EXHIBIT 99.(c.11)
CUMMINGS ASSOCIATES
WORKING PAPERS
PRELIMINARY
MARCH 25, 2003
135 JASON STREET, ARLINGTON, MASSACHUSETTS 02467
TELEPHONE: 781.641.1215 - FAX: 641.0954 - E-MAIL: CUMMINGSW@AOL.COM
PRO FORMA FINANCIAL STATEMENTS FOR MASS. TRACK SLOT FACILITIES PRELIMINARY
OVERVIEW / SUMMARY
EXHIBIT
projections as most recently requested by Bob Pozen: 2,000 slots, 57% tax rate,
$20mn cash invested in everything but slots, those assumed to be leased at $9mn
/ year, nothing for purses (57% to gov't, 43% to tracks):
A1 Balance Sheet ($20 million invested)
B1 Income Statement (57% tax) IRR = 64.7%
C1 Income Statements for Other Operations Notes to Financial
Projections
the following include existing Wonderland property at appraised value ($13
million, per R. M. Bradley, as of November, 2002) in the asset base, for a total
of $33 million:
A2 Balance Sheet ($33 million invested)
B2 Income Statement (57% tax) IRR = 36.9%
the following include up-front license fee payments in the amounts indicated,
with the tax rate adjusted to yield a 20% IRR on the initial investment (license
fee amortized over 5 years), and no dollars for purses:
B2a Initial license fee -- $20mn tax = 56.4%
B2b Initial license fee -- $30mn tax = 54.2%
B2c Initial license fee -- $40mn tax = 52.1%
B2d Initial license fee -- $50mn tax = 50.0%
the following are based upon the 3,500-slot scenario of the Cummings Report,
with "hard" investment of $55 million (including current property, but the slots
are again leased in this scenario), and again no purses:
A3 Balance Sheet ($55 million invested)
B3 Income Statement (57% tax) IRR = 37.39%
B3a Initial license fee -- $20mn tax = 58.1%
B3b Initial license fee -- $30mn tax = 56.8%
B3c Initial license fee -- $40mn tax = 55.5%
B3d Initial license fee -- $50mn tax = 54.2%
PRO FORMA FINANCIAL STATEMENTS FOR MASS. TRACK SLOT FACILITIES PRELIMINARY
EXHIBIT A1: BALANCE SHEET ($20 MILLION INVESTED)
(At full-scale opening, in millions of 2003 dollars)
ASSETS:
Cash / Working Capital $ 3.5
Existing Land, Buildings, Etc na
less accumulated depreciation na
--------
Net Existing Property na
New Construction for Slots $ 7.2
Slot Machines (2,000) 0.0 (1)
Food & Beverage Equipment 4.0
Other Equipment 6.0
Initial License Fee 0.0
--------
Total Assets $ 20.7
LIABILITIES:
Payables, etc 0.7
Long-Term Debt 0.0
Equity 20.0
--------
Total Liabilities $ 20.7
- -----------------
(1) 2000 slots assumed to be leased for $9mn / year. Revenue projections
assume ongoing replacement at customary industry rates.
PRO FORMA FINANCIAL STATEMENTS FOR MASS. TRACK SLOT FACILITIES PRELIMINARY
EXHIBIT B1: INCOME STATEMENT ($20 MILLION INVESTED, NO PURSES)
($ million, based on 2003 dollars)
YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5
REVENUES: (1)
2,000 slots
Slot Win $250 win/slot/day $ 182.5 $ 188.0 $ 193.6 $ 199.4 $ 205.4
EXPENSES
State+Local Tax on Win 57.0% $ 104.0 $ 107.1 $ 110.4 $ 113.7 $ 117.1
Greyhound Purses and Adoption (0%) 0.0 0.0 0.0 0.0 0.0
Direct Payroll 12.2 12.6 13.0 13.4 13.8
Payroll Taxes & Benefits 3.1 3.1 3.2 3.3 3.4
Slot Lease Payments 9.0 9.0 9.0 9.0 9.0
Other Slot Operating Costs 4.6 4.7 4.8 5.0 5.1
Building Operating Costs 4.6 4.7 4.8 5.0 5.1
Property Tax 0.7 0.8 0.8 0.8 0.8
Advertising/Media Marketing 5.5 5.6 5.8 6.0 6.2
Promotion: Food & Beverage $ 11.9
Other Players' Club 6.4
Bussing & Other 5.5
Total Promotion ------ 23.7 24.4 25.2 25.9 26.7
Interest on Debt 0.0 0.0 0.0 0.0 0.0
Depr'n &c: Slots (3 years) $ 0.0
Bldgs & Other (20/5 years) 1.6
Initial License Fee (5 years) 0.0
Total Dep'n & Amort'n ------ 1.6 1.6 1.6 1.6 1.6
------- ------- ------- ------- -------
Total Expenses $ 168.9 $ 173.7 $ 178.6 $ 183.6 $ 188.8
------- ------- ------- ------- -------
Net Income from Slot Operations $ 13.6 $ 14.3 $ 15.0 $ 15.8 $ 16.6
Net Income / Food & Beverage (1) $ 2.2 $ 2.3 $ 2.5 $ 2.7 $ 3.0(1)
------- ------- ------- ------- -------
Consolidated Net Income Before Tax $ 15.8 $ 16.6 $ 17.5 $ 18.5 $ 19.6
Corporate Income Taxes ($ 4.7) ($ 5.0) ($ 5.2) ($ 5.5) ($ 5.9)
------- ------- ------- ------- -------
Net Income After Corporate Taxes $ 11.1 $ 11.6 $ 12.2 $ 12.9 $ 13.7
------- ------- ------- ------- -------
Add back: Dep'n & Amort'n (inc F&B) $ 2.4 $ 2.4 $ 2.4 $ 2.4 $ 2.4
Subtract: Capital Invested ($ 20.0) 0.0 0.0 0.0 0.0
------ ------- ------- ------- ------- -------
Result: Net Cash Flow ($ 20.0) $ 13.4 $ 14.0 $ 14.6 $ 15.3 $ 16.1
IRR = 64.7%
- -------------------
(1) Food, beverage, and racing operations presented on a net basis; see
Exhibit C.
PRO FORMA FINANCIAL STATEMENTS FOR MASS. TRACK SLOT FACILITIES PRELIMINARY
EXHIBIT C1: INCOME STATEMENTS FOR OTHER OPERATIONS
($ million, based on 2003 dollars)
FOOD & BEVERAGE YEAR 1
Total Food Sales ("comped" amount) $ 27.4 ($ 5.5)
Total Beverage Sales ("comped" amount) 12.8 (6.4)
-------- -------
Total Food & Beverage Revenues (Comps) $ 40.2 ($ 11.9)
Cost of Goods Sold $ 13.5
Direct Payroll 13.5
Payroll Taxes & Benefits 2.7
Other Operating Costs 7.4
Depreciation 0.8
--------
Total Food & Beverage Expenses $ 37.9
--------
Food & Beverage Net Income $ 2.2
PRO FORMA FINANCIAL STATEMENTS FOR MASS. TRACK SLOT FACILITIES PRELIMINARY
NOTES TO FINANCIAL PROJECTIONS
SLOT OPERATIONS
State + Local Tax on Win 57% x slot win
General inflation rate 3.0% per year
Cash/working capital 1.0 weeks of revenues
Slot lease rate (inc. systems) $4,500 /slot/year
Revenue participation machines na
Lessor's share of such slots' revenues na
Ancillary equipment $3,000 per slot
Slot replacements in later years 30% each year
Payables as % of working capital 20% x working capital
Projected Total Slot jobs 407 FTE
Payroll Taxes & Benefits 25% x direct payroll
Other Slot Operating costs 2.5% x non-leased revenue
Building Operating costs 2.5% x slot win
Property Tax 2.0% x assets except cash
Advertising/Media Marketing 3.0% x slot win
Promotion:
Complimentary Food 20% x food sales
Complimentary Beverages 50% x beverage sales
Other Players' Club 3.5% x slot win
Bussing & Other 3.0% x slot win
Annual interest on long-term debt 10% x balance
Combined corporate income tax rate 30% (state+federal)
FOOD & BEVERAGE OPERATIONS
Food Beverage
Total Sales 15% 7% x slot win
Costs of Goods Sold 40% 20% x gross sales
Direct Payroll 40% 20% x gross sales
Payroll Taxes & Benefits 20% 20% x direct payroll
Other Operating Costs 20% 15% x gross sales
F & B equipment $2,000 per slot
Projected Total Food & Bev jobs 540 FTE
Projected Total jobs 947 FTE
PRO FORMA FINANCIAL STATEMENTS FOR MASS. TRACK SLOT FACILITIES PRELIMINARY
EXHIBIT A2: BALANCE SHEET ($33 MILLION INVESTED [+FEE])
(At full-scale opening, in millions of 2003 dollars)
ASSETS:
Cash / Working Capital $ 3.5
Existing Land, Buildings, Etc. na
less accumulated depreciation na
Net Existing Property $ 13.0(1)
-------
New Construction for Slots $ 7.2
Slot Machines (2,000) 0.0(2)
Food & Beverage Equipment 4.0
Other Equipment 6.0
Initial License Fee 0.0
-------
Total Assets $ 33.7
LIABILITIES:
Payables, etc. $ 0.7
Long-Term Debt 0.0
Equity 33.0
-------
Total Liabilities $ 33.7
- -----------------------
(1) Contribution of existing property at appraised value of $13mn; assumed
to be recouped in "terminal value" at end of Year 5.
(2) 2000 slots assumed to be leased for $9mn / year. Revenue projections
assume ongoing replacement at customary industry rates.
PRO FORMA FINANCIAL STATEMENTS FOR MASS. TRACK SLOT FACILITIES PRELIMINARY
EXHIBIT B2: INCOME STATEMENT ($33 MILLION INVESTED [+FEE], NO PURSES)
($ million, based on 2003 dollars)
REVENUES:(1) YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5
2,000 slots
Slot Win $250 win/slot/day $ 182.5 $ 188.0 $ 193.6 $ 199.4 $ 205.4
EXPENSES
State+Local Tax on Win 57.0% $ 104.0 $ 107.1 $ 110.4 $ 113.7 $ 117.1
Greyhound Purses and Adoption (0%) 0.0 0.0 0.0 0.0 0.0
Direct Payroll 12.2 12.6 13.0 13.4 13.8
Payroll Taxes & Benefits 3.1 3.1 3.2 3.3 3.4
Slot Lease Payments 9.0 9.0 9.0 9.0 9.0
Other Slot Operating Costs 4.6 4.7 4.8 5.0 5.1
Building Operating Costs 4.6 4.7 4.8 5.0 5.1
Property Tax 1.0 1.0 1.1 1.1 1.1
Advertising/Media Marketing 5.5 5.6 5.8 6.0 6.2
Promotion: Food & Beverage $ 11.9
Other Players' Club 6.4
Bussing & Other 5.5
Total Promotion -------- 23.7 24.4 25.2 25.9 26.7
Interest on Debt 0.0 0.0 0.0 0.0 0.0
Depr'n &c: Slots (3 years) $ 0.0
Bldgs & Other (20/5 years) 1.6
Initial License Fee (5 years) 0.0
Total Dep'n & Amort'n -------- 1.6 1.6 1.6 1.6 1.6
--------- --------- --------- --------- ---------
Total Expenses $ 169.2 $ 173.9 $ 178.8 $ 183.9 $ 189.1
--------- --------- --------- --------- ---------
Net Income from Slot Operations $ 13.3 $ 14.0 $ 14.8 $ 15.5 $ 16.3
Net Income / Food & Beverage(1) $ 2.2 $ 2.3 $ 2.5 $ 2.7 $ 3.0(1)
--------- --------- --------- --------- ---------
Consolidated Net Income Before Tax $ 15.6 $ 16.3 $ 17.2 $ 18.2 $ 19.3
Corporate Income Taxes ($ 4.7) ($ 4.9) ($ 5.2) ($ 5.5) ($ 5.8)
--------- --------- --------- --------- ---------
Net Income After Corporate Taxes $ 10.9 $ 11.4 $ 12.1 $ 12.7 $ 13.5
--------- --------- --------- --------- ---------
Add back: Dep'n & Amort'n (inc F&B) $ 2.4 $ 2.4 $ 2.4 $ 2.4 $ 2.4
Subtract: Capital Invested ($ 33.0) 0.0 0.0 0.0 13.0
(inc Terminal Value) -------- --------- --------- --------- --------- ---------
Result: Net Cash Flow ($ 33.0) $ 13.3 $ 13.8 $ 14.4 $ 15.1 $ 28.9
IRR = 36.9%
- -------------------------
(1) Food, beverage, and racing operations presented on a net basis; see
Exhibit C.
PRO FORMA FINANCIAL STATEMENTS FOR MASS. TRACK SLOT FACILITIES PRELIMINARY
EXHIBIT B2A: INCOME STATEMENT (2,000 SLOTS, $20 MILLION LICENSE FEE)
($ million, based on 2003 dollars)
REVENUES:(1) YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5
2,000 slots
Slot Win $250 win/slot/day $ 182.5 $ 188.0 $ 193.6 $ 199.4 $ 205.4
EXPENSES
State+Local Tax on Win 56.4% $ 102.9 $ 106.0 $ 109.2 $ 112.5 $ 115.8
Greyhound Purses and Adoption (0%) 0.0 0.0 0.0 0.0 0.0
Direct Payroll 12.2 12.6 13.0 13.4 13.8
Payroll Taxes & Benefits 3.1 3.1 3.2 3.3 3.4
Slot Lease Payments 9.0 9.0 9.0 9.0 9.0
Other Slot Operating Costs 4.6 4.7 4.8 5.0 5.1
Building Operating Costs 4.6 4.7 4.8 5.0 5.1
Property Tax 1.4 1.4 1.5 1.5 1.6
Advertising/Media Marketing 5.5 5.6 5.8 6.0 6.2
Promotion: Food & Beverage $ 11.9
Other Players' Club 6.4
Bussing & Other 5.5
Total Promotion -------- 23.7 24.4 25.2 25.9 26.7
Interest on Debt 0.0 0.0 0.0 0.0 0.0
Depr'n &c: Slots (3 years) $ 0.0
Bldgs & Other (20/5 years) 1.6
Initial License Fee (5 years) 4.0
Total Dep'n & Amort'n -------- 5.6 5.6 5.6 5.6 5.6
--------- --------- --------- --------- ---------
Total Expenses $ 172.5 $ 177.2 $ 128.1 $ 187.1 $ 192.3
--------- --------- --------- --------- ---------
Net Income from Slot Operations $ 10.0 $ 10.7 $ 11.5 $ 12.3 $ 13.1
Net Income / Food & Beverage(1) $ 2.2 $ 2.3 $ 2.5 $ 2.7 $ 3.0(1)
--------- --------- --------- --------- ---------
Consolidated Net Income Before Tax $ 12.3 $ 13.1 $ 14.0 $ 15.0 $ 16.1
Corporate Income Taxes ($ 3.7) ($ 3.9) ($ 4.2) ($ 4.5) ($ 4.8)
--------- --------- --------- --------- ---------
Net Income After Corporate Taxes $ 8.6 $ 9.1 $ 9.8 $ 10.5 $ 11.3
--------- --------- --------- --------- ---------
Add back: Dep'n & Amort'n (inc F&B) $ 6.4 $ 6.4 $ 6.4 $ 6.4 $ 6.4
Subtract: Capital Invested ($ 53.0) 0.0 0.0 0.0 13.0
(inc Terminal Value) -------- --------- --------- --------- --------- ---------
Result: Net Cash Flow ($ 53.0) $ 14.9 $ 15.5 $ 16.1 $ 16.8 $ 30.6
IRR = 20.0%
- ---------------------------
(1) Food, beverage, and racing operations presented on a net basis; see
Exhibit C.
PRO FORMA FINANCIAL STATEMENTS FOR MASS. TRACK SLOT FACILITIES PRELIMINARY
EXHIBIT B2B: INCOME STATEMENT (2,000 SLOTS, $30 MILLION LICENSE FEE)
($ million, based on 2003 dollars)
REVENUES:(1) YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5
2,000 slots
Slot Win $250 win/slot/day $ 182.5 $ 188.0 $ 193.6 $ 199.4 $ 205.4
EXPENSES
State+Local Tax on Win 54.2% $ 98.9 $ 101.9 $ 104.9 $ 108.1 $ 111.3
Greyhound Purses and Adoption (0%) 0.0 0.0 0.0 0.0 0.0
Direct Payroll 12.2 12.6 13.0 13.4 13.8
Payroll Taxes & Benefits 3.1 3.1 3.2 3.3 3.4
Slot Lease Payments 9.0 9.0 9.0 9.0 9.0
Other Slot Operating Costs 4.6 4.7 4.8 5.0 5.1
Building Operating Costs 4.6 4.7 4.8 5.0 5.1
Property Tax 1.6 1.7 1.7 1.8 1.8
Advertising/Media Marketing 5.5 5.6 5.8 6.0 6.2
Promotion: Food & Beverage $ 11.9
Other Players' Club 6.4
Bussing & Other 5.5
Total Promotion -------- 23.7 24.4 25.2 25.9 26.7
Interest on Debt 0.0 0.0 0.0 0.0 0.0
Depr'n &c: Slots (3 years) $ 0.0
Bldgs & Other (20/5 years) 1.6
Initial License Fee (5 years) 6.0
Total Dep'n & Amort'n -------- 7.6 7.6 7.6 7.6 7.6
--------- --------- --------- --------- ---------
Total Expenses $ 170.7 $ 175.3 $ 180.1 $ 185.0 $ 190.0
--------- --------- --------- --------- ---------
Net Income from Slot Operations $ 11.8 $ 12.7 $ 13.5 $ 14.5 $ 15.4
Net Income / Food & Beverage(1) $ 2.2 $ 2.3 $ 2.5 $ 2.7 $ 3.0(1)
--------- --------- --------- --------- ---------
Consolidated Net Income Before Tax $ 14.1 $ 15.0 $ 16.0 $ 17.0 $ 18.4
Corporate Income Taxes ($ 4.2) ($ 4.5) ($ 4.8) ($ 5.1) ($ 5.5)
--------- --------- --------- --------- ---------
Net Income After Corporate Taxes $ 9.8 $ 10.5 $ 11.2 $ 12.0 $ 12.9
--------- --------- --------- --------- ---------
Add back: Dep'n & Amort'n (inc F&B) $ 8.4 $ 8.4 $ 8.4 $ 8.4 $ 8.4
Subtract: Capital Invested ($ 63.0) 0.0 0.0 0.0 13.0
(inc Terminal Value) -------- --------- --------- --------- --------- ---------
Result: Net Cash Flow ($ 63.0) $ 18.2 $ 18.9 $ 19.6 $ 20.4 $ 34.2
IRR = 20.1%
- -----------------------
(1) Food, beverage, and racing operations presented on a net basis; see
Exhibit C.
PRO FORMA FINANCIAL STATEMENTS FOR MASS. TRACK SLOT FACILITIES PRELIMINARY
EXHIBIT B2C: INCOME STATEMENT (2,000 SLOTS, $40 MILLION LICENSE FEE)
($ million, based on 2003 dollars)
REVENUES: (1) YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5
2,000 slots
Slot Win $ 250 win/slot/day $ 182.5 $ 188.0 $ 193.6 $ 199.4 $ 205.4
EXPENSES
State+Local Tax on Win 52.1% $ 95.1 $ 97.9 $ 100.9 $ 103.9 $ 107.0
Greyhound Purses and Adoption (0%) 0.0 0.0 0.0 0.0 0.0
Direct Payroll 12.2 12.6 13.0 13.4 13.8
Payroll Taxes & Benefits 3.1 3.1 3.2 3.3 3.4
Slot Lease Payments 9.0 9.0 9.0 9.0 9.0
Other Slot Operating Costs 4.6 4.7 4.8 5.0 5.1
Building Operating Costs 4.6 4.7 4.8 5.0 5.1
Property Tax 1.8 1.9 1.9 2.0 2.0
Advertising/Media Marketing 5.5 5.6 5.8 6.0 6.2
Promotion: Food & Beverage $ 11.9
Other Players' Club 6.4
Bussing & Other 5.5
Total Promotion ---------- 23.7 24.4 25.2 25.9 26.7
Interest on Debt 0.0 0.0 0.0 0.0 0.0
Depr'n &c: Slots (3 years) $ 0.0
Bldgs & Other (20/5 years) 1.6
Initial License Fee (5 years) 8.0
Total Dep'n & Amort'n ---------- 9.6 9.6 9.6 9.6 9.6
---------- ---------- ---------- ---------- ----------
Total Expenses $ 169.0 $ 173.6 $ 178.2 $ 183.0 $ 187.9
---------- ---------- ---------- ---------- ----------
Net Income from Slot Operations $ 13.5 $ 14.4 $ 15.4 $ 16.4 $ 17.5
Net Income / Food & Beverage (1) $ 2.2 $ 2.3 $ 2.5 $ 2.7 $ 3.0(1)
---------- ---------- ---------- ---------- ----------
Consolidated Net Income Before Tax $ 15.7 $ 16.7 $ 17.9 $ 19.1 $ 20.5
Corporate Income Taxes ($ 4.7) ($ 5.0) ($ 5.4) ($ 5.7) ($ 6.1)
---------- ---------- ---------- ---------- ----------
Net Income After Corporate Taxes $ 11.0 $ 11.7 $ 12.5 $ 13.4 $ 14.3
---------- ---------- ---------- ---------- ----------
Add back: Dep'n & Amort'n (inc F&B) $ 10.4 $ 10.4 $ 10.4 $ 10.4 $ 10.4
Subtract: Capital Invested ($ 73.0) 0.0 0.0 0.0 13.0
(inc Terminal Value) ---------- ---------- ---------- ---------- ---------- ----------
Result: Net Cash Flow ($ 73.0) $ 21.4 $ 22.1 $ 22.9 $ 23.7 $ 37.7
IRR = 20.0%
- ----------------------
(1) Food, beverage, and racing operations presented on a net basis; see Exhibit
C.
PRO FORMA FINANCIAL STATEMENTS FOR MASS. TRACK SLOT FACILITIES PRELIMINARY
EXHIBIT B2D: INCOME STATEMENT (2,000 SLOTS, $50 MILLION LICENSE FEE)
($ million, based on 2003 dollars)
REVENUES: (1) YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5
2,000 slots
Slot Win $ 250 win/slot/day $ 182.5 $ 188.0 $ 193.6 $ 199.4 $ 205.4
EXPENSES
State+Local Tax on Win 50.0% $ 91.3 $ 94.0 $ 96.8 $ 99.7 $ 102.7
Greyhound Purses and Adoption (0%) 0.0 0.0 0.0 0.0 0.0
Direct Payroll 12.2 12.6 13.0 13.4 13.8
Payroll Taxes & Benefits 3.1 3.1 3.2 3.3 3.4
Slot Lease Payments 9.0 9.0 9.0 9.0 9.0
Other Slot Operating Costs 4.6 4.7 4.8 5.0 5.1
Building Operating Costs 4.6 4.7 4.8 5.0 5.1
Property Tax 2.0 2.1 2.1 2.2 2.3
Advertising/Media Marketing 5.5 5.6 5.8 6.0 6.2
Promotion: Food & Beverage $ 11.9
Other Players' Club 6.4
Bussing & Other 5.5
Total Promotion ---------- 23.7 24.4 25.2 25.9 26.7
Interest on Debt 0.0 0.0 0.0 0.0 0.0
Depr'n &c: Slots (3 years) $ 0.0
Bldgs & Other (20/5 years) 1.6
Initial License Fee (5 years) 10.0
Total Dep'n & Amort'n ---------- 11.6 11.6 11.6 11.6 11.6
---------- ---------- ---------- ---------- ----------
Total Expenses $ 167.4 $ 171.8 $ 176.4 $ 181.0 $ 185.8
---------- ---------- ---------- ---------- ----------
Net Income from Slot Operations $ 15.1 $ 16.2 $ 17.3 $ 18.4 $ 19.6
Net Income / Food & Beverage (1) $ 2.2 $ 2.3 $ 2.5 $ 2.7 $ 3.0(1)
---------- ---------- ---------- ---------- ----------
Consolidated Net Income Before Tax $ 17.3 $ 18.5 $ 19.7 $ 21.1 $ 22.6
Corporate Income Taxes ($ 5.2) ($ 5.5) ($ 5.9) ($ 6.3) ($ 6.8)
---------- ---------- ---------- ---------- ----------
Net Income After Corporate Taxes $ 12.1 $ 12.9 $ 13.8 $ 14.8 $ 15.8
---------- ---------- ---------- ---------- ----------
Add back: Dep'n & Amort'n (inc F&B) $ 12.4 $ 12.4 $ 12.4 $ 12.4 $ 12.4
Subtract: Capital Invested ($ 83.0) 0.0 0.0 0.0 13.0
(inc Terminal Value) ---------- ---------- ---------- ---------- ---------- ----------
Result: Net Cash Flow ($ 83.0) $ 24.5 $ 25.3 $ 26.2 $ 27.1 $ 41.2
IRR = 19.9%
- --------------------------
(1) Food, beverage, and racing operations presented on a net basis; see Exhibit
C.
PRO FORMA FINANCIAL STATEMENTS FOR MASS. TRACK SLOT FACILITIES PRELIMINARY
EXHIBIT A3: BALANCE SHEET ($55 MILLION [+FEE])
($ million, based on 2003 dollars)
ASSETS:
Cash / Working Capital $ 5.9
Existing Land, Buildings, Etc. na
less accumulated depreciation na
--------
Net Existing Property $ 13.0(1)
New Construction for Slots $ 19.8
Slot Machines (3,500) 0.0(2)
Food & Beverage Equipment 7.0
Other Equipment 10.5
Initial License Fee 0.0
--------
Total Assets $ 56.2
LIABILITIES:
Payables, etc. $ 1.2
Long-Term Debt 0.0
Equity 55.0
--------
Total Liabilities $ 56.2
- --------------------------
(1) Contribution of existing property at appraised value of $13mn; assumed to
be recouped in "terminal value" at end of Year 5.
(2) 3,500 slots assumed to be leased for $15.8mn / year. Revenue projections
assume ongoing replacement at customary industry rates.
PRO FORMA FINANCIAL STATEMENTS FOR MASS. TRACK SLOT FACILITIES PRELIMINARY
EXHIBIT B3: INCOME STATEMENT ($55 MILLION INVESTED [+FEE], NO PURSES)
($ million, based on 2003 dollars)
REVENUES: (1) YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5
3,500 slots
Slot Win $ 241 win/slot/day $ 308.4 $ 317.6 $ 327.2 $ 337.0 $ 347.1
EXPENSES
State+Local Tax on Win 57.0% $ 175.8 $ 181.1 $ 186.5 $ 192.1 $ 197.8
Greyhound Purses and Adoption (0%) 0.0 0.0 0.0 0.0 0.0
Direct Payroll 19.6 20.2 20.8 21.4 22.0
Payroll Taxes & Benefits 4.9 5.0 5.2 5.3 5.5
Slot Lease Payments 15.8 15.8 15.8 15.8 15.8
Other Slot Operating Costs 7.7 7.9 8.2 8.4 8.7
Building Operating Costs 7.7 7.9 8.2 8.4 8.7
Property Tax 1.7 1.8 1.8 1.9 1.9
Advertising/Media Marketing 9.3 9.5 9.8 10.1 10.4
Promotion: Food & Beverage $ 20.0
Other Players' Club 10.8
Bussing & Other 9.3
Total Promotion ---------- 40.1 41.3 42.5 43.8 45.1
Interest on Debt 0.0 0.0 0.0 0.0 0.0
Depr'n &c: Slots (3 years) $ 0.0
Bldgs & Other (20/5 years) 3.1
Initial License Fee (5 years) 0.0
Total Dep'n & Amort'n ---------- 3.1 3.1 3.1 3.1 3.1
---------- ---------- ---------- ---------- ----------
Total Expenses $ 285.6 $ 293.6 $ 301.8 $ 310.3 $ 319.0
---------- ---------- ---------- ---------- ----------
Net Income from Slot Operations $ 22.8 $ 24.1 $ 25.4 $ 26.7 $ 28.1
Net Income / Food & Beverage (1) $ 3.8 $ 3.9 $ 4.1 $ 4.5 $ 5.0(1)
---------- ---------- ---------- ---------- ----------
Consolidated Net Income Before Tax $ 26.6 $ 27.9 $ 29.5 $ 31.2 $ 33.1
Corporate Income Taxes ($ 8.0) ($ 8.4) ($ 8.8) ($ 9.4) ($ 9.9)
---------- ---------- ---------- ---------- ----------
Net Income After Corporate Taxes $ 18.6 $ 19.6 $ 20.6 $ 21.8 $ 23.2
---------- ---------- ---------- ---------- ----------
Add back: Dep'n & Amort'n (inc F&B) $ 4.5 $ 4.5 $ 4.5 $ 4.5 $ 4.5
Subtract: Capital Invested ($ 55.0) 0.0 0.0 0.0 13.0
---------- ---------- ---------- ---------- ---------- ----------
Result: Net Cash Flow ($ 55.0) $ 23.1 $ 24.1 $ 25.1 $ 26.3 $ 40.7
IRR = 37.3%
- --------------------------
(1) Food, beverage, and racing operations presented on a net basis; see Exhibit
C.
PRO FORMA FINANCIAL STATEMENTS FOR MASS. TRACK SLOT FACILITIES PRELIMINARY
EXHIBIT B3A: INCOME STATEMENT (3,500 SLOTS, $20 MILLION LICENSE FEE)
($ million, based on 2003 dollars)
REVENUES: (1) YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5
3,500 slots
Slot Win $241 win/slot/day $ 308.4 $ 317.6 $ 327.2 $ 337.0 $ 347.1
EXPENSES
State+Local Tax on Win 58.1% $ 179.2 $ 184.5 $ 190.1 $ 195.8 $ 201.7
Greyhound Purses and Adoption (0%) 0.0 0.0 0.0 0.0 0.0
Direct Payroll 19.6 20.2 20.8 21.4 22.0
Payroll Taxes & Benefits 4.9 5.0 5.2 5.3 5.5
Slot Lease Payments 15.8 15.8 15.8 15.8 15.8
Other Slot Operating Costs 7.7 7.9 8.2 8.4 8.7
Building Operating Costs 7.7 7.9 8.2 8.4 8.7
Property Tax 2.1 2.2 2.2 2.3 2.4
Advertising/Media Marketing 9.3 9.5 9.8 10.1 10.4
Promotion: Food & Beverage $ 20.0
Other Players' Club 10.8
Bussing & Other 9.3
Total Promotion --------- 40.1 41.3 42.5 43.8 45.1
Interest on Debt 0.0 0.0 0.0 0.0 0.0
Depr'n &c: Slots (3 years) $ 0.0
Bldgs & Other (20/5 years) 3.1
Initial License Fee (5 years) 4.0
Total Dep'n & Amort'n --------- 7.1 7.1 7.1 7.1 7.1
--------- --------- --------- --------- ---------
Total Expenses $ 293.3 $ 301.5 $ 309.8 $ 318.4 $ 327.3
--------- --------- --------- --------- ---------
Net Income from Slot Operations $ 15.0 $ 16.2 $ 17.4 $ 18.6 $ 19.8
Net Income / Food & Beverage (1) $ 3.8 $ 3.9 $ 4.1 $ 4.5 $ 5.0(1)
--------- --------- --------- --------- ---------
Consolidated Net Income Before Tax $ 18.8 $ 20.0 $ 21.4 $ 23.0 $ 24.8
Corporate Income Taxes ($ 5.6) ($ 6.0) ($ 6.4) ($ 6.9) ($ 7.5)
--------- --------- --------- --------- ---------
Net Income After Corporate Taxes $ 13.2 $ 14.0 $ 15.0 $ 16.1 $ 17.4
--------- --------- --------- --------- ---------
Add back: Dep'n & Amort'n (inc F&B) $ 8.5 $ 8.5 $ 8.5 $ 8.5 $ 8.5
Subtract: Capital Invested ($ 75.0) 0.0 0.0 0.0 13.0
(inc Terminal Value) -------- --------- --------- --------- --------- ---------
Result: Net Cash Flow ($ 75.0) $ 21.6 $ 22.5 $ 23.5 $ 24.6 $ 38.9
IRR = 19.9%
- ----------------------
(1) Food, beverage, and racing operations presented on a net basis; see Exhibit
C.
PRO FORMA FINANCIAL STATEMENTS FOR MASS. TRACK SLOT FACILITIES PRELIMINARY
EXHIBIT B3B: INCOME STATEMENT (3,500 SLOTS, $30 MILLION LICENSE FEE)
($ million, based on 2003 dollars)
REVENUES: (1) YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5
3,500 slots
Slot Win $241 win/slot/day $ 308.4 $ 317.6 $ 327.2 $ 337.0 $ 347.1
EXPENSES
State+Local Tax on Win 56.8%
$ 175.2 $ 180.4 $ 185.8 $ 191.4 $ 197.1
Greyhound Purses and Adoption (0%) 0.0 0.0 0.0 0.0 0.0
Direct Payroll 19.6 20.2 20.8 21.4 22.0
Payroll Taxes & Benefits 4.9 5.0 5.2 5.3 5.5
Slot Lease Payments 15.8 15.8 15.8 15.8 15.8
Other Slot Operating Costs 7.7 7.9 8.2 8.4 8.7
Building Operating Costs 7.7 7.9 8.2 8.4 8.7
Property Tax 2.3 2.4 2.4 2.5 2.6
Advertising/Media Marketing 9.3 9.5 9.8 10.1 10.4
Promotion: Food & Beverage $ 20.0
Other Players' Club 10.8
Bussing & Other 9.3
Total Promotion -------- 40.1 41.3 42.5 43.8 45.1
Interest on Debt 0.0 0.0 0.0 0.0 0.0
Depr'n &c: Slots (3 years) $ 0.0
Bldgs & Other (20/5 years) 3.1
Initial License Fee (5 years) 6.0
Total Dep'n & Amort'n -------- 9.1 9.1 9.1 9.1 9.1
--------- --------- --------- --------- ---------
Total Expenses $ 291.5 $ 299.5 $ 307.8 $ 316.3 $ 325.0
--------- --------- --------- --------- ---------
Net Income from Slot Operations $ 16.9 $ 18.1 $ 19.4 $ 20.7 $ 22.1
Net Income / Food & Beverage (1) $ 3.8 $ 3.9 $ 4.1 $ 4.5 $ 5.0(1)
--------- --------- --------- --------- ---------
Consolidated Net Income Before Tax $ 20.6 $ 22.0 $ 23.5 $ 25.2 $ 27.1
Corporate Income Taxes ($ 6.2) ($ 6.6) ($ 7.0) ($ 7.6) ($ 8.1)
--------- --------- --------- --------- ---------
Net Income After Corporate Taxes $ 14.4 $ 15.4 $ 16.4 $ 17.6 $ 19.0
---------- --------- ---------- --------- ---------
Add back: Dep'n & Amort'n (inc F&B) $ 10.5 $ 10.5 $ 10.5 $ 10.5 $ 10.5
Subtract: Capital Invested ($ 85.0) 0.0 0.0 0.0 13.0
(inc Terminal Value) -------- --------- --------- --------- --------- ---------
Result: Net Cash Flow ($ 85.0) $ 24.9 $ 25.9 $ 26.9 $ 28.1 $ 42.5
IRR = 20.0%
- -------------------------
(1) Food, beverage, and racing operations presented on a net basis; see Exhibit
C.
PRO FORMA FINANCIAL STATEMENTS FOR MASS. TRACK SLOT FACILITIES PRELIMINARY
EXHIBIT B3C: INCOME STATEMENT (3,500 SLOTS, $40 MILLION LICENSE FEE)
($ million, based on 2003 dollars)
REVENUES: (1) YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5
3,500 slots
Slot Win $241 win/slot/day $ 308.4 $ 317.6 $ 327.2 $ 337.0 $ 347.1
EXPENSES
State+Local Tax on Win 55.5% $ 171.2 $ 176.3 $ 181.6 $ 187.0 $ 192.6
Greyhound Purses and Adoption (0%) 0.0 0.0 0.0 0.0 0.0
Direct Payroll 19.6 20.2 20.8 21.4 22.0
Payroll Taxes & Benefits 4.9 5.0 5.2 5.3 5.5
Slot Lease Payments 15.8 15.8 15.8 15.8 15.8
Other Slot Operating Costs 7.7 7.9 8.2 8.4 8.7
Building Operating Costs 7.7 7.9 8.2 8.4 8.7
Property Tax 2.5 2.6 2.7 2.7 2.8
Advertising/Media Marketing 9.3 9.5 9.8 10.1 10.4
Promotion: Food & Beverage $ 20.0
Other Players' Club 10.8
Bussing & Other 9.3
Total Promotion -------- 40.1 41.3 42.5 43.8 45.1
Interest on Debt 0.0 0.0 0.0 0.0 0.0
Depr'n &c: Slots (3 years) $ 0.0
Bldgs & Other (20/5 years) 3.1
Initial License Fee (5 years) 8.0
Total Dep'n & Amort'n -------- 11.1 11.1 11.1 11.1 11.1
--------- --------- --------- --------- ---------
Total Expenses $ 289.7 $ 297.6 $ 305.7 $ 314.1 $ 322.7
--------- --------- --------- --------- ---------
Net Income from Slot Operations $ 18.7 $ 200.0 $ 21.4 $ 22.9 $ 24.4
Net Income / Food & Beverage (1) $ 3.8 $ 3.9 $ 4.1 $ 4.5 $ 5.0(1)
--------- --------- --------- --------- ---------
Consolidated Net Income Before Tax $ 22.4 $ 23.9 $ 25.5 $ 27.4 $ 29.4
Corporate Income Taxes ($ 6.7) ($ 7.2) ($ 7.7) ($ 8.2) ($ 8.8)
--------- --------- --------- --------- ---------
Net Income After Corporate Taxes $ 15.7 $ 16.7 $ 17.9 $ 19.2 $ 20.6
--------- --------- --------- --------- ---------
Add back: Dep'n & Amort'n (inc F&B) $ 12.5 $ 12.5 $ 12.5 $ 12.5 $ 12.5
Subtract: Capital Invested ($ 95.0) 0.0 0.0 0.0 13.0
(inc Terminal Value) -------- --------- --------- --------- --------- ---------
Result: Net Cash Flow ($ 95.0) $ 28.2 $ 29.2 $ 30.4 $ 31.6 $ 46.1
IRR = 20.0%
- -------------------------
(1) Food, beverage, and racing operations presented on a net basis; see Exhibit
C.
PRO FORMA FINANCIAL STATEMENTS FOR MASS. TRACK SLOT FACILITIES PRELIMINARY
EXHIBIT B3D: INCOME STATEMENT (3,500 SLOTS, $55 MILLION LICENSE FEE)
($ million, based on 2003 dollars)
REVENUES: (1) YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5
3,500 slots
Slot Win $241 win/slot/day $ 308.4 $ 317.6 $ 327.2 $ 337.0 $ 347.1
EXPENSES
State+Local Tax on Win 54.2% $ 167.1 $ 172.2 $ 177.3 $ 182.6 $ 188.1
Greyhound Purses and Adoption (0%) 0.0 0.0 0.0 0.0 0.0
Direct Payroll 19.6 20.2 20.8 21.4 22.0
Payroll Taxes & Benefits 4.9 5.0 5.2 5.3 5.5
Slot Lease Payments 15.8 15.8 15.8 15.8 15.8
Other Slot Operating Costs 7.7 7.9 8.2 8.4 8.7
Building Operating Costs 7.7 7.9 8.2 8.4 8.7
Property Tax 2.7 2.8 2.9 3.0 3.0
Advertising/Media Marketing 9.3 9.5 9.8 10.1 10.4
Promotion: Food & Beverage $ 20.0
Other Players' Club 10.8
Bussing & Other 9.3
Total Promotion -------- 40.1 41.3 42.5 43.8 45.1
Interest on Debt 0.0 0.0 0.0 0.0 0.0
Depr'n &c: Slots (3 years) $ 0.0
Bldgs & Other (20/5 years) 3.1
Initial License Fee (5 years) 10.0
Total Dep'n & Amort'n -------- 13.1 13.1 13.1 13.1 13.1
--------- --------- --------- --------- ---------
Total Expenses $ 287.9 $ 295.7 $ 303.7 $ 311.9 $ 320.4
--------- --------- --------- --------- ---------
Net Income from Slot Operations $ 20.5 $ 22.0 $ 23.5 $ 25.0 $ 26.7
Net Income / Food & Beverage (1) $ 3.8 $ 3.9 $ 4.1 $ 4.5 $ 5.0(1)
--------- --------- --------- --------- ---------
Consolidated Net Income Before Tax $ 24.2 $ 25.8 $ 27.6 $ 29.5 $ 31.7
Corporate Income Taxes ($ 7.3) ($ 7.7) ($ 8.3) ($ 8.9) ($ 9.5)
--------- --------- --------- --------- ---------
Net Income After Corporate Taxes $ 17.0 $ 18.1 $ 19.3 $ 20.7 $ 22.2
--------- --------- --------- --------- ---------
Add back: Dep'n & Amort'n (inc F&B) $ 14.5 $ 14.5 $ 14.5 $ 14.5 $ 14.5
Subtract: Capital Invested ($ 105.0) 0.0 0.0 0.0 13.0
(inc Terminal Value) -------- --------- --------- --------- --------- ---------
Result: Net Cash Flow ($ 105.0) $ 31.4 $ 32.6 $ 33.8 $ 35.2 $ 49.7
IRR = 20.1%
- -----------------------
(1) Food, beverage, and racing operations presented on a net basis; see Exhibit
C.