3
Magna Entertainment Corp.
337 Magna Drive
Aurora, Ontario
Canada L4G 7K1
Tel (905) 726-2462
Fax (905) 726-7172
MEC
---
EXHIBIT 99
PRESS RELEASE
MAGNA ENTERTAINMENT CORP.
ANNOUNCES RESULTS FOR THE THIRD QUARTER
AND NINE MONTHS ENDED SEPTEMBER 30, 2001
November 2, 2001, Aurora, Ontario, Canada......Magna Entertainment Corp. ("MEC")
(NASDAQ: MIEC; TSE: MIE.A, MEH) today reported its financial results for the
third quarter and nine months ended September 30, 2001.
------------------------------------------------------------------------------------------------------------------------------------
Nine Months Ended Three Months Ended
September 30, September 30,
2001 2000 2001 2000
-------- -------- ------- -------
Revenue /(1)/ $423,550 $339,025 $65,832 $50,213
Earnings (loss) before interest, taxes,
depreciation and amortization (EBITDA) $ 52,816 $ 31,503 $(2,825) $(4,063)
EBITDA before gains on the sale of real estate $ 35,727 $ 25,452 $(2,862) $(7,759)
Net income (loss) $ 18,478 $ 9,622 $(6,227) $(5,110)
Diluted earnings (loss) per share $ 0.22 $ 0.12 $ (0.07) $ (0.06)
(1) Effective October 1, 2000, the Company changed its method of
accounting for revenue recognition. The change in accounting
presentation has been retroactively applied.
All amounts are reported in thousands of U.S. dollars, except per share
figures.
------------------------------------------------------------------------------------------------------------------------------------
In announcing these results, Jim McAlpine, President and Chief Executive Officer
of MEC, remarked that "we are pleased with our improved operating and financial
performance for the nine months ended September 30, 2001 and the third quarter.
EBITDA before gains on the sale of real estate for the third quarter was $4.9
million better than last year. The third quarter is typically our weakest
quarter because our four largest racetracks, collectively, have the fewest live
race days during this quarter. The improvements in year to date EBITDA reflect
the ongoing consolidation of strategic racetracks and sale of non-core real
estate, offset somewhat by the impact of fewer live racing days at some of our
California tracks, the temporary closure of our racetracks and OTBs in response
to the tragic events of September 11, 2001, and a weaker U. S. economy. For the
balance of 2001, we expect to see further improvements in our operating and
financial performance as we achieve greater synergies and economies of scale,
realize improved seasonal performance resulting from live racing at Bay Meadows
and the operations of MEC Pennsylvania in the fourth quarter and benefit from
the sale of non-core real estate. At the same time, we will continue to pursue
4
strategic acquisitions. We plan to expand our account wagering operations
utilizing our "Call-A-Bet" telephone system and the Internet following the
recent favorable legislative amendments in California".
Our racetracks operate for prescribed periods each year. As a result, our
racetrack revenues and operating results for any quarter will not be indicative
of our revenues and operating results for the year. In the third quarter of
2001, three of our largest racetracks, Santa Anita Park, Gulfstream Park and
Golden Gate Fields had no live race days. We expect that seasonal fluctuations
will be reduced over time as the full impact of our acquisition and account
wagering initiatives is realized.
Our financial results for the third quarter of 2001 reflect the full quarter's
operations for all of the Company's racetracks and related operations. The
comparative results for the third quarter of 2000 do not reflect the operations
of Bay Meadows, MEC Pennsylvania or Portland Meadows, which were acquired in
November 2000, April 2001 and commenced activity in July 2001, respectively.
Revenue for the first nine months and third quarter of 2001 increased 24.9% to
$423.6 million and 31.1% to $65.8 million, respectively. The higher revenues in
the third quarter of 2001 reflect primarily the acquisition of MEC Pennsylvania
and Bay Meadows, partially offset by a lower level of sales of non-core real
estate.
EBITDA, excluding gains on the sale of non-core real estate, for the nine months
ended September 30, 2001 was $35.7 million compared to $25.5 million in the
first nine months of fiscal 2000 and for the three months ended September 30,
2001 was a loss of $2.9 million compared to a loss of $7.8 million in the third
quarter of 2000.
Revenues on the sale of non-core real estate in the third quarter of 2001 were
$1.1 million, resulting in EBITDA of $40,000, compared to revenues in the third
quarter of 2000 of $16.8 million and EBITDA of $3.7 million. We have completed
further sales of our non-core real estate in the fourth quarter of 2001 and
expect additional sales to be completed in 2002.
Net income increased 92% to $18.5 million for the first nine months of 2001
compared to 2000, despite a loss of $6.2 million in the third quarter of 2001
compared to a loss of $5.1 million in the comparative quarter of 2000.
Diluted earnings per share increased 83% to $0.22 for the first nine months of
2001 and diluted loss per share was $0.07 for the third quarter of 2001 compared
to a loss of $0.06 per share in the third quarter of 2000.
During the third quarter of 2001, cash generated from operations before changes
in non-cash working capital was $0.6 million. Total cash used for investment
activities during the quarter was $5.8 million, including $9.1 million for real
estate property and fixed asset additions and $0.5 million of other assets,
partially offset by $3.8 million of net cash proceeds from the sale of non-core
real estate.
We recently announced the acquisition of Multnomah Greyhound Park in Portland,
Oregon and the commencement of operations at Portland Meadows. These two
operations will enable us to act as the wagering hub for the State of Oregon
throughout the year, and thereby determine and manage all simulcast signals
imported into Oregon racetracks and off-track betting facilities ("OTBs"). This
will permit broader simulcast distribution of, and increase wagering on, other
MEC tracks.
As previously discussed, we are continuing to pursue strategic acquisitions and
make strategic investments in our racetracks and related operations, including
entertainment operations, to grow and enhance our racing business. As announced
last week, we have filed an amended registration statement and a preliminary
short form prospectus with securities regulators in the United States and Canada
offering 20 million shares of Class A Subordinate Voting Stock (plus an over-
allotment option of 3 million shares).
During the fourth quarter of 2001, we will continue to focus on earnings growth
through the implementation, throughout our operations, of best practices and
common systems, utilization of our corporate purchasing power to reduce costs,
improved production and distribution of our simulcast program, and the sale of
non-core real estate holdings.
5
MEC, 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, including OTBs, and owns and operates a national telephone
account wagering system called "Call-A-Bet."
The Company will hold a conference call to discuss its third quarter results on
November 5, 2001 at 11:00 a.m. New York time. The number to use for this call
is 1-800-379-5831. Please call 10 minutes prior to the start of the conference
call. The overseas number to call is 1-416-641-6888. The conference call will
be chaired by Graham Orr, Executive Vice-President and Chief Financial Officer
of MEC.
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
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.
A registration statement relating to the securities described above has been
filed with the United States Securities and Exchange Commission but has not yet
become effective. These securities may not be sold nor may offers to buy be
accepted prior to the time the registration statement becomes effective. This
press release shall not constitute an offer to sell or the solicitation of an
offer to buy nor shall there be any sale of these securities in any jurisdiction
in which such offer, solicitation or sale would be unlawful prior to
registration or qualification under the securities law of any such jurisdiction.
A prospectus for the offering may be obtained from Bear, Stearns & Co. Inc., 245
Park Avenue, New York, NY 10167 (telephone: 631-254-7129), from BMO Nesbitt
Burns Inc., 1 First Canadian Place, Toronto, Ontario M5X 1H3 (fax: 416-359-9742)
or from CIBC World Markets, 417 Fifth Avenue, New York, NY 10016 (e-mail:
useprospectus@us.cibc.com).
For more information contact:
Graham Orr
Executive Vice-President
& Chief Financial Officer
Magna Entertainment Corp.
337 Magna Drive
Aurora, ON L4G 7K1
Tel: 905-726-7099
6
MAGNA ENTERTAINMENT CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
-----------------------------------------------------------------------------------------------------------------
[Unaudited]
[U.S. dollars in thousands, except
per share figures]
------------------------------------------------------------------------------------------------------------------
Three months ended Nine months ended
September 30, September 30, September 30, September 30,
2001 2000 2001 2000
------------------------------------------------------------------------------------------------------------------
(restated, (restated,
see note 1) see note 1)
Revenue
Racetrack
Gross wagering $ 45,085 $ 19,877 $321,574 $261,089
Non-wagering 13,394 8,720 50,850 39,052
Real estate
Sale of real estate 1,091 16,766 37,236 25,035
Rental and other 6,262 4,850 13,890 13,849
------------------------------------------------------------------------------------------------------------------
65,832 50,213 423,550 339,025
------------------------------------------------------------------------------------------------------------------
Costs and expenses
Racetrack
Purses, awards and other 24,509 10,623 198,217 164,865
Operating costs 31,686 21,077 117,947 97,021
General and administrative 6,172 3,942 21,402 11,019
Real estate
Cost of real estate sold 1,054 13,070 20,147 18,984
Operating costs 4,466 4,490 9,882 11,650
General and administrative 282 253 829 721
Predevelopment and other costs 488 821 2,310 3,262
Depreciation and amortization 7,376 4,792 19,360 14,744
Interest expense (income), net 282 (171) 2,360 (206)
------------------------------------------------------------------------------------------------------------------
76,315 58,897 392,454 322,060
------------------------------------------------------------------------------------------------------------------
Income (loss) before income taxes (10,483) (8,684) 31,096 16,965
Income tax provision (benefit) (4,256) (3,574) 12,618 7,343
------------------------------------------------------------------------------------------------------------------
Net income (loss) (6,227) (5,110) 18,478 9,622
Other comprehensive (loss) income
Foreign currency translation Adjustment 2,974 (7,413) (5,982) (13,742)
------------------------------------------------------------------------------------------------------------------
Comprehensive income (loss) $ (3,253) $(12,523) $ 12,496 $ (4,120)
==================================================================================================================
Earnings (loss) per share of Class A
Subordinate Voting Stock,
Class B Stock or Exchangeable shares:
Basic $ (0.07) $ (0.06) $ 0.23 $ 0.12
Diluted $ (0.07) $ (0.06) $ 0.22 $ 0.12
==================================================================================================================
Average number of shares of Class A
Subordinate Voting Stock, Class B Stock
and Exchangeable Shares
outstanding during the period [in
thousands]:
Basic 83,719 80,466 82,107 80,407
Diluted 83,977 80,466 82,439 80,411
==================================================================================================================
7
MAGNA ENTERTAINMENT CORP.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
---------------------------------------------------------------------------------------------------------
[Unaudited]
[U.S. dollars in thousands]
---------------------------------------------------------------------------------------------------------
Three months ended Nine months ended
September 30, September 30, September 30, September 30,
2001 2000 2001 2000
---------------------------------------------------------------------------------------------------------
Cash provided from (used for):
OPERATING ACTIVITIES
Net income (loss) $(6,227) $(5,110) $ 18,478 $ 9,622
Items not involving current cash flows 6,857 (660) (4,476) 6,642
---------------------------------------------------------------------------------------------------------
630 (5,770) 14,002 16,264
Changes in non-cash items related to
operations (3,956) (3,056) 6,357 (28,931)
---------------------------------------------------------------------------------------------------------
(3,326) (8,826) 20,359 (12,667)
---------------------------------------------------------------------------------------------------------
INVESTMENT ACTIVITIES
Acquisition of business, net of cash - - (21,035) -
Real estate property and
fixed asset additions (9,111) (5,539) (25,494) (14,306)
Proceeds on disposal of real estate 3,888 16,766 36,793 25,035
Other asset (additions) disposals (530) - (366) 1,749
Proceeds on real estate sold to Magna - (397) - 5,750
---------------------------------------------------------------------------------------------------------
(5,753) 10,830 (10,102) 18,228
---------------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES
Decrease in bank indebtedness - (4,703) (7,609) (6,759)
(Repayment of) increase in
long-term debt (1,090) 125 7,571 (6,642)
Contributed capital - - - 1,352
Issuance of share capital 33 - 476 -
---------------------------------------------------------------------------------------------------------
(1,057) (4,578) 438 (12,049)
---------------------------------------------------------------------------------------------------------
Effect of exchange rate changes on cash
And cash equivalents 1,811 (527) 186 (582)
---------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash
equivalents during the period (8,325) (3,101) 10,881 (7,070)
Cash and cash equivalents, beginning of
period 51,182 46,691 31,976 50,660
---------------------------------------------------------------------------------------------------------
Cash and cash equivalents, end of period $42,857 $43,590 $ 42,857 $ 43,590
=========================================================================================================
8
MAGNA ENTERTAINMENT CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
-------------------------------------------------------------------------------------------------------
[Unaudited]
[U.S. dollars in thousands]
-------------------------------------------------------------------------------------------------------
September 30, December 31,
2001 2000
-------------------------------------------------------------------------------------------------------
ASSETS
-------------------------------------------------------------------------------------------------------
Current assets:
Cash and cash equivalents $ 42,857 $ 31,976
Restricted cash 8,715 13,461
Accounts receivable 25,156 33,399
Prepaid expenses and other 10,313 7,984
-------------------------------------------------------------------------------------------------------
87,041 86,820
-------------------------------------------------------------------------------------------------------
Real estate properties and fixed assets, net 574,943 568,265
-------------------------------------------------------------------------------------------------------
Other assets, net 173,506 117,561
-------------------------------------------------------------------------------------------------------
Future tax assets 6,018 8,393
-------------------------------------------------------------------------------------------------------
$841,508 $781,039
=======================================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
-------------------------------------------------------------------------------------------------------
Current liabilities:
Bank indebtedness $ - $ 7,609
Accounts payable and other liabilities 53,218 64,847
Income taxes payable 13,749 1,111
Long-term debt due within one year 23,694 12,754
-------------------------------------------------------------------------------------------------------
90,661 86,321
-------------------------------------------------------------------------------------------------------
Long-term debt 73,447 63,343
-------------------------------------------------------------------------------------------------------
Other long-term liabilities 1,786 234
-------------------------------------------------------------------------------------------------------
Future tax liabilities 107,604 89,353
-------------------------------------------------------------------------------------------------------
Shareholders' equity:
Capital stock issued and outstanding -
Class A Subordinate Voting Stock 154,594 100,770
Exchangeable Shares 17,839 57,937
Class B Stock 394,094 394,094
Contributed surplus 1,352 1,352
Retained earnings (deficit) 16,488 (1,990)
Accumulated comprehensive loss (16,357) (10,375)
-------------------------------------------------------------------------------------------------------
568,010 541,788
-------------------------------------------------------------------------------------------------------
$841,508 $781,039
=======================================================================================================
9
MAGNA ENTERTAINMENT CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. Summary of significant accounting policies
Basis of presentation
---------------------
The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and with instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. The preparation of the consolidated financial statements
in conformity with generally accepted accounting principles requires management
to make estimates and assumptions that affect the amounts reported in the
consolidated financial statements and accompanying notes. Actual results could
differ from estimates. In the opinion of management, all adjustments, which
consist of normal and recurring adjustments, necessary for fair presentation
have been included. Operating results for the three and nine month periods ended
September 30, 2001 are not necessarily indicative of the results that may be
expected for the year ended December 31, 2001. For further information, refer to
the consolidated financial statements and footnotes thereto included in the
Company's annual report on Form 10-K for the year ended December 31, 2000.
As a result of the seasonal nature of our racetrack business, racetrack revenues
and operating results for any quarter will not be indicative of the revenues and
operating results for the year. The accompanying consolidated statement of
operations and comprehensive income (loss) for the nine months ended September
30, 2001, reflect a disproportionate share of annual net earnings as the Company
normally earns a substantial portion of its net earnings in the first quarter of
each year.
Effective October 1, 2000, the Company changed its method of accounting for
revenue recognition in accordance with Staff Accounting Bulletin (SAB) No. 101,
Revenue Recognition in Financial Statements and guidance provided by EITF 99-19
Recording Revenue Gross as a Principal versus Net as an Agent. Previously the
Company recorded its wagering revenue net of "purses, stakes and awards" and
"pari-mutuel wagering taxes". Under the new accounting method adopted during
the fourth quarter of 2000, the Company now recognizes revenue gross of "purses,
stakes and awards" and "pari-mutuel wagering taxes". The costs relating to
these amounts are shown as "purses, awards and other" in the accompanying
consolidated statement of operations and comprehensive income (loss). In
accordance with SAB 101 guidance, all prior period income statements have been
retroactively reclassified to comply with the new accounting method.
2. Business Acquisition
On April 5, 2001, the Company completed the acquisition of Ladbroke Racing
Pennsylvania Inc. and Sport Broadcasting, Inc. (collectively the "Ladbroke
Companies") for a total purchase price, of $47.5 million, net of cash acquired
of $7.0 million and transaction costs. The total purchase price was satisfied
by cash payments of $28 million, the issuance of two promissory notes totalling
$13.25 million which bear interest at 6% with the first note in the amount of
$6,625,000 maturing on the first anniversary of the closing date and the second
note in the amount of $6,625,000 maturing on the second anniversary of the
closing date and by the issuance of 3,178,297 shares of Class A Subordinate
Voting Stock. The Ladbroke Companies include account wagering operations, The
Meadows harness track and four off-track betting facilities.
10
The purchase price, which may be adjusted further, has been allocated to the
assets and liabilities acquired as follows (in thousands):
Non-cash working capital $ (6,514)
Real estate properties and fixed assets 19,947
Other assets 61,550
Deferred income taxes (27,448)
--------
Net assets acquired and total
purchase price, net of cash acquired $ 47,535
========
The purchase consideration for this acquisition is as follows:
Cash $ 21,035
Issuance of shares of Class A Subordinate Voting Stock 13,250
Issuance of two promissory notes 13,250
--------
$ 47,535
========
Pro-Forma Impact
If the acquisition of the Ladbroke Companies had occurred on January 1, 2000,
the Company's unaudited pro-forma results would have been:
For the nine months For the nine months
ended September 30, 2001 ended September 30, 2000
------------------------ ------------------------
Revenues $443,462 $393,394
Expenses 411,669 372,252
-------- --------
Income before income taxes 31,793 21,142
======== ========
Net income 18,651 11,698
======== ========
Net income per share
(basic and diluted) $ 0.22 $ 0.14
======== ========
3. Capital Stock
Changes in Class A Subordinate Voting Stock, Exchangeable Shares and Class B
Stock for the nine months ended September 30, 2001 are shown in the following
table (number of shares and stated value in the following table have been
rounded to the nearest thousand):
11
Class A Subordinate Exchangeable
Voting Stock Shares Class B Stock
------------------------ -------------------------- ----------------------------
Number Stated Number Stated Number Stated
of Shares Value of Shares Value of Shares Value
--------------------------------------------------------------------------------------------------------------------------------
Issued and outstanding at
December 31, 2000 14,192 $100,770 7,807 $ 57,937 58,466 $394,094
Issued on exercise of stock
options 9 40 - - - -
Conversion of Exchangeable
Shares to Class A
Subordinate Voting Stock 71 527 (71) (527) - -
--------------------------------------------------------------------------------------------------------------------------------
Issued and outstanding at
March 31, 2001 14,272 101,337 7,736 57,410 58,466 394,094
Issued on acquisition of the
Ladbroke Companies on
April 5, 2001 3,178 13,250 - - - -
Issued under the Plan 63 403 - - - -
Conversion of Exchangeable
Shares to Class A
Subordinate Voting Stock 626 4,645 (626) (4,645) - -
--------------------------------------------------------------------------------------------------------------------------------
Issued and outstanding at
June 30, 2001 18,139 119,635 7,110 52,765 58,466 394,094
Issued on exercise of stock
options 7 33 - - - -
Conversion of Exchangeable
Shares to Class A
Subordinate Voting Stock 4,707 34,926 (4,707) (34,926) - -
--------------------------------------------------------------------------------------------------------------------------------
Issued and outstanding at
September 30, 2001 22,853 $154,594 2,403 $ 17,839 58,466 $394,094
================================================================================================================================
The Company has a Long-term Incentive Plan (the "Plan") (adopted in 2000) which
allows for the grant of nonqualified stock options, incentive stock options,
stock appreciation rights, restricted stock, bonus stock and performance shares
to directors, officers, employees, consultants, independent contractors and
agents. A maximum of 8.0 million shares could be issued under the Plan, of which
6.5 million are available for issuance pursuant to stock options and tandem
stock appreciation rights and 1.5 million are available for issuance pursuant to
any other type of award under the Plan. During the three months ended September
30, 2001, 6,667 shares were issued under the Plan. During the nine months
ended September 30, 2001, 78,094 shares were issued under the Plan.
The Company grants stock options to certain directors, officers and key
employees to purchase shares of the Company's Class A Subordinate Voting Stock.
The majority of the stock options give the grantee the right to purchase Class A
Subordinate Voting Stock of the Company at a price no less than the fair market
value of such stock at the date of grant. Generally, stock options under the
Plan vest over a period of two to six years from the date of grant at rates of
1/7/th/ to 1/3/rd/ per year and expire on or before the tenth anniversary of the
date of grant, subject to earlier cancellation in the events specified in the
stock option agreements entered into by the Company with each recipient of
options.
During the nine months ended September 30, 2001, 1,250,000 stock options were
granted, 15,000 stock options were exercised and 603,333 stock options were
revoked. At September 30, 2001, there were 4,453,333 options outstanding that
were all granted during 2000 and 2001. The exercise price of the stock options
outstanding at September 30, 2001 ranged from $3.91 to $7.00 with an average
exercise price of $5.99.
12
There were 2,299,618 options exercisable at September 30, 2001 with an average
exercise price of $6.23.
4. Earnings (Loss) Per Share
The following is a reconciliation of the numerator and denominator of the basic
and diluted per share computations (in thousands except per share amounts):
Three months ended Nine months ended
September 30, September 30,
2001 2000 2001 2000
----------------------------------------------------------------------------------------------------------------------------------
Net income (loss) $(6,227) $ (5,110) $18,478 $ 9,622
==================================================================================================================================
Basic Diluted Basic & Basic Diluted Basic Diluted
Diluted
Weighted Average
Shares Outstanding:
Class A Subordinate Voting
Stock 20,496 20,754 13,102 17,001 17,333 9,011 9,015
Class B Stock 58,466 58,466 58,466 58,466 58,466 59,806 59,806
Exchangeable Shares 4,757 4,757 8,898 6,640 6,640 11,590 11,590
----------------------------------------------------------------------------------------------------------------------------------
83,719 83,977 80,466 82,107 82,439 80,407 80,411
----------------------------------------------------------------------------------------------------------------------------------
Earnings (Loss) Per Share $(0.07) $ (0.07) ($0.06) $0.23 $ 0.22 $0.12 $ 0.12
==================================================================================================================================
5. Segment Information
The Company's reportable segments reflect how the Company is organized and
managed by senior management. The Company has two reportable segments: racetrack
operations and real estate operations.
The accounting policies of the segments are the same as those described in the
"Significant Accounting Policies" section in the Company's annual report on Form
10-K for the year ended December 31, 2000.
The following summary presents key information by operating segment (in
thousands):
Three months ended September 30, 2001
Racetrack Real Estate
Operations Operations Total
---------------------------------------------------------------------------------------------------------------
Revenue $ 58,479 $ 7,353 $ 65,832
---------------------------------------------------------------------------------------------------------------
Income (loss) before income taxes $ (11,942) $ 1,459 $ (10,483)
---------------------------------------------------------------------------------------------------------------
Real estate properties and fixed asset additions, net $ 5,868 $ 3,243 $ 9,111
---------------------------------------------------------------------------------------------------------------
13
Three months ended September 30, 2000
Racetrack Real Estate
Operations Operations Total
---------------------------------------------------------------------------------------------------------------
Revenue $ 28,597 $ 21,616 $ 50,213
---------------------------------------------------------------------------------------------------------------
Income (loss) before income taxes $ (11,890) $ 3,206 $ (8,684)
---------------------------------------------------------------------------------------------------------------
Real estate properties and fixed asset additions, net $ 3,963 $ 1,576 $ 5,539
---------------------------------------------------------------------------------------------------------------
Nine months ended September 30, 2001
Racetrack Real Estate
Operations Operations Total
---------------------------------------------------------------------------------------------------------------
Revenue $ 372,424 $ 51,126 $ 423,550
---------------------------------------------------------------------------------------------------------------
Income before income taxes $ 11,728 $ 19,368 $ 31,096
---------------------------------------------------------------------------------------------------------------
Real estate properties and fixed asset additions, net $ 17,706 $ 7,788 $ 25,494
---------------------------------------------------------------------------------------------------------------
Nine months ended September 30, 2000
Racetrack Real Estate
Operations Operations Total
---------------------------------------------------------------------------------------------------------------
Revenue $ 300,141 $ 38,884 $ 339,025
---------------------------------------------------------------------------------------------------------------
Income before income taxes $ 11,626 $ 5,339 $ 16,965
---------------------------------------------------------------------------------------------------------------
Real estate properties and fixed asset additions, net $ 9,776 $ 4,530 $ 14,306
---------------------------------------------------------------------------------------------------------------
6. Subsequent Events
a) On October 26, 2001, the Company filed an amendment to its registration
statement offering 20 million shares of Class A Subordinate Voting Stock
for sale in the United States and in Canada.
b) On October 26, 2001, the Company completed the acquisition of MKC
Acquisition Co., operating as Multnomah Greyhound Park in Portland, Oregon.
On closing, the Company paid approximately $4 million in cash and issued
330,962 shares of Class A Subordinate Voting Stock.
c) On October 31, 2001, the Company sold two non-core real estate properties
located in Milton, Ontario to magna International Inc. for total proceeds
of approximately $12.5 million. The gain on the sale of the properties of
approximately $6.0 million, net of tax, is a related party transaction and
will therefore be reported as a contribution to equity.