreement with BBRG to
transfer the operations under the Concessions Agreement and the Management
Agreement to the Company in return for a six year term note in the amount of
$970,000. In 1997 the Note was amended requiring equal quarterly payments of
principal and interest beginning April 1, 1999 of approximately $36,000 with
interest at 6%. This note was liquidated as partial consideration for the
disposal of the Company's interest in Back Bay Restaurant Group on September 24,
1999.
In May 1994, holders of approximately $19,300,000 of the Company's
14.25% Subordinated Notes (the "Notes) exchanged them for approximately 887,000
shares of BBRG common stock. The shares were exchanged in full settlement of
principal, accumulated interest and default premiums due in respect of such
Notes. Holders of approximately $285,000 of the Notes elected not to participate
in the Exchange. As of September 30, 1999, a balance of $10,000 remains unpaid
and in default.
In July 1998, the Company obtained long-term debt financing for
$5,000,000 with Century Bank. The proceeds were used to repay previously
outstanding indebtedness, including approximately $275,000 of subordinated debt,
$2,381,000 of a realty trust term loan, $1,568,000 of a line of credit note,
$118,000 on a margin agreement, and $356,000 of a short-term note payable. The
remaining proceeds were used to pay other liabilities. The note agreement
contains certain restrictive covenants including the maintenance of certain
financial ratios and debt coverage requirements. The note is collateralized by a
mortgage and security interest in all real estate and personal property at
Wonderland Greyhound Park.
INVESTMENTS
On September 24, 1999, the Company entered into a Stock Purchase Agreement with
Charles F. Sarkis, the Buyer, pursuant to which the Buyer purchased 450,518
shares of common stock of Back Bay Restaurant Group, Inc. (BBRG) a Delaware
corporation, owned by the Company.
The Buyer is the Chairman and a majority stockholder of the Company and the
President, Chief Executive Officer, and sole director of BBRG. Immediately prior
to consummation of the transactions contemplated by the Stock Purchase
Agreement and the Stock Repurchase Agreement, the Company was the majority
stockholder of BBRG.
The aggregate purchase price of the stock was $2,703,108. In exchange for the
delivery of the shares the Buyer delivered a promissory note in the amount of
the purchase price and stock pledge agreement relating to the shares. Under the
terms of the note, $500,000 was paid on November 4, 1999, $500,000 was paid on
December 16, 1999, $351,554 was paid on January 31, 2000, and the remaining
outstanding principal balance and all accrued interest shall be paid in four
equal installments of principal on December 16, 2000, December 16, 2001,
December 16, 2002, December 16, 2003, with any unpaid amounts due December 16,
2003.
Simultaneously with the execution of the Stock Purchase Agreement, the Company
entered into a Stock Repurchase Agreement with BBRG pursuant to which BBRG
repurchased 222,933 shares of common stock of BBRG in exchange for the
cancellation of a certain promissory note, dated May 2, 1994, issued by the
Company in favor of BBRG in the principal amount of $970,000 and accrued
interest thereon in the amount of $367,598.
The Stock Purchase agreement and the Stock Repurchase agreement were approved
by the Company's Board of Directors, including its disinterested member.
The Board of Directors determined that the $6.00 per share valuation negotiated
with the Buyer was fair and in the best interests of the Company's stockholders
based upon a fairness opinion delivered by its financial advisor.
The per share book value of the Company's investment in BBRG immediately prior
to these transactions was $8.92. The Company incurred a loss of $2.92 per share
on the Purchase and Repurchase transactions, for an aggregate loss of
$1,966,108.
PAGE 11 OF 16
12
THE WESTWOOD GROUP, INC. AND SUBSIDIARIES
SEPTEMBER 30, 1999
(Unaudited)
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30 , 1999 COMPARED TO THREE MONTHS ENDED SEPTEMBER
30, 1998.
The table below illustrates certain key statistics for Wonderland Park, the
Company's greyhound racing operation, for the three months ended September 30,
1999 and 1998.
1999 1998
--------------------------
Performances 91 105
Simulcast days 92 92
Pari-mutuel handle (thousands)
Live-on track 7,039 8,175
Live-simulcast 10,217 10,562
Guest-simulcast 12,116 12,274
--------------------------
Total 29,372 31,011
Total attendance 95,374 108,415
--------------------------
Average per capita on site wagering $ 201 $ 189
OPERATING REVENUE
The Company is still experiencing a decline in total attendance,
caused by a variety of factors including a general decline in the pari-mutuel
racing industry and strong competition for the wagered dollar, from the
Massachusetts State Lottery and from the introduction of casino gambling and
slot machines in neighboring states.
Total operating revenue decreased to $4.6 million in the quarter ended
September 30, 1999 as compared to $4.9 million in the same period of 1998.
Pari-mutuel commissions decreased by
PAGE 12 OF 16
13
THE WESTWOOD GROUP, INC. AND SUBSIDIARIES
SEPTEMBER 30, 1999
(Unaudited)
approximately $0.2 million or 5% to $3.7 million for the three months ended
September 30, 1999. Total handle in third quarter of 1999 was approximately
$29.4 million as compared to $31.0 million in 1998. Guest-simulcast handle
decreased by approximately $158,000 from $12.3 million in the third quarter of
1998 to $12.1 million in the corresponding period in 1999. Live-on track handle
decreased by approximately $1.1 million in 1999 as compared to 1998, while
Live-simulcast handle decreased by approximately $346,000.
Wonderland had fourteen fewer live racing performances in 1999 as
compared to 1998, with an average attendance of approximately 1,048 persons,
while average attendance was approximately 1,032 persons in 1998.
OPERATING EXPENSES
Operating expenses totalled approximately $4.1 million for the three months
ended September 30, 1999, a decrease of approximately $450,000 from
approximately $4.6 million for the three months ended September 30, 1998.
The Company realized savings in general operating expenses due to
lower audio-visual, utility and occupancy costs. The Company also incurred lower
purse expense due to the decrease in on-track handle. In addition, there were
cost savings associated with wages, administrative and food costs.
INTEREST EXPENSE
Interest expense was $205,000 during July through September 1999, an increase
of 137,000 over the same period.
TAX PROVISION
The sale of the investment in subsidiary resulted in a taxable gain
generating a projected combined federal and state liability of approximately
$293,000 less a prior estimate recorded in the second quarter of $51,000.
PAGE 13 OF 16
14
THE WESTWOOD GROUP, INC. AND SUBSIDIARIES
SEPTEMBER 30, 1999
(Unaudited)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (CONTINUED)
RACING OPERATIONS
In order to meet the requirements for renewal of racing licenses in
2000, the Company's racing subsidiary must demonstrate, amongst other criteria,
it is a financially stable entity, capable of disposing of its obligations on a
timely basis. In November 1999, the Company obtained a 2000 racing license.
NINE MONTHS ENDED SEPTEMBER 30, 1999 COMPARED TO THE NINE MONTHS ENDED SEPTEMBER
30, 1998.
OPERATING REVENUE
The table below illustrates certain key statistics for Wonderland Park, the
Company's Greyhound racing operation, for the nine months ended September 30,
1999 and 1998.
1999 1998
----------------------------
Performances 267 311
Simulcast Days 272 273
Pari-mutuel handle (thousands):
Live-on track 19,450 25,016
Live-simulcast 31,886 29,269
Guest-simulcast 36,844 38,682
----------------------------
88,180 92,967
Total attendance 267,177 321,527
Average per capita on site wagering 211 198
Total operating revenues decreased to $13.6 million from $14.8 million, a
decline of 8.6%. Parimutuel commissions declined 7.9% to $11.1 million from
$12.0 million. This drop was related to a decline in total handle of $4.8
million, or 5%, from the previous period in 1998. Although live-simulcast, or
"host" handle increased by $2.6 million, live on-track and guest simulcast
handle decreased by $5.6 million and $1.8 million, respectively. Wonderland had
forty-four fewer live racing performances in the first nine months of 1999 than
in the first nine months of 1998. Average attendance per performance was 1,001
in 1999 and 1,034 in 1998.
OPERATING EXPENSES
The decline in operating expenses of 9.5% was roughly in line with the decline
in operating revenue. This reflects the variable nature of certain important
cost components such as purses and salaries, as well as realized savings in the
marketing, utility, and occupancy cost areas.
INTEREST EXPENSE
Interest expense was $405,000 in 1999 and $286,000 in 1998. The increase is the
result of the effect of accrued interest on notes payable to subsidiaries as of
September 30, 1999.
TAX PROVISION
The sale of the investment in subsidiary resulted in a taxable gain generating a
projected combined federal and state liability of approximately $293,000.
LIQUIDITY AND CAPITAL RESOURCES
At September 30, 1999, the Company has a working capital deficit of
approximately $1.5 million, a stockholders' deficit of approximately $924,000
and is in default on certain debt obligations totaling approximately $10,000.
Historically, the Company's primary sources of capital to finance its
businesses have been its cash flow from operations and credit facilities. The
Company's capital needs are primarily from maintenance and enhancement of the
racing facility at Wonderland, and for debt service requirements.
PAGE 14 OF 16
15
THE WESTWOOD GROUP, INC. AND SUBSIDIARIES
SEPTEMBER 30, 1999
(Unaudited)
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is subject to various claims and legal actions that arise in
the ordinary course of its business.
In 1996 litigation ensued between Foxboro Realty Associates, LLC, ET AL.
("FRA") and the Company, its subsidiary Foxboro Park, Inc., ET AL., in Norfolk
Superior Court in Massachusetts over Foxboro's right to occupy Foxboro Raceway.
The Court issued an execution pursuant to which Foxboro was evicted from the
racetrack on July 31, 1997. The parties appealed to the Appeals Court on January
27, 1998. The Company expects the appeals to be decided sometime during calendar
year 1999.
On July 8, 1998, Foxboro Route 1 Limited Partnership, ET AL., filed a civil
action in Suffolk Superior Court in Massachusetts against The Westwood Group,
Inc., Wonderland Greyhound Park, Inc., ET AL., seeking payment for use and
occupancy of Foxboro Raceway, and other damages, from 1992 through July 1997.
The ultimate outcome of such pending litigation cannot be determined at
this time, however it is the opinion of the Company's management, any liability
under such pending litigation would not materially affect its financial
condition or operations.
ITEM 2. CHANGES IN SECURITIES
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS
(a) Reports on Form 10-K
The Company's December 31, 1998 Annual Report on Form 10K
BBRG's December 31, 1998 Annual Report on Form 10K
(B) REPORTS ON FORM 8-K
Form 8-K filed October 12, 1999
PAGE 15 OF 16
16
THE WESTWOOD GROUP, INC. AND SUBSIDIARIES
SEPTEMBER 30, 1999
(Unaudited)
Pursuant to the requirement of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
THE WESTWOOD GROUP, INC.
Date February 15, 2000 /s/ Richard P. Dalton
--------------------------------
Richard P. Dalton
President, Chief Executive
Officer and Director
(Principal Financial and
Accounting Officer)
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